EXHIBIT 10.3
EMPLOYMENT AND STOCK OWNERSHIP AGREEMENT
BY AND BETWEEN
ENERGY PARTNERS, LTD.
AND
XXXX X. XXXXX
THIS EMPLOYMENT AND STOCK OWNERSHIP AGREEMENT (the
"Agreement"), entered into in Houston, Texas on this 15th day of January , 2002,
by and between an individual of the full age of majority domiciled in Xxxxxx
County, State of Texas (hereinafter called "Employee") and Energy Partners,
Ltd., a corporation organized and existing under the laws of the State of
Delaware (hereinafter called "Company"), represented herein by its duly
authorized President, Xxxxxxx X. Xxxxxxxx.
1. TERMS AND CONDITIONS OF EMPLOYMENT.
1.1 Length Of Employment. In consideration for the compensation
and other benefits set forth in Section 1.2 and other
provisions of this Agreement, the Company agrees to employ and
Employee agrees to be employed by the Company for a period of
three (3) years from the date of execution of this Agreement
(the "Term"), unless Employee's employment hereunder sooner
terminates pursuant to Section 1.4, 1.5, 1.6 or 1.7.
Employee's employment shall be subject to the other terms and
conditions of this Agreement. Employee agrees to devote his
full time, attention and energies to, and use his best ability
and fidelity in the performance of, the duties attaching to
his employment.
1.2 Consideration. As compensation, Employee will receive an
annual salary of $174,000 payable in accordance with the
normal payroll practices of Company. Such salary will be
reviewed annually by the Compensation Committee of the Board
of Directors of Company, at the same time that salary is
reviewed by the Compensation Committee for other officers of
Company, for the purpose of considering increases in such
salary. In no event will such salary be reduced below the
amount set forth above. Company will reimburse Employee for
reasonable moving expenses should Employee elect or be asked
and agree to relocate to New Orleans, provided that nothing
contained herein shall require Employee to relocate his
principal residence from Houston, Texas as a condition of
continuing employment hereunder, except for reasonable travel.
In addition, Employee will participate with other senior
executives of Company in compensation and benefit plans in
effect from time to time, including the 401(k) plan and bonus
program, and health and dental benefits. Employee will be
entitled to vacation time in accordance with Company policy.
1.3 Indemnity. The Company will indemnify and hold harmless
Employee from and against any and all claims and liabilities
to which Employee may be or become subject by reason of
Employee now or hereafter being an employee, officer and/or
director of the Company or any of its subsidiaries and/or by
reason of Employee's alleged acts or omissions, whether or not
Employee continues to be such employee, officer and/or
director at the time any such claim or liability is asserted,
to the fullest extent permitted by Delaware or other
applicable law and the Company's or applicable subsidiary's
charter documents and bylaws as in effect from time to time,
and will reimburse Employee for all legal and other expenses
reasonably incurred by Employee in connection therewith to the
extent permitted.
1.4 Termination For Cause. Employee's employment and the Company's
obligations under this Agreement may be terminated by the
Company for "Cause" immediately and without notice although
the term of this Agreement has not expired. "Cause" is defined
as (i) Employee's conviction of a felony, (ii) dishonesty,
(iii) failure to perform his duties, (iv) insubordination, (v)
theft, (vi) wrongful disclosure of confidential information,
(vii) conflict of interest that is undisclosed and not Board
approved, (viii) violation of written Company policies
applicable to all employees, or (ix) engaging in any manner,
directly or indirectly, in a business that competes with the
business of the Company in any capacity that is undisclosed
and not Board approved. The determination whether the
Agreement may be terminated as set forth in this Section 1.4
will be in the Company's sole discretion, provided that in
case of termination as provided in clauses (iii), (vii) or
(ix) above, Employee shall be given written notice of the
events deemed to be "Cause" and shall be given thirty (30)
days to cure such events. Within thirty (30) days of execution
of this Agreement, Employee will prepare and deliver to the
Company's President a written disclosure statement of all
business relationships in which he may be engaged in any
manner. If employee is terminated for Cause, (i) all
compensation payable under this Agreement shall cease as of
the date of termination of employment and (ii) all options
described in Section 2.1 which have vested as set forth in
Section 1.6 or 2.1 prior to termination for Cause will be the
property of and exercisable by Employee for a thirty (30) day
period following termination (but in no event beyond the end
of the term of the option), but any option rights that have
not vested prior to termination for Cause will be forfeited.
1.5 Employee's Termination Upon Death Or Disability. Employee's
employment and Company's obligations under this Agreement will
terminate automatically, effective immediately and without any
notice, upon Employee's death or a "determination of
disability." For purposes of this Agreement disability shall
mean Employee's inability because of illness or other physical
or mental disability to perform his duties, with or without
reasonable accommodation, for a period of ninety (90) calendar
days (whether consecutive or not) during any period of 360
calendar days . A "determination of disability" will be made
by the Company, in its sole reasonable discretion, in
consultation with a physician satisfactory to Company,
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and Employee will cooperate with the efforts to make such
determination. Any such determination will be conclusive and
binding on the parties. Any determination of disability under
this Section 1.5 is not intended to alter any benefits any
party may be entitled to receive under any long-term
disability insurance policy maintained by either Company or
Employee with respect to Employee, which benefits will be
governed solely by the terms of any such insurance policy. If
Employee is terminated due to death or a determination of
disability, (i) all compensation payable under this Agreement
shall cease as of the date of the death of Employee or the
date of the determination of disability and (ii) options
described in Section 2.1 which have vested as set forth in
Section 1.6 or 2.1 prior to termination will be the property
of Employee and will remain exercisable by Employee for
thirty-six (36) months following the date of death or
determination of disability (but in no event beyond the end of
the term of the option), but any option rights that have not
vested prior to termination will be forfeited.
1.6 Change Of Control. If a Change of Control (as defined in
Company's 2000 Long Term Stock Incentive Plan ("Stock
Incentive Plan")) occurs, all options, bonuses and other
incentive awards granted to Employee pursuant to this
Agreement or otherwise (i) which have not vested prior to such
Change of Control and (ii) as to which there are no conditions
for vesting other than continued employment with Company, will
upon such Change of Control become fully vested, will (in the
case of options) become fully exercisable and (in the case of
all such stock options, bonuses and other incentive awards)
all restrictions relating to vesting will lapse. If employee
is terminated without Cause in connection with the Change of
Control, Company's obligation to provide compensation under
this Agreement shall cease after a 90 day notice period and
the provisions of Section 1.8 and 1.9 shall not apply.
1.7 Voluntary Termination by Employee. If Employee voluntarily
terminates employment with Company during the term of this
Agreement, (i) all compensation payable under this Agreement
shall cease as of the date of termination of employment and
(ii) all options described in Section 2.1 which have vested as
set forth in Section 1.6 or 2.1 prior to termination will be
the property of and exercisable by Employee for a thirty (30)
day period following termination (but in no event beyond the
end of the term of the option), but any option rights that
have not vested prior to termination will be forfeited.
1.8 Non-Competition. Employee and Company acknowledge that the
Company is and has been engaged in the business of exploration
and production of oil and gas related activities in the Gulf
of Mexico and that the Company will provide Employee with
confidential information regarding the Company and the
Company's business. In return for this and other consideration
provided under this Agreement, for a period of two (2) years
following Employee's termination of employment with the
Company, Employee agrees that he will not compete, directly or
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through any instrumentality, with the Company by engaging in
any activity whatsoever as to any of the lease blocks and
leases in which the Company owns an interest, and prospects of
the Company which are subject to confidentiality agreements,
on the date of termination. The Company will furnish Employee
a list of such blocks, leases and prospects promptly upon
termination of employment.
1.9 Non-Solicitation. Employee agrees that, for a period of two
(2) years following Employee's termination of employment with
the Company, he shall not, directly or indirectly, (a) solicit
or otherwise attempt to induce any person who is on the date
of termination an employee of the Company or any of its
subsidiaries or affiliates to discontinue his or her
relationship with the Company or any of its subsidiaries or
affiliates or to solicit any such employee of the Company to
enter into an employment relationship with any person or
entity or to solicit any such employee of the Company to
accept employment by or to enter into any form of business
relationship with Employee or any person or entity affiliated
or controlled by Employee or (b) cause or attempt to cause any
third party then under contract with the Company to modify its
business relationship with the Company in any manner adverse
to the Company.
2. COMPANY SECURITIES.
All shares of Company common stock, preferred stock, warrants
and earnout shares received or to be received by Employee in connection
with the Agreement and Plan of Merger dated as of December 16, 2001, as
it may be amended from time to time, between the Company and
Xxxx-Xxxxxxx Oil Company and all stock options granted by Employee in
accordance with the first sentence of Section 2.1, shall be securities
subject to this Section.
2.1 Receipt Of Options. Subject to the terms and conditions of
this Agreement and the terms and conditions of Company's Stock
Incentive Plan, the Company's President will recommend to
Company's Compensation Committee that Employee receive an
option to purchase 75,000 shares of common stock of Company at
a per share exercise price equal to the closing price on the
date of grant. Such option will vest and become exercisable in
three installments as follows: one-third on the first
anniversary of the date of this Agreement, one-third on the
second anniversary of the date of this Agreement, and the
remaining one-third on the third anniversary of the date of
this Agreement. Employee must be employed by Company to vest
in accordance with this Section. Employee must exercise each
option within 10 years from the date of this Agreement or the
option will lapse, unless it shall sooner lapse pursuant to
Section 1.4, 1.5 or 1.7 or the terms of the applicable option
agreement. Employee will be eligible for additional options as
determined under the Stock Incentive Plan beginning in 2002.
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2.2 Transfer Of Shares. Subject to compliance with Section 3.2,
Employee may sell, assign, pledge, transfer or otherwise
dispose of ("dispose") securities subject to this Agreement
(other than earnout rights, which may not be disposed of) as
follows: without prior approval of the Compensation Committee
of the Company, (i) Employee may not dispose of any securities
prior to November 7, 2002; (ii) Employee may dispose of
one-half of each class of securities on or after November 7,
2002 and prior to November 7, 2003; and (iii) Employee may
dispose of all of such securities on or after November 7,
2003. For purposes of clause (ii) of the preceding sentence,
shares of Company common stock issuable upon exercise of
vested stock options shall and, at Employee's option in lieu
of disposing of preferred stock or warrants, and so long as
such securities are at the time "in the money," shares of
Company common stock issuable upon conversion or exercise
thereof may, be included in determining the number of shares
of Company common stock Employee may dispose of. This Section
2.2 shall not apply to transfers by Employee to his immediate
family members, to a trust, family partnership or similar
family-related or family-controlled entity for the benefit of
his family members, or to a distributee under the will or
transferee under the laws of intestate succession of Employee.
2.3 Restrictions On Transfer. Any transfer of securities made in
violation of Section 2.2 of this Agreement ("transfer") or
attempted transfer will be null and void and of no force or
effect whatever. Any purported transferee will not be deemed
to be a shareholder of Company and will not be entitled to
receive a new certificate or any distributions on or with
respect to the securities owned by Employee. Employee hereby
acknowledges the reasonableness of the restrictions on
transfer imposed by this Agreement in view of Company's
purposes and the relationship of Employee with Company.
Accordingly, the restrictions on transfer of securities
contained herein will be specifically enforceable. Employee
hereby further agrees to hold Company, each shareholder and
each shareholder's successors and assigns wholly and
completely harmless from any cost, liability or damage
(including, without limitation, liabilities for income taxes
and costs of enforcing this indemnity) incurred by any of such
indemnified persons as a result of a transfer or attempted
transfer.
2.4 Legend. In addition to other legends required under applicable
securities laws, the securities that are subject to this
Agreement shall contain the following legend:
"This Security is also subject to restrictions on
transfer contained in an agreement between the issuer
and such holder."
All securities hereafter issued to Employee or to
Employee's beneficiaries, heirs, successors in interest,
representatives or assigns with respect to any securities
subject to this Agreement, whether by stock split, stock
dividend or otherwise, will bear the same legend and be
subject to all the terms and conditions hereof.
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3. MISCELLANEOUS.
3.1 Entire Agreement. Employee acknowledges that he has
concurrently executed the Registration Rights Agreement (as
set forth in Exhibit A attached hereto). Without limiting the
generality of the foregoing, this Agreement embodies the
entire agreement between the parties hereto regarding the
subject matter hereof, and will supersede any and all prior
agreements whether written or oral relating to employment
and/or securities of Company owned by Employee, and will be
binding upon Employee and Employee's heirs, legatees, legal
representatives, successors, donees, transferees and assigns,
and Employee does hereby authorize and obligate Employee's
executors, heirs and legatees to comply with the terms of this
Agreement. The parties will not be bound by or be liable for
any statement, representation, promise, inducement or
understanding of any kind or nature regarding the subject
matter hereof which is not set forth herein. No changes,
amendments or modifications of any of the terms or conditions
of this document will be valid unless reduced to writing and
signed by all parties hereto, Company being represented by its
President or his designee.
3.2 Compliance With Applicable Law. Notwithstanding any provision
of this Agreement to the contrary, the completion of any
transfer or sale of any security of Company (or any rights to
acquire such shares or securities convertible into, or
exchangeable for, such shares) by Employee will be subject to
compliance with any applicable statute, law, regulation,
ordinance, rule, judgment, rule of common law, order, decree,
award, governmental approval, concession, grant, franchise,
license. agreements, directive, guideline, policy,
requirement, or other governmental restriction or any similar
form of decision of, or determination by, or any
interpretation or administration of any of the foregoing by,
any applicable governmental authority (collectively,
"Applicable Law"). Company and Employee will cooperate with
each other and will take all such action, including without
limitation obtaining all governmental approvals required to
comply with Applicable Law in connection with the sale or
transfer of any security of Company (or any rights to acquire
such shares or securities convertible into, or exchangeable
for, such shares). Company, Employee and each of the other
shareholders of Company will bear their own costs and expenses
in connection with obtaining any such governmental approvals.
3.3 Severability. Each provision of this Agreement is intended to
be severable. In the event that any one or more of the
provisions contained in this Agreement will for any reason be
held to be invalid, illegal, or unenforceable, such holding
will not affect the validity or enforceability of any other
provision of this Agreement, and this Agreement will be
construed as if such invalid, illegal, or unenforceable
provision had never been contained herein; provided, however,
that no provision will be severed if it is clearly apparent
under the circumstances that the parties would not have
entered into this Agreement without such provision.
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3.4 APPLICABLE LAW. THIS DOCUMENT WILL BE CONSTRUED FOR ALL
PURPOSES AS A TEXAS DOCUMENT AND WILL BE INTERPRETED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
3.5 Number and Gender. As used herein, the singular will include
the plural and vice versa and words used in one gender will
include all others as appropriate.
3.6 Additional Documents. The parties hereto agree to execute
whatever documents or instruments and to perform whatever acts
may be reasonably required to fulfill the requirements and/or
intents hereof.
3.7 Legal Assistance. The parties hereto have each consulted with
legal counsel or have had the opportunity to consult with
legal counsel regarding the terms and conditions of this
Agreement.
3.8 Headings. Section headings and other headings contained in
this Agreement are for reference purposes only and will not
affect in any way the meaning or interpretation of this
Agreement.
3.9 Arbitration. Any dispute, controversy or claim arising out of
or in relation to or in connection with this Agreement,
including without limitation any dispute as to the
construction, validity, interpretation, enforceability or
breach of this Agreement, shall be exclusively and finally
settled by arbitration in accordance with this Section 3.9.
Either party may submit such a dispute, controversy or claim
to arbitration by notice to the other party and the
administrator for the American Arbitration Association
("AAA"). The arbitration proceedings shall be conducted in New
Orleans, Louisiana, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association as
in effect on the date hereof. The arbitration shall be heard
and determined by three arbitrators. Each side shall appoint
an arbitrator of its or his choice within twenty (20) days of
the submission of the notice of arbitration. The
party-appointed arbitrators shall in turn appoint a presiding
arbitrator for the tribunal within twenty (20) days following
the appointment of the second party-appointed arbitrator. If
the party-appointed arbitrators cannot reach agreement on a
presiding arbitrator for the tribunal and/or one party fails
to appoint its party-appointed arbitrator within the
applicable period, the AAA shall act as appointing authority
to appoint an independent arbitrator with at least ten (10)
years experience in the legal and/or commercial aspects of the
petroleum exploration and production industry. None of the
arbitrators shall have been an employee or consultant to
either party to this Agreement or any of their respective
affiliates, or have any financial interest in the dispute,
controversy or claim. All decisions of the arbitral tribunal
shall be by majority vote. The arbitrators may not award
consequential, punitive or similar damages. Expenses in
connection with
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the arbitration and the compensation and expenses of the
arbitrators shall be borne in such manner as may be specified
in the arbitral award. Privileges protecting attorney-client
communications and attorney work product from compelled
disclosure or use in evidence, as recognized by and under the
Federal Rules of Civil Procedure, shall apply to and be
binding in any arbitration proceeding conducted under this
Section 3.9. This Section 3.9 does not apply to any dispute,
controversy or claim in which the claimant seeks injunctive,
declaratory or other equitable relief, and each of Company and
Employee reserves the right to bring such action in court,
which Company and Employee agree shall be exclusively the U.S.
Federal Courts sitting in the Eastern District of Louisiana
and each party irrevocably consents to personal jurisdiction
in any and all such tribunals.
3.10 Amendments. This Agreement may be amended or modified in all
respects at any time but only by an instrument in writing
executed by the parties hereto.
3.11 Waiver. The failure by any party to enforce any of its rights
hereunder will not be deemed to be a waiver of such rights,
unless such waiver is an express written waiver which has been
signed by the waiving party, and in the case of the Company,
expressly approved by its Board of Directors. Waiver of any
one breach will not be deemed to be a waiver of any other
breach.
3.12 Counterpart Execution. This Agreement may be executed in
separate counterparts, with the same effect as if the parties
hereto had signed the same document. Counterparts so executed
and delivered shall be deemed to be an original, shall be
construed together and shall constitute one Agreement.
[SIGNATURES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have set forth their
hands on the day, month and year first above written in multiple originals, each
of which shall have the same force and effect as if it were the sole original.
WITNESSES: ENERGY PARTNERS, LTD.
By:
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Xxxxxxx X. Xxxxxxxx
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Employee:
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