Exhibit 10.12
January 1, 1997
Xx. Xxxxxxx X. Xxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Dear Xxx:
Subject to the ratification of this Agreement by the Compensation,
Corporate Governance and Human Resources Committee ("Compensation Committee") of
the Board of Directors of NGC Corporation, set forth below are the terms of your
employment by NGC Corporation (hereinafter referred to collectively as "NGC" or
the "Company").
1. TITLE AND DUTIES
Your title shall be Senior Vice President and General Counsel. You
will be responsible for the management of the Company's Legal & Regulatory
Department and shall have such other duties as may be delegated from time to
time by your immediate supervisor. You will be located at NGC's headquarters in
Houston, Texas. You shall devote your full time, energy and skill to the
performance of your duties for NGC, and will exercise due diligence and
reasonable care in the performance of such duties.
2. TERM
(a) Unless earlier terminated as provided for herein, the term of this
Agreement will be for three years, beginning on January 1, 1997 (the "Term").
(b) If your employment with NGC is terminated due to your voluntary
resignation or by the Company for "cause", this Agreement shall terminate
immediately (except for the confidentiality, non-competition and non-
solicitation provisions of Paragraph 4 and the provisions of Paragraphs 5 and
6), and the Company shall have no further obligation to you except for the
payment of amounts due before the date of such termination. You further agree
that the benefits which you have received from the execution of this Agreement
through the date of such termination constitute sufficient consideration for
your obligations pursuant to Paragraph 4, notwithstanding the fact that the
Company has no further obligation to you except for the payment of amounts due
before the
Xx. Xxxxxxx X. Xxxxxxxx
January 1, 1997
Page 2
date of such termination. For purposes of this Agreement, you may be terminated
for "cause" as a result of (i) refusal to implement or adhere to lawful policies
or directives of the Board of Directors of NGC; (ii) serious misconduct,
dishonesty or disloyalty, directly related to the performance of duties for the
Company, which results from a willful act or omission or from gross negligence,
and which is materially or is likely to be materially injurious to the
operations, financial condition or business reputation of the Company or any
significant subsidiary thereof; (iii) your being convicted (or entering into a
plea bargain admitting criminal guilt) in any criminal proceeding that may have
an adverse impact on the Company's reputation and standing in the community;
(iv) drug or alcohol abuse; (v) willful and continued failure to perform your
duties under this Agreement which is not cured within 10 days after written
notice of such failure is provided to you by NGC; or (vi) any other material
breach of this Agreement by you that is not cured within thirty days after
written notice of such breach is delivered to you from the Company. For these
purposes, no act or failure to act shall be considered "willful" unless it is
done, or omitted to be done, in bad faith without reasonable belief that the
action or omission was in the best interest of the Company.
(c) If your employment is terminated during the Term of this Agreement
due to resignation following "constructive termination" (as defined below) or
for any other reason other than your voluntary resignation, death, disability,
or discharge for cause, you shall receive as your sole compensation (i) your
Base Salary as described in Paragraph 3(a), guaranteed bonus as described in
Paragraph 3(b) and company medical and life insurance coverage for the remainder
of the Term, or for two years from the date of actual termination of employment,
whichever provides the longer period of payment and coverage, and (ii) any
employee stock options granted to you prior to or during the Term of this
Agreement shall become vested as of the date of resignation due to such
constructive termination or discharge not for cause, but only up to the
percentage that would have been vested had you remained in regular employment to
the end of the Term of this Agreement.
For purposes of this Agreement a "constructive termination" shall be
deemed to have occurred in the event that (i) your Base Salary as defined in
Paragraph 3(a), bonus compensation under Paragraph 3(b), option grants under
Paragraph 3(c) or other compensation as described in Paragraphs 3(d), 3(e) and
3(f) is reduced; (ii) a significant diminution in your responsibilities,
authority or scope of duties is effected by the Board of Directors or as the
result of the change in control of the Company, and such diminution is made
without your written consent (without regard to whether or not any change is
made to your title); or (iii)
Xx. Xxxxxxx X. Xxxxxxxx
January 1, 1997
Page 3
the Company materially breaches this Agreement. For purposes of this Agreement,
a "change in control of the Company" means the occurrence of any of the
following events: (a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) is or becomes the "beneficial owner" (as defined in Rule l3d-3
under the Exchange Act), directly or indirectly, of more than 50% of the total
voting stock of the Company; (b) the Company is merged with or into or
consolidated with another person and, immediately after giving effect to the
merger or consolidation, (A) less than 50% of the total voting power of the
outstanding voting stock of the surviving or resulting person is then
"beneficially owned" (within the meaning of Rule l3d-3 under the Exchange Act)
in the aggregate by (x) the stockholders of the Company immediately prior to
such merger or consolidation, or (y) if a record date has been set to determine
the stockholders of the Company entitled to vote with respect to such merger or
consolidation, the stockholders of the Company as of such record date and (B)
any "person" or "group" (as defined in Section 13(d)(3) or 14(d)(2) of the
Exchange Act) has become the direct or indirect "beneficial owner" (as defined
in Rule l3d-3 under the Exchange Act) of more than 50% of the voting power of
the voting stock of the surviving or resulting person; (c) the Company, either
individually or in conjunction with one or more of its subsidiaries, sells,
assigns, conveys, transfers, leases or otherwise disposes of, or the
subsidiaries sell, assign, convey, transfer, lease or otherwise dispose of, all
or substantially all of the properties and assets of the Company and the
subsidiaries, taken as a whole (either in one transaction or a series of related
transactions), to any person (other than the Company or a wholly owned
subsidiary); or (d) the liquidation or dissolution of the Company. Any
resignation by you as a result of assertion of a constructive termination shall
be communicated by delivery to the Board of Directors of the Company thirty
days' advance written notice of such constructive termination and the grounds
therefor, during which period the Company shall be entitled to cure or remedy
the matters set forth in such notice to your reasonable satisfaction. Unless you
withdraw such notice prior to the expiration of such thirty day period, such
resignation shall take effect upon the expiration of thirty days from the date
of the delivery of such notice. Any other resignation by you shall be
communicated by thirty days' advance written notice.
(d) If you die, or become disabled and cannot perform your duties, you
(or your estate) shall be entitled to the Base Salary (as defined in Paragraph 3
(a)) payable to you hereunder for three months following the month in which you
die or become disabled, plus the amount of any guaranteed bonus as described in
Paragraph 3(b) guaranteed pursuant to Paragraph 3(b) for the year of death or
disability, prorated through the date of death or disability. For purposes of
this
Xx. Xxxxxxx X. Xxxxxxxx
January 1, 1997
Page 4
Agreement, you shall be disabled as of the first date on which you become
eligible to receive disability benefits under the Company's long-term disability
plan (or Social Security disability benefits at a time when the Company does not
maintain a long-term disability plan or such plan is not available to you).
3. COMPENSATION
(a) Each year during the Term hereof, you will be paid a base salary
of $250,000 per annum ("Base Salary"), payable in accordance with the Company's
payroll guidelines. Increases may be made to your Base Salary at the discretion
of the Board of Directors based upon your individual performance.
(b) You shall be a participant in the Company's Incentive Compensation
Plan. You shall receive a guaranteed bonus of at least $100,000 per annum during
the three year Term. Such guaranteed bonus shall be in addition to the payment
during the Term of this Agreement of any bonus which was granted to you prior to
the date of this Agreement. As part of NGC's incentive compensation program, you
will have the opportunity to earn Additional Compensation, dependent upon NGC's
financial performance and other personal strategic objectives, determined in
accordance with such program.
(c) Each year during the Term of this Agreement, commencing December
1, 1997 you will receive stock option grants, with an exercise price equal to
market price on date of grant, under the NGC Corporation Amended & Restated 1991
Stock Option Plan, with a present value of the five year projected gain of
$375,000 ("Projected Value"). You recognize that the Projected Value is subject
to the future market performance of the Company stock and that there is no
guarantee that the actual value of such options will achieve that value.
"Projected Value" means that at the end of five years from date of grant,
assuming an increase in market price of 15% per annum during the five years, the
stock option may be exercised to obtain stock having a market price with a
present value of $375,000 over the exercise price. These options are subject to
the vesting, forfeiture and other terms and conditions of the NGC Corporation
Amended & Restated 1991 Stock Option Plan.
(d) You will be entitled to participate in NGC's benefits programs for
senior management executives, including, without limitation, NGC's deferred
compensation plan for executives, and NGC's Alternative Benefits for Senior
Executives Plan. Pursuant to the terms of NGC's vacation policy you will be
entitled to four weeks per year of paid vacation.
Xx. Xxxxxxx X. Xxxxxxxx
January 1, 1997
Page 5
(e) The Company will pay an additional $5,000 per year on your behalf
to provide you with additional life insurance and disability coverage in excess
of the death benefit or disability coverage under NGC's standard executive
employee and benefit plans. You shall select such coverage and shall own the
insurance policies providing such coverage. You will be responsible for coverage
and effectiveness of the policies, the Company's only obligation being to pay
such amounts.
(f) You shall be entitled to participate in such other plans and
receive such other perquisites as the Board of Directors of the Company in its
sole discretion determines, including but not limited to, reserved parking,
downtown luncheon club monthly dues, health club monthly dues, annual physical
examination, financial and/or federal income tax planning and return preparation
not to exceed $25,000 annually.
4. CONFIDENTIALITY
You recognize and acknowledge that:
Xx. Xxxxxxx X. Xxxxxxxx
January 1, 1997
Page 6
(a) You will have access to certain information concerning the Company
that is confidential and proprietary and constitutes valuable and unique
property of the Company. You agree that you will not at any time, either during
or after your employment, disclose to others, use, copy or permit to be copied,
except pursuant to your duties on behalf of the Company or its successors,
assigns or nominees, any secret or confidential information of the Company
(whether or not developed by you) without the prior written consent of the Board
of Directors of the Company. The term "secret or confidential information of the
Company" (sometimes referred to herein as "Confidential Information") shall
include, without limitation, the Company's plans, strategies, potential
acquisitions, costs, prices, systems for buying, selling, and/or trading natural
gas, natural gas liquids, crude oil, coal, and electricity, client lists,
pricing policies, financial information, the names of and pertinent information
regarding suppliers, computer programs, policy or procedure manuals, training
and recruiting procedures, accounting procedures, the status and content of the
Company's contracts with its suppliers or clients, or servicing methods and
techniques at any time used, developed, or investigated by the Company, before
or during your tenure of employment to the extent any of the foregoing are (i)
not generally available to the public and (ii) maintained as confidential by the
Company. You further agree to maintain in confidence any confidential
information of third parties received as a result of your employment and duties
with the Company.
(b) At the termination of your employment you will deliver to the
Company, as determined appropriate by the Company, all correspondence,
memoranda, notes, records, client lists, computer systems, programs, or other
documents and all copies thereof made, composed or received by you, solely or
jointly with others, and which are in your possession, custody, or control at
such date and which are related in any manner to the past, present, or
anticipated business of the Company.
(c) To protect and safeguard the Company's trade secrets and
Confidential Information and also the Company's goodwill with its suppliers and
clients, for a period of twelve months following the termination of your
employment for any reason other than pursuant to Paragraph 2(c) above, you will
not, within a 50 mile radius of any location where the Company had an office at
any time during the Term hereof or any location where a client or supplier of
the Company (which is a material client or supplier at any time during the Term
hereof) had an office at any time during the Term hereof, without the prior
written consent of the Board of Directors of the Company, directly or
indirectly, engage in or be interested in (as owner, partner, shareholder,
employee, director, agent,
Xx. Xxxxxxx X. Xxxxxxxx
January 1, 1997
Page 7
consultant or otherwise), any business which is a competitor of the Company, as
hereinafter defined. For purposes of this Agreement, a "competitor of the
Company" is any entity, including without limitation a corporation, sole
proprietorship, partnership, joint venture, syndicate, trust or any other form
of organization or a parent, subsidiary or division of any of the foregoing,
which, during such period or the immediately preceding fiscal year of such
entity, was engaged in the unregulated marketing, gathering, transportation or
processing of natural gas or derivatives of natural gas or other hydrocarbons or
electricity. For purposes of this paragraph, the following entities shall not be
deemed to be competitors of the Company: (i) a Local Distribution Company
("LDC") to the extent that any purchases or sales by such LDC are only for
consumption on its system; (ii) a natural gas producer to the extent that such
producer sells only its own production or production of other working interest
owners in xxxxx in which it owns an interest; (iii) a natural gas pipeline
company in the jurisdictional aspects of its business, i.e., other than a
nonjurisdictional marketing affiliate or production affiliate (except as to such
production affiliates own production as described in clause (ii) of this
Paragraph 4(c)). The terms of this Paragraph 4(c) shall not apply to your
present or future investments in the securities of companies listed on a
national securities exchange or traded on the over-the-counter market to the
extent such investments do not exceed one percent (1%) of the total outstanding
shares of such company.
(d) For a period of twenty-four months after the expiration or
termination of your employment for whatever reason other than pursuant to
Paragraph 2(c) above or for a period of twelve months following the termination
of your employment pursuant to Paragraph 2(c) above, you shall not induce or
otherwise entice any employee of the Company to leave the Company, nor shall you
attempt to hire any of the Company's employees.
(e) You agree that the foregoing restrictions contain reasonable
limitations as to the time, geographical area, and scope of activity to be
restrained and that these restrictions do not impose any greater restraint than
is necessary to protect the goodwill and other legitimate business interests of
the Company, including but not limited to the protection of Confidential
Information. You also agree that the general public shall not be harmed by
enforcement of this Paragraph 4. Should any provision in this Paragraph 4 be
held unreasonably broad with respect to the restrictions as to time,
geographical area, or scope of activity to be restrained, any such restriction
shall be construed by limiting and reducing it to the extent necessary to render
it reasonable, and as so construed, such provision shall be enforced.
Xx. Xxxxxxx X. Xxxxxxxx
January 1, 1997
Page 8
5. INDEMNIFICATION
If, at any time during or after the Term of this Agreement, you are
made a party to, or are threatened to be made a party in, any civil, criminal or
administrative action, suit or proceeding by reason of the fact that you are or
were a director, officer, employee, or agent of the Company, or of any other
corporation or any partnership, joint venture, trust or other enterprise for
which you served as such at the request of the Company, then you shall be
indemnified by the Company against expenses actually and reasonably incurred by
you or imposed on you in connection with, or resulting from, the defense of such
action, suit or proceeding, or in connection with, or resulting from, any appeal
therein if you acted in good faith and in a manner you reasonably believed to be
in or not opposed to the best interest of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe your conduct
was unlawful, except with respect to matters as to which it is adjudged that you
are liable to the Company or to such other corporation, partnership, joint
venture, trust or other enterprise for gross negligence or willful misconduct in
the performance of your duties. As used herein, the term "expenses" shall
include all obligations actually and reasonably incurred by you for the payment
of money, including, without limitation, attorney's fees, judgments, awards,
fines, penalties and amounts paid in satisfaction of a judgment or in settlement
of any such action, suit or proceeding, except amounts paid to the Company or
such other corporation, partnership, joint venture, trust or other enterprise by
you. The foregoing indemnification provisions shall be in addition to any other
rights to indemnification to which you may be entitled.
6. ARBITRATION
The parties hereto may attempt to resolve any dispute hereunder
informally via mediation or other means. Otherwise, any controversy or claim
arising out of or relating to this Agreement, or any breach thereof, shall,
except as provided in Paragraph 4, be adjusted only by arbitration in accordance
with the rules of the American Arbitration Association, and judgment upon such
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitration shall be held in the City of Houston, Texas, or such
other place as may be agreed upon at the time by the parties to the arbitration.
The arbitrator(s) shall, in their award, allocate between the parties the costs
of arbitration, which shall include reasonable attorneys' fees of the parties,
as well as the arbitrators' fees and expenses, in such proportions as the
arbitrator(s) deem just; provided however, notwithstanding the above, in the
event you are the prevailing party,
Xx. Xxxxxxx X. Xxxxxxxx
January 1, 1997
Page 9
then the Company agrees to reimburse you for all such costs of arbitration,
including, but not limited to attorneys' fees and expenses reasonably incurred
by you; provided further, notwithstanding the above, in the event the Company is
the prevailing party, then the total costs of arbitration, including but not
limited to attorneys' fees reasonably incurred by the Company and arbitrators'
fees and expenses that may be allocated to you by the arbitrator(s) shall not in
any event exceed Twenty-Five Thousand Dollars ($25,000). Notwithstanding the
foregoing, you shall be entitled to seek specific performance in a court of
competent jurisdiction of your right to be paid your full compensation until
your separation from employment, during the pendency or dispute of any
controversy arising under or in connection with this Agreement.
7. OTHER PROVISIONS
(a) THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICTS OF LAW,
RULE OR PRINCIPLE THAT MIGHT OTHERWISE REFER TO THE SUBSTANTIVE LAW OF ANOTHER
JURISDICTION.
(b) Except as otherwise indicated, this Agreement is not assignable
without the written authorization of both parties; provided that the Company may
assign this Agreement to any entity to which the Company transfers substantially
all of its assets or to any entity which is a successor to the Company by
reorganization, incorporation, merger or similar business combination.
(c) Except as otherwise provided herein, the provisions of Paragraphs
4, 5 and 6 of this Agreement shall survive the termination of this Agreement.
(d) This Agreement supersedes all previous employment agreements,
written or oral, between the Company and you. This Agreement may be amended only
by written amendment duly executed by both parties or their legal
representatives and authorized by action of the Board. Except as otherwise
specifically provided in this Agreement, no waiver by either party hereto of any
breach by the other party hereto of any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of a subsequent
breach of such condition or provision or a waiver of a similar or dissimilar
provision or condition at the same or at any prior or subsequent time.
Xx. Xxxxxxx X. Xxxxxxxx
January 1, 1997
Page 10
(e) Any notice or other communication required or permitted pursuant
to the terms of this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States mail, first class,
postage prepaid and registered with return receipt requested, addressed to the
intended recipient at his or its address set forth below and, in the case of a
notice or other communication to the Company, directed to the attention of the
Board of Directors with a copy to the Secretary of the Company, or to such other
address as the intended recipient may have theretofore furnished to the sender
in writing in accordance herewith, except that until any notice of change of
address is received, notices shall be sent to the following addresses:
IF TO YOU: IF TO THE COMPANY:
Xxxxxxx X. Xxxxxxxx NGC Corporation
9537 Bayou Brook 0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000-0000
(f) If any one or more of the provisions or parts of a provision
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity or unenforceability shall not
affect any other provision or part of a provision of this Agreement, but this
Agreement shall be reformed and construed as if such invalid or illegal or
unenforceable provision or part of a provision had never been contained herein
and such provisions or part thereof shall be reformed so that it would be valid,
legal and enforceable to the maximum extent permitted by law.
(g) You shall not be required to mitigate damages (or the amount of
any compensation provided under this Agreement to be paid) following your
termination of employment, by seeking employment or otherwise.
Xx. Xxxxxxx X. Xxxxxxxx
January 1, 1997
Page 11
If the foregoing reflects your understanding of the terms of your
employment with the Company, please execute each copy of this letter in the
space provided below.
NGC CORPORATION
By: /s/ X. X. Xxxxxx
--------------------------------
X. X. Xxxxxx
AGREED AND ACCEPTED this
21st day of May, 1997, and
effective as of January 1, 1997
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxxx
