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EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "Agreement") is made the 31st
day of March, 1998, by and between National Energy Group, Inc., a Delaware
corporation acting by and through its hereunto duly authorized officer (the
"Company"), and X.X. Xxxxx (the "Executive").
WHEREAS, the Executive is presently in the employ of the Company in
the capacity of Executive Vice President and Chief Operating Officer, and the
Company is willing to provide certain employment assurances to the Executive in
the event of a Change of Control (as defined below) of the Company as incentive
and inducement for the Executive to continue in such employment in his present
capacity after a Change of Control; and
WHEREAS, in consideration of such employment assurances, the Executive
is willing to remain in the employ of the Company in the capacity of Executive
Vice President and Chief Operating Officer after a Change of Control of the
Company.
NOW, THEREFORE, in consideration of the premises and the mutual terms
and conditions hereof, the Company and the Executive hereby agree as follows:
1. Employment. In consideration of the benefits hereinafter
specified, the Executive hereby agrees to continue his employment with the
Company in the capacity of Executive Vice President and Chief Operating Officer
after a Change of Control of the Company and to discharge his duties in such
capacity during the term of this Agreement.
2. Exclusive Services. The Executive shall devote his full
working time, ability and attention to the business of the Company during the
term of this Agreement and shall not, directly or indirectly, render any
services of a business, commercial or professional nature to any other person,
corporation or organization, whether for compensation or otherwise, without the
prior knowledge and consent of the Board of Directors (the "Board") or
President and Chief Executive Officer of the Company; provided, however, that
the provisions of this Agreement shall not be construed as preventing the
Executive from investing in other non-competitive businesses or enterprises if
such investments do not require substantial services on the part of the
Executive in the affairs or operations of any such business or enterprise so as
to significantly diminish the performance by the Executive of his duties,
functions and responsibilities under this Agreement. During the term of this
Agreement, the Executive shall not, directly or indirectly, either through any
kind of ownership (other than ownership of securities of publicly held
corporations of which the Executive owns less than five percent (5%) of any
class of outstanding securities) or as a director, officer, agent, employee or
consultant engage in any business that is competitive with the Company.
3. Authority and Duties. During the term of this Agreement, the
Executive shall have such authority and shall perform such duties, functions
and responsibilities as are specified by the Bylaws of the Company, the
Executive Committee, the Board of Directors, or the President of the Company
and/or as are appropriate for the office of the Executive Vice President and
Chief Operating Officer and shall serve with the necessary power and authority
commensurate with such position. If the Company removes the Executive from the
office of the Executive Vice President and Chief Operating Officer of the
Company after a Change of Control or limits, restricts or reassigns his
authority and responsibility after a Change of Control so as to be less
significant than, or not comparable to, that to which he held immediately
preceding such Change of Control in his capacity as Executive Vice President
and Chief Operating Officer without his prior mutual consent, the Executive
shall be entitled to resign for good reason and receive the Severance Benefits
set forth in this Agreement.
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4. Compensation. In consideration for the services to be
rendered by the Executive to the Company and/or its subsidiaries, the Company
shall pay to the Executive at least the gross cash compensation and shall award
to the Executive at least the bonuses as set forth below:
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ANNUAL PERIOD ANNUAL ANNUAL BONUS
BASE SALARY
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For the one year period following 100% of the average of the Executive's 100% of the average of the bonuses
effective date of a Change of annual base salary in effect paid to the Executive for each of
Control immediately prior to the Change in the three fiscal years before the
Control and of the Executive's annual Change in Control
base salary for each of the immediately
preceding two years
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For the second year following 100% of the average of the Executive's 100% of the average of the bonuses
effective date of a Change of Control annual base salary on the date that is paid to the Executive for the
one year after the Change in Control and three immediately preceding fiscal
of the Executive's annual base salary for years
each of the immediately preceding two
years
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For the third year following effective 100% of the average of the Executive's 100% of the average of the bonuses
date of a Change of Control annual base salary on the date that is paid to the Executive for the
two years after the Change in Control and three immediately preceding fiscal
of the Executive's annual base salary for years
each of the immediately preceding two
years
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In the event that the Executive shall not have been employed for three years
prior to the effective date of this Agreement, the Executive's annual base
compensation rate or bonus rate shall be averaged over the actual period of
employment of the Executive by the Company.
Each of the annual base salary amounts set forth above shall be paid
to the Executive in equal monthly installments, or as otherwise agreed, during
each corresponding year of the term of this Agreement, provided that for any
period of less than one (1) year, the annual base salary shall be pro-rated
accordingly. The annual bonus amount indicated above or amounts in excess of
such indicated bonus shall be awarded no later than December 31 of the
corresponding annual period. The amount set forth above is compensation to the
Executive or gross amounts due hereunder, and the Company shall have the right
to deduct therefrom all taxes and other amounts which may be required to be
deducted or withheld by law (including, but not limited to, income tax,
withholding, social security and medicare payments) whether such law is now in
effect or becomes effective after the execution of this Agreement.
5. Benefits and Business Expenses. During the term hereof:
(a) The Executive shall be entitled to continue his
participation in programs maintained by the Company for the benefit of
its employees and officers and to participate in new or amended
programs, including, but not limited to, medical, health, life,
accident and disability insurance programs, pension plans, incentive
compensation plans, stock option plans, stock appreciation rights
plans, and limited stock appreciation rights plans. The Company shall
not terminate nor amend such plans to the detriment of the Executive.
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(b) To the extent that the Company has provided the
Officer with an automobile, club memberships, association and trade
memberships and other memberships prior to the Change of Control, the
Company shall continue to provide the Officer with such items, of a
comparable nature, following a Change of Control. The Company shall
pay the expenses of such automobile, memberships and subscriptions.
(c) The Executive shall be reimbursed for any business
expenses reasonably incurred in carrying out his duties, functions and
responsibilities upon presentation of expense reports to the Company.
6. Term. This Agreement shall have a term of three (3) years
commencing on the effective date of a Change of Control and shall be
automatically extended on the 9th day of each and every calendar month during
the term of this Agreement for an additional calendar month so that at the
beginning of each and every month during the term of this Agreement there shall
be a remaining term of three (3) years (but in no event beyond the time the
Executive reaches age 65) unless and until the Company gives written notice to
the Executive that the term of this Agreement shall not be further so extended,
in which case the Executive shall be entitled to resign for good reason. The
provisions of this Section 6 shall apply to each Change of Control irrespective
of any Changes of Control which may have occurred previously.
7. Severance Benefits After Change Of Control. In addition to
such compensation and other benefits payable to or provided for the Executive
as authorized by the Board from time to time, Executive shall be entitled to
receive in lieu of the compensation described in paragraph 4 hereof, and the
Company shall pay or provide to the Executive the following severance benefits
(the "Severance Benefits") in the event that, during the term hereof, the
Company discharges the Executive without cause or the Executive resigns for
good reason after a Change of Control, to- wit:
(a) The Company shall pay to the Executive a lump sum
cash payment (multiplied by the applicable factor described below)
payable on such date of termination of employment equal to the
Executive's "base compensation" then in effect, which shall, and is
defined to, consist of the sum of (i) the Executive's annual base
salary then in effect, (ii) the average of the amounts of the last
three annual cash bonuses paid or granted to, or earned by, the
Executive, and (iii) the average of the total amounts of the Company's
contributions to its retirement plan allocable to the Executive on a
fully vested basis for the last three fiscal years of the retirement
plan. The amount of the "base compensation" payable to the Executive
pursuant to this Section 7(a) shall be multiplied by the number three
(3) for the purposes of determining the lump sum cash severance
payment due under this Section 7(a).
(b) All stock options granted by the Company to the
Executive, all contributions made by the Executive and by the Company
for the account of the Executive to any pension, retirement or any
other benefit plan, and all other benefits or bonuses, including but
not limited to net profits interests which contain vesting or
exercisability provisions conditioned upon or subject to the continued
employment of the Executive, shall become fully vested and exercisable
and shall remain fully exercisable for a period of the later of three
hundred sixty (360) days after (i) the date of such termination of
employment, or (ii) the termination of this Agreement.
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(c) The Company shall continue the participation of the
Executive in all life, accident, disability, medical, dental and all
other health and casualty insurance plans maintained by the Company
for its officers and employees for a period of one (1) year after the
date of such termination of employment or for such longer period as
may be required by applicable law.
(d) Notwithstanding any provision of this Agreement to
the contrary, if the Executive is a disqualified individual (as the
term "disqualified individual" is defined in Section 280G of the Code)
and if any portion of the Severance Benefits under this Section 7 of
this Agreement would be an excess parachute payment (as the term
"excess parachute payment" is defined in Section 280G of the Code) but
for the application of this sentence, then the amount of the Severance
Benefits otherwise payable to the Executive pursuant to this Agreement
will be reduced to the minimum extent necessary (but in no event to
less than zero) so that no portion of the Severance Benefits, as so
reduced, constitutes an excess parachute payment. The determination
of whether any reduction in the amount of the Severance Benefits is
required pursuant to this Section 7(d) will be made by the Company's
independent accountants. The fact that the Executive has his
Severance Benefits reduced as a result of the limitations set forth in
this Section 7(d) will not of itself limit or otherwise affect any
rights of the Executive arising other than pursuant to this Agreement.
(e) The Company has determined that the amounts payable
under this Agreement constitute reasonable compensation for services
rendered. Accordingly, notwithstanding any other provision hereof,
unless such action would be expressly prohibited by applicable law, if
any amount is paid pursuant to this Agreement which is determined to
be subject to the excise tax imposed by Section 4999 of the Code, the
Company will pay to the Executive an additional amount in cash equal
to the amount necessary to cause the aggregate amount payable under
this Agreement, including such additional cash payment (net of all
federal, state and local income taxes and all taxes payable as the
result of the application of Sections 280G and 4999 of the Code), to
be equal to the aggregate amount payable under this Agreement,
excluding such additional payment (net of all federal, state and local
income taxes), as if Sections 280G and 4999 of the Code (and any
successor provisions thereto) had not been enacted into law.
8. Place of Performance. During the term hereof:
(a) The principal office of the Executive and the
principal place for performance by him of his duties, functions and
responsibilities under this Agreement shall be in the City or suburbs
of Dallas, Texas.
(b) It is recognized that the performance of the
Executive's duties hereunder may occasionally require the Executive,
on behalf of the Company, to be away from his principal office for
business reasons. Unless consent of the Executive is obtained, such
periods of being away from his principal office on behalf of the
Company shall not exceed thirty (30) calendar days per year.
9. Definition of Change of Control. For purposes of this
Agreement, "Change of Control" shall mean the occurrence of one or more of the
following events: (i) a person or entity or group (as that term is used in
Section 13(d)(3) of the Exchange Act) of persons or entities shall have become
the beneficial owner of a majority of the securities of the Company ordinarily
having the right to vote in the election of directors, (ii) during any
consecutive two-year period,
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individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any directors who are members of such
Board of Directors of the Company on the date hereof and any new directors
whose election by such Board of Directors of the Company or whose nomination
for election by the stockholders of the Company was approved by a vote of 66b%
of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Company then in office, (iii) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, the assets of the Company to any
person or entity or group (as so defined in Section 13(d)(3) of the Exchange
Act) of persons or entities (other than any wholly owned subsidiary of the
Company), or (iv) the merger or consolidation of the Company into or with
another corporation or the merger of another corporation into the Company with
the effect that immediately after such transaction any person or entity or
group (as so defined in Section 13(d)(3) of the Exchange Act) of persons or
entities, or the stockholders of any other entity, shall have become the
beneficial owner of securities of the surviving corporation of such merger or
consolidation representing a majority of the voting power of the outstanding
securities of the surviving corporation ordinarily having the right to vote in
the election of directors. The Alexander Energy Corporation merger, however it
might be structured, shall not constitute a Change of Control under this
Agreement.
10. Discharge with Cause. For the purposes of this Agreement, the
Company shall be deemed to have discharged the Executive for cause only if any
one of the following conditions existed:
(a) If the Executive shall have willfully breached or
habitually neglected his duties and responsibilities as the Executive
Vice President and Chief Operating Officer of the Company; or
(b) If the Executive shall have been convicted of any
felony offense during the term of this Agreement.
The discharge of the Executive by the Company when none of the foregoing
conditions exist shall be deemed to be a discharge without cause.
11. Resignation for Good Reason. For the purposes of this
Agreement, the Executive shall have resigned for good reason if any one of the
following conditions existed at the time of his resignation:
(a) If the Company shall have assigned to the Executive
authority and responsibilities less significant than, or not
comparable to, that which he had in his capacity as Executive Vice
President and Chief Operating Officer immediately preceding a Change
of Control or shall otherwise so limit or restrict his authority and
responsibilities after a Change of Control;
(b) The Company shall have reduced the Executive's annual
base salary below his annual base salary in effect on the effective
date of a Change of Control or the Company shall have reduced the
Executive's annual cash bonus below that of his last annual cash bonus
prior to the effective date of a Change of Control;
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(c) The Company shall have taken any actions having the
purpose or intent and the effect of inducing the Executive to resign,
such as failing to provide the Executive with all personnel benefits
which are otherwise generally provided to executive officers of the
Company or reasonably necessary or appropriate for the performance by
the Executive of his duties as Executive Vice President and Chief
Operating Officer of the Company; or
(d) The Company shall have declined to extend the term of
this Agreement pursuant to Section 6 hereof.
12. Termination Upon Death. This Agreement shall terminate
immediately upon the date of the death of the Executive.
13. Remedies. If the Executive shall file any judicial action for
enforcement of this Agreement and successfully recover compensation or damages,
the Executive shall be entitled to recover from the Company an additional
amount equal to interest at ten percent (10%) per annum on the amount recovered
from the date such amount was due and payable together with all expenses and
reasonable attorneys' fees incurred in obtaining legal advice and counselling
respecting his rights under this Agreement and in prosecuting and disposing of
such action. The provisions of this Section shall be cumulative and without
prejudice to any other right or remedy to which the Executive may be entitled
either at law, in equity or under this Agreement and shall not constitute the
exclusive remedy of the Executive for breach of this Agreement.
14. General Provisions.
(a) Notices. Any notices to be given hereunder by either
party to the other may be given either by personal delivery in writing
or by fax, or by mail, registered or certified, postage prepaid,
return receipt requested, addressed to the parties at their respective
addresses set forth below their signatures to this Agreement, or at
such other addresses as they may specify to the other in writing.
(b) Law Governing. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas.
(c) Invalid Provisions. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under
present or future laws effective during the term hereof, such
provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof, and the remaining
provisions hereof shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom. Furthermore, in lieu of such illegal, invalid
or unenforceable provision, there shall be added automatically as part
of this Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and still be
legal, valid or enforceable.
(d) Entire Agreement. This Agreement sets forth the
entire understanding of the parties and supersedes all prior
agreements or understandings, whether written or oral, with respect to
the subject matter hereof. No terms, conditions or warranties, other
than those contained herein, and no amendments or modifications hereto
shall be binding unless made in writing and signed by the parties
hereto.
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(e) Binding Effect. This Agreement shall extend to and
be binding upon and inure to the benefit of the parties hereto, their
respective heirs, representatives, successors and assigns. All of the
provisions of this Agreement shall be fully applicable to any
successor to the Company resulting from a Change of Control. The
Company agrees that in the event of a tender or exchange offer,
merger, consolidation or liquidation or any such similar event
involving the Company, its securities or assets, it shall reveal the
existence of this Agreement to the acquiring person or entity. The
Company further agrees that if such action is not inconsistent with
the best interests of the Company, it shall condition approval of any
transactions proposed by the acquiror upon obtaining the consent, in
writing, of the potential successor to the Company to be bound by this
Agreement. In the event the Executive dies prior to the termination
of this Agreement, any compensation or other payment due and owing to
the Executive on or before the date of the Executive's death shall be
paid to his estate, executors, administrators, heirs or legal
representatives. Since the duties and services of the Executive
hereunder are special, personal and unique in nature, the Executive
may not transfer, sell or otherwise assign his rights, obligations or
benefits under this Agreement.
(f) Waiver. The waiver by either party hereto of a
breach of any term or provision of this Agreement shall not operate or
be construed as a waiver of a subsequent breach of the same provisions
by either party or of the breach of any other term or provision of
this Agreement.
(g) Titles. Titles of the paragraphs herein are used
solely for convenience and shall not be used for interpretation or
construing any word, clause, paragraph or provision of this Agreement.
(h) Certain Conflicts. The parties hereto acknowledge
and agree that Executive has entered into that certain letter
agreement pertaining to the Executive's employment with the Company
dated January 2, 1998 (the "Letter Agreement"). Where a conflict may
arise between the provisions of this Agreement and the Letter
Agreement, the provisions of the Letter Agreement shall apply.
(i) Mediation/Arbitration. In the event of a dispute
between the parties to this agreement, the parties agree not to
commence any action in a court of law or equity but to participate in
good faith in a minimum of four (4) hours of mediation in Dallas,
Texas with an attorney-mediator trained and certified by the American
Arbitration Association, the United States Arbitration and Mediation
Service, or any comparable organization, and to abide by the mediation
procedures and decision of such organization. The parties agree to
equally bear the costs of the mediation. In the event the parties
cannot resolve their dispute through mediation as described herein,
the parties agree to participate in binding arbitration pursuant to
the rules of the American Arbitration Association or mutually
agreeable similar organization. Such arbitration shall be held in
Dallas, Texas, shall be binding and nonappealable and a judgment on
the award to the prevailing party (inclusive of reasonable attorney's
fees and costs) may be entered in any court having competent
jurisdiction.
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IN WITNESS WHEREOF, the Company and the Executive have executed this
Executive Employment Agreement as of the day and year first written above,
effective as of the date specified above.
COMPANY:
NATIONAL ENERGY GROUP, INC.
By:
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Miles X. Xxxxxx
President and Chief Executive Officer
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
(000) 000-0000
(000) 000-0000 (Fax)
EXECUTIVE:
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X.X. XXXXX
Address: 000 X. Xxx Xxxxx Xxxxxx, #0000
Xxxxxxxxxx, XX 00000
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