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EXHIBIT 10.7
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement"), dated as of December 19,
1995, and effective upon the date described in paragraph 12 hereof, between
Triad Drilling Company ("Employer"), and Xxxxx X. Xxxx ("Employee").
W I T N E S S E T H:
WHEREAS, Employer desires to employ Employee, and Employee desires to be
employed by Employer, upon the terms and subject to the conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, agreements and representations herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Employment. Employer hereby employs Employee and Employee hereby
accepts such employment and agrees to perform his duties and responsibilities
hereunder in accordance with the terms and conditions hereinafter set forth.
Employee represents and warrants that he may enter into this Agreement and the
employment contemplated hereby without violating any other agreements or
covenants, whether written or oral, by which he may be bound.
2. Term. The term of this Agreement shall commence as of December
19, 1995 and shall continue until December 19, 2000 (the "Initial Term"),
unless terminated prior thereto in accordance with Section 9 hereof. Subject
to the rights of termination set forth in this Agreement, this Agreement shall
be automatically renewed for successive additional one (1) year terms after the
Initial Term (each such renewal term referred to as a "Renewal Term"), unless
either party provides written notice of
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termination to the other party on or before one hundred twenty (120) days prior
to the end of the Initial Term or any Renewal Term.
3. Duties and Responsibilities. Employee shall have the title of
President and Chief Operating Officer and shall perform and discharge the
duties and responsibilities incident to that office and such other management
and administrative duties and responsibilities as may be prescribed from time
to time by the Board of Directors of Employer. Employee also agrees to perform
reasonable management and administrative services for, and to consult with and
advise, corporations affiliated with Employer as the Board of Directors of
Employer may from time to time specify. Nothing contained in this Agreement
shall be construed as making Employee personally responsible for the
liabilities of Employer, its Subsidiaries (as defined in Section 9(a)) and
affiliates or any other corporation to which Employee provides services. Such
title, and the duties and responsibilities incident thereto, may, by
appropriate Employer Board of Director action, be upgraded from time to time,
and such upgraded title, duties and responsibilities, together with the
appropriate increase in salary, shall be incorporated into this Agreement by
referencing the same on the attached Exhibit A, made a part hereof.
4. Extent of Service. Employee shall devote his full and undivided
business time to the business of Employer and shall not during the term of this
Agreement be engaged in any other business activity pursued for gain, profit or
other pecuniary advantage without the prior written approval of Employer's
Board of Directors. Except as provided in Section 6 hereof, the foregoing
shall not be construed as preventing the Employee from devoting reasonable
amounts of time to personal, civil and charitable activities, and to his
personal investments, if such other activities and such investments
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do not interfere in any material respect with the performance by the Employee
of his duties and obligations under this Agreement.
5. Compensation.
(a) Salary and Insurance. For all services rendered by
Employee under this Agreement, Employer shall pay to Employee a salary at the
rate of $90,000 per year, payable in accordance with Employer's customary
practices for senior employees in arrears, less withholding required by law and
other deductions agreed to by Employee, so long as this Agreement shall be in
effect (the "Salary"). Such Salary may, by appropriate Employer Board of
Director action, be increased from time to time, and such increased Salary
shall be incorporated into this Agreement by referencing such increased Salary
on the attached Exhibit A. Employee shall also be included, on a basis
comparable with the other executive employees of UTI Energy Corp. ("UTI") and
its Subsidiaries, in any life, health or disability insurance plans and
policies, and shall be entitled to such other benefits if and to the extent
generally made available from time to time to senior executives of Employer,
including paid vacations, paid sick leave, holiday pay and the use of an
automobile; provided, however, that such other benefits shall not include the
right to participate in any stock option plan, restricted stock plan or other
form of employee incentive plan sponsored by UTI, Employer or its Subsidiaries
and affiliates unless the plan sponsor specifically grants to Employee the
right to participate in any of such plans. Employer shall also provide
Employee with office and secretarial facilities appropriate for and customarily
used in the performance of such duties and responsibilities as are from time to
time assigned to him pursuant to this Agreement, and Employee shall be
reimbursed for all travel, business and entertainment related expenses from
time to time incurred by him on behalf of
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Employer or any of its Subsidiaries or affiliates in accordance with Employer's
standard policies and procedures from time to time in effect, subject to
receipt of satisfactory evidence of payment thereof.
(b) Additional Compensation. Employer shall also pay to
Employee such additional compensation, including but not limited to bonus and
incentive compensation payments ("Additional Compensation"), as shall be
determined from time to time by Employer's Board of Directors.
6. Covenant Not to Compete. During the term of this Agreement and
for a period of two (2) years after the termination hereof, unless Employee's
employment hereunder is terminated by Employer involuntarily on the part of the
Employee and without "Cause" (as defined in Section 9(a)(iii)), Employee shall
not, unless acting pursuant hereto or with the prior written consent of
Employer, (i) directly or indirectly own, manage, operate, join, control, or
participate in the ownership, management, operation or control of, or be
connected as an officer, director, employee, partner or otherwise with, any
business which competes with or which is engaged in activities similar to those
conducted by Employer and its Subsidiaries and affiliates, which is located
within the territory served by Employer or its Subsidiaries or affiliates
within the twelve (12) month period preceding the date of termination of this
Agreement; or (ii) induce or attempt to persuade any employee of Employer or
any of its Subsidiaries or affiliates to terminate his employment relationship
in order to enter into employment competitive with Employer or any of its
Subsidiaries or affiliates.
7. Confidential Information. Employee acknowledges and agrees that
all records and other information not released to the general public, all trade
secrets, unpublished data or other information and all trade secrets and
confidential or
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proprietary information, in each case relating to the services, business and
operations of Employer and its Subsidiaries and affiliates, whether reduced to
writing or not, are confidential and the sole property of Employer and its
Subsidiaries and affiliates (all of the same being herein collectively called
the "Confidential Information"). Employee acknowledges and agrees that, in his
capacity as an officer of Employer and other executive capacities provided for
herein, he will be involved in all aspects of the business and operations of
Employer and its Subsidiaries and affiliates, and that, as a result thereof, he
will be privy to the Confidential Information. Employee will not, at any time
during his employment hereunder or thereafter, use any of the Confidential
Information, except in the regular course of employment hereunder, or disclose
any of the Confidential Information to any other person or entity, except to
the extent Employer's Board of Directors may so authorize in writing, and that,
upon termination of his employment hereunder, he will surrender to Employer all
Confidential Information then in his possession or under his control.
8. Remedies. Employee acknowledges that the provisions of Sections
6 and 7 of this Agreement are reasonable and necessary for the protection of
Employer and its Subsidiaries and affiliates and that Employer and its
Subsidiaries and affiliates will be irrevocably damaged if such provisions are
not specifically enforced. Accordingly, Employee specifically recognizes and
agrees that, in the event of a breach or threatened breach by him of the
undertakings expressed in Sections 6 and 7 of this Agreement, the remedies
available to Employer at law may be inadequate and that Employer shall be
entitled, in addition to any other relief available to it at law, in equity or
otherwise, to temporary and permanent injunctions restraining such breach or
threatened breach. Should a court of competent jurisdiction declare any of
these provisions unenforceable
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due to an unreasonable restriction of duration or geographical area, or for any
other reason, such court shall have the express authority of the parties to
this Agreement to reform such provisions and/or to grant Employer or its
Subsidiaries and affiliates any and all other relief, at law or in equity,
reasonably necessary to protect the interests of Employer and its Subsidiaries
and affiliates.
9. Termination.
(a) Definitions. For purposes of this paragraph 9, the
following definitions shall apply:
(i) "Full Additional Compensation" shall mean the
amount of Additional Compensation (as defined in Section 5(b))
that Employee would have been entitled to receive if he had been
an employee during the entire fiscal year, payable within ninety
(90) days after the end of the fiscal year in which the
termination of employment occurred.
(ii) "Adverse Change" shall mean the occurrence of any
of the following events:
(1) a significant reduction by Employer of the
authority, duties or responsibilities of the Employee;
(2) any removal of the Employee from an officer
position with Employer, except in connection with
promotions to a higher office;
(3) a reduction by Employer in the Employee's
Salary or a material reduction in the Employee's other
benefits; or
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(4) a transfer of the Employee, without his
express written consent, to a location which is more than
forty (40) miles from his previous work location.
(iii) "Cause" shall mean gross negligence in the
performance of Employee's duties hereunder or the failure of the
Employee to observe or perform (other than by reason of
Disability) in any material respect the duties of his employment,
gross misconduct, insubordination, habitual insobriety or
substance abuse or embezzlement of funds.
(iv) "Compensation" shall mean the average of Employee's
Salary immediately prior to termination of employment.
(v) "Continuation of Employee Benefits" shall mean:
(1) the continuation of Employee's health,
disability and life insurance benefits for a period of
eighteen (18) months from termination of employment
without any increase in cost to Employee; provided,
however, that Employer shall not be required to provide
such benefits if Employee is subsequently employed and
receives substantially similar benefits; and
(2) upon the written request of Employee, the
continuation of some or all of Employee's benefits (as
requested by Employee) for a period of up to an additional
eighteen (18) months beyond the period specified in
subparagraph (1) above, provided that Employee reimburses
Employer for its direct out-of-pocket costs of providing
Employee with such benefits;
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provided, however, that the continuation of Employee's benefits
shall not include, except to the extent then vested, Employee's
continued participation or right to participate in any stock
option plan, restricted stock plan, pension plan or other form of
employee incentive or benefit plan sponsored by UTI, Employer or
its Subsidiaries and affiliates.
(vi) "Disabled" or "Disability" shall mean the inability
of Employee to perform substantially all of his duties and
responsibilities hereunder by reason of illness, injury or
incapacity for six (6) consecutive months, during which period
Employer shall continue to pay to Employee his Salary as provided
in Section 5 hereof.
(vii) "Plan Vesting" shall mean the full and complete
vesting of Employee's interests under any stock option plan,
restricted stock plan, pension plan or other form of employee
incentive plan of UTI, Employer or any of its Subsidiaries or
affiliates, or in which Employer or any of its Subsidiaries or
affiliate participates, notwithstanding any vesting schedule or
provision in such plan or plans.
(viii) "Pro Rated Additional Compensation" shall mean the
amount of Additional Compensation (as defined in Section 5(b))
that Employee would have been entitled to receive if he had been
an employee during the entire fiscal year multiplied by the
fraction equal to the number of months of the fiscal year that
had elapsed as of the month of such termination (counting the
month of termination as an entire month) divided by twelve (12),
payable within ninety (90) days after the end of the fiscal year
in which the termination of employment occurred.
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(ix) "Separation Pay" shall mean Employee's Compensation
times a fraction, the numerator of which shall be the number of
months of Employee's service with UTI, Employer, UGI Corporation,
a Delaware corporation ("UGI"), or any company affiliated with
either Employer or UGI, and the denominator of which shall be
260, payable within thirty (30) days after termination of
employment; provided that Separation Pay shall in no event exceed
fifty percent (50%) of Compensation.
(x) "Subsidiary" of any entity or person shall mean any
corporation, incorporated or unincorporated association, limited
liability company, partnership or other entity of which at least
a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such entity
or person.
(xi) "Vacation Pay" shall mean a lump sum payment equal
to the Employee's unused vacation days and holidays remaining in
the calendar year of termination times a fraction, the numerator
of which shall be Employee's Compensation and the denominator of
which shall be 260, payable within thirty (30) days after
termination of employment.
(b) Termination Events. This Agreement shall terminate, and
Employer shall have no further liability or obligation hereunder except as set
forth herein, upon the first to occur of the expiration of the term of this
Agreement (as set forth in Section 2) or the occurrence of any one of the
following events:
(i) The Employee becomes Disabled, in which event
Employer shall pay to the Employee his Separation Pay, Vacation
Pay and Pro Rated Additional Compensation, and Employee shall be
entitled to
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Employee's Plan Vesting. In the event Employee, due to his
Disability, is unable to properly manage funds, Employer may make
such payments to Employee's guardian or other person taking care
of him, and Employer shall have no further responsibility for any
funds so paid.
(ii) The Employee dies, in which event Employer shall
pay to his executors or administrators the Employee's Separation
Pay, Vacation Pay and Pro Rated Additional Compensation, and his
executors or administrators shall be entitled to Employee's Plan
Vesting.
(iii) The Employee is terminated by Employer for reasons
not constituting Cause, in which event Employer shall pay to the
Employee one year of Compensation, Separation Pay, Vacation Pay
and Full Additional Compensation, and the Employee shall be
entitled to Plan Vesting and Continuation of Employee Benefits.
(iv) The Employee voluntarily terminates his employment
within one (1) year following an Adverse Change, in which event
Employer shall pay to the Employee one year of Compensation,
Separation Pay, Vacation Pay and Full Additional Compensation,
and the Employee shall be entitled to Plan Vesting and
Continuation of Employee Benefits.
(v) The Employee voluntarily terminates his employment,
in which event Employer shall pay to the Employee his Vacation
Pay.
(vi) The Employee is terminated for Cause, in which
event Employer shall pay to the Employee his Vacation Pay.
(vii) The Employee retires as an Employee pursuant to
Section 11 hereof, in which event Employer shall pay to the
Employee his Separation
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Pay, Vacation Pay and Pro Rated Additional Compensation, and
Employee shall be entitled to such plan vesting as shall be
provided for a retiring participant in the applicable plan or
plans.
10. Vacation. Employee shall be entitled to four (4) weeks paid
vacation each calendar year. A maximum of one (1) week of any vacation time
unused in a calendar year may be carried over into the next immediately
following calendar year.
11. Retirement. For purposes of this Agreement, Employee shall be
entitled to retire as an employee of Employer on or after the first to occur of
the following events:
(a) Employee attains the age of sixty (60) years;
(b) the combination of Employee's age and years of service
with Employer, UGI, or any company affiliated with either
Employer or UGI, equals seventy (70). For purposes of
this subparagraph, a year of service is defined as a
twelve consecutive month period in which the Employee has
at least one thousand (1,000) hours of service, measured
by the first of Employee's initial employment dates with
either Employer, UGI or any company affiliated with either
Employer or UGI.
The Employee shall be required to give the Employer at least 90 days prior
written notice of the Employee's date of retirement.
12. Effective Date. This Agreement shall become effective upon the
date on which both its execution by and delivery to both parties hereto have
occurred (the "Effective Date"). On the Effective Date, this Agreement shall
supersede all previously executed employment agreements between Employee and
UTI, Employer or any
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Subsidiary or affiliate of UTI or Employer, which agreements shall then
terminate and be of no further force and effect.
13. Legal Fees. Notwithstanding anything in this Agreement to the
contrary, Employer and Employee agree that in the event litigation (including
any arbitration proceeding) arises concerning the enforcement of the terms and
conditions of this Agreement, all reasonable attorney's fees and other expenses
incurred by the prevailing party in such litigation shall be paid by the
opposing party.
14. Arbitration. Either Employee or Employer may demand that any
dispute hereunder be resolved by binding arbitration. Notice of the demand for
arbitration by either party shall be given in writing to the other party to
this Agreement. Upon such demand, the dispute will be settled by arbitration
in Philadelphia, Pennsylvania, before a single arbitrator pursuant to the rules
of the American Arbitration Association. The arbitrator shall be selected by
the joint agreement of the parties, but if they do not so agree within twenty
(20) days after the date of the notice referred to above, the selection shall
be made pursuant to the rules of, and from the panels of arbitrators maintained
by, such Association. Any award rendered by the arbitrator shall be conclusive
and binding upon the parties hereto; provided, however, that any such award
shall be accompanied by a written opinion of the arbitrator giving the reasons
for the award. The expenses of the arbitrator shall be equally shared.
Nothing herein shall prevent the parties from settling any dispute by mutual
agreement at any time.
15. Contents of Agreement, Parties in Interest, Assignment, etc.
This Agreement sets forth the entire understanding of the parties hereto with
respect to the subject matter hereof. All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective heirs,
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representatives, successors and assigns of the parties hereto, except that the
duties and responsibilities of Employee hereunder which are of a personal
nature shall neither be assigned nor transferred in whole or in part by the
Employee. This Agreement shall not be amended except by written instrument
duly executed by Employer and Employee.
16. Severability. If any term or provision of this Agreement shall
be held to be invalid or unenforceable in any jurisdiction for any reason, such
term or provision shall, as to such jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without invalidating the remaining terms
and provisions hereof, and this Agreement shall be construed in such
jurisdiction as if such invalid or unenforceable term or provision had not been
contained herein and all of its provisions shall remain in full force and
effect in every other jurisdiction without regard to such invalidity or
unenforceability.
17. Governing Law. This Agreement shall be construed, interpreted
and enforced in accordance with the laws of the Commonwealth of Oklahoma
without giving effect to the principles of conflicts of law thereof.
18. Notices. All notices, consents, waivers or communications which
are required or permitted hereunder shall be sufficient if given in writing and
delivered personally or by registered or certified mail, return receipt
requested, postage prepaid, if to Employer at Suite 112, 000 Xxxxx Xxxx Xxxxx,
Xxxxx, Xxxxxxxxxxxx 00000, Attention: President, or, if to Employee, to his or
her address as listed on Employer's records (or to such other respective
addressee or address as shall be set forth in a notice given in the same
manner). All such notices shall be deemed to have been given on the date
delivered or mailed in the manner provided above.
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IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
TRIAD DRILLING COMPANY
By: /s/ Xxxxxx X. Drum
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Name: Xxxxxx X. Drum
Title: Chairman
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
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