EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This AGREEMENT (the "Agreement") by and between Carrizo Oil &
Gas, Inc., a Texas corporation (the "Company") and Xxxxxxx X. Xxxxx (the
"Executive"), to be effective as of the 21st day of March, 2005, (the "Agreement
Effective Date").
In entering into this Agreement, the Board of Directors of the
Company (the "Board") desires to provide the Executive with substantial
incentives to serve the Company as one of its senior executives performing at
the highest level of leadership and stewardship, without distraction or concern
over minimum compensation, benefits or tenure, to manage the Company's future
growth and development, and maximize the returns to the Company's stockholders.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period. As of the Agreement Effective Date (hereinafter
defined), the Company hereby agrees to employ the Executive and the Executive
hereby agrees to accept employment with the Company, in accordance with, and
subject to, the terms and provisions of this Agreement, for the period (the
"Employment Period") commencing on the Agreement Effective Date and ending on
the first anniversary of the Agreement Effective Date; provided, on the
Agreement Effective Date and on each day thereafter, the Employment Period shall
automatically be extended for an additional one day without any further action
by either the Company or the Executive, it being the intention of the parties
that there shall be continuously a remaining term of not less than one year's
duration of the Employment Period until an event has occurred as described in,
or one of the parties shall have made an appropriate election and notification
pursuant to, the provisions of Section 3.
2. Terms of Employment.
(a) Position and Duties. It is contemplated that initially the
Executive shall be a full time employee and that upon commencement of his
entitlement to Base Salary under Section 2(b)(i) of this Agreement, during the
Employment Period, and excluding any periods of vacation and sick leave to which
the Executive is entitled, the Executive agrees to devote full attention and
time during normal business hours to the business and affairs of the Company
and, to the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's reasonable best efforts to perform
faithfully and efficiently such responsibilities. During the Employment Period,
it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not interfere with the
performance of the Executive's responsibilities as an employee of the Company in
accordance with this Agreement.
(b) Compensation.
(i) Base Salary. Commencing on the date on which the
Executive commences full time employment with the Company and
thereafter during his Employment Period, the Executive shall
receive an annual base salary of $175,000 ("Annual Base
Salary"), which shall be paid on a semimonthly basis.
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During the Employment Period, the Annual Base Salary shall be
reviewed at least annually and shall be increased at any time
and from time to time as shall be substantially consistent
with increases in base salary generally awarded in the
ordinary course of business to executives of the Company and
its affiliated companies. Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. As used in this Agreement, the
term "affiliated companies" shall include, when used with
reference to the Company, any company controlled by,
controlling or under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary,
the Executive may be awarded, for each fiscal year or portion
thereof during the Employment Period, an Annual Bonus (the
"Annual Bonus"), in an amount comparable to the Annual Bonus
Award to other Company executives, taking into account the
Executive's position, responsibilities, and accomplishments
with the Company, prorated for any period consisting of less
than 12 full months.
(iii) Incentive, Savings and Retirement Plans. During
the Employment Period, the Executive shall be entitled to
participate in all incentive, savings and retirement plans
that are tax-qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended ("Code"), and all plans that
are supplemental to any such tax-qualified plans, in each case
to the extent that such plans are applicable generally to
other salaried employees of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the
case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company or its
affiliated companies (including, without limitation, medical,
prescription, dental, vision, disability, salary continuance,
group life and supplemental group life, accidental death and
travel accident insurance plans and programs) to the extent
applicable generally to other salaried employees of the
Company and its affiliated companies.
(v) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement
for all reasonable expenses incurred by the Executive in
accordance with the policies, practices and procedures of the
Company and its affiliated companies.
(vi) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance
with the plans, policies, programs and practices of the
Company and its affiliated companies.
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3. Termination of Employment.
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Period.
If the Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 13(d) of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For the purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for either (i) 180 consecutive business
days or (ii) in any two-year period 270 nonconsecutive business days as a result
of incapacity due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably.)
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean for the Company's termination of the Executive's
employment for any of the following: (i) the Executive's final conviction of a
felony crime that enriched the Executive at the expense of the Company;
provided, however, that after indictment, the Company may suspend the Executive
from the rendition of services, but without limiting or modifying in any other
way the Company's obligations under this Agreement; (ii) a breach by the
Executive of a fiduciary duty owed to the Company; (iii) a breach by the
Executive of any of the covenants made by him in Sections 8 and 10 hereof; (iv)
the willful and gross neglect by the Executive of the duties specifically and
expressly required by this Agreement; or (v) the Executive's continuing failure
to substantially perform his duties and responsibilities hereunder (except by
reason of the Executive's incapacity due to physical or mental illness or
injury) for a period of 45 days after the Required Board Majority, as defined
herein, has delivered to the Executive a written demand for substantial
performance hereunder which specifically identifies the bases for the Required
Board Majority's determination that the Executive has not substantially
performed his duties and responsibilities hereunder (that period being the
"Grace Period"); provided, that for purposes of this clause (v), the Company
shall not have Cause to terminate the Executive's employment unless (A) at a
meeting of the Board called and held following the Grace Period in the city in
which the Company's principal executive offices are located, of which the
Executive was given not less than 10 days' prior written notice and at which the
Executive was afforded the opportunity to be represented by counsel, appear and
be heard, the Required Board Majority shall adopt a written resolution which (1)
sets forth the Required Board Majority's determination that the failure of the
Executive to substantially perform his duties and responsibilities hereunder has
(except by reason of his incapacity due to physical or mental illness or
injury)continued past the Grace Period and (2) specifically identifies the bases
for that determination, and (B) the Company, at the written direction of the
Required Board Majority, shall deliver to the Executive a Notice of Termination
for Cause to which a copy of that resolution, certified as being true and
correct by the secretary or any assistant secretary of the Company, is attached.
"Required Board Majority" means at any time a majority of the members of the
Board at that time which includes at least a majority of the
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Directors, each of whom has not been an employee of the Company or any
subsidiary of the Company.
(c) Good Reason; Window Period. The Executive's employment may
be terminated during the Employment Period by the Executive for Good Reason, or
during a Window Period by the Executive without any reason. For purposes of this
Agreement. "Window Period" shall mean the 60-day period immediately following
elapse of one year after any Change of Control as defined in Section 9 of this
Agreement. For purposes of this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
materially inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 2 of this Agreement, or any other
action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(ii) any material failure by the Company to comply
with any of the provisions of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring
in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive;
(iii) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted
by this Agreement;
(iv) any failure by the Company to comply with and
satisfy the requirements of Section 11 of this Agreement,
provided that (A) the successor described in Section 11(c) has
received, at least 10 days prior to the Date of Termination
(as defined in subparagraph (e) below), written notice from
the Company or the Executive of the requirements of such
provision and (B) such failure to be in compliance and satisfy
the requirements of Section 11 shall continue as of the Date
of Termination.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason or without any reason during a Window
Period, shall be communicated by Notice of Termination to the other party hereto
given in accordance with Section 13(d) of this Agreement. The failure by the
Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in enforcing
the Executive's or the Company's rights hereunder.
(e) Date of Termination. For purposes of this Agreement, the
term "Date of Termination" means (i) if the Executive's employment is terminated
by the Company for Cause, or by the Executive during a Window Period or for Good
Reason, the date of receipt of the
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Notice of Termination or any later date specified therein, as the case may be,
(ii) if the Executive's employment is terminated by the Company other than for
Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
4. Obligations of the Company upon Termination.
(a) Disability, Good Reason or During a Window Period; Other
than for Cause or Death (except during a Window Period). If, during the
Employment Period, (x) the Company shall terminate the Executive's employment
other than for Cause, including a termination by reason of Disability (but not
by reason of death), or (y) the Executive shall terminate employment for Good
Reason or (z) his employment shall be terminated during a Window Period by the
Company for Cause, by the Executive without any reason, or by reason of death:
(i) the Company shall pay or provide to or in respect
of the Executive the following amounts and benefits:
A. in a lump sum in cash, within 10 days
after the Date of Termination, an amount equal to the
sum of (1) the Executive's Annual Base Salary through
the Date of Termination, (2) any deferred
compensation previously awarded to or earned by the
Executive (together with any accrued interest or
earnings thereon) and (3) any compensation for unused
vacation time for which the Executive is eligible in
accordance with the plans, policies, programs and
practices of the Company and its affiliated
companies, in each case to the extent not theretofore
paid (the sum of the amounts described in clauses
(1), (2) and (3) shall be hereinafter referred to as
(the "Accrued Obligation");
B. in a lump sum cash, discounted at 6%,
within 10 days after the Date of Termination, an
amount equal to 100% of Annual Base Salary that would
have been paid annually to the Executive pursuant to
this Agreement for the period (the "Remaining
Employment Period") beginning on the Date of
Termination and ending on the latest possible date of
termination of the Employment Period in accordance
with the provisions of Section 1 hereof (the "Final
Expiration Date") if the Executive's employment had
not been terminated; (if the termination occurs after
the date a Change of Control occurs the "Remaining
Employment Period" will be a minimum of 18 months);
C. effective as of the Date of Termination,
(1) immediate vesting and exercisability of, and
termination of any restrictions on sale or transfer
(other than any such restriction arising by operation
of law) with respect to, each and every stock option,
restricted stock award, restricted stock unit award
and other equity-based award and performance award
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(each, a "Compensatory Award") that is outstanding as
of a time immediately prior to the Date of
Termination and (2) the extension of the term during
which each and every Compensatory Award may be
exercised by the Executive until the earlier of (x)
the first anniversary of the Date of Termination or
(y) the date upon which the right to exercise any
Compensatory Award would have expired if the
Executive had continued to be employed by the Company
under the terms of this Agreement until the Final
Expiration Date.
D. as soon as practicable following the
calendar year of the date of termination, an amount
equal to the product of (x) the Annual Bonus that
would have been paid to the Executive with respect to
the year of termination had the Date of Termination
not occurred and (y) a fraction, the numerator of
which is the number of days in the fiscal year
through the Date of Termination and the denominator
of which is 365;
Anything in this Agreement to the contrary notwithstanding, if a Change of
Control occurs and if the Executive's employment with the Company is terminated
prior to the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment (x) was at the
request of a third party who has taken steps reasonably calculated to effect the
Change of Control or (y) otherwise arose in connection with or anticipation of
the Change of Control, then for all purposes of this Agreement, the "date a
Change of Control occurs" shall mean the date immediately prior to the date of
such termination of employment.
(ii) for the Remaining Employment Period, or such
longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those which
would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 2(b)(iv)
of this Agreement if the Executive's employment had not been
terminated in accordance with the plans, practices, programs
or policies of the Company and its affiliated companies(such
continuation of such benefits for the applicable period herein
set forth shall be hereinafter referred to as "Welfare Benefit
Continuation"), but with the Company's medical benefits
coverages being secondary to any coverages provided by another
employer. For purposes of determining eligibility of the
Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be
considered to have remained employed until the Final
Expiration Date and to have retired on such date.
(b) Death (except during a Window Period). If the Executive's
employment is terminated by reason of the Executive's death during the
Employment Period and other than during a Window Period in which event the
provisions of Section 4(a) shall govern, this Agreement shall terminate without
further obligations to the Executive's legal representatives under this
Agreement, other than (i) the payment of Accrued Obligations (which shall be
paid to the Executive's estate or beneficiary, as applicable, in a lump sum in
cash within 30 days of the Date of Termination), (ii) the payment of an amount
equal to the Annual Salary that would have
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been paid to the Executive pursuant to this Agreement during the Remaining
Employment Period if the Executive's employment had not terminated by reason of
death (which shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination)
reduced by the amount payable in respect of the Executive's death under any life
insurance policy (other than accidental death and dismemberment or travel
accident policies) but only to the extent such amounts are attributable to
premiums paid by the Company, (iii) during the period beginning on the Date of
Termination and ending on the first anniversary thereof medical benefits
coverage determined as if the Executive's employment had not terminated by
reason of death, (iv) as soon as practicable following the fiscal year in which
death occurs, payment of an amount equal to the product of (x) the Annual Bonus
that would have been paid to the Executive with respect to the year of
termination had the Date of Termination not occurred and (y) a fraction, the
numerator of which is the number of days in the fiscal year through the Date of
Termination and the denominator of which is 365 and (v) effective as of the Date
of Termination, (A) immediate vesting and exercisability of, and termination of
any restrictions on sale or transfer (other than any such restriction arising by
operation of law) with respect to, each and every Compensatory Award outstanding
as of a time immediately prior to the Date of Termination, (B) the extension of
the term during which each and every Compensatory Award may be exercised or
purchased by the Executive until the earlier of (1) the first anniversary of the
Date of Termination or (2) the date upon which the right to exercise or purchase
any Compensatory Award would have expired if the Executive had continued to be
employed by the Company under the terms of this Agreement until the Final
Expiration Date.
(c) Cause, Other than for Disability, Good Reason or During a
Window Period. If the Executive's employment shall be terminated for Cause
during the Employment Period and other than during a Window Period, in which
event the provisions of Section 4(a) shall govern, this Agreement shall
terminate without further obligations to the Executive other than for Accrued
Obligations. If the Executive terminates employment during the Employment
Period, excluding a termination for any Disability, Good Reason or without any
reason during a Window Period, in which event the provisions of Section 4(a)
shall govern, this Agreement shall terminate without further obligations to the
Executive, other than for the payment of Accrued Obligations. In such case, all
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination.
5. Non-exclusivity of Rights. Except as provided in Section 4 of this
Agreement, nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any plan, program, policy or practice
provided by the Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amount which are vested benefits or
which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any of
its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as such plan, policy, practice or program is superseded by this
Agreement.
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6. Full Settlement; Resolution of Disputes.
(a) The Company's obligation to make payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any setoff, counterclaim, recoupment, defense, mitigation or other
claim, right or action which the Company may have against the Executive or
others. The Company agrees to pay promptly as incurred, to the full extent
permitted by law, all legal fees and expenses which the Executive may reasonably
incur as a result of any contest (regardless of the outcome thereof) by the
Company, the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any such payment pursuant to this Agreement), plus in each case interest on
any delayed payment at the annual percentage rate which is three percentage
points above the interest rate shown as the Prime Rate in the Money Rates column
in the then most recently published edition of The Wall Street Journal
(Southwest Edition), or, if such rate is not then so published on at least a
weekly basis, the interest rate announced by JPMorgan Chase Bank (or its
successor), from time to time, as its Base Rate (or prime lending rate), from
the date those amounts were required to have been paid or reimbursed to the
Executive until those amounts are finally and fully paid or reimbursed;
provided, however, that in no event shall the amount of interest contracted for,
charged or received hereunder exceed the maximum non-usurious amount of interest
allowed by applicable law; provided, further, that if the Executive is not the
prevailing party in any such contest, then he shall, upon the conclusion
thereof, repay to the Company any amounts that were previously advanced pursuant
of this sentence by the Company as payment of legal fees and expenses.
(b) If there shall be any dispute between the Company and the
Executive concerning (i) in the event of any termination of the Executive's
employment by the Company, whether such termination was for Cause or Disability,
or (ii) in the event of any termination of employment by the Executive, whether
Good Reason existed or whether such termination occurred during a Window Period,
then, unless and until there is a final, nonappealable judgment by a court of
competent jurisdiction declaring that such termination was for Cause or
Disability or that the determination by the Executive of the existence of Good
Reason was note made in good faith or that the termination by the Executive did
not occur during a Window Period, the Company shall pay all amounts, and provide
all benefits, to the Executive and/or the Executive's family or other
beneficiaries, as the case may be, that the Company would be required to pay or
provide pursuant to Section 4(a) hereof as though such termination were by the
Company without Cause or by the Executive with Good Reason or during a Window
Period; provided, however, that the Company shall not be required to pay any
disputed amounts pursuant to this paragraph except upon receipt of an
undertaking by or on behalf of the Executive to repay all such amounts to which
the Executive is ultimately adjudged by such court not to be entitled.
7. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding
and except as set forth below, in the event it shall be determined that any
payment or distribution in the nature of compensation (within the meaning of
Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required
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under this Section 7 (a "Payment"), would be subject to the excise tax imposed
by Section 4999 of the Code, together with any interest or penalties imposed
with respect to such excise tax ("Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross Up Payment") in an amount
such that, after payment (whether through withholding at the source or
otherwise) by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto), employment
taxes and Excise Tax imposed upon the Gross Up Payment, the Executive retains an
amount of the Gross Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of this Section 7, all
determinations required to be made under this Section 7, including whether and
when a Gross Up Payment is required and the amount of such Gross Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by Xxxxxxx Xxxx Xxxxxxx of Texas, P.C. (or such other nationally recognized
certified public accounting firm that is providing audit services for the
Company immediately prior to the date of a Change of Control in replacement of
Xxxxxxx Xxxx Xxxxxxx of Texas, P.C.) (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control or the Accounting Firm declines
or is unable to serve, the Executive shall appoint another nationally recognized
certified public accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be borne solely
by the Company. Any Gross Up Payment, as determined pursuant to this Section 7,
shall be paid by the Company to the Executive within five days of the receipt of
the Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive with a
written opinion that failure to report the Excise Tax on the Executive's
applicable federal income tax return would not result in the imposition of
negligence or similar penalty. Any determination by the Accounting Firm shall be
binding upon the Company and the Executive. As a result of the uncertainty in
the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross Up
Payments which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to the
following provisions of this Section 7 and the Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross Up Payment. Such notification shall be given
as soon as practicable but no later than 10 business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30 day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that
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any payment of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that it desires
to contest such claim, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim;
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in writing
from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney
reasonably selected by the Company;
(iii) cooperate with the Company in good faith in
order to effectively contest such claim; and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after tax basis, for any Excise Tax, employment tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation of the
foregoing provisions of this Section 7, the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and xxx for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and xxx for a refund, the Company shall provide the
amount of such payment to the Executive as an additional payment ("Supplemental
Payment") (subject to possible repayment as provided in the next paragraph) and
shall indemnify and hold the Executive harmless, on an after tax basis, from any
Excise Tax, employment tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such payment or with respect to any
imputed income with respect thereto; and further provided that any extension of
the statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company's control
of the contest shall be limited to issues with respect to which a Gross Up
Payment or Supplemental Payment would be payable hereunder and the Executive
shall be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
provided by the Company pursuant to the foregoing provisions of this Section 7,
the Executive becomes entitled to receive any refund with respect to such claim,
the Executive shall (subject to the Company
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complying with the requirements of this Section 7) promptly pay to the Company
the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto).
8. Confidential Information. The Executive shall hold 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 affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement) (referred to herein as "Confidential Information"). After termination
of the Executive's employment with the Company, the Executive shall not, without
the prior written consent of the Company or as may otherwise be required by law
or legal process, communicate or divulge any such information, knowledge or data
to anyone other than the Company and those designated by it. In no event shall
an asserted violation of the provisions of this Section 8 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement. Also, within 14 days of the termination of the Executive's
employment for any reason, the Executive shall return to Company all documents
and other tangible items of or containing Company information which are in the
Executive's possession, custody or control.
9. Change of Control.
As used in this Agreement, the terms set forth below shall
have the following respective meanings:
"Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in
effect on the date of this Agreement.
"Associate" shall mean, with reference to any Person, (a) any
corporation, firm, partnership, association, unincorporated organization or
other entity (other than the Company or a subsidiary of the Company) of which
such Person is an officer or general partner (or officer or general partner of a
general partner) or is, directly or indirectly, the Beneficial Owner of 10% or
more of any class of equity securities, (b) any trust or other estate in which
such Person has a substantial beneficial interest or as to which such Person
serves as trustee or in a similar fiduciary capacity and (c) any relative or
spouse of such Person, or any relative of such spouse, who has the same home as
such Person.
"Beneficial Owner" shall mean, with reference to any
securities, any Person if:
(a) such Person or any of such Person's Affiliates and
Associates, directly or indirectly, is the "beneficial owner" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange
Act, as in effect on the date of this Agreement) such securities or otherwise
has the right to vote or dispose of such securities, including pursuant to any
agreement, arrangement or understanding (whether or not in writing); provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subsection (a) as a result of an
agreement, arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (i) arises solely from a
11
revocable proxy or consent given in response to a public (i.e., not including a
solicitation exempted by Rule 14a-2(b)(2) of the General Rules and Regulations
under the Exchange Act) proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act and (ii) is not then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor report);
(b) such Person or any of such Person's Affiliates and
Associates, directly or indirectly, has the right or obligation to acquire such
securities (whether such right or obligation is exercisable or effective
immediately or only after the passage of time or the occurrence of an event)
pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights, other
rights, warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to "beneficially own," (i)
securities tendered pursuant to a tender or exchange offer made by such Person
or any of such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange or (ii) securities issuable upon exercise
of Exempt Rights; or
(c) such Person or any such Person's Affiliates or Associates
(i) has any agreement, arrangement or understanding (whether or not in writing)
with any other Person (or any Affiliate or Associate thereof) that beneficially
owns such securities for the purpose of acquiring, holding, voting (except as
set forth in the proviso to subsection (a) of this definition) or disposing of
such securities or (ii) is a member of a group (as that term is used in Rule
13d-5(b) of the General Rules and Regulations under the Exchange Act) that
includes any other Person that beneficially owns such securities;
provided, however, that nothing in this definition shall cause a Person engaged
in business as an underwriter of securities to be the Beneficial Owner of, or to
"beneficially own," any securities acquired through such Person's participation
in good faith in a firm commitment underwriting until the expiration of 40 days
after the date of such acquisition. For purposes hereof, "voting" a security
shall include voting, granting a proxy, consenting or making a request or demand
relating to corporate action (including, without limitation, a demand for
stockholder list, to call a stockholder meeting or to inspect corporate books
and records) or otherwise giving an authorization (within the meaning of Section
14(a) of the Exchange Act) in respect of such security.
The terms "beneficially own" and "beneficially owning" shall have
meanings that are correlative to this definition of the term "Beneficial Owner".
"Change of Control" shall mean any of the following:
(a) any Person (other than an Exempt Person) shall become the
Beneficial Owner of 40% or more of the shares of Common Stock then outstanding
or 40% or more of the combined voting power of the Voting Stock of the Company
then outstanding; provided, however, that no Change of Control shall be deemed
to occur for purposes of this subsection (a) if such Person shall become a
Beneficial Owner of 40% or more of the shares of Common Stock or 40% or more of
the combined voting power of the Voting Stock of the Company solely as a result
of (i) an Exempt Transaction or (ii) an acquisition by a Person pursuant to a
reorganization, merger or consolidation, if, following such reorganization,
merger or
12
consolidation, the conditions described in clauses (i), (ii) and (iii) of
subsection (c) of this definition are satisfied; or
(b) individuals who, as of the Agreement Effective Date,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the Agreement Effective Date whose election,
or nomination for election by the Company's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board; provided, further, that there shall be excluded, for this purpose, any
such individual whose initial assumption of office occurs as a result of any
actual or threatened election contest that is subject to the provisions of Rule
14a-11 under the Exchange Act; or
(c) the Company engages in and completes a reorganization,
merger or consolidation, in each case, unless, following such reorganization,
merger or consolidation, (i) more than 85% of the then outstanding shares of
common stock of the corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then outstanding Voting Stock
of such corporation beneficially owned, directly or indirectly, by all or
substantially all of the Persons who were the Beneficial Owners of the
outstanding Common Stock immediately prior to such reorganization, merger, or
consolidation is in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation, of the
outstanding Common Stock, (ii) no Person (excluding any Exempt Person or any
Person beneficially owning, immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 40% or more of the Common Stock then
outstanding or 40% or more of the combined voting power of the Voting Stock of
the Company then outstanding) beneficially owns, directly or indirectly, 40% or
more of the then outstanding shares of common stock of the corporation resulting
from such reorganization, merger or consolidation or the combined voting power
of the then outstanding Voting Stock of such corporation and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were members of the Incumbent
Board at the time of the execution of the initial agreement or initial action by
the Board providing for such reorganization, merger or consolidation; or
(d) the Company engages in and completes (i) a complete
liquidation or dissolution of the Company unless such liquidation or dissolution
is approved a part of a plan of liquidation and dissolution involving a sale or
disposition of all or substantially all of the assets of the Company to a
corporation with respect to which, following such sale or other disposition, all
of the requirements of clauses (ii) (A), (B) and (C) of this subsection (d) are
satisfied, or (ii) the sale or other disposition of all or substantially all of
the assets of the Company, other than to a corporation, with respect to which,
following such sale or other disposition, (A) more than 85% of the then
outstanding shares of common stock or such corporation and the combined voting
power of the Voting Stock of such corporation is then beneficially owned,
directly or indirectly, by all or substantially all of the Persons who were the
Beneficial Owners of the outstanding Common Stock immediately prior to such sale
or other disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the outstanding Common
Stock, (B) no Person (excluding any Exempt Person and any Person beneficially
owning, immediately prior to such sale or other disposition, directly or
indirectly,
13
40% or more of the Common Stock then outstanding or 40% or more of the combined
voting power of the Voting Stock of the Company then outstanding) beneficially
owns, directly or indirectly, 40% or more of the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding Voting Stock of such corporation and (C) at least a majority of the
members of the board of directors of such corporation were members of the
Incumbent Board at the time of the execution of the initial agreement or initial
action of the Board providing for such sale or other disposition of assets of
the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exempt Person" shall mean the Company, any subsidiary of the
Company, any employee benefit plan of the Company or any subsidiary of the
Company, and any Person organized, appointed or established by the Company for
or pursuant to the terms of any such plan.
"Exempt Rights" shall mean any rights to purchase shares of
Common Stock or other Voting Stock of the Company if at the time of the issuance
thereof such rights are not separable from such Common Stock or other Voting
Stock (i.e., are not transferable otherwise than in connection with a transfer
of the underlying Common Stock or other Voting Stock) except upon the occurrence
of a contingency, whether such rights exist as of the Agreement Effective Date
or are thereafter issued by the Company as a dividend on shares of Common Stock
or other Voting Securities or otherwise.
"Exempt Transaction" shall mean an increase in the percentage
of the outstanding shares of Common Stock or the percentage of the combined
voting power of the outstanding Voting Stock of the Company beneficially owned
by any Person solely as a result of a reduction in the number of shares of
Common Stock then outstanding due to the repurchase of Common Stock or Voting
Stock by the Company, unless and until such time as (a) such Person or any
Affiliate or Associate of such Person shall purchase or otherwise become the
Beneficial Owner of additional shares of Common Stock constituting 1% or more of
the then outstanding shares of Common Stock or additional Voting Stock
representing 1% or more of the combined voting power of the then outstanding
Voting Stock, or (b) any other Person (or Persons) who is (or collectively are)
the Beneficial Owner of shares of Common Stock constituting 1% or more of the
then outstanding shares of Common Stock or Voting Stock representing 1% or more
of the combined voting power of the then outstanding Voting Stock shall become
an Affiliate or Associate of such Person.
"Person" shall mean any individual, firm, corporation,
partnership, association, trust, unincorporated organization or other entity.
"Voting Stock" shall mean, with respect to a corporation, all
securities of such corporation of any class or series that are entitled to vote
generally in the election of directors of such corporation (excluding any class
or series that would be entitled so to vote by reason of the occurrence of any
contingency, so long as such contingency has not occurred).
14
10. Non-Compete and Non-Solicitation.
(a) The Executive recognizes that in each of the highly
competitive businesses in which the Company is engaged, personal contact is of
primary importance in securing new customers and in retaining the accounts and
goodwill of present customers and protecting the business of the Company. The
Executive, therefore, agrees that during the Employment Period and, if the Date
of Termination occurs by reason of the Executive terminating his employment for
reasons other than Disability or Good Reason and other than during a Window
Period, for a period of two years after the Date of Termination, he will not,
with respect to any immediate geologic trends in which the Company or any of its
affiliated companies is active as of the Date of Termination, without regard to
whether the Executive has worked at such location (the "Relevant Geographic
Area"), (i) accept employment or render service to any person that is engaged in
a business directly competitive with the business then engaged in by the Company
or any of its affiliated companies, (ii) enter into or take part in or lend his
name, counsel or assistance to any business, either as proprietor, principal,
investor, partner, director, officer, executive, consultant, advisor, agent,
independent contractor, or in any other capacity whatsoever, for any purpose
that would be competitive with the business of the Company or any of its
affiliated companies or (iii) directly or indirectly, either as principal,
agent, independent contractor, consultant, director, officer, employee,
employer, advisor, stockholder, partner or in any other individual or
representative capacity whatsoever, either for his own benefit or for the
benefit of any other person or entity either (A) hire, contract or solicit, or
attempt any of the foregoing, with respect to hiring any employee of the Company
or its affiliated companies, or (B) induce or otherwise counsel, advise or
encourage any employee of the Company or its affiliated companies to leave the
employment of the Company or its affiliated companies (all of the foregoing
activities described in (i), (ii) and (iii) are collectively referred to as the
"Prohibited Activity").
(b) In addition to all other remedies at law or in equity
which the Company may have for breach of a provision of this Section 10 by the
Executive, it is agreed that in the event of any breach or attempted or
threatened breach of any such provision, the Company shall be entitled, upon
application to any court of proper jurisdiction, to a temporary restraining
order or preliminary injunction (without the necessity of (i) proving
irreparable harm, (ii) establishing that monetary damages are inadequate or
(iii) posting any bond with respect thereto) against the Executive prohibiting
such breach or attempted or threatened breach by proving only the existence of
such breach or attempted or threatened breach. If the provisions of this Section
10 should ever be deemed to exceed the time, geographic or occupational
limitations permitted by the applicable law, the Executive and the Company agree
that such provisions shall be and are hereby reformed to the maximum time,
geographic or occupational limitations permitted by the applicable law. The
Executive specifically recognizes and affirms that the aforementioned covenants
are material and important terms of this Agreement and the Executive further
agrees that in the event he engages in Prohibited Activity or in the event that
all or any part or application of this Section 10 be held or found invalid or
unenforceable for any reason whatsoever by a court of competent jurisdiction in
an action between the Executive and the Company, the Company shall be entitled
to rescind any stock option exercise during the period commencing six months
preceding the date of the Executive's termination of employment and ending three
months following such termination or, if the Executive has exercised all of his
stock options, receive from the Executive all common stock acquired thorough the
exercise of such
15
options and held by the Executive. If the Executive has sold, transferred, or
otherwise disposed of common stock obtained pursuant to the exercise of options
granted by the Company, the Company shall be entitled to receive from the
Executive the difference between the option price paid by the Executive and the
fair market value of the common stock on the date of sale, transfer, or other
disposition.
(c) The covenants of the Executive set forth in this Section
10 are independent of and severable from every other provision of this
Agreement; and the breach of any other provision of this Agreement by the
Company or the breach by the Company of any other agreement between the Company
and the Executive shall not affect the validity of the provisions of this
Section 10 or constitute a defense of the Executive in any suit or action
brought by the Company to enforce any of the provisions of this Section 10 or
seek any relief for the breach thereof by the Executive.
(d) The Executive acknowledges, agrees and stipulates that:
(i) the terms and provisions of this Agreement are reasonable and constitute an
otherwise enforceable agreement to which the terms and provisions of this
Section 10 are ancillary or a part of as contemplated by TEX. BUS. & COM. CODE
XXX. Sections 15.50-15.52; (ii) the consideration provided by the Company under
this Agreement is not illusory; and (iii) the consideration given by the Company
under this Agreement, including, without limitation, the provision by the
Company of Confidential Information to the Executive as contemplated by Section
8, gives rise to the Company's interest in restraining and prohibiting the
Executive from engaging in the Prohibited Activity within the Relevant
Geographic Area as provided under this Section 10, and the Executive's covenant
not to engage in the Prohibited Activity within the Relevant Geographic Area
pursuant to this Section 10 is designed to enforce the Executive's consideration
(or return promises), including, without limitation, the Executive's promise to
not disclose Confidential Information under this Agreement.
11. Successors.
(a) This Agreement is personal to the Executive and without
the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
heirs, executors and other legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon he Company and may only be assigned to a successor described in
Section 11(c).
(c) The Company will require any successor (whether direct or
indirect, y purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
16
12. Section 409A. If any provision provided herein results in
the imposition of an excise tax under the provisions of Section 409A of the
Internal Revenue Code and related regulations and Treasury pronouncements
("Section 409A"), the Executive and the Company agree that any such provision
will be reformed to avoid imposition of any such excise tax in the manner that
the Executive and the Company determine are appropriate to comply with Section
409A.
13. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without reference to principles
of conflict of laws that would require the application of the laws of any other
state or jurisdiction.
(b) The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
(c) This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective
successors and heirs, executors and other legal representatives.
(d) All notices and other communications hereunder shall be in
writing and shall be given, if by the Executive to the Company, by telecopy or
facsimile transmission at the telecommunications number set forth below and, if
by either the Company or the Executive, either by hand delivery to the other
party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Name: Xxxxxxx X. Xxxxx
Carrizo Oil & Gas, Inc.
0000 Xxxxxxxxx Xxxxxx , Xxxxx 0000
Xxxxxxx, Xxxxx 00000
If to the Company:
Carrizo Oil & Gas, Inc.
0000 Xxxxxxxxx Xxxxxx , Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Fax Number: (000) 000-0000
Telephone Number: (000) 000-0000
Attention: Corporate Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
17
(e) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(f) The Company may withhold from any amounts payable under
this Agreement such federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(g) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason or during a Window Period pursuant to
Section 3(c) of this Agreement, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
(h) This Agreement contains the complete and total
understanding of the parties concerning the subject matter hereof and expressly
supersedes any previous agreement between the parties relating to the subject
matter hereof.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
18
IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all to be
effective as of the Agreement Effective Date.
CARRIZO OIL & GAS, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Chief Financial Officer, Secretary and
Treasurer
EXECUTIVE
/s/ Xxxxxxx X. Xxxxx
----------------------------------------------
Xxxxxxx X. Xxxxx
19
