EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "Agreement") is made the 20th
day of March, 1997, by and between National Energy Group, Inc., a Delaware
corporation acting by and through its hereunto duly authorized officer (the
"Company"), and Xxxxxx X. Xxxxxx (the "Executive").
WHEREAS, the Executive is presently in the employ of the Company in the
capacity of Vice President and General Counsel, 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 Vice
President and General Counsel 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 Vice President and General Counsel 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 Vice President and General
Counsel and shall serve with the necessary power and authority commensurate
with such position and consistent with
the manner with which the Executive has carried out the office in the past.
If the Company removes the Executive from the office of the Vice President
and General Counsel 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
Vice President and General Counsel 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.
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
ANNUAL PERIOD BASE SALARY ANNUAL BONUS
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For the one year period following 100% of the average of the Executive's 100% of the average of the
effective date of a Change of Control annual base salary in effect immediately bonuses paid to the Executive for
prior to the Change in Control and of the each of the three fiscal years
Executive's annual base salary for each of before the Change in Control
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
effective date of a Change of Control annual base salary on the date that is one bonuses paid to the Executive for
year after the Change in Control and of the the three immediately preceding
Executive's annual base salary for each of fiscal years
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
date of a Change of Control annual base salary on the date that is two bonuses paid to the Executive for
years after the Change in Control and of the three immediately preceding
the Executive's annual base salary for fiscal 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.
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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.
(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 (a)
multiplied by the number three (3) for the purposes of determining the
lump sum cash severance payment due under this Section 7(a).
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(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.
(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.
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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, 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 66 2/3% 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 Vice President and
General Counsel of the Company; or
(b) If the Executive shall have been convicted of any felony offense
during the term of this Agreement.
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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 Vice President and General Counsel
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; or
(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 Vice President and General Counsel 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.
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(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.
(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.
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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: /s/ MILES X. XXXXXX
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Miles X. Xxxxxx
President and Chief Executive Officer
1400 One Energy Square
0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
(000) 000-0000
(000) 000-0000 (FAX)
EXECUTIVE:
/s/ XXXXXX X. XXXXXX
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Xxxxxx X. Xxxxxx
0000 Xxxxxxx
Xxxxxx, Xxxxx 00000
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