XXXXXXX XXXXX
-EMPLOYMENT AGREEMENT-
PAGE 1
--------------------------------------------------------------------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into this 1st
day of September, 2000 by and between Xxxxxxx Xxxxx ("Employee") and Playa
Minerals & Energy, Inc. ("Company).
RECITAL
This Agreement is made and entered into with reference to the following facts
and objectives:
The Company desires to establish its right to the services of Employee in the
capacities described below, on the terms and conditions hereinafter set forth,
and Employee is willing to accept such employment on such terms and conditions.
Therefore, in consideration of the mutual agreements hereinafter set forth,
Employee and Company have agreed and do hereby agree as follows:
AGREEMENT
Section 1: DUTIES
The Company does hereby hire, engage, and employ Employee as the Chairman of the
Company, and Employee does hereby accept and agree to such hiring, engagement
and employment. Employee shall serve Company in such positions, diligently,
competently, and in conformity with provisions of this Agreement and the
corporate policies of Company as they presently exist, and as such policies may
be amended, modified, changed, or adopted during the Period of Employment, as
hereinafter defined.
Subject to specific elaboration by the Company's Board of Directors as to the
duties (which shall be consistent herewith and with Employee's offices provided
for hereunder) that are to be performed by Employee and the manner in which such
duties are to be performed, the duties of Employee shall entail those duties
customarily performed by a Chairman of the Company with a sales volume and the
number of employees commensurate with those of Company. .
Throughout the Period of Employment, Employee shall devote part of his time,
energy, and skill to the performance of his duties for Company. The foregoing
notwithstanding, Employee shall be permitted to (1) engage in charitable and
community affairs, (ii) act as a officer and/or director of any corporations or
organizations outside Company and
PAGE 2
--------------------------------------------------------------------------------
receive compensation therefore, and (iii) to make investments of any character
in any business or businesses not in competition with Company and to manage such
investments.
Employee shall exercise due diligence and care in the performance of his duties
for and the fulfillment of his obligations to Company under this Agreement.
The Company shall furnish Employee with office, secretarial and other facilities
and services as are reasonably necessary or appropriate for the performance of
Employee's duties hereunder and consistent with his positions as to the Chairman
of the Company.
Section 2: PERIOD OF EMPLOYMENT
The Period of Employment shall, unless sooner terminated as provided herein, be
five (5) years commencing on the 1st day of September, 2000 (the "Effective
Date") and ending with the close of business on the 31st day of August, 2006
(the "Employment Term")
The Employment Term shall automatically be extended one (1) year (the "Renewal
Period") unless written notification is given by either party to the other at
least six (6) months prior to the end of the Period of Employment. For the
purposes of this Agreement, the Period of Employment shall be the Employment
Term plus any and all Renewal Periods.
Section 3: COMPENSATION
1) BASE SALARY. During the Period of Employment, Company shall pay Employee,
and Employee agrees to accept from Company, in payment for his services a
base salary of two hundred thousand dollars ($ 200,000.00) per year ("Base
Salary"), payable in equal semi-monthly installments or at such other time
or times as Employee and Company shall agree. Upward adjustment to the Base
Salary shall be considered by Company' not less frequently than annually.
Company's Board of Directors at any time or times may, but shall have no
obligation to, supplement Employee's salary by such bonuses and/or other
special payments and benefits as Company in its sole and absolute discretion
may determine.
2) ANNUAL INCENTIVE COMPENSATION. As an incentive to increase the reserves of
the company and maximize cash flow of existing assets, an annual bonus shall
be computed each year based on increases in the proved reserve base of
properties on each January 1St owned by the company as of the prior year.
New acquisitions by the company shall not be considered as part of the
increase in
PAGE 3
--------------------------------------------------------------------------------
reserve base for purposes of the bonus calculation. Increases in reserve
base shall be those increases in BOE equivalent over the reserve report for
the previous year. The reserve increases must be documented by independent
third party engineers hired by the company.
The bonus shall be computed by multiplying the PV 10% value of the current
year's increase over the prior year by a factor of 3 % to the net increase
in cash value. The bonus shall then be paid as decided between the Directors
and Xx. Xxxxx either in cash, stock, or a combination thereof.
3) EQUITY COMPENSATION. Employee shall be entitled to participate in an
equity-based plan or arrangement, including but not limited to, stock
options, stock appreciation rights, restricted stock, or other equity
incentive plan or arrangement for senior management employees of Company,
including Employee, or for Employee alone, in accordance with the terms,
conditions, and provisions as the same may be changed, amended, or
terminated, from time to time.
4) SIGN-ON BONUS. Company has granted Employee 175,000 number of Discounted
Stock Options with a strike price of $.02. These options were immediately
vested. However, these options were not exercisable until six months from
grant date to insure Employee of being taxed at exercise rather than at
grant.
Anything in this Agreement or in such plan or arrangement to the contrary
notwithstanding, the inclusion in such plan or arrangement of any
provision(s) addressing participation by Employee in such plan or arrangement
for a period of years shall not be interpreted as a promise of continued
employment by Company for such period of years or any other period of time.
Section 4: BENEFITS
1) HEALTH AND WELFARE. During the Period of Employment, and for additional
period or periods as specified under Section 6(b) ("Death or Disability -
Termination Due to Death or Disability"), Employee shall participate in all
health and welfare benefit plans and programs generally available to all
other senior management employees of Company or to all employees of Company,
subject to any restrictions specified in such plans and to receive such
other benefits and conditions of employment as are provided to all other
senior officers or executives of Company as of the date of this Agreement.
2) FRINGE BENEFITS. During the Period of Employment, Employee shall be entitled
to participate in all fringe benefit plans and programs generally available
to all other
PAGE 4
--------------------------------------------------------------------------------
senior management employees of Company or to all employees of Company,
subject to any restrictions specified in such plans and to receive such
other benefits and conditions of employment as are provided to all other
senior officers or executives of Company as of the date of this Agreement
3) BUSINESS EXPENSES. During the Period of Employment, Company shall pay, or in
case paid by Employee in the first instance reimburse Employee for, any and
all necessary, customary, and usual expenses incurred by his in connection
with the performance of his duties hereunder, including, without limitation,
all traveling expenses, and entertainment expenses, upon submission of
appropriate vouchers and documentation.
Section 5: NO OTHER BENEFITS OR COMPENSATION
Employee, as a result of his employment by Company shall be entitled to only the
compensation and benefits provided for in this Agreement, subject to the terms
thereof and no others.
Section 6: DEATH OR DISABILITY
1) DEFINITION OF PERMANENTLY DISABLED AND PERMANENT DISABILITY. For purposes of
this Agreement, the terms "Permanently Disabled" and "Permanent Disability"
shall mean Employee's inability, because of physical or mental illness or
injury, to perform substantially all of his customary duties pursuant to
this Agreement, and the continuation of such disabled condition for a period
of ninety (90) continuous days, or for not less than one hundred eighty
(180) days during any continuous twenty-four (24) month period. Whether
Employee is Permanently Disabled shall be certified to Company by a
Qualified Physician (as hereinafter defined), or if requested by Employee a
panel of three Qualified Physicians. If Employee requests such a panel,
Employee and Company shall each select a Qualified Physician who together
shall then select a third Qualified Physician. The determination of the
individual Qualified Physician or the panel, as the case may be, shall be
binding and conclusive for all purposes. As used herein, the term "Qualified
Physician' shall mean any medical doctor who is licensed to practice
medicine in the State of Texas. Employee and Company may in any instance,
and in lieu of a determination by a Qualified Physician or panel of
Qualified Physicians, agree between themselves that Employee is Permanently
Disabled.
2) The terms Permanent Disability and Permanently Disabled as used herein may
have meanings different from those used in any disability insurance policy
or
PAGE 5
--------------------------------------------------------------------------------
program maintained by Employee or Company.
3) VESTING ON DEATH OR DISABILITY. Upon any termination of this Agreement and
Employee's employment hereunder by reason of Employee's death or Permanent
Disability, as defined in Section 6(a) ("Death or Disability - Definition of
Permanently Disabled and Permanent Disability"), provided that the terms and
provisions of such plan and applicable law permit, any deferred or unvested
portion of any award made to Employee in respect of any retirement, pension,
profit sharing, long term incentive, and similar plans automatically shall
become fully vested in Employee shall be nonforfeitable, and shall continue
in effect and be redeemable by or payable to Employee (or his designated
beneficiary or estate) at the time and on the same conditions as would have
applied had Employee's employment not been so terminated.
4) TERMINATION DUE TO DEATH OR DISABILITY. If Employee dies or becomes
Permanently Disabled during the Period of Employment, Employee's employment
shall automatically cease and terminate as of the date of Employee's death.
5) In the case of Employee's death or Permanent Disability, Company shall pay
Employee or Employee's estate or designated beneficiary a cash lump-sum
payment of:
i. any Base Salary and any incentive compensation accrued to
Employee as di the date of Employee's death, or in the case of
Employee's Permanent Disability, as of Employee's disability
date;
ii. Plus, 3.00 times the sum of:
a) Employee's Base Salary in effect at the time of
Employee's death or Permanent Disability;
b) The greater of target annual incentive compensation in effect at
the time of Employee's death or Permanent Disability or the
average of the last two (2) years' bonus/annual incentive
payout;
iii. unused vacation and/or other payments under Section 4; and
iv. acceleration of all vesting on any long-term incentives.
In the event Employee's employment is terminated on account of Employee's
Permanent Disability, he shall, so long as his Permanent Disability
continues,
PAGE 6
--------------------------------------------------------------------------------
remain eligible for all benefits provided under any long-term disability
programs of Company in effect at the time of such termination, subject to
the terms and conditions of any such programs, as the same may be changed,
modified, or terminated for or with respect to all senior management
personnel of Company.
Section 7: TERMINATION BY THE COMPANY
1. TERMINATION FOR CAUSE. The Company may, by providing written notice
to Employee, terminate the employment of Employee under this
Agreement for "cause" at any time. The term "Cause' for purpose of
this Agreement shall mean:
i. Employee's conviction of or entrance of a plea of non contendere to a
felony or to any other crime, which other crime is punishable by
incarceration for a period of one (1) year or longer, or other
conduct of a criminal nature that may have an adverse impact on
Company's reputation and standing in the community; or
ii. fraudulent conduct by Employee in connection with the business
affairs of Company, regardless of whether said conduct is
designed to defraud Company or others; or
iii. theft, embezzlement, or other criminal misappropriation of
funds by Employee, whether from Company or any other person; or
iv. any breach of or Employee's failure to fulfill any of
Employee's obligations, covenants, agreements, or duties under
this Agreement
If Employee's employment is terminated for Cause, the termination shall take
effect upon on the effective date (pursuant to Section 20 ("Notices")) of
written notice of such termination to Employee.
In the event Employee's employment is terminated for Cause, Company shall
have no obligation to pay Employee any amounts, including, but not limited
to Base Salary, for or with respect to any period after the effective date
of the termination of Employee's employment for Cause.
If Company attempts to terminate Employee's employment pursuant to this
Section 7(i) and it is ultimately determined that Company lacked Cause, the
provisions of Section 7(ii)("Termination by Company-Termination Without
Cause") shall apply, and Employee's sole and exclusive remedy for such
breach of the Agreement by Company and/or any other damages that Employee
shall have suffered or incurred
PAGE 7
--------------------------------------------------------------------------------
of any nature whatsoever, shall be to receive the payments expressly called
for by Section 7(ii)("Termination by Company-Termination Without Cause")
with interest on any past due payments at the rate of eight percent (8%) per
year from the date on which the applicable payment would have been made
pursuant to Section 7 ("Termination by Company-Termination Without Cause")
plus Employee's costs and expenses (including but not limited to reasonable
attorneys' fees) incurred in connection with such dispute.
2. TERMINATION WITHOUT CAUSE. The Company may, with or without reason,
terminate Employee's employment under this Agreement without Cause at any
time, by providing Employee thirty (30) days prior written notice of such
termination. If Employee's employment is terminated pursuant to this Section
7 Employee shall not be obligated to render services to the company
following the effective date of such notice. As Company's sole and exclusive
obligation and duty to Employee resulting directly or indirectly from the
termination of Employee's employment with Company and in full and complete
settlement of any and all claims that Employee may have or claim to have
arising directly or indirectly out of the termination of his employment with
Company, Company shall pay Employee a cash lump sum payment of:
i. any Base Salary and any incentive compensation accrued to
Employee as of the date of Employee's termination.
ii. Plus, 3.00 times the sum of:
a) Employee's Base Salary in effect at the time of
Employee's termination;
b) The greater of target annual incentive compensation in effect at
the time of Employee's termination or the average of the last
two (2) yearn' bonus/annual incentive payout; and
iv. unused vacation and/or other payments under Section 4, and;
iv. acceleration of all vesting on any long-term incentives.
The Company shall allow Employee to continue participation in Company's
group health insurance plan at Company's expense until the-earlier of:
i. Employee is gainfully employed by another employer; or
ii. the end of the Period of Employment had Employee not so been
terminated.
PAGE 8
--------------------------------------------------------------------------------
Section 8: TERMINATION BY EMPLOYEE
1. TERMINATION-WITHOUT GOOD REASON. Employee shall have the right to terminate
this Agreement and his employment hereunder at any time upon thirty (30)
days prior written notice of such termination to Company. Upon the effective
date of any such termination all obligations and rights of Employee and
Company hereunder shall terminate and cease.
In the event Employee's employment is terminated for without Good Reason,
Company shall have no obligation to pay Employee any amounts, including,
but not limited to Base Salary, for or with respect to any period after the
effective date of the termination of Employee's employment without Good
Reason.
2. TERMINATION-WITH GOOD REASON. The Employee may resign for Good
Reason, if Company:
i. requires Employee to relocate his home, without Employee's
consent; or
ii. fails to provide Employee with the compensation and benefits
called for by this Agreement; or
iii. assigns Employee to a lower organizational level than the level at
which he is on the date of this Agreement assigned, or
substantially diminishes Employee's assignment, duties,
responsibilities, or operating authority from those specified in
Section 1 ("Duties"); or
iv. breaches this Agreement.
Employee shall have the right to terminate this Agreement and his
employment hereunder for Good Reason, if, thirty (30) days after the
effective date of Employee's notice to Company of such circumstances
constituting Good Reason, such circumstances continue to exist, and for all
purposes of this Agreement any such termination of this Agreement by
Employee for Good Reason shall have the same effects under this Agreement
as the termination of Employee's employment without Cause per Section 7(2)
("Termination by Company-Termination Without Cause").
PAGE 9
--------------------------------------------------------------------------------
Section 9: CHANGE-OF-CONTROL
The Employee may resign due to Change-of-Control of Company following the
occurrence of any one (1) events:
i. a tender offer or exchange is made and consummated for ownership
of securities of Company representing twenty-five (25%) percent
or more of the combined voting power of the then outstanding
voting securities, AND at any time during any twelve (12) month-
period, Company directors in office at the beginning of such
period cease to constitute a majority of Company's Board of
Directors, disregarding any vacancies occurring during such
period by reasons of death or disability but deeming any.
individual whose election; or nomination for election, by
Company's physician and subscriber members, to fill such vacancy
to have been in office at the beginning of such one (1) year
prior; or
ii. a merger or consolidation occurs to which Company is party,
whether or not Company is the surviving entity; or
iii. is divested, by sale, closure, liquidation, foreclosure, or other
means, of fifty percent (50%) of its assets or business as now
held or conducted.
iv. the stockholders of the Company approve a plan of complete
liquidation of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or
substantially all of the Company's assets (or any transaction
having a similar effect), other than a sale or disposition by the
Company of all or substantially all of the Company's assets to an
entity, at least 50% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the
Company immediately prior to such sale.
For all purposes of this Agreement any such termination of this Agreement by
Employee due to a Change-of-Control shall have the same effects under this
Agreement as the termination of Employee's employment without Cause per Section
7(b) ("Termination by Company-Termination Without Cause").
Section 10: GROSS-UP
If and to the extent any payment made under this Agreement either alone or in
conjunction with other payments Employee has the right to receive either
directly or indirectly from Company (the "Total Payments"), would constitute an
excess parachute payment under Section 280G of the Internal Revenue Code of
1986, as amended, (the "Code") Company agrees to pay Employee an amount (the
"Gross-up Payment"), such that after payment by Employee of all taxes, including
interest and penalties imposed
PAGE 10
--------------------------------------------------------------------------------
with respect to such taxes, including any excise
tax imposed by Section -4999 of the Code, (the "Excise Tax) Employee retains an
amount of the Gross-up Payment equal to the Excise Tax imposed upon the Total
Payments.
Section 11: MEANS AND EFFECT OF TERMINATION
Any termination of Employee's employment under this Agreement shall be
communicated by written notice of termination from the terminating party to the
other party. The notice of termination shall indicate the specific provision(s)
of this Agreement relied upon in effecting the termination and shall set forth
in reasonable detail the facts and circumstances alleged to provide a basis for
termination, if any such basis is required by the applicable provision(s) of
this Agreement. The burden of establishing the existence of Cause or Good Reason
shall be upon the terminating party. If Employee's employment is terminated by
either party, then promptly after the effective date of such termination or in
the manner and at the time or times provided in the relevant Section of this
Agreement, Company promptly shall provide and pay to Employee, or, in the event
of his death, his estate or heirs, all compensation, benefits, and
reimbursements due or payable to Employee for the period to the effective date
of the termination. To the extent permitted by applicable law, the calendar
month in which Employee's employment is terminated shall be counted as a full
month in determining amount and vesting of any benefits under benefit plans of
Company.
Section 12: ASSIGNMENT
This Agreement is personal in its nature and neither of the parties hereto
shall, without the consent of the other, assign or transfer this Agreement or
any rights or obligations hereunder; provided, however, that, in the event of
the merger, consolidation, or transfer or sale of all or substantially all of
the assets of Company with or to any other individual or entity, this Agreement
shall, subject to the provisions hereof, be binding upon and inure to the
benefit of such successor and- such successor shall discharge and perform all
the promises, covenants, duties, and obligations of Company hereunder.
Section 13: GOVERNING LAW
This Agreement and the legal relations hereby created between the parties hereto
shall be governed by and construed under and in accordance with the internal
laws of the State of Texas.
PAGE 11
--------------------------------------------------------------------------------
Section 14: ENTIRE AGREEMENT
This Agreement embodies the entire agreement of the parties hereto respecting
the matters within its scope. This Agreement supersedes all prior agreements of
the parties hereto on the subject matter hereof. Any prior negotiations,
correspondence, agreements, proposals, or understandings relating to the
subject-matter hereof shall be deemed to be merged into this Agreement and to
the extent inconsistent herewith, such negotiations, correspondence, agreements,
proposals, or understandings shall be deemed to be of no force or effect. There
are no representations, warranties, or agreements, whether express or implied,
or oral or written, with respect to the subject-matter hereof, except as set
forth herein.
Section 15: MODIFICATIONS
This Agreement shall not be modified by any oral agreement, either express or
implied, and all modifications hereof shall be in writing and be signed by the
parties hereto.
Section 16: WAIVER
Failure to insist upon strict compliance with any of the terms, covenants, or
conditions hereof shall not be deemed a waiver of such term, covenant, or
condition, nor shall any waiver or relinquishment of, or failure to insist upon
strict compliance with, any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
Section 17: NUMBER AND GENDER
Where the context requires, the singular shall include the plural, the plural
shall include the singular, and any gender shall include all other genders.
Section 18: SECTION HEADINGS
The section headings in this Agreement are for the purpose of convenience only
and shall not limit or otherwise affect any of the terms hereof.
Section 19: ATTORNEY'S FEES
Employee and Company agree that in any dispute resolution proceedings arising
out of this Agreement the employee shall be entitled to its or his reasonable
attorney's fees and costs incurred by it or his in connection with resolution of
the dispute in addition to any other relief granted. Payable on a quarterly
basis - satisfactory bills submitted.
PAGE 12
--------------------------------------------------------------------------------
Section 20: SEVERABILITY
In the event that a court of competent jurisdiction determines that any portion
of this Agreement is in violation of any statute or public policy, then only the
portions of this Agreement which violate such statute or public policy shall be
stricken. All portions of this Agreement which do not violate any statute or
public policy shall continue in full force and effect. Furthermore, any court
order striking any portion of this Agreement shall modify the stricken terms as
narrowly as possible to give as much effect as possible to the intentions of the
parties under this Agreement.
Section 21: NOTICES
All notices under this Agreement shall be in writing arid shall be either
personally delivered or mailed postage prepaid, by certified mail, return
receipt requested:
(a) if to Company: Playa Minerals & Energy, Inc
000 Xxxxx Xxx Xxxxxxx Xxxx X.
Xxxxx 000
Xxxxxxx, XX 00000
(b) if to Employee: Xxxxxxx Xxxxx
00000 Xxxxxxx Xx
Xxxxxx, XX 00000
Notice shall be effective when personally delivered, or five (5) business days
after being so mailed.
IN WITNESS WHEREOF, Company has caused this Agreement to be executed by its duly
authorized officer, and Employee has hereunto signed this Agreement, on the date
first written above.
Playa Minerals & Energy, Inc. (the "Company")
By
-----------------------------------------
Its
----------------------------------------
-------------------------------------------
Xxxxxxx Xxxxx (the "Employee")
