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EXHIBIT 10.1
EXHIBIT A
SECOND RESTATED
EMPLOYMENT AGREEMENT
This Agreement is entered into as of the ___ day of ________, 199_, by
and between Continental Natural Gas, Inc., an Oklahoma corporation
("Employer"), and Xxxxx X. Xxxxx ("Employee").
RECITALS
A. As of January 1, 1992, Employer and Employee entered into an
Employment Agreement pursuant to which Employee agreed to employment with
Employer;
B. The Employment Agreement (the "Employment Agreement") was
subsequently amended January 1, 1995 and February 28, 1996;
C. Employer desires to continue to employ Employee and Employee
desires to continue to be employed by Employer to serve and perform such duties
at such times and places and upon such terms and conditions as hereinafter
provided;
D. Employer desires to receive from Employee a covenant not to
disclose certain information relating to Employer's business and a covenant not
to compete with Employer;
E. Employer and Employee desire to set forth in writing the terms
and conditions of their agreement and understandings.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration this day paid by
each party to the other, the receipt and sufficiency of which are hereby
acknowledged, Employer and Employee agree as follows:
1. Employment. Employer hereby agrees to continue the employment of
Employee and Employee hereby agrees to continue to provide Employee's services
to Employer upon the terms and conditions herein stated.
2. Term. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement shall begin as of the date hereof, and
shall terminate on December 31, 1999.
3. Compensation.
(a) Salary. For services rendered by Employee under this
Agreement, Employer shall pay Employee a salary of One Hundred Fifty
Thousand Dollars ($150,000.00) per annum, payable in twenty-six (26)
equal bi-weekly installments. On January 1 of each calendar year during
the term hereof, the
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annual salary payable to Employee pursuant to this paragraph 3(a) shall
be increased by a percentage equal to the percentage increase as of such
date, if any, in the Official Consumers Price Index published by the
Bureau of Labor Statistics of the U. S. Department of Labor, applicable
to the smallest geographic region which includes Tulsa, Oklahoma, with
reference to the Official Consumers Price Index for January 1 of the
previous year.
(b) Bonus. For the calendar year 1997 and for all subsequent
calendar years during the term of this Agreement, Employer shall pay
Employee a yearly bonus equal as follows:
(i) If the Adjusted Income for such calendar year is
equal to or greater than the Initial Threshold, but less than the
Second Threshold, the yearly bonus payable to Employee shall
equal the product obtained by multipying (A) $50,000 by (B) a
fraction (I) the numerator of which is the amount by which the
Adjusted Income for such calendar year exceeds the Initial
Threshold and (II) the denominator of which is the difference
between the Second Threshold and the Initial Threshold;
(ii) If the Adjusted Income is equal to or greater than
the Second Threshold, but less than the Third Threshold, the
yearly bonus payable to Employee shall equal $50,000;
(iii) If the Adjusted Income is equal to or greater than
the Third Threshold, but less than the Fourth Threshold, the
yearly bonus payable to Employee shall equal $100,000; or
(iv) If the Adjusted Income is equal to or greater than
the Fourth Threshold, the yearly bonus payable to Employee shall
equal $150,000.
The Thresholds for the 1997 calendar year shall be as follows:
Initial Threshold = $4,400,000
Second Threshold = $5,500,000
Third Threshold = $6,600,000
Fourth Threshold = $7,700,000
For any calendar year subsequent to 1997, the Initial Threshold shall be
an amount equal to 20% of Average Daily Adjusted Equity for the previous
calendar year, the Second Threshold will be 25% of such Average Daily
Adjusted Equity, the Third Threshold will be 30% of such Average Daily
Adjusted Equity and the Fourth Threshold will be 35% of such Average
Daily Adjusted Equity . As used herein, the term "Adjusted
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Income" shall mean, for the calendar year in question, the income of
Employer before income taxes plus depreciation, depletion and
amortization and any other noncash items. As used herein, the term
"Average Daily Adjusted Equity" shall mean, for the calendar year in
question, the average of the Adjusted Equity for the year in question;
such Adjusted Equity being an amount, determined each day, equal to (A)
the stockholders' equity of Employer as of the last day of the previous
calendar year less (B) the then Unutilized IPO Proceeds. As of any day,
the then Unutilized IPO Proceeds shall be an amount equal to (I) the net
proceeds, after all expenses, to Employer raised pursuant to the initial
public offering ("IPO") consummated by Employer as of the effective date
of this Agreement less (II) the amount of Employer's long-term debt as
of such day which has been incurred by Employer since the date of the
IPO (plus any long-term debt incurred by Employer prior to the IPO if
incurred in contemplation of the IPO, as determined by Employer, in
Employer's sole discretion, exercised in good faith).
Notwithstanding any of the foregoing, for any calendar year
during which occurs an event which would have been a "Buyout Event"
under the Employment Agreement (prior to its amendment hereby), the
bonus payable with respect to the gain realized by Employer as a result
of such event shall be 1.5%.
Within thirty (30) days after the end of each calendar month,
Employer shall make a good faith estimate of the Adjusted Income for
such calendar month and pay Employee the estimated bonus attributable
thereto). Within ninety (90) days after the end of each calendar year
during the term hereof, an accounting of the actual amounts owed to
Employee pursuant to this paragraph 3(b) shall be conducted by Employer
and, to the extent of the difference between the aggregate of the
estimated monthly payments to Employee and the actual amounts owed by
Employer to Employee, the party owing such amounts shall make payment to
the other. Such payment shall be made within five (5) days after
delivery of the accounting to Employee. Any payment not paid on or
before the due date therefor shall bear interest at a varying rate of
interest per annum equal to the prime lending rate of Bank of Oklahoma,
N.A., plus one and one-half percent (1-1/2%).
If this Agreement becomes effective on any day other than January
1, the bonus payable to Employee for the first calendar year during
which this Agreement is effective shall be prorated. The bonus payable
to Employee for the portion of such calendar year from January 1 through
the day prior to the effective date of this Agreement shall be paid
based upon the terms of the Employment Agreement prior to its amendment
and restatement hereunder. The bonus which would have been paid under
such Employment Agreement prior to its amendment and
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restatement hereunder shall be computed for the entire calendar year and
then multiplied by a fraction, the numerator of which is the number of
days of such calendar year prior to the effective date of this Agreement
and the denominator of which is the number of days in such entire
calendar year. The bonus payable to Employee for the remaining portion
of such calendar year shall be paid based upon the terms described in
this paragraph 3(b), prorated in the same manner as described in the
preceding sentence (using the number of remaining days in such calendar
year as the numerator).
(c) Determination of Adjusted Income and Average Daily Adjusted
Equity. The Adjusted Income and Average Daily Adjusted Equity shall be
determined by the certified public accountant or accounting firm (the
"CPA") which normally audits the books of Employer. Such determinations
shall be made using generally accepted accounting principles,
consistently applied and consistent with past practices of Employer.
Such determinations shall be binding on all parties and conclusive in
all respects; provided, however, Employee shall have the right to audit
the determinations. If Employee's audit reveals inconsistencies in the
determination by the CPA resulting in an error in the amount payable
hereunder for any twelve-month period in excess of five percent (5%),
Employer shall bear the cost of Employee's audit. Otherwise, Employee's
audit shall be Employee's expense. After any such audit, once the
correct amount owed is determined, the party owing the other shall pay
the amount owed upon demand.
(d) Automobile Allowance. Employer shall also pay Employee at
the same times Employee is paid salary pursuant to paragraph 3(a) above,
Four Hundred Dollars ($400.00) per month during the term of this
Agreement as an automobile allowance. In consideration thereof and as a
result of the nature of the services to be performed by Employee,
Employee shall keep an automobile available and in working condition so
that Employee can adequately perform the services required to be
performed by Employee hereunder.
(e) Additional Compensation. The compensation agreed to be
paid to Employee by Employer in this paragraph 3 shall not operate in
any manner as a limitation of any type upon or as a direction, express
or implied, against the exercise by the Board (the "Board") of Directors
of Employer of its power, authority and discretion to grant additional
bonuses and/or fees or other additional direct or indirect benefits or
compensation to or on behalf of Employee if, in the business judgment of
the Board, such action is merited and in the best interest of Employer.
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(f) Withholding. The salary and any other compensation paid
to Employee shall be subject to any and all such payroll and withholding
deductions as are required by the laws of any jurisdiction, federal,
state or local, with taxing authority with respect to such salary and
other compensation.
(g) Payments after Termination. Notwithstanding any other
provision of this Agreement to the contrary, except as provided in
paragraph 13 hereof, any payment required pursuant to this paragraph 3
attributable to any period of time occurring during the term of this
Agreement shall be made when due despite the fact that such payment is
due after termination of this Agreement.
4. Duties. To the best of Employee's ability, using reasonable and
prudent judgment and care, Employee shall render such services and perform such
duties as are customary for a Vice-President and Controller in the industry and
as may be requested by Employer from time to time.
5. Extent of Services. Employee shall devote such time and energy
to the furtherance of Employer's business as shall be determined by the Board.
During the term of this Agreement, Employee shall not, directly or indirectly,
alone or as a member of any business entity, or as an officer, director or
stockholder of any corporation, be engaged in or concerned with any other
commercial or business duties or pursuits which would require such substantial
services on the part of Employee that Employee, in Employer's sole opinion,
would be unable to perform the services required to be performed by Employee
hereby.
6. Working Facilities and Staff. Employee shall be furnished with
such facilities, staff and services as are suitable to Employee's position and
adequate for the performance of Employee's duties.
7. Expenses. Employer will reimburse Employee for all such expenses
which Employer, in Employer's sole discretion, deems are reasonably incurred
for promoting the business of Employer, upon the presentation by Employee, from
time to time, of an itemized account of such expenditures.
8. Vacations. During the term of this Agreement, Employee shall be
entitled, during each year of employment with Employer, to a vacation in
accordance with the established company policy of Employer, during which time
Employee's compensation hereunder shall be paid in full.
9. Insurance. During the term of this Agreement, Employer shall
provide to Employee, and pay all premiums for, major medical insurance with
coverage for Employee and Employee's immediate family on terms no less
favorable than is currently provided.
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10. Pension and Profit-sharing Plan. During the term of this
Agreement, to the extent it is financially reasonable as determined by the
Board, Employer shall maintain in effect any pension and profit-sharing plans
maintained by Employer as of the date hereof and Employee shall be entitled to
participate in such plans on a non-discriminatory basis.
11. Memberships. During the term of this Agreement, Employer shall
maintain its membership at Cedar Ridge Country Club and Employee shall be
designated as the exclusive user thereof, entitled to enjoy all of the rights
and privileges pertaining thereto. In addition, Employer agrees to pay, on
behalf of Employee, up to Three Thousand Dollars ($3,000.00) per year for dues
and/or fees for club memberships, dinner clubs and/or professional
organizations.
12. Disability and Death. If Employee is unable to perform
Employee's services by reason of illness or incapacity for a period of more
than ninety (90) consecutive days, the compensation otherwise payable to
Employee during the continued period of such illness or incapacity shall be
reduced by fifty percent (50%). Employee's full compensation shall be
reinstated upon Employee's return to employment and the discharge of Employee's
full duties hereunder. Notwithstanding anything herein to the contrary,
Employer may terminate this Agreement at any time after Employee shall be
absent from Employee's employment, for whatever cause, for a continuous period
of more than sixty (60) consecutive days, in which event, subject to paragraph
3(g) hereof, all obligations of the Employer hereunder, including Employer's
obligations to pay Employee the compensation provided in paragraph 3 hereof,
shall immediately cease upon any such termination. In no event, however, shall
any provision of this paragraph 12 be interpreted to limit or restrict
Employee's rights to participate in and receive benefits under the existing
Employer disability plan(s). Subject to paragraph 3(g) hereof, all of
Employer's obligations hereunder, including Employer's obligations to pay
Employee the compensation provided in paragraph 3 hereof, shall cease
immediately upon Employee's death. The determination of all periods of time
under this paragraph 12 shall be calculated by including (and counting)
weekends which occur within the applicable period but excluding days of sick
leave, vacation, holidays and other days off, if any, allowed pursuant to
established company policy of Employer.
13. Termination for Cause. Employer may terminate Employee's
employment under this Agreement upon (10) days' notice to Employee after the
occurrence of any of the following events ("Cause Events") unless such events
were caused at the direction of Employer:
(a) Any failure by Employee to faithfully perform the
covenants and agreements of Employee herein stated;
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(b) Willful, gross misconduct by Employee in connection with
the performance of the covenants and agreements of Employee herein
stated;
(c) If Employee violates any law, rule or regulation which
violation materially adversely affects Employer or any of Employer's
subsidiaries or other affiliates (collectively hereinafter referred to
as the "Employer Companies");
(d) If Employee violates any of the provisions of paragraphs
16 or 17;
(e) If Employee converts any property of Employer Companies;
(f) If Employee is convicted of any felony which materially
adversely affects Employer Companies or the ability of Employee to
perform Employee's duties hereunder; or
(g) If Employee is convicted of any lesser crime or offense
involving property or business of Employer Companies.
In the event of a dispute as to whether a Cause Event has occurred, upon the
request of Employer or Employee, such dispute shall be resolved pursuant to the
expedited procedures of the commercial arbitration rules of the American
Arbitration Association regardless of the amount in controversy, with each
party to bear its own arbitration costs and expenses. The parties stipulate
that the hearing locale for any such arbitration proceeding will be Tulsa,
Oklahoma. Judgment upon the award rendered as a result of such arbitration may
be entered in any court having jurisdiction thereof. The parties further
stipulate that the provisions hereof shall be a complete defense to any suit,
action or proceeding instituted in any federal, state or local court or before
any administrative tribunal with respect to any controversy or dispute arising
out of or relating to whether a Cause Event has occurred. Upon termination of
Employee's employment under this Agreement as a result of a Cause Event, all of
Employer's obligations hereunder, including Employer's obligations to pay
Employee the compensation provided in paragraph 3 hereof (whether or not then
accrued), shall immediately cease. Nothing contained herein shall be construed
as limiting in any manner any of the rights or remedies available to Employer
pursuant to this agreement or otherwise with respect to such Cause Event.
14. Expiration of Term. In the event this Agreement is terminated
due to expiration of the term of this Agreement as set forth in paragraph 2
hereof, subject to paragraph 3(g) hereof, all of Employer's obligations
hereunder, including Employer's obligations to pay Employee the compensation
provided in paragraph 3 hereof, shall immediately cease.
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15. Other Termination by Employer. In the event Employer terminates
Employee's employment hereunder for any reason other than as provided in
paragraphs 12, 13 or 14, (a) all of Employer's obligations hereunder, including
Employer's obligations to pay Employee the compensation provided in paragraph 3
hereof, shall continue until terminated under paragraph 14 above, and (b)
notwithstanding anything to the contrary contained herein, the provisions of
paragraph 17 hereof shall not apply.
16. Disclosure of Information. Employee acknowledges that, in and as
a result of Employee's employment with Employer, Employee has and will be
making use of, acquiring, developing and/or adding to confidential information
of special and unique value relating to such matters as Employer Companies'
products, trade secrets, systems, procedures, manuals, confidential reports,
customer and supplier lists, and other information, data and displays, whether
or not patented or copyrighted, as well as the nature and type of product sold
by Employer Companies, the identity of Employer Companies' suppliers and
customers, the products and methods used and preferred by Employer Companies'
customers, and the prices paid by such customers (collectively hereinafter
referred to as the "Confidential Information"). As a material inducement to
Employer to enter into this Agreement and to pay to Employee the compensation
referred to in paragraph 3 hereof (as well as any additional benefits referred
to herein), Employee covenants and agrees that Employee and Employee's
partners, agents, representatives, servants, employers, employees and any and
all other persons acting, directly or indirectly, for or with Employee shall
not, at any time during or following the term of Employee's employment
hereunder, directly or indirectly, for any purpose whatsoever, divulge or
disclose any of the Confidential Information which has been obtained by or
disclosed to Employee and shall not at any time during or following the term of
Employee's employment hereunder, directly or indirectly, use, for any purpose
whatsoever, any of the Confidential Information for Employee's benefit or for
any purpose, whether or not beneficial to Employee, except for the purpose of
permitting Employee to perform the services for Employer contemplated by this
Agreement. Employee further covenants and agrees that all such Confidential
Information shall be the exclusive property of Employer and, upon the
expiration of this Agreement, Employee shall deliver to Employer all
Confidential Information then in the possession, custody or control of Employee
and without regard to the form in which such Confidential Information is stored
or the media for storage for such Confidential Information.
17. Covenants Against Competition. Employee acknowledges that
Employee's services to be rendered hereunder are of a special and unusual
character which have a unique value to Employer, the loss of which cannot
adequately be compensated by damages in an action at law. In view of the
unique value to Employer of the services of Employee for which Employer has
contracted hereunder,
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and because of the Confidential Information to be obtained by or disclosed to
Employee, as hereinabove set forth, and as a material inducement to Employer to
enter into this Agreement, and to pay to Employee the compensation referred to
in paragraph 3 hereof, (as well as any additional benefits referred to herein),
Employee covenants and agrees that Employee and Employee's partners, agents,
representatives, servants, employers, employees and any and all other persons
acting, directly or indirectly, for or with Employee shall not, during the
term of this Agreement and for a period of two (2) years thereafter, within the
continental United States:
(a) Solicit in any manner the termination of any of the
Agreements (the "CNG Agreements") between any of the Employer Companies
and any end-user customer ("CNG End-User") or supplier ("CNG Supplier");
(b) Prior to or immediately upon termination of any CNG
Agreement, compete with or bid competitively against any of the Employer
Companies in order to sell product to any CNG End-User or obtain supply
or product from the same source of supply provided by any CNG Supplier
to any of the Employer Companies; or
(c) Solicit for employment or employ any person who is then or
was at any time during the term of this Agreement an employee of
Employer Companies.
18. Reasonableness of Restrictions. Employee has carefully read and
considered the provisions of paragraphs 16 and 17 hereof and having done so,
agrees that the restrictions set forth in such paragraphs (including, but not
limited to, the time period restriction and the geographical areas of
restriction set forth in paragraphs 16 and 17) are fair and reasonable and are
reasonably required for the protection of the interests of Employer, its
officers, directors and other employees. Notwithstanding the foregoing, in the
event that any of the provisions of paragraphs 16 or 17 shall be held to be
invalid or unenforceable, the remaining provisions thereof shall nevertheless
continue to be valid and enforceable as though the invalid or unenforceable
parts had not been included therein. In the event that any provision of
paragraph 16 or 17 relating to time period and/or areas of restriction shall be
declared by a court of competent jurisdiction to exceed the maximum time period
or areas such court deems reasonable and enforceable, such time period and/or
areas of restriction shall be deemed to become and thereafter be the maximum
time period and/or areas which such court deems reasonable and enforceable.
19. Equitable Relief; Accounting for Profits. In the event of a
breach or threatened breach of any of the provisions of paragraphs 16 or 17,
Employer, in addition to and not in limitation of any other rights or remedies
available to Employer at law or in equity, shall be entitled to a permanent
injunction in order to
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prevent or to restrain any such breach by Employee or by Employee's partners,
agents, representatives, servants, employers, employees and/or any and all
persons, directly or indirectly, acting for or with Employee. Employee further
covenants and agrees that if Employee shall violate any of Employee's covenants
and agreements pursuant to paragraphs 16 and 17 above, Employer shall be
entitled to an accounting and repayment of all profits, compensations,
commissions, remunerations and/or other benefits which Employee, directly or
indirectly, may realize as a result of, growing out of or in connection with,
any such violation. Such remedy shall be in addition to and not in limitation
of any injunctive relief or other rights or remedies which Employer is or may
be entitled to at law or in equity or under this Agreement. In any action
brought by Employer against Employee for the breach of paragraph 16 or 17,
Employer shall be entitled to recover Employer's costs and expenses, including
reasonable attorneys' fees.
20. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and shall be deemed to have been
given if personally delivered or if deposited in the United States mail, by
certified mail, with proper postage prepaid thereon, addressed as follows:
If to Employer: Continental Natural Gas, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Att'n: Xx. Xxxx X. Xxxxx
If to Employee: Xx. Xxxxx X. Xxxxx
00000 Xxxxx Xxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
or to such other address as either party may hereafter advise the other by
notice given in accordance with the provisions hereof.
21. Waiver of Breach. The waiver by Employer of a breach of any
provision of this Agreement by Employee shall not operate or be construed as a
waiver of any subsequent breach by Employee.
22. Assignment. Employer may assign this Agreement to any successor
in interest of Employer's business. The rights and obligations of the parties
under this Agreement shall inure to the benefit of and shall be binding upon
the successors and assigns of Employer and Employee; provided, however, that
Employee may not assign this Agreement without the prior written consent of
Employer.
23. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same Agreement.
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24. Governing Law. This Agreement shall be construed in accordance
with, and the rights and duties of the parties hereto shall be governed by, the
internal laws of the State of Oklahoma. The parties hereto irrevocably and
unconditionally consent to and submit themselves to the exclusive jurisdiction
of the courts of the State of Oklahoma located in Tulsa County, Oklahoma and
the courts of the United States of America located in the Northern District of
Oklahoma (collectively, the "Agreed Courts") with respect to any actions, suits
or proceedings arising out of or in connection with this Agreement and the
transactions contemplated hereby and the parties hereto agree not to commence
any action, suit or proceeding relating thereto except in such Agreed Courts.
The parties hereto further agree that service of any process, summons, notice,
or documents in accordance with paragraph 20 hereof shall be effective service
of process for any action, suit or proceeding brought. The parties hereto
irrevocably and unconditionally waive any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in the Agreed Courts and hereby further
irrevocably and unconditionally waive and agree not to plead or claim that any
such action, suit or proceeding brought in any of the Agreed Courts has been
brought in an inconvenient forum.
25. Entire Agreement. This instrument contains the entire Agreement
of the parties pertaining to Employee's employment by Employer, superseding all
other agreements (including, without limitation, the January 1, 1992 Employment
Agreement between Employer and Employee, and all amendments, modifications and
supplements thereto) (collectively hereinafter referred to as the "Prior
Employment Agreements") whether oral or written, express or implied. It may
not be changed orally but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought. Further, except as specifically set forth herein,
Employer and Employee do hereby release each other from any and all claims,
known or unknown, fixed or contingent, that either may have against the other
pursuant to the Prior Employment Agreements or otherwise.
26. Severability. The provisions of this Agreement shall be deemed
severable, and the invalidity or unenforceability of any one or more of the
provisions hereof shall not affect the validity and enforceability of the other
provisions hereof.
27. Construction. Every covenant, term and provision of this
Agreement shall be construed simply according to its fair meaning and not
strictly for or against any party.
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IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above set forth.
Continental Natural Gas, Inc.
By /s/ XXXX X. XXXXX
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Xxxx X. Xxxxx, Chairman
"Employer"
/s/ XXXXX X. XXXXX
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Xxxxx X. Xxxxx
"Employee"
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