EXHIBIT 10.17
EMPLOYMENT AND NON-COMPETITION AGREEMENT
This Employment Agreement (this "Agreement") between Horizon Offshore,
Inc., a Delaware corporation ("Company"), and Xxxx X. Xxx ("Employee") is dated
as of June 1, 2001.
The Company and the Employee agree as follows:
1. EMPLOYMENT. The Company has hired Employee and Employee agreed to be
employed upon the terms and conditions hereinafter set forth.
2. TERM. (a) Subject to the provisions for termination as hereinafter
provided, Employee's employment pursuant to the terms of this Agreement shall be
for the period expiring on May 31, 2004 (the "Employment Term"). The employment
Term shall automatically extend for an additional year unless on or before May
15 of each year, beginning in 2002, Employee provides written notice of intent
not to extend the employment Term.
(b) Following Employee ceasing for whatever reason to be an
employee of the Company, each party shall have the right to enforce all rights,
and shall be bound by all obligations, of such party that are continuing rights
and obligations under the terms of this Agreement.
3. TITLE AND DUTIES. The Employee shall be the Company's President and
Chief Executive Officer and shall perform such duties, consistent with the
Employee's job title, as may be prescribed from time to time by the Board of
Directors of the Company (the "Board"). Employee is currently a member of the
Board. Throughout the Employment Term, Company shall continue to cause Employee
to be nominated to serve on the Board and will use reasonable efforts to secure
Employee's election to the Board. It is the intention of the parties that
Employee will be elected to and will serve on the Board while serving hereunder
as President and Chief executive Officer.
4. COMPENSATION AND BENEFITS.
(a) The Company will provide or will cause to be provided to Employee a
minimum annual base salary of $400,000.00. This annual base salary shall become
effective upon signing of this Agreement. During the term of this Agreement the
annual base salary shall in no event be less than $400,000.00, but shall be
increased annually by the greater of five (5%) percent of the preceding year's
salary or the increase in the Consumer Price Index as compiled and published by
the U.S. Bureau of Labor Statistics.
(b) The Company shall also provide or cause to be provided an automobile
allowance of $2,400.00 per month.
(c) Upon signing of this Agreement, the Company and Employee shall execute
a separate Stock Option Agreement pursuant to which Employee shall receive
options to purchase 75,000 shares of the common stock of the Company, $1.00 par
value per share, in accordance with the Company's Stock Incentive Plan. The
Stock Option Agreement shall provide for vesting of one-sixth of the options
every six months for three years, or immediately upon death or disability of
Employee,
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the termination of this Agreement by the Company for any reason other than For
Cause or by the Employee for Good Reason or change in control of the Company.
Employee shall also participate in the Company's regular Stock Incentive Plan.
Any options granted pursuant to such Plan shall vest immediately upon change in
control of the Company.
(d) Company shall provide, at its sole cost, during the Employment Term
life insurance in the amount of $1,500,000.00. Employee shall receive an annual
bonus of not less than twenty-five (25%) percent on his annual base salary,
which bonus shall be increased to one hundred (100%) percent of his annual base
salary upon obtainment of goals set annually by the Company's Board of
Directors. The bonus shall be payable each calendar year during the Employment
Term.
(e) The Company shall also provide or cause to be provided an annual
allowance for financial planning in the amount of $25,000.00, payable on or
before the 15th day of June each year.
(f) The Company shall pay for a membership in Employee's name in the
Westlake Club and Falcon Point Country Club.
(g) The Employee will be entitled to 4 weeks of paid vacation during each
Fiscal Year and to all other vacation and holidays as provided to executives of
the Company generally.
(h) In accordance with the Company's By-Laws and Certificate of
Incorporation, the Company will indemnify the Employee, to the fullest extent
permitted by applicable the law, for any and all claims brought against him
arising out his services to the Company and its subsidiaries. In addition, the
Company will continue to maintain a directors' and officers' insurance policy
covering the Employee substantially in the form of the policy in existence as of
the Agreement Date to the extent such policy remains available at reasonable
commercial terms.
5. TERMINATION OF EMPLOYMENT.
(a) During the Employment Term, the Employee's status as an employee
will terminate immediately and automatically and this Agreement shall terminate,
subject to the provisions of Section 2(b), upon the earliest to occur of:
(i) the death or "Disability" (as defined below) of the Employee;
(ii) the discharge of the Employee by the Company "For Cause" (as
defined below);
(iii) termination by Employee "For Good Reason" (as defined below);
or
(iv) the expiration of the Employment Term.
The Employee hereby accepts such employment subject to the terms and
conditions hereof.
(b) As used herein, "For Cause" shall mean any one or more of the
following:
(i) material or repeated violations by the Employee (after notice
thereof from the Company) of the terms of this Agreement or
the Employee's material or repeated failure (after notice
thereof from the Company and the opportunity to remedy the
failure within thirty (30) days of such notice) to perform the
Employee's duties in a manner consistent with the Employee's
position;
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(ii) the Employee's final conviction of a felony; or
(iii) substance abuse on the part of the Employee.
Anything in this Agreement to the contrary notwithstanding, the Employee's
employment may not be terminated "for cause" unless and until there shall have
been delivered to the Employee a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of the
Board (without giving effect to the Employee's status as a director or any vote
of the Employee) at a meeting of the Board called and held for the purpose
(after reasonable notice to the employee and an opportunity for the Employee to
be heard before the Board), finding that in the good faith opinion of the Board
the Employee was guilty of any of the conduct set forth in clause (i) through
(ii) of this subparagraph (b) and specifying the particulars thereof in detail.
(c) As used herein, "Disability" shall mean a physical or mental
incapacity of the Employee that, in the good faith determination of the Board,
has prevented the Employee from performing the duties assigned the Employee by
the Company for 60 consecutive days or for a period of more than 90 days in the
aggregate in any 12-month period and that, in the determination of the Company
after consultation with a medical doctor appointed by the Company, may be
expected to prevent the Employee for any period of time thereafter from devoting
the Employee's full time and energies (or such lesser time and energies as may
be acceptable to the Company in its sole discretion) to the Employee's duties as
provided hereunder. The Employee's employment hereunder, except as otherwise
agreed to in writing between the Company and the Employee, shall cease as of the
date of such determination. The Employee agrees to submit to medical
examinations, at the Company's sole cost and expense, to determine whether a
Disability exists pursuant to reasonable requests that the Company may make from
time to time. During the period of any such physical or mental incapacity as
provided above, the salary otherwise payable to the Employee may, in the
absolute discretion of the Company, be reduced by the amount of any disability
benefits or payments received by the Employee from the Company or any disability
or health plan funded in whole or in part by the Company (excluding health
insurance benefits or other reimbursement of medical expenses attributable to
insurance policies that have not been funded in any part by the Company).
(d) As used herein, "For Good Reason" shall mean breach of any provision
of this Agreement by Company and failure to remedy such breach within thirty
(30) days of written notice; diminution in the title, duties, responsibilities
or authority of Employee; failure of the Employee to be elected to the Board;
the acquisition or a public announcement that a person or group of persons
(other than the holders of the Company's common stock on the date of this
Agreement and other than the Company or any of its subsidiaries or any employee
benefit plan of the Company or any such subsidiary) has acquired 30% or more of
the company's outstanding common stock; the Company is involved in a merger or
other business combination or sale or transfer of assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
subsidiaries, taken as a whole and as a result of such transaction the Company's
equity holders prior to the transaction hold less than fifty (50%) percent of
the surviving or transferee entity. ; or relocation of Employee's place of
employment outside the Houston Metropolitan area.
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6. EFFECT OF TERMINATION ON COMPENSATION. In the event of termination of
this Agreement by Employee for Good Reason, or by Company for any reason other
than For Cause, Employee shall be entitled to the following:
(a) a lump sum payment by Company equal to three hundred (300%) percent
of Employee's annual base salary in effect at the time of termination;
(b) immediate vesting of any stock options or other equity based awards
issued to Employee prior to termination, with the right to exercise any such
options within 365 days of termination;
(c) continued participation in any welfare benefit plans including
without limit medical, life insurance and disability insurance for a period of
three (3) years from termination; and
(d) continued payment of the automobile allowance for a period of three
(3) years from termination.
(e) a pro rata bonus in an amount determined by calculating the bonus
that the Executive would receive for the Fiscal Year in which the Termination
Date occurs based upon the level of achievement of the applicable performance
goals through the end of the fiscal quarter in which the Termination Date
occurs, annualized as if such level of performance had continued throughout the
entire Fiscal Year and then multiplying such bonus amount by the fraction
obtained by dividing the number of days in the year through the Termination Date
by 365 (the "Pro Rata Bonus");
(f) Employee shall have no duty to find new employment following the
termination of his employment under circumstances which require Company to pay
any amount to Employee pursuant to this Section 6. Any salary or remuneration
received by Employee from a third party for the providing of personal services
(whether by employment or by functioning as an independent contractor) following
the termination of his employment under circumstances pursuant to which Section
6 applies shall not reduce Company's obligation to make a payment to Employee
(or the amount of such payment) pursuant to the terms of Section 6.
7. ADDITIONAL PAYMENTS BY COMPANY. Notwithstanding anything to the contrary
in this Agreement, in the event that any payment, benefit or distribution by
Company to or for the benefit of the Employee, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended, or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest or penalties, are hereinafter collectively referred to as the
"Excise Tax"), Company shall pay to the Employee an additional payment (a
"Gross-up Payment") in an amount such that after
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payment by the Employee of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise Tax imposed on any
Gross-up Payment, the Employee retains an amount of the Gross-up Payment equal
to the Excise Tax imposed upon the Payments. Company and the Employee shall make
an initial determination as to whether a Gross-up Payment is required and the
amount of any such Gross-up Payment. The Employee shall notify Company in
writing of any claim by the Internal Revenue Service which, if successful, would
require Company to make a Gross-up Payment (or a Gross-up Payment in excess of
that, if any, initially determined by Company and the Employee) within five days
of the receipt of such claim. Company shall notify the Employee in writing at
least ten days prior to the due date of any response required with respect to
such claim if it plans to contest the claim. If Company decides to contest such
claim, the Employee shall cooperate fully with Company in such action; provided,
however, Company shall bear and pay directly or indirectly all costs and
expenses (including additional interest and penalties) incurred in connection
with such action and shall indemnify and hold the Employee harmless, on an
after-tax basis, for any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of Company's action. If, as
a result of Company's action with respect to a claim, the Employee receives a
refund of any amount paid by Company with respect to such claim, the Employee
shall promptly pay such refund to Company. If Company fails to timely notify the
Employee whether it will contest such claim or Company determines not to contest
such claim, then Company shall immediately pay to the Employee the portion of
such claim, if any, which it has not previously paid to the Employee.
8. TRADE SECRETS, ETC. The Employee shall hold, both during the Employment
Term and thereafter, in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to the Company or
any of its subsidiaries or corporate affiliates and their respective businesses
and operations, which shall have been obtained by the Employee during the
Employee's employment (whether prior to or after the date hereof) and which
shall not have become public knowledge (other than by acts of the Employee or
his representatives in violation of this Agreement). The Employee agrees
(i) that, without the prior written consent of the Company or as may be
otherwise required by law or legal process, he will not communicate or divulge
any such information, knowledge or data to any party other than the Company and
(ii) to deliver promptly to the Company upon its written request any
confidential information, knowledge or data in his possession, whether produced
by the Company or any of its subsidiaries and corporate affiliates or by the
Employee, that relates to the business of the Company or any of its subsidiaries
and joint ventures or any past, current or prospective activity of the Company
or any of its subsidiaries and joint ventures. The Employee shall be permitted
to retain copies of such data as are necessary in order to enable the Employee
to assert any rights under this Agreement, provided that such data shall be used
solely for such purpose.
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9. LIMITED COVENANT NOT TO COMPETE. (a) While Employee is employed by the
Company and for a period of one (1) year following the termination of Employee's
employment with the Company during which one year period the Employee shall,
subject to the terms and conditions of this Agreement, continue to receive the
compensation and benefits provided for in Section 6 hereinabove, the Employee
will not, directly or indirectly, own, manage, operate, control, be employed by,
participate in, or be connected in any manner with the ownership, management,
operation or control of any company or other business enterprise engaged in a
line or lines of business similar to that of the Company or any of its
subsidiaries or joint ventures, within the State of Texas, Louisiana,
Mississippi, Alabama or Florida (including any area offshore in the Gulf of
Mexico or any such state) or any other jurisdiction, whether within or outside
the United States in which the business of the Company or any of its
subsidiaries or joint ventures is carried on, so long as the Company or any of
its subsidiaries or joint ventures carries on a like line of business therein;
provided, however, that nothing contained herein shall prohibit the Employee
from making investments in any company which do not exceed in the aggregate two
percent of the equity interest of such company.
(b) As part of the consideration for the compensation and benefits to be
paid to the Employee hereunder; to protect the trade secrets and confidential
information of Company and its affiliates that have been and will in the future
be disclosed or entrusted to the Employee, the business good will of the Company
and its affiliates that has been and will in the future be developed in the
Employee, or the business opportunities that have been and will in the future be
disclosed or entrusted to the Employee by the Company and its affiliates; and,
as an additional incentive for the Company to enter in this Agreement, the
Company and the Employee agree to the non-competition obligations hereunder. The
obligations of the Employee set forth in this Section 9 shall apply during the
term of this Agreement and shall survive termination of this Agreement and/or
the termination of the Employee's services under this Agreement regardless of
the reason for such termination.
10. NO TAMPERING. While Employee is employed by the Company and for one
year following the termination of Employee's employment with the Company, the
Employee shall not (a) request, induce or attempt to influence any supplier of
goods or services to the Company curtail or cancel any business they may
transact with the Company; (b) request, induce or attempt to influence any
customers of the Company that have done business with or potential customers
which have been in contact with the Company to curtail or cancel any business
they may transact with the Company; or (c) request, induce or attempt to
influence any employee of the Company to terminate his or her employment with
the Company.
11. STATEMENTS CONCERNING THE COMPANY. The Parties shall refrain, both
during the Employment Term and following the termination of Employee's
employment by the Company for any reason, from publishing any oral or written
statements about the other, any of their affiliates, or any of such entities'
officers, employees, agents or representatives that are slanderous, libelous, or
defamatory; or that disclose private or confidential information about the
Employee or the Company, any of its affiliates, or any of such entities'
business affairs, officers, employees, agents or representatives; or that
constitute an intrusion into the seclusion or private lives of the Employee, the
Company, any of its affiliates, or any of such entities' officers, employees,
agents or representatives or that give rise to unreasonable publicity about the
private lives of the Employee, the Company, any of its affiliates, or any of
such entities' officers, employees, agents or
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representatives; or that place the Employee or the Company, any of its
affiliates, or any of such entities' officers, employee, agents or
representatives in a false light before the public; or that constitute a
misappropriation of the name or likeness of the Company, any of its affiliates,
or any of such entities; officers, employees, agents or representatives. A
violation or threatened violation of this prohibition may be enjoined by the
courts. The rights afforded the Employee and the Company and its affiliates
under this provision are in addition to any and all rights and remedies
otherwise afforded by law.
12. INJUNCTIVE RELIEF. In the event of a breach or threatened breach by the
Employee of the provisions of Sections 8, 9, 10 or 11 of this Agreement during
or after the term of this Agreement, the Company shall be entitled to injunctive
relief restraining the Employee from violation of such paragraph. Nothing herein
shall be construed as prohibiting the Company from pursuing any other remedy at
law or in equity it may have in the event of breach or threatened breach of this
Agreement by the Employee.
13. BINDING EFFECT.
(a) This Agreement shall be binding upon and inure to the benefit of the
Company and any of its successors or assigns.
(b) This Agreement is personal to the Employee and shall not be
assignable by the Employee without the consent of the Company (there being no
obligation to give such consent) other than such rights or benefits as are
transferred by will or the laws of descent and distribution.
(c) The Company will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the assets or businesses of the Company (i) to assume
unconditionally and expressly this Agreement and (ii) to agree to perform all of
the obligations under this Agreement in the same manner and to the same extent
as would have been required of the Company had no assignment or succession
occurred, such assumption to be set forth in a writing reasonably satisfactory
to the Employee. In the event of any such assignment or succession, the term
"Company" as used in this Agreement shall refer also to such successor or
assign.
14. NOTICES. Any notice or other communication required under this
Agreement shall be in writing, shall be deemed to have been given and received
when delivered in person, or, if mailed, shall be deemed to have been given when
deposited in the United States mail, first class, registered or certified,
return receipt requested, with proper postage prepaid, and shall be deemed to
have been received on the third business day thereafter, and shall be addressed
as follows:
If to the Company, addressed to:
Horizon Offshore, Inc.
0000 Xxxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Vice President of Human Resources
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If to the Employee, addressed to:
Xxxx X. Xxx
0000 Xxxxxxx Xxxxxxx
Xxxx, Xxxxx 00000
or such other address as to which any party hereto may have notified the other
in writing.
15. GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Texas.
16. ENTIRE AGREEMENT. This Agreement and the documents referred to herein,
contain or refer to the entire arrangement or understanding between the Employee
and the Company relating to the employment of the Employee by the Company and
supersedes all prior agreements, promises, correspondence, discussions,
representations and understandings, written or verbal.. No provision of the
Agreement, may be modified or amended except by an instrument in writing signed
by or for both parties hereto.
17. SEVERABILITY. If any term or provision of this Agreement, or the
application thereof to any person or circumstance, shall at any time or to any
extent be invalid or unenforceable, the remainder of this Agreement, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby and each term and provision of this Agreement shall be valid and
enforced to the fullest extent permitted by law.
18. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach thereof.
19. REMEDIES NOT EXCLUSIVE. No remedy specified herein shall be deemed to
be such party's exclusive remedy, and accordingly, in addition to all of the
rights and remedies provided for in this Agreement, the parties shall have all
other rights and remedies provided to them by applicable law, rule or
regulation.
20. BENEFICIARIES. Whenever this Agreement provides for any payment to be
made to the Employee or his estate, such payment may be made instead to such
beneficiary or beneficiaries as the Employee may have designated in writing and
filed with the Company. The Employee shall have the right to revoke any such
designation from time to time and to redesignate any beneficiary or
beneficiaries by written notice to the Company.
21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
22. ATTORNEY FEES AND EXPENSES. The Company shall pay any attorney fees and
other expenses incurred by the Employee in negotiation or preparation of this
Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
hereinabove written.
HORIZON OFFSHORE, INC.
By: /s/ XXXXX X. XXXXX
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Name: Xxxxx X. Xxxxx
Title: Executive Vice President and
Chief Financial Officer
EMPLOYEE:
/s/ XXXX X. XXX
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Xxxx X. Xxx
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