EXHIBIT 10.8
EMPLOYMENT AGREEMENT
BY AND BETWEEN
UNITED PETROLEUM CORPORATION
AND
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of September 18, 1996 by and between UNITED PETROLEUM CORPORATION, a Delaware
corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("Employee").
WHEREAS, the Company and Employee desire to enter into this Agreement
to assure the Company of the services of Employee and to set forth the
respective rights and duties of the parties hereto;
WHEREAS, the Company (a) is presently in the business of oil and gas
production distribution and marketing and (b) intends to invest its available
resources in one or more new business ventures, (such activities, present and
future, being hereinafter referred to as the "Business");
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, terms and conditions set forth herein, the Company and Employee agree
as follows:
ARTICLE I
Employment
1.1 Employment and Title. The Company hereby employs Employee, and
Employee hereby accepts such employment, as President and Chief Executive
Officer of the Company, all upon the terms and conditions set forth herein.
1.2 Services.
(a) During the Term (as hereinafter defined) hereof, Employee
agrees to perform diligently and in good faith the duties of
President and Chief Executive Officer of the Company under the
direction of the Board of Directors of the Company (the "Board
of Directors") or the Executive Committee of the Board of
Directors (the "Executive Committee"). Employee agrees to use
his best efforts for the benefit of the Company. The Company
acknowledges that Employee is, and has been, involved in
various projects and activities (i.e. ▇▇▇▇ ▇▇▇▇▇▇ Racing),
some of which provide indirect benefit to the Company. The
Company further acknowledges that such projects and activities
have not adversely affected Employee's performance of his
duties and responsibilities; and nothing herein shall restrict
or prohibit Employee's involvement in such projects and
activities, provided that such projects and activities do not
compete with, or unduly interfere with, in the sole discretion
of the Executive Committee, Employee's duties and
responsibilities hereunder. Employee shall be vested
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with such authority as is generally commensurate with the
position of President and Chief Executive Officer of the
Company, as further outlined below.
(b) Employee shall be the person primarily responsible for
insuring that the management of the Company operates within
and institutes the various directives of the Board of
Directors. Employee will work and consult with, as well as
keep fully informed, the Chairman of the Executive Committee
as to all pertinent aspects of the Company's planning,
operations, and general businesses activities. As appropriate,
Employee, in coordination with the Chairman of the Executive
Committee, will communicate and report to the Executive
Committee and the Board of Directors on a periodic basis as to
all pertinent aspects of the Company's planning, operations,
general business activities, industry developments, business
prospects and other such information reasonably required by
the Board of Directors to fulfill its duties to the Company's
stockholders.
1.3 Location. The principal place of employment and the location of
Employee's principal office shall be in Knoxville, Tennessee; provided, however,
Employee shall, when requested by the Board of Directors, or may, if he
determines it to be reasonably necessary, temporarily perform outside of
Knoxville, Tennessee such services as are reasonably required for the proper
execution of his duties under this Agreement.
1.4 Representations. Each party represents and warrants to the other
that he/it has full power and authority to enter into and perform this Agreement
and that his/its execution and performance of this Agreement shall not
constitute a default under or breach of any of the terms of any agreement to
which he/it is a party or under which he/it is bound. Each party represents that
no consent or approval of any third party is required for his/its execution,
delivery and performance of this Agreement or that all consents or approvals of
any third party required for his/its execution, delivery and performance of this
Agreement have been obtained.
1.5 Sole Discretion. As the term "sole discretion" is used in this
Agreement, unless otherwise defined, it will be interpreted as the exercise of
reasonable discretion applying normal business practices to a contractual
relationship between a company and its President and Chief Executive Officer.
ARTICLE II
Term
2.1 Term. The term of Employee's employment hereunder (the "Term")
shall commence as of the date hereof (the "Commencement Date") and shall
continue through the of the contract year following the fifth anniversary of the
Commencement Date (the "Scheduled Termination Date") unless earlier terminated
pursuant to the provisions of this Agreement.
ARTICLE III
Compensation
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3.1 Base Salary. As compensation for the services to be rendered by
Employee, the Company shall pay Employee, during the Term of this Agreement, an
annual base salary of not less than Four Hundred Thousand Dollars ($400,000),
which base salary shall accrue monthly (prorated for periods less than a month)
and shall be paid in equal monthly installments, in arrears. The base salary
will be adjusted annually for changes in the cost of living and will be reviewed
annually, or, more frequently, as appropriate, by the Board of Directors or the
Compensation Committee of the Board of Directors, as the case may be, in its
sole discretion.
3.2 Incentive Compensation. The Company may pay Employee, during the
Term of this Agreement, a performance/incentive bonus which shall be based on
the attainment of the annual sales and profits levels forth on Exhibit A, to be
attached hereto upon completion, which have been prepared after review of a
report and recommendations of an independent consultant.
3.3 Non-qualified Stock Options. Upon the execution of this Agreement,
and subject to the provisions of Section 3.6, the Company shall grant to
Employee nonqualified options to acquire Five Hundred Thousand (500,000) shares
of its common stock (the "Option Shares"), subject to the following terms and
conditions:
The option price per Option Share will be equal to the fair market value of a
share of Company common stock on the date of grant which, for purposes of this
Section 3.4, shall be the average of the bid and asked prices per share of
Company common stock on the business day immediately preceding the effective
date of this Agreement.
(b) The Option Shares shall vest in full upon grant.
(c) The Option Shares shall expire (unless previously
exercised in accordance with the terms of this
Section 3.4), on May 1, 2006. Vested Option Shares
shall be exercisable by Employee, in whole or in
part, on or before such expiration date by payment in
full, in cash or by check, to the Company of the
aggregate option price for the Option Shares so
acquired.
3.4 Additional Compensation
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(a) Restricted Stock Grants. The Company may grant
Employee, during the Term of this Agreement,
unregistered shares of its Common Stock, which
grants, if any, shall be determined by the Board of
Directors or the Compensation Committee of the Board
of Directors, as the case may be, in its sole
discretion.
(b) Fee for Guaranty of Company Obligations. The Company
agrees to pay to Employee, annually, commencing on
the anniversary of this Agreement, and on each
anniversary date thereafter, an amount equal to one
percent (1%) of the principal balance of all Company
(inclusive of subsidiaries) obligations and/or debts
for which he has executed a guaranty; which principal
balance shall be determined as of the anniversary
date of this Agreement in each subsequent year.
(b) Commissions. The Company will pay Employee a
commission (payable in cash or in unregistered shares
of its Common Stock, at the Employee's option) for
each acquisition consummated by the Company or any
Affiliate of the Company during the Term hereof. For
purposes of this Section 3.5(b). The commissions
shall be based upon the consideration (whether such
consideration is in the form of cash, stock, notes,
bonds, debentures, reserved production payments or
other reserved interests or any other thing of value,
or any combination of the foregoing) actually paid or
agreed to be paid by the Company or any Affiliate of
the Company in connection with an acquisition, shall
be paid to Employee within sixty (60) days of the
closing of the acquisition, and shall be in an amount
of one and one-half percent (1.5%) of the total
consideration. The term "Affiliate" as used in this
Agreement includes any individual, corporation,
partnership, trust, estate or other legal entity
controlling, controlled by or under common control
with the Company, with the concept of control in such
context meaning the possession, directly or
indirectly, of the power to direct or cause the
direction of the management and policies of another,
whether through the ownership or voting securities,
by contract or otherwise, and shall also include any
employee, officer, director, or agent of the Company
acting for or in behalf of the Company.
(c) Overrides. The Company (and any Affiliate of the
Company) will assign to Employee an overriding
royalty interest of 1.5% (reduced proportionately in
the event the Company or such Affiliate owns less
than a 100% interest) of all the production of oil,
gas and other hydrocarbon substances produced from
any well drilled subsequent to the Commencement Date
on lands covered by any oil and gas lease or oil, gas
and mineral lease included in any producing and/or
non-producing oil and/or gas properties acquired
during the Term hereof, the assignment with respect
to any such lease to be in the form of Assignment of
Overriding Royalty Interest attached hereto as
Exhibit B and by this reference incorporated herein,
properly completed with the name and address of the
Assignor, the address of the Assignee and
descriptions of the leases involved. The Company (and
any Affiliate of the Company) will convey to Employee
an interest of 1.5% (reduced proportionately in the
event the Company or such Affiliate owns less than a
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100% interest) of all the production of oil, gas and
other hydrocarbon substances produced from any well
drilled subsequent to the Commencement Date on lands
not covered by an oil and gas lease or oil, gas and
mineral lease in which Employee is entitled to an
overriding royalty interest pursuant to the next
preceding sentence hereof but included in any
producing and/or non-producing oil and/or gas
properties acquired during the Term hereof, the deed
with respect to any such interest to contain a
special warranty of title and to be in a form
customarily used in the oil and gas industry to
convey royalty interests or mineral interests, as
applicable, or to convey a portion of a production
payment interest, net profits interest and like or
similar interests. Each such assignment and deed will
be made and delivered as soon as is practicable after
the acquisition of the producing and/or non-producing
oil and/or gas properties to be affected thereby.
3.5 Effect of Changes in Capitalization.
(a) If the number of outstanding shares of common stock
of the Company is increased or decreased or changed
into or exchanged for a different number or kind of
shares or other securities of the Company by reason
of any merger, share exchange, consolidation,
reorganization, recapitalization, reclassification,
stock split, combination of shares, exchange of
shares, stock dividend or other distribution payable
in capital stock, or other increase or decrease in
such shares effected without receipt of consideration
by the Company, a proportionate and appropriate
adjustment shall be made by the Company with respect
to the number Option Shares then outstanding under
Section 3.4, so that the proportionate interest of
Employee immediately following such event shall, to
the extent practicable, be the same as immediately
prior to such event. Any such adjustment in the
number of Option Shares shall not change the
aggregate option price payable with respect to the
then unexercised Option Shares, but shall include a
corresponding proportionate adjustment in the option
price per Option Share.
(b) Adjustments under this Section 3.6 relating to Option
Shares or securities of the Company shall be made by
the Board of Directors, whose determination in that
respect shall be final and conclusive. No fractional
shares or units of other securities shall be issued
pursuant to any such adjustment, and any fractions
resulting from any such adjustment shall be
eliminated in each case by rounding upward to the
nearest whole share or unit.
3.6 Employee's Legal Fees. Employee may, and the Company has encouraged
the Employee to, engage competent independent legal counsel for advice and
guidance with respect to this Agreement, including, without limitation, advice
as to the federal income tax consequences of this Article III. The Company shall
reimburse Employee for all reasonable legal fees incurred by Employee in
connection with the negotiation and execution of this Agreement. Further, during
the term of this agreement, and any extension hereof, in the event an action is
filed against Employee, individually, based upon allegations involving
Employee's performance of his duties hereunder, the Company shall reimburse
Employee for all reasonable legal fees incurred by Employee in defense thereof.
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3.7 Relocation Costs. The Company agrees to reimburse Employee for
reasonable moving expenses incurred by Employee in connection with any
relocation required by the Company (including the costs of any temporary rental
accommodations), subject to requirements for acceptable documentation and any
applicable Internal Revenue Service reporting requirements. Such reimbursement
shall include the Company's purchase of Employee's residence located in
Knoxville, Tennessee as determined by the average of appraisals performed by two
qualified appraisers, one selected by the Company and one selected by Employee.
3.8 Benefits. Employee shall be entitled, during the Term hereof, to
the same medical, hospital, dental and life insurance coverage and benefits as
are available to the Company's most senior executive officers on the
Commencement Date together with the following additional benefits.
(a) A Company automobile of a type, model and style
satisfactory to Employee;
(b) Reimbursement of all operating expenses of the
Company automobile;
(c) Comprehensive medical coverage, including dependent
coverage, paid fully by the Company;
(d) The Company shall purchase and maintain "Key Man"
Life insurance on Employee in an amount equal to the
aggregate balance of all Company obligations which
the Employee has guaranteed plus $1,000,000, the
beneficiary and owner of which shall be the Company;
(e) Long-term disability insurance in an amount, adjusted
annually, equal to Employee's prior year base salary
and incentive compensation, if any, excluding
compensation earned through Company stock options or
other securities; the beneficiary and owner of which
policy shall be the Company, which agrees that it
shall continue Employee's compensation so long as the
Company receives payments or benefits from said
policy, including continuation of said compensation
beyond termination of this agreement;
(f) All fees, dues and expenses at:
(i) one downtown Knoxville luncheon club of
Employee's choice; and
(ii) a Knoxville, Tennessee Country Club of
Employee's choice.
(g) The Company's normal vacation allowance for all
employees who are executive officers of the Company,
but not less than four weeks annually.
(h) An Officers and Directors Indemnity Agreement,
substantially in the form attached hereto as Exhibit
C.
3.9 Withholding. Any and all amounts payable under this Agreement,
including, without limitation, amounts payable under this Article III and
Article VII, are subject to withholding for such federal, state and local taxes
as the Company, in its reasonable judgment, determines to be required pursuant
to any applicable law, rule or regulation.
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ARTICLE IV
Working Facilities, Expenses and Insurance
Working Facilities and Expenses. Employee shall be furnished with an
office at the principal executive offices of the Company, and at such
other location as agreed to by Employee and the Company, and other
working facilities and secretarial and other assistance suitable to his
position and reasonably required for the performance of his duties
hereunder. The Company shall reimburse Employee for all of Employee's
reasonable expenses incurred while employed and performing his duties
under and in accordance with the terms and conditions of this
Agreement, subject to Employee's full and appropriate documentation,
including, without limitation, receipts for all such expenses in the
manner required pursuant to Company's policies and procedures and the
Internal Revenue Code of 1986, as amended (the "Code") and applicable
regulations as are in effect from time to time.
4.2 Insurance. The Company may secure in its own name or otherwise, and
at its own expense, life, disability and other insurance covering Employee or
Employee and others, and Employee shall not have any right, title or interest in
or to such insurance other than as expressly provided herein. Employee agrees to
assist the Company in procuring such insurance by submitting to the usual and
customary medical and other examinations to be conducted by such physicians(s)
as the Company or such insurance company may designate and by signing such
applications and other written instruments as may be required by any insurance
company to which application is made for such insurance.
ARTICLE V
Illness or Incapacity
5.1 Right to Terminate. If, during the Term of this Agreement, Employee
shall be unable to perform in his duties hereunder for a period exceeding nine
(9) consecutive months by reason of illness or incapacity, this Agreement may be
terminated by the Company in its sole discretion pursuant to Section 7.2 hereof.
5.2 Right to Replace. If Employee's illness or incapacity, whether by
physical or mental cause, renders him unable for a minimum period of ninety (90)
consecutive calendar days to carry out his duties and responsibilities as set
forth herein, the Company shall have the right to designate a person to replace
Employee temporarily in the capacity described in Article I hereof; provided,
however, that if Employee returns to work from such illness or incapacity within
the nine (9) month period following his inability due to such illness or
incapacity, he shall be entitled to be reinstated in the capacity described in
Article I hereof with all rights, duties and privileges attendant thereto.
5.3 Rights Prior to Termination. Employee shall be entitled to his full
remuneration and benefits hereunder during such illness or incapacity unless and
until an election is made by the Company to terminate this Agreement in
accordance with the provisions of this Article.
5.4 Determination of Illness or Incapacity. For purposes of this
Article V, the term "illness or incapacity" shall mean Employee's inability to
substantially perform his duties hereunder
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due to physical or mental illness as determined by the Board of Directors, based
upon medical documentation of same.
ARTICLE VI
Confidentiality
6.1 Confidentiality. During the Term of this Agreement and thereafter,
Employee agrees to maintain the confidential nature of the Company's trade
secrets, including, without limitation, development ideas, acquisition
strategies and plans, financial information, records, "know-how", methods of
doing business, customer, supplier and distributor lists and all other
confidential information of the Company. Employee shall not use (other than in
connection with his employment), in any way whatsoever, such trade secrets
except as authorized in writing by the Company. Employee shall, upon the
termination of his employment, deliver to the Company any and all records,
books, documents or any other materials whatsoever (including all copies
thereof) containing such trade secrets, which shall be and remain the property
of the Company.
6.2 Non-Removal of Records. All documents, papers, materials, notes,
books, correspondence, drawings and other written and graphic records relating
to the Business of the Company which Employee shall prepare or use, or come into
contact with, shall be and remain the sole property of the Company and,
effective immediately upon the termination of the Employee's employment with the
Company for any reason, shall not be removed from the Company's premises without
the Company's prior written consent.
ARTICLE VII
Termination
7.1 Termination For Cause. This Agreement and the employment of
Employee may be terminated by the Company "For Cause" in any of the following
circumstances:
(a) Employee has committed any fraud, misappropriation or
similar act against the Company;
(b) Employee has been proven to have engaged in illegal
activities which, individually, or in the aggregate,
have a material adverse effect on the Company.
A Termination For Cause under this Section 7.1 shall be
effective upon the date set forth in a written notice of termination delivered
to Employee and removal of Employee's liability for any obligation of the
Company or guaranty of any Company obligation, whether such Company obligation
is non-contingent or contingent.
7.2 Termination Without Cause. This Agreement and the employment of the
Employee may be terminated "Without Cause" as follows:
(a) By mutual agreement of the parties hereto, provided
Employee's liability for any obligation of the
Company or guaranty of any Company obligation,
whether such Company obligation is non-contingent or
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contingent, has been removed; or
(b) Upon Employee's death.
A Termination Without Cause under Section 7.2(a) hereof shall
be effective upon the date set forth in a written notice of termination
delivered hereunder, which shall be not less than ninety (90) days after the
giving of such notice. A Termination Without Cause under Section 7.2 (d) hereof
shall be automatically effective upon the date of death of the Employee.
7.3 Effect of Termination For Cause. If Employee's employment is
terminated For Cause:
(a) Employee shall be entitled to accrued base salary
under Section 3.1 through the date of termination;
(b) Employee shall be entitled to reimbursement for
expenses accrued through the date of termination in
accordance with the provisions of Section 4.1 hereof;
and
(c) Employee shall be entitled to any commissions on
acquisitions or agreements for acquisitions entered
into prior to termination, whether such acquisitions
are consummated or are to be consummated after the
date effective termination date.
7.4 Effect of Termination Without Cause. If Employee's employment is
terminated Without Cause:
(a) Employee shall be entitled to compensation under
Section 3 through the date of termination;
(b) Employee shall be entitled to reimbursement for
expenses accrued through the date of termination in
accordance with the provisions of Section 4.1 hereof;
(c) Employee shall be entitled to receive a one-time,
lump sum severance payment equal to two and nine
point nine-tenths (2.99) times the total amount of
the annual base salary payable under Section 3.1
hereof, which amount shall be paid upon termination;
(d) Employee shall be entitled to receive all benefits as
would have been awarded under Section 3.8 hereof
through the Scheduled Termination Date, which
benefits shall be awarded as and when the same would
have been awarded under the Agreement had it not been
terminated;
(e) Employee shall be entitled to any commissions on
acquisitions or agreements for acquisitions entered
into prior to termination, whether such acquisitions
are consummated or are to be consummated after the
date effective termination date; and
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(e) Except as provided in Article XI, this Agreement
shall thereupon be of no further force or effect.
7.5 Termination Upon Change of Control. Upon a "Change of Control" (as
such term is defined in Section 7.6 hereof) of the Company during the Term
hereof, Employee may, at his sole discretion, declare this Agreement terminated
and receive a one-time, lump sum severance payment equal to two and ninety-nine
hundreds (2.99) times the total amount of the annual base salary payable under
the terms of Section 3.1 of this Agreement upon the date of such Change of
Control, if within three (3) years of the Change of Control:
(a) Employee's employment hereunder is terminated prior
to the Scheduled Termination Date Without Cause; or
(b) Employee elects to terminate his employment with the
Company in the event (i) he is removed from the
office of President and Chief Executive Officer of
the Company or (ii) the Company fails to afford
Employee the power and authority generally
commensurate with the position of President and Chief
Executive Officer or (iii) the Company requires
Employee to relocate his residence; and
(c) Employee's liability for any obligation of the
Company or guaranty of any Company obligation,
whether such Company obligation is non-contingent or
contingent, has been removed.
7.6 Change of Control. For purposes of Section 7.5 of this Agreement, a
Change of Control shall be deemed to have occurred in the event of:
(a) The acquisition by any person or entity, or group
thereof acting in concert, of "beneficial" ownership
(as such term is defined in Securities and Exchange
Commission ("SEC") Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) (the "Exchange
Act"), of securities of the Company which, together
with securities previously owned, confer upon such
person, entity or group the voting power, on any
matters brought to a vote of shareholders, of twenty
five percent (25%) or more of the then outstanding
shares of capital stock of the Company; or
(b) The sale, assignment or transfer of assets of the
Company or any subsidiary or subsidiaries, in a
transaction or series of transactions, if the
aggregate consideration received or to be received by
the Company or any such subsidiary in connection with
such sale, assignment or transfer is greater than
twenty five percent (25%) of the book value,
determined by the Company in accordance with
generally accepted accounting principles, of the
Company's assets determined on a consolidated basis
immediately before such transaction or the first of
such transactions; or
(c) The merger, consolidation, share exchange or
reorganization of the Company (or one or more
subsidiaries of the Company) as a result of which the
holders of all of the shares of capital stock of the
Company as a group
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would receive less than twenty five percent (25%) of
the voting power of the capital stock or other
interests of the surviving or resulting corporation
or entity; or
(d) The adoption of a plan of liquidation or the approval
of the dissolution of the Company; or
(e) The commencement (within the meaning of SEC Rule
14d-2 under the Exchange Act) of a tender or exchange
offer which, if successful, would result in a Change
of Control of the Company; or
(f) A determination by the Board of Directors of the
Company, in view of then current circumstances or
impending events, that a Change of Control of the
Company has occurred or is imminent, which
determination shall be made for the specific purpose
of triggering the operative provisions of this
Agreement.
7.7 Limitations on Change of Control Compensation. In the event that
the lump-sum payment payable to Employee under Section 7.5 hereof ("Severance
Benefits"), or any other payments or benefits received or to be received by
Employee from the Company (whether payable pursuant to the terms of this
Agreement, or any other plan, agreement or arrangement with the Company or any
corporation affiliated with the Company within the meaning of Section 1504 of
the Code, in the opinion of tax counsel selected by the Company acceptable to
Employee, constitute "parachute payments" within the meaning of Section
280G(b)(2) of the Code and the present value of such "parachute payments" equals
or exceeds three times the average of the annual compensation payable to
Employee by the Company (or an Affiliate) and includable in Employee's gross
income for federal income tax purposes for the five (5) calendar years preceding
the year in which a change in ownership or control (as hereinafter defined) of
the Company occurred ("Base Amount"), such Severance Benefits shall be reduced
to an amount the present value of which (when combined with the present value of
any other payments or benefits otherwise received or to be received by Employee
from the Company (or an Affiliate) that are deemed "parachute payments" is equal
to 2.99 times the Base Amount, notwithstanding any other provision to the
contrary in this Agreement. The Severance Benefits shall not be reduced if (i)
Employee shall have effectively waived his receipt or enjoyment of any such
payment or benefit which triggered the applicability of this Section 7.7 or (ii)
in the opinion of such tax counsel, the Severance Benefits (in their full amount
or as partially reduced, as the case may be) plus all other payments or benefits
which constitute "parachute payments" within the meaning of Section 280G(b)(2)
of the Code are reasonable compensation for the services actually rendered,
within the meaning of Section 280G(b)(4) of the Code and such payments are
deductible by the Company. The Base Amount shall include every type and form of
compensation includable in Employee's gross income in respect of his employment
by the Company (or an Affiliate), except to the extent otherwise provided in
temporary or final regulations promulgated under Section 280G(b) of the Code.
For purposes of this Section 7.7, a "change in ownership or control" shall have
the meaning set forth in Section 280G(b) of the Code and any temporary or final
regulations promulgated thereunder. The present value of any non-cash benefit or
any deferred cash payment shall be determined by the Company's independent
auditors in accordance with the principles of Section 280G of the Code.
Employee shall have the right to request that the Company obtain a
ruling from the Internal Revenue Service ("IRS") as to whether any or all
payments or benefits determined by such
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tax counsel are, in the view of the IRS, "parachute payments" under Section
280G. If a ruling is sought pursuant to Employee's request, no Severance
Benefits payable under this Agreement in excess of the Section 280G limitations
shall be made to Employee until after fifteen (15) days from the date of such
ruling, however, Severance Benefits shall continue to be paid during the time up
to the amount of that limitation. For purposes of this Section 7.7, Employee and
the Company shall agree to be bound by the IRS's ruling as to whether payments
constitute "parachute payments" under Section 280G. If the IRS declines, for any
reason, to provide the ruling requested, the tax counsel's opinion provided with
respect to what payments or benefits constitute "parachute payments" shall
control and the period during which the Severance Benefits may be deferred shall
be extended to a date fifteen (15) days from the date of the IRS's notice
indicating that no ruling would be forthcoming.
In the event that Section 280G, or any successor statute is
repealed, this Section 7.7 shall cease to be effective on the effective date of
such repeal. The parties to this Agreement recognize that final regulations
under Section 280G of the Code may affect the amounts that may be paid under
this Agreement and agree that, upon issuance of such final regulations, this
Agreement may be modified as in good faith deemed necessary in light of the
provisions of such regulations to achieve the purposes of this Agreement, and
that consent to such modification shall not be unreasonably withheld.
ARTICLE VIII
Non-Competition and Non-Interference
8.1 Non-Competition. Employee agrees that during the Term hereof and,
in the case of a Termination For Cause, for a period of six (6) months
thereafter, Employee will not, directly, indirectly, or as an agent on behalf of
or in conjunction with any person, firm, partnership, corporation or other
entity, own, manage, control, join, or participate in the ownership, management,
operation, or control of, or be financially interested in or advise, lend money
to, or be employed by or provide consulting services to, or be connected in any
manner with any similar business in which the Company is engaged as of the date
of termination and which is located within 50 miles of any Company facility or
operation within the United States of America.
8.2 Non-Interference. Employee agrees that during the Term hereof and,
in the case of a Termination For Cause, for a period of six (6) months
thereafter, Employee will not, directly, indirectly or as an agent on behalf of
or in conjunction with any person, firm, partnership, corporation or other
entity, induce or entice any employee of the Company to leave such employment or
cause anyone else to do so.
8.3 Severability. If any covenant or provision contained in Article
VIII is determined to be void or unenforceable in whole or in part, it shall not
be deemed to affect or impair the validity of any other covenant or provision.
If, in any arbitral or judicial proceeding, a tribunal shall refuse to enforce
all of the separate covenants deemed included in this Article VIII, then such
unenforceable covenants shall be deemed eliminated from the provisions hereof
for the purpose of such proceedings to the extent necessary to permit the
remaining separate covenants to be enforced in such proceedings.
ARTICLE IX
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Remedies
9.1 Equitable Remedies. Employee and the Company agree that the
services to be rendered by Employee pursuant to this Agreement, and the rights
and interests granted and the obligations to be performed by Employee to the
Company pursuant to this Agreement, are of a special, unique, extraordinary and
intellectual character, which gives them a peculiar value, the loss of which
cannot be reasonably or adequately compensated in damages in any action at law,
and that a breach by Employee of any of the terms of this Agreement will cause
the Company great and irreparable injury and damage. Employee hereby expressly
agrees that the Company shall be entitled to the remedies of injunction,
specific performance and other equitable relief to prevent a breach of Articles
VI and VIII of this Agreement, both pendente lite and permanently, against
Employee, as such breach would cause irreparable injury to the Company and a
remedy at law would be inadequate and insufficient. Therefore, the Company may,
in addition to pursuing its other remedies, obtain an injunction from any court
having jurisdiction in the matter restraining any further violation.
9.2 Rights and Remedies Preserved. Nothing in this Agreement except
Section 10.11 shall limit any right or remedy the Company or Employee may have
under this Agreement or pursuant to law for any breach of this Agreement by the
other party. The rights granted to the parties herein are cumulative and the
election of one shall not constitute a waiver of such party's right to assert
all other legal remedies available under the circumstances.
ARTICLE X
Miscellaneous
10.1 No Waivers. The failure of either party to enforce any provision
of this Agreement shall not be construed as a waiver of any such provision, nor
prevent such party thereafter from enforcing such provision or any other
provision of this Agreement.
10.2 Notices. Any notice to be given to the Company and Employee under
the terms of this Agreement may be delivered personally, by telecopy, telex or
other form of written electronic transmission, or by registered or certified
mail, postage prepaid, and shall be addressed as follows:
If to the Company: United Petroleum Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Secretary
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Employee: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
AND a Copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-13-
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Either party may hereafter notify the other in writing of any change in address.
Any notice shall be deemed duly given (i) when personally delivered, (ii) when
telecopied, telexed or transmitted by other form of written electronic
transmission (upon confirmation of receipt) or (iii) on the third day after it
is mailed by registered or certified mail, postage prepaid, as provided herein.
10.3 Severability. The provisions of this Agreement are severable and
if any provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts thereof, shall not be affected thereby.
10.4 Successors and Assigns. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Company, including the survivor upon any merger,
consolidation, share exchange or combination of the Company with any other
entity. Employee shall not have the right to assign, delegate or otherwise
transfer any duty or obligation to be performed by him hereunder to any person
or entity.
10.5 Entire Agreement. This Agreement supersedes all prior and
contemporaneous agreements and understandings between the parties hereto, oral
or written, and may not be modified or terminated orally. No modification,
termination or attempted waiver shall be valid unless in writing, signed by the
party against whom such modification, termination or waiver is sought to be
enforced. This Agreement was the subject of negotiation by the parties hereto
and their counsel. The parties agree that no prior drafts of this Agreement
shall be admissible as evidence (whether in any arbitration or court of law) in
any proceeding which involves the interpretation of any provisions of this
Agreement.
10.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Tennessee without reference
to the conflict of law principles thereof.
10.7 Section Headings. The section headings contained herein are for
the purposes of convenience only and are not intended to define or limit the
contents of said sections.
10.8 Further Assurances. Each party hereto shall cooperate and shall
take such further action and shall execute and deliver such further documents as
may be reasonably requested by the other party in order to carry out the
provisions and purposes of this Agreement.
10.9 Gender. Whenever the pronouns "he" or "his" are used herein they
shall also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in the
plural and words in the plural shall be read and construed as though in the
singular in all cases where they would so apply.
10.10 Counterparts. This Agreement may be executed in counterparts, all
of which taken together shall be deemed one original.
10.11 Arbitration. The parties hereto agree that any dispute concerning
or arising out of the provisions of the Agreement shall be resolved by
arbitration in accordance with the rules of the
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American Arbitration Association. Such arbitration shall be held in Knoxville,
Tennessee and the decision of the arbitrator(s) shall be conclusive and binding
on the parties and shall be enforceable in any court of competent jurisdiction.
The arbitrator may, in his or her discretion, award attorneys fees and costs to
such party as he or she sees fit in rendering his or her decision.
Notwithstanding the foregoing, if any dispute arises hereunder as to which the
Company desires to exercise any rights or remedies under Section 9.1 hereof, the
Company may, in its discretion, in lieu of submitting the matter to arbitration,
bring an action thereon in any court of competent jurisdiction in Tennessee,
which court may grant any and all relief available in equity or at law. In any
such action, the prevailing party shall be entitled to reasonable attorneys fees
and costs as may be awarded by the court.
ARTICLE XI
Survival
11.1 Survival. The provisions of Articles III [3.5(c)],VI, VII, VIII,
IX and X, of this Agreement shall survive the termination of this Agreement
whether upon, or prior to, the Scheduled Termination Date hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
ATTEST: UNITED PETROLEUM CORPORATION
A Delaware Corporation,
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ [NAME ILLEGIBLE]
------------------------------- -------------------------------
Secretary Title: Executive Vice President & CFO
WITNESS: EMPLOYEE
/s/ [NAME ILLEGIBLE] /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------- ------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
EXHIBIT A
TO BE SUPPLIED
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EXHIBIT B
ASSIGNMENT OF OVERRIDING ROYALTY INTEREST
THE STATE OF TENNESSEE)
) KNOW ALL MEN BY THESE PRESENTS, That:
COUNTY OF ▇▇▇▇ )
United Petroleum Corporation, a Delaware corporation, with offices and
place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ (herein call
"Assignor"), in consideration of One Hundred Dollars ($100.00) and other good
and valuable consideration paid by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, whose address is ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ (herein called "Assignee"), the receipt and
sufficiency of which are hereby acknowledged, effective as of the Effective Date
and subject to the provisions hereof, has GRANTED, BARGAINED, SOLD, TRANSFERRED,
ASSIGNED and CONVEYED, and by these presents does GRANT, BARGAIN, SELL,
TRANSFER, ASSIGN, and CONVEY, unto Assignee an overriding royalty interest equal
to an undivided one and one-half percent (1.5%) of all of the oil, gas
casinghead gas and other hydrocarbon substances in, under and that may be
produced, saved and sold pursuant to and under the terms and provisions of the
oil and gas lease or leases described in Exhibit (A) attached hereto and made a
part hereof, as such lease or leases may be amended, extended and/or ratified
(herein called "the Leases", whether one or more, and inclusive of all
amendments thereto and extensions and ratifications thereof), and from the lands
covered by the Leases.
The overriding royalty interest assigned hereby shall be delivered to
Assignee free and clear of all costs and expenses of every kind or character
saving and except gross production, pipe line, severance, ad valorem, windfall
profits, excise, sales and other taxes, whether similar or dissimilar, which are
assessed or levied against or are otherwise applicable to said interest or the
production attributable thereto.
In the event any of the Leases covers less than the full mineral
interest in the lands described therein, or any portion thereof, then the
overriding royalty interest assigned hereby shall be proportionately reduced and
shall be payable to Assignee in the proportion that the mineral ownership of the
lessor in the lands covered by such of the Leases bears to the full mineral
ownership in such lands. In the event Assignor owns the title to less than the
full interest in any or all of the Leases, then the overriding royalty interest
assigned hereby in such lease or leases shall be proportionately reduced and
shall be payable to Assignee in the proportion that the interest owned by
Assignor in such lease or leases bears to the full leasehold ownership in such
lease or leases.
1
In the event the interest of Assignor in the Leases or any of them, is
subject to increase or decrease upon the occurrence of payout or other event
under the terms of the Leases or any farmount agreement or other agreement to
which such interest was subject at the time Assignor acquired its interest
therein, the overriding royalty interest assigned herein shall be
proportionately increased or decreased (as the case may be) effective as of the
date such interest is increased or decreased (as the case may be) and such
overriding royalty interest shall thereafter be payable to Assignee in the
proportion that the interest thereafter owned by Assignor in such lease or
leases bears to the full leasehold ownership in such lease or leases.
In the event Assignor owns the title to less than the full interest
in any of the Leases and Assignor, its successors or assigns, hereafter acquires
an additional interest therein, the overriding royalty interest assigned hereby
shall be applicable to the additional leasehold interest so acquired by
Assignor, its successors and assigns. In the event any of the Leases covers less
than the full mineral interest in all or any portion of the lands covered
thereby and such lease hereafter covers and additional mineral interest not
presently covered thereby because title thereto is cured or such additional
mineral interest otherwise becomes subject to said lease, the overriding royalty
interest assigned hereby and applicable to such lease shall be proportionately
increased effective as of the date such additional mineral interest becomes
subject to such lease, and such overriding royalty interest shall thereafter be
payable to Assignee in the proportion that the mineral ownership of the lessor
in the lands covered by such lease as of such date bears to the full mineral
ownership in such lands.
Assignee agrees that Assignor, its successors and assigns, shall have
the right and power without the joinder or consent of Assignee to pool or
unitize the overriding royalty interest assigned hereby in the same manner and
to the same extent as the royalty interest reserved by the lessor in the Lease
may be pooled or unitized, whether pursuant to the provisions of the Leases, by
operation or action of law or governmental authority, or pursuant to the
provisions of any supplemental written agreement or amendment of the Leases. In
the event of such pooling or unitization, Assignee shall receive in lieu of the
overriding royalty interest assigned hereby on production from any such unit
only the proportion of such overriding royalty interest as the acreage subject
to said overriding royalty interest and included in the unit bears to the total
acreage included in the particular unit involved.
Assignee agrees that nothing contained herein shall impose upon
Assignor, its successors and assigns, any duty or obligation, either express or
implied, to maintain the Leases in force and effect by the payment of delay
rentals or shut-in royalties, the drilling of ▇▇▇▇▇ or otherwise, the overriding
royalty interest assigned hereby being due and payable out of production if, as
and when production is
2
obtained, saved and sold from the lands covered by the Leases or lands pooled
therewith.
The overriding royalty interest assigned hereby shall be paid or
delivered to Assignee in the same manner, by the same method, at the same time
and under the same conditions as is provided for the payment or delivery of
royalty to the lessor under the terms of such of the Leases under which
production is obtained, saved and sold; provided, however, such overriding
royalty interest shall never bear, either directly or indirectly, any costs or
expenses to treat, store, gather, dehydrate, compress, pipe, transport, truck or
otherwise market or transport such production.
The overriding royalty interest assigned hereby shall be applicable to
any and all extensions, modifications, ratifications, renewals, and/or top
leases of the Leases which cover or pertain to all or any part of the same lands
covered by the lease extended, modified, ratified, renewed or top-leased, which
are taken, obtained or acquired by Assignor, its successors or assigns, within
one year from the expiration, termination or cancellation date of the lease so
extended, modified, ratified, renewed or top-leased. The overriding royalty
interest assigned hereby shall also be applicable to any new leases which cover
or pertain to all or any portion of the same lands covered by any of the Leases,
which are taken, obtained or acquired by Assignor, its successors or assigns,
within one year from the expiration, termination or cancellation date of the
lease that covered or pertained to all or a portion of the lands covered by the
new lease.
The overriding royalty interest assigned hereby shall not be applicable
to the production of oil, gas and other hydrocarbons produced from a well
drilled and completed on lands covered by the Leases prior to the Effective Date
or to a well which was being drilled on such lands on the Effective Date
provided that if any such well is plugged and abandoned and Assignor or the
successors or assignees of Assignor thereafter reenters such well and completes
the same, the overriding royalty interest shall be applicable thereto in the
same manner and to the same extend as if the well had not been drilled or
drilling on or prior to the Effective Date.
TO HAVE AND TO HOLD the overriding royalty interest assigned hereby
unto Assignee, his heirs, personal representatives, successors and assigns,
subject to the terms and provisions hereof and of the Leases. Assignor binds
itself, its successors and assigns to warrant and forever defend, all and
singular, said overriding royalty interest unto Assignee, his heirs, personal
representatives, successors and assigns, against every person and entity
whomsoever lawfully claiming or to claim the same or any part thereof, by,
through or under Assignor, but not otherwise.
3
EXECUTED this _____ day of ________________, 19_____, effective as of the ____
day of ______________, 19_____ (the "Effective Date").
United Petroleum Corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title: President
-----------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Address: ---------------------------
---------------------------
THE STATE OF TENNESSEE)
COUNTY OF ▇▇▇▇)
This instrument was acknowledged on this the 18 day of September, 1996, by
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President of United Petroleum Corporation, a Delaware Corp.,
on behalf of said Corporation.
/s/▇▇▇▇ ▇▇▇▇▇ Majeis
----------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TENNESSEE
▇▇▇▇ ▇▇▇▇▇ Majeis
----------------------------
(Printed Name of Notary)
My Commission Expires
March 20, 1997
---------------------
