EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), dated as of August 22,
2006 (the "Effective Date"), by and between the Gateway Energy Corporation, a
Delaware corporation (the "Employer"), and Xxxxxxxxxxx X. Xxxxxxxxx (the
"Executive").
W I T N E S S E T H:
In consideration of the promises, the agreements and mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Employer and the Executive
hereby agree as follows:
1. Agreement of Employment. The Executive's future employment with the
Employer shall be subject to the terms and conditions of this Agreement. Various
capitalized terms are defined either where they first appear in this Agreement
or in Sections 7(b) and 8.
2. Term, Position and Responsibilities.
(a) Term of Employment. Pursuant to this Agreement, Employer
shall employ the Executive for a term commencing on the Effective Date
and ending upon termination pursuant to Section 6 (such period to be
known as the "Term"). The respective rights and obligations of the
parties hereunder shall survive the end of the Term to the extent that
any obligation of the Employer under this Agreement remains unpaid (or
otherwise not fully discharged) as of such time, and to the extent
provided in Sections 7 and 18.
(b) Position and Responsibilities. During the Term, the
Executive shall serve as Chief Financial Officer of the Employer
reporting directly to its Board. The Executive shall devote
substantially all of his skill, knowledge and working time to the
conscientious performance of such duties, except for reasonable
vacation time (as described in Section 5(b)), absence for sickness or
similar Disability and authorized leaves of absence.
(c) Place of Employment. During the Term, the Executive's
primary place of employment shall be at the Employer's headquarters
located in Houston, Texas, except as travel to other locations is
warranted by the business of the Employer.
3. Base Salary. As partial compensation for the services to be
performed by the Executive hereunder, the Employer shall pay the Executive an
annualized base salary of at least $90,000.00 during each year of the Term. The
Compensation and Stock Option Committee of the Employer's Board of Directors
(the "Committee") shall review Executive's base salary at least annually during
the Term and, in its discretion, may increase (but not decrease) such base
salary from time to time based upon the performance of the Executive, the
financial condition of the Employer, prevailing industry salary scales and such
other factors as it may consider relevant. The annualized base salary payable to
the Executive under this Section 3, as the same may be increased from time to
time and without regard to any reduction therefrom in accordance with the next
sentence, shall hereinafter be referred to as the "Base Salary." The Base Salary
actually payable under this Section 3 shall be reduced to the extent that the
Executive elects to defer any portion of such Base Salary under the terms of any
section 401(k) savings plan or nonqualified deferred compensation plan
maintained or established by the Employer and shall be reduced for applicable
statutory reductions and withholding. The Employer shall pay the Executive the
Base Salary in semi-monthly installments, or in such other installments as may
be mutually agreed upon by the Employer and the Executive.
4. Benefits.
(a) Welfare Benefits. During the Term, the Employer shall
arrange for the provision to the Executive and his family of medical,
dental, prescription drug, vision, life insurance and long-term
disability benefits. The benefits so required shall be comparable to
those benefits presently available to the Executive by the Employer,
as the same may be amended and in effect from time to time.
(b) Retirement Benefits. During the Term, the Executive
shall be entitled to participate in a tax-qualified "section 401(k)"
retirement plan as made generally available to employees of the
Employer and such other retirement plans as are generally available
from time to time to senior executive officers of the Employer.
5. Perquisites and Expenses.
(a) General. During the Term, the Executive shall be
entitled to participate in such perquisites as are generally available
from time to time to senior executive officers of the Employer, on the
terms and conditions then prevailing under such perquisites.
(b) Vacation. During the Term, the Executive shall be
entitled to three (3) weeks of paid vacation per year, without
carry-over accumulation, consistent with the Employer's vacation
policy generally applicable to other employees of the Employer.
(c) Expense Reimbursement. During the Term, the Executive
shall be entitled to receive prompt reimbursement upon a timely basis
(according to the then-current practices of the Employer) for all
reasonable expenses incurred by the Executive in performing his duties
and responsibilities hereunder upon the presentation by the Executive
of an itemized monthly accounting of such expenditures, including
receipts where required by the Employer's policy or federal income tax
regulations.
6. Termination of Employment.
(a) Due to Death or Disability. Upon the Executive's death
or Disability, all obligations of the Employer and the Executive under
Sections 1 through 5 of this Agreement shall immediately cease;
provided, however, the Employer shall pay, and the Executive (or his
estate) shall be entitled to receive, the following:
(i) any accrued, unpaid portion of Base Salary and
accrued vacation through the Date of Termination;
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(ii) in lieu of any annual incentive compensation for
the period in which Executive's applicable Date of
Termination occurs, but subject to the terms of
any annual incentive compensation plan or program
which would provide for greater compensation upon
the Date of Termination, the Executive shall be
paid the amount produced by multiplying:
(A) the Executive's annual incentive bonus
for the year in which the Executive's
Date of Termination occurs determined as
of the end of such year in accordance
with the applicable plan, by
(B) a fraction, the numerator of which is
the number of days the Executive was
employed in the year through the Date of
Termination, and the denominator of
which is the total number of days in the
year relevant to the annual incentive
compensation plan; and
(iii) all amounts owing and accrued at the Date of
Termination, after taking into account such death
or Disability, under any long-term incentive
compensation and deferred compensation plans in
which the Executive theretofore participated,
under the terms and conditions of such plans.
Amounts which are immediately payable will be paid as promptly as
reasonably practicable, but no later than thirty (30) days, after the
Executive's Date of Termination, except that the amounts payable under
clause (ii) above shall be paid as promptly as reasonably practicable
after the end of the year in which the Date of Termination occurs. In
addition, the Employer shall continue to provide at its expense the
benefits described in Section 4(a) of this Agreement, as in effect at
the time of Executive's death or Disability, to the Executive (if
disabled) and Executive's immediate family for a period of eighteen
(18) months.
(b) Termination by the Employer for Cause and Voluntary
Termination by the Executive. Upon the Executive's termination of
employment during the Term (i) by the Employer for Cause or (ii) by
the Executive without Good Reason (other than due to the Executive's
death or Disability), in which case Executive agrees to deliver to the
Board the Notice of Termination at least thirty (30) days prior to
termination of employment, all obligations of the Employer under
Sections 1 through 5 of this Agreement shall immediately cease;
provided, however, the Employer shall pay the Executive, and the
Executive shall be entitled to receive, any accrued, unpaid portion of
Base Salary through the Date of Termination. In addition, the
Executive shall be entitled to any vested, non-forfeitable amounts
owing and accrued at the Date of Termination under any long-term
incentive compensation and deferred compensation plans in which the
Executive theretofore participated, under the terms and conditions of
such plans. Amounts which are immediately payable will be paid as
promptly as reasonably practicable, but no later than thirty (30)
days, after the Executive's Date of Termination.
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(i) Termination by the Employer without Cause and
Termination by the Executive for Good Reason. Upon
the Executive's termination of employment during
the Term either (1) by the Employer for any reason
other than death, Disability, Retirement or for
Cause, or (2) by the Executive for Good Reason,
all obligations of the Employer and the Executive
under Sections 1 through 5 of this Agreement shall
immediately cease; provided, however, the Employer
shall provide to the Executive and the Executive
shall be entitled to receive:
(ii) payment of the aggregate of the following amounts:
(A) the Executive's accrued and unpaid Base
Salary and accrued vacation through the
Date of Termination to the extent not
theretofore paid; and
(B) one (1) times an amount equal to the
highest sum of the Executive's Base
Salary plus annual incentive bonus
earned, in each of the three most
recently completed fiscal years of the
Employer, provided that in the event a
Change of Control has occurred prior to
the Date of Termination, such highest
sum shall be multiplied times one and
one-half (1 1/2); and
(iii) the Employer shall continue to provide at its
expense the benefits described in Section 4(a) of
this Agreement, as in effect at the Date of
Termination to the Executive and Executive's
immediate family for a period of up to eighteen
(18) months. The Executive's coverage for the
remainder of such eighteen-month period shall not
be included in the calculation of the period of
coverage to be provided pursuant to any statutory
continuation of benefits obligation (such as
COBRA). The Executive's right to statutory
continuation coverage shall commence on the first
day following the end of such eighteen-month
period. If such welfare benefit plans and programs
do not allow the Executive's continued
participation, a cash payment shall be made to the
Executive equal to the value of the additional
benefits the Executive would have received under
such benefit programs in which the Executive was
participating immediately prior to the Date of
Termination. With respect to any payment under the
immediately preceding sentence, the value of any
insurance-provided benefits shall be based on the
premium cost to the Executive, which shall not
exceed the highest risk premium charged by a
carrier having an investment grade or better
credit rating. These benefits shall be reduced by
the amount of similar benefits Executive is
eligible to receive during such period from or
through a subsequent employer, as determined
solely by the Board. For the purposes of enforcing
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this offset provision, Executive shall notify the
Board as to the terms and conditions of any
subsequent employment and the corresponding
benefits received pursuant thereto, and shall
provide, or cause to provide the Board, correct,
complete, and timely information concerning the
same.
Amounts which are payable above will be paid as promptly as reasonably
practicable, but no later than thirty (30) days, after the Executive's
Date of Termination, provided however, if a Change of Control has not
occurred prior to the Date of Termination, then the Company may elect
to pay such amounts in twelve (12) equal monthly installments with the
first such installment being due and payable on the first day of the
first calendar month following the Date of Termination. If the Company
elects to make such payments in installments, the Company shall secure
the entire amount due pursuant to a letter of credit issued by a bank.
(c) Notice of Termination. Any purported termination of the
Executive's employment (other than by reason of death) or notice on
non-renewal of the Term pursuant to Section 2(d) shall be communicated
by written "Notice of Termination" from one party hereto to the other
party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice that indicates the specific
termination provision in this Agreement relied upon. Any Notice of
Termination shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and the
effective date of termination of this Agreement and Executive's
employment.
(d) Notices of Cause and Good Reason. A termination for
Cause shall be permitted hereunder only if an Employer provides the
Notice of Termination not later than six (6) months after the date the
Employer first knew or should have known of the act or omission to act
giving rise to the termination for Cause. A termination for Good
Reason shall be permitted hereunder only if the Executive provides the
Notice of Termination not later than six (6) months after the date the
Executive first knew or should have known of the act or omission to
act giving rise to the termination for Good Reason. In either case,
the six (6)-month period shall be tolled during any permitted period
of correction or administrative procedure.
(e) Discharge of Obligations. The payments and benefits
under Section 6 shall fully and totally satisfy the Executive's
entitlement, and shall fully discharge the Employer, in respect of all
statutory compensation and benefits and any notice obligation under
applicable law. Any payments and benefits provided for in this Section
6 shall be contingent upon Executive executing a full release of any
and all claims against the Employer, the Board and officers of the
Employer and any affiliates and representatives of the Employer
arising out of Executive's employment with the Employer or this
Agreement.
(f) Termination by Either Party After the Term Hereof.
Notwithstanding any of the provisions of Section 7 hereof, if
Executive's employment is terminated for any reason after the
expiration of the Term hereof and no other written employment
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agreement between the Executive and the Employer is in effect,
Executive will be free of all his obligations under second sentences
of Section 7(d), (e) and (e) hereof.
(g) Resignation. In the event of termination of Executive's
employment hereunder (for any reason other than death), the Executive
agrees that if at such time he is a member of the Board or officer of
this Employer or a director or officer of any of its subsidiaries, he
will promptly deliver to the Employer his written and executed
resignation from all such positions, such resignation to be effective
as of the Executive's Date of Termination.
7. Non-Disclosure, Non-Competition and Non-Solicitation Covenants. Set
out in this Section are certain covenants regarding non-disclosure,
non-competition and non-solicitation which the Executive acknowledges, accepts
and agrees to by entering into this Agreement.
(a) Acknowledgements. The Executive acknowledges that, as
Chief Executive Officer and President of the Employer, the Executive
frequently is or will be exposed to certain "Trade Secrets" and
"Confidential Information" (as those terms are defined in Section
7(b)). Accordingly, the Executive acknowledges and agrees that it is
reasonable for the Employer to require the Executive to abide by the
covenants set forth in this Section 7 during and after Executive's
term of employment.
(b) Definitions. For purposes of this Section 7, the
following terms shall have the following meanings:
(i) "Competitive Position" means a position as an
employee, employer, consultant, agent, principal,
partner, shareholder, officer, director or other
individual or representative capacity with a
competitor whereby Executive is required to
perform executive level services substantially
similar to those that the Executive performs for
the Employer.
(ii) "Competitor" refers to any person or entity
engaged, wholly or partly, in the business of
owning or operating natural gas gathering,
transportation and distribution systems and
related facilities or nitrogen rejection processes
which would result in direct competition with the
Employer.
(iii) "Confidential Information" means the proprietary
and confidential data or information of the
Employer, other than "Trade Secrets" (as defined
below), which is of tangible or intangible value
to the Employer and is not public information or
is not generally known or available to the
Employer's Competitors.
(iv) "Trade Secrets" means information of the Employer,
including, but not limited to, technical or
non-technical data, compilations, programs,
devices, methods, techniques, financial data,
financial plans, product plans or lists of actual
or potential customers or suppliers, which (a)
derives economic value, actual or potential, from
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not being generally known to, and not being
readily ascertainable by proper means by, other
persons who can obtain economic value from its
disclosure or use; and (b) is the subject of
efforts that are reasonable under the
circumstances to maintain its secrecy.
(c) Non-disclosure, Ownership of Proprietary Property.
(i) The Executive hereby covenants and agrees that (A)
with regard to information constituting a Trade
Secret, at all times during the Executive's
employment with the Employer and all times
thereafter during which such information continues
to constitute a Trade Secret; and (B) with regard
to any Confidential Information, at all times
during the Term and for a period of five (5) years
after his Date of Termination, the Executive shall
regard and treat all information constituting a
Trade Secret or Confidential Information as
strictly confidential and wholly owned by the
Employer and will not, for any reason in any
fashion, either directly or indirectly, use, sell,
lend, lease, distribute, license, give, transfer,
assign, show, disclose, disseminate, reproduce,
copy, appropriate or otherwise communicate any
such information to any party for any purpose
other than strictly in accordance with the express
terms of this Agreement and other than as may be
required by law.
(ii) In addition to complying with the provisions of
Section 7(c)(i) and except as provided in Section
6(g), the Executive shall exercise the Executive's
best efforts to assist the Employer, to the extent
the Employer deems reasonably necessary, in the
procurement of any protection of its rights to or
in any of the Trade Secrets or Confidential
Information.
(d) Immediately upon the Executive's Date of Termination
with the Employer, or at any point prior to or after that time upon
the specific request of the Employer, the Executive shall return to
the Employer all written or descriptive materials of any kind in the
Executive's possession or to which the Executive has access that
constitute or contain any Confidential Information or Trade Secrets.
(e) Non-Competition. The Executive agrees that during the
Term of this Agreement, the Executive will not, either directly or
indirectly, alone or in conjunction with any other party, take any
action in furtherance of or in conjunction with a Competitive Position
with a Competitor of the Employer. Except as provided in Section 6(g),
the Executive agrees that for a period of twelve (12) months after his
Date of Termination, the Executive will not, either directly or
indirectly, alone or in conjunction with any other party, take any
action in furtherance of or in conjunction with a Competitive Position
with a Competitor within the continental United States.
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(f) Non-Solicitation of Customers. The Executive agrees
that, while employed with the Employer, the Executive will not, either
directly or indirectly, alone or in conjunction with any other party,
solicit, divert or appropriate, or attempt to solicit, divert or
appropriate, any customer or actively sought prospective customer of
the Employer for on behalf of himself or any Competitor. Except as
provided in Section 6(g), the Executive agrees that for a period of
twelve (12) months after his Date of Termination, the Executive will
not, either directly or indirectly, alone or in conjunction with any
other party, for or on behalf of himself or a Competitor, solicit,
divert or appropriate, or attempt to solicit, divert or appropriate
any customer or actively sought prospective customer of the Employer
with whom the Executive had substantial contact during a period of
time up to, but no longer than two (2) years prior to the Executive's
Date of Termination.
(g) Non-Solicitation of Personnel. The Executive agrees
that, while employed with the Employer, the Executive will not, either
directly or indirectly, alone or in conjunction with any other party,
solicit or attempt to solicit any employee or other personnel of the
Employer to terminate, alter or lessen that party's affiliation with
the Employer or to violate the terms of any agreement or understanding
between such employee or other person and the Employer. The Executive
agrees that, for a period of twelve (12) months after the Executive's
Date of Termination, the Executive will not, either directly or
indirectly, alone or in conjunction with any other party, solicit or
attempt to solicit any "material" or "key" (as those terms are defined
in the next sentence) employee or other personnel of the Employer to
terminate, alter or lessen that party's affiliation with the Employer
or to violate the terms of any agreement or understanding between such
employee or other person and the Employer. For purposes of the
preceding sentence, "material" or "key" employees or other personnel
of the Employer are those who have access to the Employer's Trade
Secrets and Confidential Information.
(h) Remedies. The Executive agrees that damages at law for
the Executive's violation of any of the covenants in this Section 7
would not be an adequate or proper remedy and that should the
Executive violate or threaten to violate any of the provisions of such
covenants, an Employer or its successors or assigns shall be entitled
to obtain a temporary or permanent injunction against the Executive in
any court having jurisdiction prohibiting any further violation of any
such covenants.
(i) Ability to Earn Livelihood. Executive expressly agrees
and acknowledges that the covenants and restrictions contained in
Section 7 do not preclude Executive from earning a livelihood, nor do
they unreasonably impose limitations on Executive's ability to earn a
living. In addition, Executive agrees and acknowledges that the
potential harm to the Employer of its non-enforcement outweighs any
harm to the Executive of its enforcement by injunction or otherwise.
(j) Enforcement. If any court of competent jurisdiction or
arbitrator deems any term, or the scope of any provision, of Section 7
unenforceable, the aspects of this Section 7 so deemed shall be
reduced, reformed or modified by appropriate order and shall
thereafter continue, as so modified, in full force and effect, and the
remainder of Section 7 of the Agreement shall nevertheless stand and
shall remain in full force and effect.
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8. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings (unless expressly indicated to the contrary)
and the term shall be capitalized when the meaning is intended:
(a) "Board" means the Board of Directors of the Employer.
(b) "Cause" means, as to the Executive, any of the following:
(i) the Executive's conviction of any felony, or any
other crime involving misuse or misappropriation
of money, or entering a plea of no contest in a
court of law to a felonious crime or other crime
involving a misuse or misappropriation of money or
property; or
(ii) the Executive's engaging in one or more acts of
dishonesty which (A) result in material and
demonstrable damage to the Employer or (B)
materially and demonstrably impair the value of
the Executive's services to the Employer; or
(iii) a fraudulent certification under Section 302 or
Section 906 of the Xxxxxxxx-Xxxxx Act of 2002, as
amended from time to time; or
(iv) the Executive's violation of any of the covenants
set out in Section 7 of this Agreement.
Notwithstanding the foregoing, the Executive may not be
terminated for Cause unless and until there shall have been delivered
to the Executive a copy of a notice specifying the nature of the
grounds for such termination. The notice also shall afford the
Executive with the opportunity, together with the Executive's counsel,
to be heard regarding the existence of Cause. The Executive shall have
thirty (30) days to correct the acts or omissions complained of, if
correctable. Nothing contained in the foregoing provisions of this
Section or elsewhere in this Agreement shall be deemed to interfere in
any way with the right to terminate the Executive's employment at any
time without Cause.
(c) "Change in Control" means the occurrence of any of the
following events during the Term of this Agreement and shall be deemed
to have occurred on the date the first such event occurs:
(i) Change in Voting Power. Any person or persons
acting together which would constitute a "group"
for purposes of Section 13(d) of the Exchange Act
(other than the Employer, or any Subsidiary, or
any entity beneficially owned by any of the
foregoing) beneficially own (as defined in Rule
13(d)-3 under the Exchange Act) without Board
approval or consent, directly or indirectly, at
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least thirty percent (30%) of the total voting
power of the Employer entitled to vote generally
in the election of the Board;
(d) Change in Board of Directors. Either:
(i) the Current Directors (as hereinafter defined)
cease for any reason to constitute at least a
majority of the members of the Board (for these
purposes, a "Current Director" means any member of
the Board as of the date of this Agreement, and
any successor of a Current Director whose election
or nomination for election by the Employer's
stockholders was approved by at least a majority
of the current Directors then on the Board); or
(ii) at any meeting of the stockholders of the Employer
called for the purpose of electing directors, a
majority of the persons nominated by the Board for
election as directors fail to be elected; or
(iii) Liquidation, Merger or Consolidation. The
stockholders of the Employer approve an agreement
providing for the merger or consolidation of the
Employer (i) in which the Employer is not the
continuing or surviving corporation (other than
consolidation or merger with a wholly owned
subsidiary of the Employer in which all shares
outstanding immediately prior to the effectiveness
thereof are changed into or exchanged for the same
consideration) or (ii) pursuant to which the
shares are converted into cash, securities or
other property, except a consolidation or merger
of the Employer in which the holders of the shares
immediately prior to the consolidation or merger
have, directly or indirectly, at least a majority
of the common stock of the continuing or surviving
corporation immediately after such consolidation
or merger, or in which the Board immediately prior
to the merger or consolidation would, immediately
after the merger or consolidation, constitute a
majority of the board of directors of the
continuing or surviving corporation; or
(iv) Sale of Assets. The stockholders of the Employer
approve an agreement (or agreements) providing for
the sale or other disposition (in one transaction
or a series of transactions) of all or
substantially all of the assets of the Employer or
a plan of complete liquidation of the Employer.
(e) "Code" means the Internal Revenue Code of 1986, as
amended.
(f) "Date of Termination" means, (i) if the Executive's
employment with the Employer (or a successor) is terminated by the
Executive's death, the date of the Executive's death; (ii) if such
employment is terminated by the Employer for Cause, the date on which
Notice of Termination is given; and (iii) if such employment is
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terminated for any other reason, the date on which Notice of
Termination is given or, if no such Notice of Termination is given,
the day after the date the Executive ceases to render services.
(g) "Disability" means a determination by the Board, in its
reasonable discretion, that the Executive is unable to engage in the
customary duties and responsibilities of his position by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to
last for a continuous period of at least six (6) months. If the
Executive disputes the determination of the Board, the dispute shall
be resolved by a mutually agreed upon physician. Upon the failure of
the Employer and the Executive to agree upon a physician, the
Executive and the Employer shall each select, at their own expense, a
physician, duly licensed to practice in that field of medicine
encompassing the area of alleged disability, to examine the Executive.
The physicians selected by Executive and the Employer, respectively,
shall mutually select a third physician, duly licensed to practice in
that field of medicine encompassing the area of alleged disability, to
examine Executive. Each such physician selected shall be a
disinterested person of recognized competence who, at the time of his
or her selection, has no professional or business relationship with
the other physicians selected, Executive or the Employer. Thereafter,
within a reasonable time period after the selection of the three (3)
physicians, not to exceed thirty (30) days after the selection of the
final physician, Executive shall submit to an examination by each such
physician. Each physician shall then determine whether Executive is
disabled within the meaning of this Agreement, and shall provide
written notice of his or her determination to both Executive and the
Employer. The decision reached by a majority of the physicians shall
be conclusive on the parties hereto. The cost of each physician shall
be borne equally by the Executive and the Employer. In no event shall
the good faith determination of any physician selected pursuant to
this Agreement give rise to liability of any kind whatsoever by such
physician to either Executive or the Employer.
(h) "Good Reason" means the occurrence of any of the
following events:
(i) the assignment to the Executive of duties
materially inconsistent with the Executive's
position (including status, titles and reporting
requirements), authority, duties or
responsibilities as contemplated by Section 2(b)
of this Agreement, or any other action by the
Employer which results in a significant diminution
in such position, authority, duties;
(ii) the Employer's requiring the Executive to be based
at any office or location more than fifty (50)
miles from the location described in Section 2(c);
(iii) a reduction by the Employer in the Executive's
rate of annual Base Salary; or
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(iv) the failure of the Employer to obtain from a
successor (including a successor to a material
portion of the business or assets of the Employer)
a satisfactory assumption in writing of the
Employer's obligations under this Agreement.
Notwithstanding the foregoing, Good Reason shall not exist if (i) such
event occurs with the Executive's express prior written consent; (ii)
the event is an isolated, insubstantial and inadvertent action or
failure to act which was not taken in bad faith and which is remedied
by the Employer promptly after receipt of notice thereof given by the
Executive; or (iii) the event occurs in connection with the
termination of the Executive's employment for Cause or due to
Disability or death.
(i) "Retirement" means termination of Executive's employment
by the Employer after Executive has reached the Employer's retirement
age, as established from time to time by the Employer for its senior
executive officers, which in no event shall be earlier than 65 years
of age.
9. Assumption of Agreement. The Employer will require any successor
(by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Employer, by agreement in form and substance
reasonably satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that Employer
would be required to perform it if no such succession had taken place. Failure
of the Employer to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the Executive
to compensation from the Employer in the same amount and on the same terms as
the Executive would be entitled hereunder if the Executive incurred a
termination of employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this Agreement,
the term "Employer" shall mean the Employer as herein previously defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, written agreement or otherwise.
10. Entire Agreement. Except as otherwise expressly provided herein,
this Agreement constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof, and all promises, representations,
understandings, arrangements and prior agreements relating to such subject
matter (including those made to or with the Executive by any other person or
entity) are merged herein and superseded hereby.
11. Successors and Assigns. This Agreement shall inure to the benefit
of and be enforceable by the Executive and the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees, and shall be binding upon and inure to the benefit of the
Employer and its permitted successors and assigns as provided. This Agreement is
a personal contract and the rights and interests of the Executive hereunder may
not be sold, transferred, assigned, pledged, encumbered, margined, conveyed,
gifted, alienated, or hypothecated by the Executive, except as otherwise
expressly permitted by the provisions of this Agreement. The Employer shall have
the right to assign this Agreement to any corporation with which it may merge or
consolidate.
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12. Arbitration. Except for the rights and duties of the parties set
forth in Section 7(g) of this Agreement, any dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration in Houston, Texas, according to the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of his right to be paid
for all periods up to the Date of Termination during the pendency of any dispute
or controversy arising under or in connection with this Agreement. If the
Executive is the prevailing party with respect to enforcement of this Agreement,
Employer shall pay all costs and expenses, including but not limited to,
reasonable attorneys' fees actually incurred by the Executive in the successful
enforcement in respect to any of his rights under this Agreement.
13. Governing Law. This Agreement is governed by and is to be
construed, administered, and enforced in accordance with the laws of the State
of Texas, without regard to Texas conflicts of law principles, except in so far
as federal laws and regulations may be applicable.
14. Withholding. The foregoing and other provisions of this Agreement
notwithstanding, all payments to be made to the Executive under this Agreement
will be subject to required withholding taxes and other required deductions, and
the Executive shall provide the Employer such information as the Employer
reasonably requests so that such Employer may implement and verify the operation
of this Section.
15. Amendments and Waivers. No provisions of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge is
approved by the Committee or a person authorized thereby and is agreed to in
writing by the Executive and such officer as may be specifically designated by
the Committee. No waiver by any party hereto at any time of any breach by any
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
16. Severability. In the event that all or any part of any provision
of this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement or such provision shall be
unaffected thereby and shall remain in full force and effect. If any provision
of this Agreement or portion thereof is so broad as to be unenforceable, it
shall be interpreted to be only so broad as is enforceable. Nothing in this
Agreement is intended to or shall be construed to violate any federal or state
law or regulation.
17. Notices. Any notice or other communication required or permitted
to be delivered under this Agreement shall be in writing, delivered personally,
by courier service or by certified or registered mail, first-class postage
prepaid and return receipt requested, deemed to have been received on the date
of delivery or on the third business day after the mailing thereof, and
addressed as follows (or to such other address as the party entitled to notice
shall hereafter designate in accordance with the terms hereof):
(a) if to the Employer, to it at its headquarters, to the
attention of the chairman of its Board of Directors; and
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(b) if to the Executive, to the Executive at the last
address the Executive has filed in writing with the Employer.
18. Assistance in Litigation. During the Term and for a period of
three (3) years thereafter, the Executive shall, upon reasonable notice, furnish
such information and proper assistance to the Employer as may reasonably be
required by the Employer in connection with any litigation in which the Employer
or any of its subsidiaries or affiliates is, or may become, a party. The
Employer shall reimburse the Executive for all reasonable out-of-pocket expenses
incurred by the Executive in rendering such assistance and, in the event
Executive is no longer employed by the Employer, the Employer shall pay
Executive reasonable compensation for his time spent rendering such assistance.
The provisions of this Section 18 shall continue in effect notwithstanding
termination of the Executive's employment hereunder for any reason. If
assistance is required after the Term, Executive shall not be required to
provide assistance to the extent it unreasonably interferes with Executive's new
employment.
19. No General Waivers. The failure of any party at any time to
require performance by any other party of any provision hereof or to resort to
any remedy provided herein or at law or in equity shall in no way affect the
right of such party to require such performance or to resort to such remedy at
any time thereafter, nor shall the waiver by any party of a breach of any of the
provisions hereof be deemed to be a waiver of any subsequent breach of such
provisions. No such waiver shall be effective unless in writing and signed by
the party against whom such waiver is sought to be enforced.
20. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which together shall constitute
one and the same instrument.
21. Headings. The section and other headings contained in this
Agreement are for the convenience of the parties only and are not intended to be
a part hereof or to affect the meaning or interpretation hereof.
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IN WITNESS WHEREOF, the Employer has duly executed this Agreement by
its authorized representative and the Executive has hereunto set his hand, in
each case effective as of the date first above written.
GATEWAY ENERGY CORPORATION
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Name: Xxxxxx Xxxxxx
Title: President and
Chief Executive Officer
THE EXECUTIVE:
/s/ Xxxxxxxxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxxxxxxxx X. Xxxxxxxxx
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