EXHIBIT 10.10
EMPLOYMENT AGREEMENT
TABLE OF CONTENTS
Page
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1. Employment Period 1
2. Terms of Employment 1
(a) Position and Duties 1
(b) Compensation 2
(i) Base Salary 2
(ii) Annual Bonus 2
(iii) Incentive, Savings and Retirement Plans 2
(iv) Welfare Benefit Plans 2
(v) Expenses 3
(vi) Vacation 3
(vii) Stock Option Grants 3
3. Termination of Employment 3
(a) Death or Disability 3
(b) Cause 4
(c) Good Reason 4
(d) Notice of Termination 4
(e) Date of Termination 5
4. Obligations of the Company upon Termination 5
(a) Disability or Good Reason; Other than for Cause or Death 5
(b) Death 6
(c) Cause; Other than for Disability or Good Reason 6
5. Non-exclusivity of Rights 6
6. Full Settlement 6
7. Confidential Information 6
8. Change of Control; Potential Change of Control 7
9. Covenant Not to Compete 11
10. Successors 13
11. Miscellaneous 13
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EMPLOYMENT AGREEMENT
This AGREEMENT (the "Agreement") by and between Edge Petroleum
Corporation, a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxx (the
"Executive"), dated as of the 19th day of December, 1996 and to be effective as
of the Agreement Effective Date (as defined in Section 11(h) hereof).
In entering into this Agreement, the Board of Directors of the Company
(the "Board") desires to provide the Executive with incentives to serve the
Company as one of its executives.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period. As of the Agreement Effective Date
(hereinafter defined), the Company hereby agrees to employ the Executive and the
Executive hereby agrees to accept employment with the Company, in accordance
with, and subject to, the terms and provisions of this Agreement, for the period
(the "Employment Period") commencing on the Agreement Effective Date and ending
on the second anniversary of the Agreement Effective Date; provided, on the
second anniversary of the Agreement Effective Date and each second anniversary
of the Agreement Effective Date thereafter, the Employment Period shall
automatically renew for an additional two years without any further action by
either the Company or the Executive.
2. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executive's position (including
status, offices, titles and reporting requirements), authority, duties and
responsibilities shall be as the Company's chief financial officer and (B) the
Executive's services shall be performed in the county where the Executive was
employed on the Agreement Effective Date.
(ii) During the Employment Period, and excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive agrees to
devote his full attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period, it shall not be a violation of
this Agreement for the Executive to (A) serve on civic or charitable boards or
committees, (B) deliver lectures or fulfill speaking engagements and (C)
manage personal investments, so long as such activities do not interfere with
the performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement.
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(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive shall receive
an annual base salary equal to $125,000 ("Annual Base Salary"), which shall be
paid on a semimonthly basis. During the Employment Period, the Annual Base
Salary shall be reviewed on June 30, 1997 and in December 1998 and thereafter
annually. Executive's salary shall be increased to $150,000 as of July 1, 1997
if (i) the IPO is successfully implemented, (ii) an investor relations system
has been established and is operational, (iii) there has been designed and
implemented the first version of a financial reporting system and reports,
(iv) a price/risk management policy has been developed and adopted by the
Company and a comprehensive employee benefits plan has been implemented,
including a Section 401(k) Plan. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive under this
Agreement. Annual Base Salary shall not be reduced after any such increase and
the term "Annual Base Salary," as utilized in this Agreement, shall refer to
Annual Base Salary as so increased. As used in this Agreement, the term
"affiliated companies" shall include, when used with reference to the Company,
any company controlled by, controlling or under common control with the
Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the Executive shall
be awarded, for each fiscal year or portion thereof during the Employment
Period, an Annual Bonus (the "Annual Bonus"), in cash and stock determined
based on the Company's growth in each of the Company's reserves per share and
audited annual net cash flow per share relative to Company's reserves and the
audited net cash flow of the Company for the prior calendar year with the
maximum Annual Bonus to be for the period up to and including December 31,
1997 and for calendar years thereafter to be up to 50% of Annual Base Salary
(for the period ending December 31, 1997 to be calculated on the basis of
$137,500 total Base Salary for such period), with a maximum payable if the
Company achieves the top 25% of the range of its annual performance goals
established at the outset of the year, and in each case any Annual Bonus shall
be paid approximately 25% in cash and 75% in shares of Company Common Stock.
(iii) Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all incentive,
savings and retirement plans that are tax-qualified under Section 401(a) of
the Internal Revenue Code of 1986, as amended ("Code"), and all plans that are
supplemental to any such tax-qualified plans, in each case to the extent that
such plans are applicable generally to other executives of the Company and its
affiliated companies.
(iv) Welfare Benefit Plans. During the Employment Period, the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company or its affiliated
companies (including, without limitation, medical,
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prescription, dental, vision, disability, salary continuance, group life and
supplemental group life, accidental death and travel accident insurance plans
and programs) to the extent applicable generally to other executives of the
Company or its affiliated companies.
(v) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies.
(vi) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation of two weeks per year beginning in 1997 and each
period of December 24 to January 2.
(vii) Stock Option Grants. Upon consummation of the IPO, Executive shall
be granted stock options on .5 of 1% (one-half of one percent), determined on
a fully diluted basis (excluding any overallotment option to the extent not
exercised at the initial closing date of the IPO, restricted stock or stock
options granted in connection with the IPO), shares of Company common stock,
par value $.01 per share ("Common Stock"), at an exercise price equal to the
IPO Price ("Initial Stock Option"). The Initial Stock Option has a term of 10
years and is exercisable in cumulative annual increments of one-fifth of the
total number of shares subject to the option, beginning on the first
anniversary of the Date of Grant. "IPO" shall mean the initial public offering
of Common Stock pursuant to which the Company receives payment in cash for
shares of its Common Stock that it sells pursuant to a registration statement
on Form S-1 filed and declared effective under the Securities Act of 1933.
"IPO Price" shall mean the per share price to the public for the Common Stock
sold in the IPO, as set forth on the cover page of the final prospectus for
the IPO.
3. Termination of Employment.
(a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 11(d) of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 120 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the
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Company or its insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement, "Cause"
shall mean for the Company's termination of the Executive's employment means:
(i) the Executive's final conviction of a felony crime that enriched the
Executive at the expense of the Company; or (ii) the Executive's continuing
failure to substantially perform his duties and responsibilities hereunder
(except by reason of the Executive's incapacity due to physical or mental
illness or injury) for a period of 45 days after the Company has delivered to
the Executive a written demand for substantial performance hereunder ; or (iii)
the Executive's serious or willful misconduct or a serious or willful neglect of
duties which, in either case, has resulted, or in all probability is likely to
result, in material economic damage to the Company.
(c) Good Reason. The Executive's employment may be terminated during
the Employment Period by the Executive for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean the occurrence of one of the following but
only after the occurrence of a Change of Control.
(i) any material failure by the Company to substantially comply with
any of the provisions of this Agreement, other than a failure which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(ii) the Company's requiring the Executive to be based at any location
other than that described in Section 2(a)(i)(B) hereof;
(iii) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement;
(iv) any failure by the Company to comply with and satisfy the
requirements of Section 10 of this Agreement, provided that (A) the successor
described in Section 10(c) has received, at least 10 days prior to the Date of
Termination (as defined in subparagraph (e) below), written notice from the
Company or the Executive of the requirements of such provision and (B) such
failure to be in compliance and satisfy the requirements of Section 10 shall
continue as of the Date of Termination; or
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 11(d) of
this Agreement. The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good Reason or Cause shall not waive any right of the Executive or the Company
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hereunder or preclude the Executive or the Company from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. For purposes of this Agreement, the term
"Date of Termination" means (i) if the Executive's employment is terminated by
the Company for Cause, or by the Executive for Good Reason, the date of receipt
of the Notice of Termination or any later date specified therein, as the case
may be, (ii) if the Executive's employment is terminated by the Company other
than for Cause or Disability, the Date of Termination shall be the date on which
the Company notifies the Executive of such termination and (iii) if the
Executive's employment is terminated by reason of death or Disability, the Date
of Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
4. Obligations of the Company upon Termination.
(a) Disability or Good Reason; Other than for Cause or Death. If,
during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause, including a termination by reason of Disability
but not by reason of death, or the Executive shall terminate employment for Good
Reason, or by reason of death:
(i) the Company shall pay or provide to or in respect of the Executive the
following amounts and benefits:
A. in a lump sum in cash, within 10 days after the Date of
Termination, an amount equal to the sum of (1) the Executive's Annual Base
Salary through the Date of Termination, (2) any deferred compensation
earned and vested by the Executive (together with any accrued interest or
earnings thereon) and (3) any compensation for accrued, earned and unused
vacation time for which the Executive is eligible in accordance with the
practices of the Company, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (1), (2) and (3) shall be
hereinafter referred to as the "Accrued Obligation");
B. in a lump sum in cash, undiscounted, within 10 days after the Date
of Termination, an amount equal to the Annual Base Salary;
C. effective as of the Date of Termination, immediate vesting and
exercisability of, and termination of any restrictions on sale or transfer
(other than any such restriction arising by operation of law) with respect
to, each and every stock option, restricted stock award, restricted stock
unit award and other equity-based award and performance award (each, a
"Compensatory Award") that is outstanding as of a time immediately prior to
the Date of Termination;
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(b) Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than (i) the payment of Accrued Obligations (which
shall be paid to the Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination), and (ii) the payment of
an amount equal to one-half of his Annual Salary in a cash lump sum within 30
days of the Date of Termination.
(c) Cause; Other than for Disability or Good Reason. If the
Executive's employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than for Accrued Obligations. If the Executive terminates
employment during the Employment Period, excluding a termination for any of
Disability or Good Reason, this Agreement shall terminate without further
obligations to the Executive, other than for the payment of Accrued Obligations.
In such case, all Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination.
5. Non-exclusivity of Rights. Except as provided in Section 4 of
this Agreement, nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any plan, program, policy or practice
provided by the Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amounts which are vested benefits
or which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any of
its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as such plan, policy, practice or program is superseded by this
Agreement.
6. Full Settlement. The Company's obligation to make payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any setoff, counterclaim, recoupment,
defense, mitigation or other claim, right or action which the Company may have
against the Executive or others.
7. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement) (referred to herein as "Confidential Information"). After
termination of the Executive's employment with the Company, the Executive shall
not, without the prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data
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to anyone other than the Company and those designated by it. In no event shall
an asserted violation of the provisions of this Section 7 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement. Also, within 14 days of the termination of Executive's
employment for any reason, Executive shall return to Company all documents and
other tangible items of or containing Company information which are in
Executive's possession, custody or control.
8. Change of Control; Potential Change of Control.
As used in this Agreement, the terms set forth below shall have the
following respective meanings:
"Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement.
"Associate" shall mean, with reference to any Person, (a) any
corporation, firm, partnership, association, unincorporated organization or
other entity (other than the Company or a subsidiary of the Company) of which
such Person is an officer or general partner (or officer or general partner of a
general partner) or is, directly or indirectly, the Beneficial Owner of 10% or
more of any class of equity securities, (b) any trust or other estate in which
such Person has a substantial beneficial interest or as to which such Person
serves as trustee or in a similar fiduciary capacity and (c) any relative or
spouse of such Person, or any relative of such spouse, who has the same home as
such Person.
"Beneficial Owner" shall mean, with reference to any securities, any
Person if:
(a) such Person or any of such Person's Affiliates and Associates, directly
or indirectly, is the "beneficial owner" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act, as in
effect on the date of this Agreement) such securities or otherwise has the
right to vote or dispose of such securities, including pursuant to any
agreement, arrangement or understanding (whether or not in writing); provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subsection (a) as a result of an
agreement, arrangement or understanding to vote such security if such
agreement, arrangement or understanding: (i) arises solely from a revocable
proxy or consent given in response to a public (i.e., not including a
solicitation exempted by Rule 14a-2(b)(2) of the General Rules and Regulations
under the Exchange Act) proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and
Regulations under the Exchange Act and (ii) is not then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or successor
report);
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(b) such Person or any of such Person's Affiliates and Associates, directly
or indirectly, has the right or obligation to acquire such securities (whether
such right or obligation is exercisable or effective immediately or only after
the passage of time or the occurrence of an event) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the exercise
of conversion rights, exchange rights, other rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to "beneficially own," (i) securities tendered pursuant to a
tender or exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange or (ii) securities issuable upon exercise of Exempt
Rights; or
(c) such Person or any of such Person's Affiliates or Associates (i) has
any agreement, arrangement or understanding (whether or not in writing) with
any other Person (or any Affiliate or Associate thereof) that beneficially
owns such securities for the purpose of acquiring, holding, voting (except as
set forth in the proviso to subsection (a) of this definition) or disposing of
such securities or (ii) is a member of a group (as that term is used in Rule
13d-5(b) of the General Rules and Regulations under the Exchange Act) that
includes any other Person that beneficially owns such securities;
provided, however, that nothing in this definition shall cause a Person engaged
in business as an underwriter of securities to be the Beneficial Owner of, or to
"beneficially own," any securities acquired through such Person's participation
in good faith in a firm commitment underwriting until the expiration of 40 days
after the date of such acquisition. For purposes hereof, "voting" a security
shall include voting, granting a proxy, consenting or making a request or demand
relating to corporate action (including, without limitation, a demand for a
stockholder list, to call a stockholder meeting or to inspect corporate books
and records) or otherwise giving an authorization (within the meaning of Section
14(a) of the Exchange Act) in respect of such security.
The terms "beneficially own" and "beneficially owning" shall have
meanings that are correlative to this definition of the term "Beneficial Owner."
"Change of Control" shall mean any of the following occurring on or
after the Agreement Effective Date except that the transactions contemplated by
the Combination Agreement dated as of December 3, 1996, by and among the
Company, Edge Petroleum Corporation, a Texas corporation, Edge Mergeco, Inc.,
Gulfedge Limited Partnership, Edge Group II Limited Partnership and Edge Group
Partnership shall not constitute a Change of Control:
(a) any Person (other than an Exempt Person) shall become the Beneficial
Owner of [___%] or more of the shares of Common Stock then outstanding or
[___%] or more of the combined voting power of the Voting Stock of the Company
then outstanding; provided, however, that no Change of Control shall be deemed
to occur for purposes of this subsection (a) if such Person shall become a
Beneficial Owner of [___%] or more of the shares of
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Common Stock or [___%] or more of the combined voting power of the Voting
Stock of the Company solely as a result of (i) an Exempt Transaction or (ii)
an acquisition by a Person pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or consolidation, the
conditions described in clauses (i), (ii) and (iii) of subsection (c) of this
definition are satisfied;
(b) individuals who, as of the Agreement Effective Date, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the Agreement Effective Date whose election, or
nomination for election by the Company's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board; provided, further, that there shall be excluded, for this purpose, any
such individual whose initial assumption of office occurs as a result of any
actual or threatened election contest that is subject to the provisions of
Rule 14a-11 under the Exchange Act;
(c) approval by the shareholders of the Company of a reorganization, merger
or consolidation, in each case, unless, following such reorganization, merger
or consolidation, (i) more than [___%] of the then outstanding shares of
common stock of the corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then outstanding Voting
Stock of such corporation beneficially owned, directly or indirectly, by all
or substantially all of the Persons who were the Beneficial Owners of the
outstanding Common Stock immediately prior to such reorganization, merger or
consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation, of the
outstanding Common Stock, (ii) no Person (excluding any Exempt Person or any
Person beneficially owning, immediately prior to such reorganization, merger
or consolidation, directly or indirectly, [___%] or more of the Common Stock
then outstanding or [___%] or more of the combined voting power of the Voting
Stock of the Company then outstanding) beneficially owns, directly or
indirectly, [___%] or more of the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or consolidation or
the combined voting power of the then outstanding Voting Stock of such
corporation and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time of the execution
of the initial agreement or initial action by the Board providing for such
reorganization, merger or consolidation; or
(d) approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company unless such liquidation or
dissolution is approved as part of a plan of liquidation and dissolution
involving a sale or disposition of all or substantially all of the assets of
the Company to a corporation with respect to which, following such sale or
other disposition, all of the requirements of clauses (ii)(A), (B) and (C) of
this subsection (d)
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are satisfied, or (ii) the sale or other disposition of all or substantially
all of the assets of the Company, other than to a corporation, with respect to
which, following such sale or other disposition, (A) more than [___%] of the
then outstanding shares of common stock of such corporation and the combined
voting power of the Voting Stock of such corporation is then beneficially
owned, directly or indirectly, by all or substantially all of the Persons who
were the Beneficial Owners of the outstanding Common Stock immediately prior
to such sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other disposition, of the
outstanding Common Stock, (B) no Person (excluding any Exempt Person and any
Person beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, [___%] or more of the Common Stock then
outstanding or [___%] or more of the combined voting power of the Voting Stock
of the Company then outstanding) beneficially owns, directly or indirectly,
[___%] or more of the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding Voting Stock
of such corporation and (C) at least a majority of the members of the board of
directors of such corporation were members of the Incumbent Board at the time
of the execution of the initial agreement or initial action of the Board
providing for such sale or other disposition of assets of the Company.
The blank percentages in this definition shall be the same as the
correlative percentages in employment contracts between Xxxxx and Xxxx Xxxxxxx
and the Company that define Change of Control.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exempt Person" shall mean the Company, any subsidiary of the Company,
any employee benefit plan of the Company or any subsidiary of the Company, and
any Person organized, appointed or established by the Company for or pursuant to
the terms of any such plan.
"Exempt Rights" shall mean any rights to purchase shares of Common
Stock or other Voting Stock of the Company if at the time of the issuance
thereof such rights are not separable from such Common Stock or other Voting
Stock (i.e., are not transferable otherwise than in connection with a transfer
of the underlying Common Stock or other Voting Stock) except upon the occurrence
of a contingency, whether such rights exist as of the Agreement Effective Date
or are thereafter issued by the Company as a dividend on shares of Common Stock
or other Voting Securities or otherwise.
"Exempt Transaction" shall mean an increase in the percentage of the
outstanding shares of Common Stock or the percentage of the combined voting
power of the outstanding Voting Stock of the Company beneficially owned by any
Person solely as a result of a reduction in the number of shares of Common Stock
then outstanding due to the repurchase of Common Stock or Voting Stock by the
Company, unless and until such time as (a) such Person or any Affiliate or
Associate of such Person shall purchase or otherwise become the Beneficial Owner
of additional
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shares of Common Stock constituting 1% or more of the then outstanding shares of
Common Stock or additional Voting Stock representing 1% or more of the combined
voting power of the then outstanding Voting Stock, or (b) any other Person (or
Persons) who is (or collectively are) the Beneficial Owner of shares of Common
Stock constituting 1% or more of the then outstanding shares of Common Stock or
Voting Stock representing 1% or more of the combined voting power of the then
outstanding Voting Stock shall become an Affiliate or Associate of such Person.
"Person" shall mean any individual, firm, corporation, partnership,
association, trust, unincorporated organization or other entity.
"Potential Change of Control" shall mean any of the following
occurring on or after the Agreement Effective Date except that the transactions
contemplated by the Combination Agreement dated as of December 3, 1996, by and
among the Company, Edge Petroleum Corporation, a Texas corporation, Edge
Mergeco, Inc., Gulfedge Limited Partnership, Edge Group II Limited Partnership
and Edge Group Partnership shall not constitute a Potential Change of Control:
(a) the commencement of a tender or exchange offer for the Company's Common
Stock that, if consummated, would result in a Change of Control; or
(b) the Company enters into an agreement which, if consummated, would
constitute a Change of control; or
(c) the commencement of a contested election contest subject to the
provisions of Rule 14a-11 under the Exchange Act; or
(d) the occurrence of any other event that the Company's Board determines
could result in a Change of Control.
"Voting Stock" shall mean, with respect to a corporation, all
securities of such corporation of any class or series that are entitled to vote
generally in the election of directors of such corporation (excluding any class
or series that would be entitled so to vote by reason of the occurrence of any
contingency, so long as such continency has not occurred).
9. Covenant Not to Compete.
(a) Executive recognizes that in each of the highly competitive
businesses in which the Company is engaged, personal contact is of primary
importance in securing new customers and in retaining the accounts and goodwill
of present customers and protecting the business of the Company. The Executive,
therefore, agrees that during the Employment Period and, if the Date of
Termination occurs by reason of the Executive terminating his employment for
reasons other than Disability or Good Reason, for a period of one year after the
Date of Termination, he will
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not, either within 75 miles of any geographic location with respect to which he
has devoted substantial attention to the material business interests of the
Company (other than the Company's home office) or any of its affiliated
companies or with respect to any immediate geologic trends in which the Company
or any of its affiliated companies is active as of the Date of Termination
without regard in either case to whether Executive has worked at such location
(the "Relevant Geographic Area"), (i) accept employment or render service to any
Person that is engaged in a business directly competitive with the business then
engaged in by the Company or any of its affiliated companies or (ii) enter into
or take part in or lend his name, counsel or assistance to any business, either
as proprietor, principal, investor, partner, director, officer, executive,
consultant, advisor, agent, independent contractor, or in any other capacity
whatsoever, for any purpose that would be competitive with the business of the
Company or any of its affiliated companies (all of the foregoing activities are
collectively referred to as the "Prohibited Activity").
(b) In addition to all other remedies at law or in equity which the
Company may have for breach of a provision of this Section 9 by the Executive,
it is agreed that in the event of any breach or attempted or threatened breach
of any such provision, the Company shall be entitled, upon application to any
court of proper jurisdiction, to a temporary restraining order or preliminary
injunction (without the necessity of (i) proving irreparable harm, (ii)
establishing that monetary damages are inadequate or (iii) posting any bond with
respect thereto) against the Executive prohibiting such breach or attempted or
threatened breach by proving only the existence of such breach or attempted or
threatened breach. If the provisions of this Section 9 should ever be deemed to
exceed the time, geographic or occupational limitations permitted by the
applicable law, the Executive and the Company agree that such provisions shall
be and are hereby reformed to the maximum time, geographic or occupational
limitations permitted by the applicable law.
(c) The covenants of the Executive set forth in this Section 9 are
independent of and severable from every other provision of this Agreement; and
the breach of any other provision of this Agreement by the Company or the breach
by the Company of any other agreement between the Company and the Executive
shall not affect the validity of the provisions of this Section 9 or constitute
a defense of the Executive in any suit or action brought by the Company to
enforce any of the provisions of this Section 9 or seek any relief for the
breach thereof by Executive.
(d) The Executive acknowledges, agrees and stipulates that: (i) the
terms and provisions of this Agreement are reasonable and constitute an
otherwise enforceable agreement to which the terms and provisions of this
Section 9 are ancillary or a part of as contemplated by Tex. Bus. & Com. Code
Xxx. (S)(S) 15.50-15.52; (ii) the consideration provided by the Company under
this Agreement is not illusory; and (iii) the consideration given by the Company
under this Agreement, including, without limitation, the provision by the
Company of Confidential Information to the Executive as contemplated by Section
7, gives rise to the Company's interest in restraining and prohibiting the
Executive from engaging in the Prohibited Activity within the Relevant
Geographic Area as provided under this Section 9, and the Executive's covenant
not to engage in the Prohibited Activity within the Relevant Geographic Area
pursuant to this Section 9 is designed to enforce the
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Executive's consideration (or return promises), including, without limitation,
the Executive's promise to not disclose Confidential Information under this
Agreement.
10. Successors.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's heirs,
executors and other legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and may only be assigned to a successor described in Section 10(c).
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, without reference to principles of conflict
of laws that would require the application of the laws of any other state or
jurisdiction.
(b) The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.
(c) This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective successors
and heirs, executors and other legal representatives.
(d) All notices and other communications hereunder shall be in writing
and shall be given, if by the Executive to the Company, by telecopy or facsimile
transmission at the telecommunications number set forth below and, if by either
the Company or the Executive, either by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
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If to the Executive:
-------------------
Xxxxxxx X. Xxxx
0000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Telecommunications Number: (000) 000-0000
If to the Company:
-----------------
Edge Petroleum Corporation
Attention: Xxxx Xxxxxxx
0000 Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecommunications Number: (000) 000-0000
Attention: Corporate Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(e) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(f) The Company may withhold from any amounts payable under this
Agreement such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(g) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason or during a Window Period pursuant to Section 3(c) of
this Agreement, shall not be deemed to be a waiver of such provision or right or
any other provision or right of this Agreement.
(h) This Agreement shall become effective as of the date on which both
the Company and the Executive have executed the Agreement (the "Agreement
Effective Date").
IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
/s/ Xxxx Xxxxxxx
Date:___________________ -----------------------------
Xxxx Xxxxxxx
Chief Executive Officer
/s/ Xxxxxxx X. Xxxx
Date:___________________ -----------------------------
Xxxxxxx X. Xxxx
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