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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into this 16th day of
December, 1996, by and between HUGOTON ENERGY CORPORATION, a Kansas corporation
(hereinafter referred to as the "Company") and W. XXXX XXXXXX (hereinafter
referred to as "Employee").
WITNESSETH:
WHEREAS, the Company is engaged in the oil and gas business;
WHEREAS, Employee has been employed by the Company continuously since
October 1, 1993;
WHEREAS, the Compensation Committee (the "Compensation Committee") of
the Company's Board of Directors (the "Board") has determined that it is in the
best interests of the Company and its stockholders to continue to employ
Employee and Employee desires to continue to be employed by the Company;
WHEREAS, the Company and Employee desire to set forth in writing the
terms and conditions of their agreements and understandings;
WHEREAS, the terms of this Agreement were duly approved and authorized
for and on behalf of the Company by the Board at a meeting held on December 16,
1996, at which meeting a quorum was present and voted, and were also duly
approved by the Compensation Committee at a meeting held on October 21, 1996,
at which meeting a quorum was present and voted;
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises herein contained, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties,
intending to be legally bound, agree as follows:
1. Term of Employment. The Company shall employ Employee in the
capacity set forth herein for a term of three (3) years commencing on October
1, 1996, and ending on September 30, 1999 (the "Employment Period").
2. Responsibilities of Employee.
(a) In accepting employment by the Company, Employee
shall undertake and assume the responsibility of performing for and on behalf
of the Company any and all duties customarily associated with the position of
Executive Vice President and Chief Financial Officer of the Company.
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(b) Employee agrees to devote his full time and effort to
his duties as an employee of the Company. Employee may devote a reasonable
amount of his time to civic and community affairs, and subject to the
provisions of paragraph 6 hereof, to other business and financial interests;
provided that such other activities do not interfere with the performance of
Employee's responsibility as Executive Vice President and Chief Financial
Officer of the Company.
3. Compensation. As compensation for the services to be rendered
by Employee for the Company under this Agreement, Employee shall be entitled to
the following (collectively referred to hereinafter as "Total Compensation"):
(a) The Company shall pay Employee during the period in
which Employee is employed by the Company an annual salary of One Hundred Fifty
Thousand Dollars ($150,000.00) or in such amount as may be determined by the
Company from time to time (but in no event shall such amount decrease) ("Base
Compensation"), payable periodically for such periods as may be established by
the Company for payment of its employees under its normal payroll practices.
(b) Employee may receive a bonus and fringe benefits each year
in amounts to be determined by the Company. Such bonus may, in the discretion
of the Company, be based, in part, upon the Company meeting certain financial
goals, which goals may be agreed upon by the Company and Employee.
4. STOCK OPTIONS, Incentive, Savings and Retirement Plans and
Welfare Benefit Plans.
(a) During the period in which Employee is employed by
the Company, all stock options heretofore granted to Employee under any of the
Company's stock option plans or employee benefit plans as of the date of this
Agreement shall continue in effect, vesting as therein provided, and Employee
shall have the right to exercise any vested stock option, whenever granted,
until it expires by its terms under the applicable option agreement.
(b) During the period in which Employee is employed by
the Company, Employee shall be entitled to participate in all incentive,
savings and retirement plans, practices, policies and programs applicable
generally to other employees of the Company.
(c) During the period in which Employee is employed by
the Company, Employee and/or Employee's family, as the case may be, shall be
eligible for participation and shall receive all benefits under welfare benefit
plans, practices and policies and programs provided by the Company to the
extent applicable generally to other employees of the Company, including,
without limitation, medical and dental insurance coverage under the Company's
medical and dental insurance plans.
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5. Expenses. Employee shall be reimbursed for all reasonable
business expenses incurred by him in connection with or incident to the
performance of his duties and responsibilities hereunder upon the Employee's
submission to the Company of vouchers or expense statements evidencing such
expenses in such form or format as the Company may reasonably require.
6. Non-Competition and Non-Disclosure:, Injunctive Relief.
Employee acknowledges that the services he is to render are of a special and
unusual character with unique value to the Company. The Company recognizes that
Employee is expected to be a factor in the growth and success of the Company.
The Company recognizes that the continued success of the Company depends, in
part, upon the effective performance of Employee's duties as employee of the
Company. Therefore, one of the primary purposes of this Agreement is to
provide for the long-term financial security of Employee and his family so that
he will be better able to direct his undivided attention to the successful
performance of his duties on behalf of the Company. In view of the value to the
Company of the services of Employee for which the Company has contracted
hereunder, because of certain confidential information to be obtained by or
disclosed to Employee, and as a inducement to the Company to enter into this
Agreement and to pay to Employee the compensation stated herein, Employee
covenants and agrees as follows:
(a) During the period in which Employee is employed by
the Company, Employee shall not directly or indirectly be employed by or render
advisory, consulting or other services in connection with any business
enterprise or person which operates a business in the oil and gas industry in
those states in which the Company or its subsidiaries owns or operates
properties.
(b) During the period in which Employee is employed by
the Company, Employee shall not, directly or indirectly, in any capacity
(including, without limitation, as a proprietor, investor, director or
officer), be financially interested in or engage in any business similar to or
related to the business of the Company if such business is in competition with
the Company in those states which the Company or its subsidiaries owns or
operates properties; however, it is specifically agreed between the parties
that Employee may continue to be financially interested in and engage in any
business similar to or related to the Company's business which he is interested
in or engaged in on the date of this Agreement, provided, that such activities
do not materially detract from the Employee's performance of his
responsibilities as Executive Vice President and Chief Financial Officer,
provided, further that, nothing contained in this subparagraph shall relieve
the Employee of his obligations contained in paragraph 6(a) above.
(c) During the period in which Employee is employed by
the Company and thereafter, Employee will not disclose to any third party or
directly or indirectly make use of, other than in connection with the business
and affairs of the Company, any knowledge or information pertaining to the
Company or any of its subsidiaries, their business or personnel or policies for
any reason without the prior consent of the Company.
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(d) During the period in which Employee is employed by
the Company, Employee may not solicit, raid, entice or induce 1) any person,
firm or corporation that is a customer to become a customer of another firm,
corporation or person; or 2) any person that is employed by the Company or its
subsidiaries to become employed by any other person, firm or company.
(e) Employee acknowledges and agrees that the services to
be rendered by him are of a special, unique and extraordinary character and, in
connection with such services, he will have access to confidential and
proprietary information vital to the Company's and its subsidiaries'
businesses. By reason of this, Employee consents and agrees that if he violates
any of the provisions of this paragraph 6, the Company and its subsidiaries
would sustain irreparable harm and, therefore, in addition to any other
remedies which the Company may have under this Agreement or otherwise, the
Company shall be entitled to an injunction restraining Employee from committing
or continuing any such violation of this Agreement.
7. Termination of Employment
(a) Death. Employee's employment shall terminate automatically
upon Employee's death.
(b) Termination of Employment By the Company For Cause. The
Company may terminate Employee's employment under this Agreement for Cause. For
purposes hereof, the term "Cause" shall mean (i) the inability of Employee,
through sickness or other incapacity, to perform his duties under this
Agreement for a period of six (6) months, (ii) dishonesty, theft, or conviction
of a crime involving moral turpitude, in each case only if it could reasonably
effect his ability to perform assigned duties for the Company or cause a
material adverse effect on the Company, (iii) commission of a material act of
fraud against the Company or its subsidiaries, or (iv) failure of Employee to
observe or perform his material duties and obligations as an employee of the
Company or a material breach of this Agreement, after thirty (30) days advance
written notice of such failure which has not been cured.
(c) Termination By the Company Without Cause. The Company may also
terminate Employee's employment under this Agreement without Cause.
(d) Termination By Employee for Good Reason. If a Change of
Control (as defined hereafter) in the Company has occurred, Employee may
terminate his employment during the Employment Period for Good Reason (defined
hereafter) upon thirty (30) days' notice to the Company. For purposes of this
Agreement, the term "Good Reason" shall mean the occurrence, without Employee's
express written consent, of any one or more of the following events:
(i) A change in Employee's duties or a change in the title or
offices held by Employee, or any occurrence which causes Employee to
have his principal place of employment somewhere other than Wichita,
Kansas.
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(ii) A reduction in Employee's compensation or the failure by the
Company to continue to provide prompt payment (or reimbursement to
Employee) of all reasonable expenses incurred by Employee in
connection with Employee's professional and business activities.
(iii) A failure by the Company to waive any and all restrictions
that might exist on the exercise of any stock options held by Employee
under the Company's stock option plans as of the date of a Change of
Control.
(iv) The failure of the Company to obtain the assumption of this
Agreement, without limitation or reduction, by any successor to the
Company.
(e) Voluntary Termination By Employee. Employee shall have the
right at any time after the date hereof to voluntarily terminate his employment
with the Company (a "Voluntary Termination") for any reason in the sole
discretion of Employee by not less than thirty (30) days' prior written notice
to the Company; provided however, a termination without Cause or a termination
for Good Reason shall not be treated for any purpose hereunder as a Voluntary
Termination.
(f) Change of Control. A "Change of Control" shall have occurred
if:
(i) fifty percent (50%) or more of the outstanding common stock of
the Company has been acquired by any person or persons (as defined in
Section 3(a)(9) of the Securities Exchange Act of 1934 (the "Act")),
provided such person(s) is not a current stockholder(s) of the Company
currently holding ten percent (10%) or more of the outstanding common
stock of the Company. For purposes of this paragraph 7, such person
shall include affiliated persons (as defined in the Act).);
(ii) there has been a merger or equivalent combination involving
the Company after which fifty percent (50%) or more of the voting
stock of the surviving corporation is held by persons other than those
persons who were stockholders holding ten percent (10%) or more of the
outstanding stock of the Company immediately prior to the date of such
merger or equivalent combination; or
(iii) there has been a merger or equivalent combination or stock sale
involving the Company and after such transaction fifty percent (50%)
or more of the members of the Board elected by stockholders are
persons who were not directors immediately prior to such transaction.
8. Termination Procedures and Certain Definitions.
(a) Notice of Termination. Any termination by the Company for
Cause, without Cause or by Employee for Good Reason or in a Voluntary
Termination, shall be communicated by Notice of Termination to the other party
hereto given in accordance with paragraph 13 of this
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Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of Employee's employment under the provision so indicated and (iii) if the Date
of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date. The failure by Employee 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
Employee or the Company, respectively, hereunder or preclude Employee or the
Company, respectively, from asserting such fact or circumstance in enforcing
Employee's or the Company's rights hereunder. Employee's continued employment
with the Company, after a Notice of Termination is provided, shall not
constitute consent to, or a waiver of any rights with respect to, any
circumstance constituting Good Reason hereunder.
(b) Date of Termination. "Date of Termination" means (i) if
Employee's employment is terminated by the Company for Cause, the date of
receipt of the Notice of Termination or any later date specified therein, as
the case may be, (ii) if Employee's employment is terminated by the Company
other than for Cause, the Date of Termination shall be the date not less than
thirty (30) days after the date on which the Company notifies Employee of such
termination, and (iii) if Employee terminates his employment for Good Reason or
in a Voluntary Termination, the Date of Termination shall be the date, not less
than thirty (30) days after the date on which Employee notifies the Company of
such termination.
9. Obligations of the Company on Termination.
(a) If during the Employment Period, Employee's employment is
terminated with Cause, upon Employee's death or upon a Voluntary
Termination, the Company shall immediately pay Employee in cash the
amount of his Total Compensation previously earned but not yet paid.
(b) If during the Employment Period, Employee's
employment is terminated by the Company without Cause or by Employee
for Good Reason:
(i) In General. The Company shall immediately pay
Employee in cash the amount of his Total Compensation
previously earned but not yet paid.
(ii) Severance Benefits.
(a) All stock options of Employee under the
Company's stock option plans, which have not already
vested, shall immediately vest and be exercisable.
(b) Employee shall continue to participate in all
of the Company's welfare benefit plans, including
health and medical plans, for six (6) months after
termination and shall be entitled to reimbursement of
COBRA
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payments to maintain medical and dental insurance up
to twelve (12) additional months for said coverage.
(c) The Company shall pay Employee in a lump sum a
"Severance Benefit" in cash equal to three (3) times
the following:
(i) Employee's Base Compensation as of
the date of such termination, provided such
Base Compensation for this purpose shall not
be less than $175,000; and
(ii) The amount which the Company has
contributed to Employee's account in the
Company's 401(k) plan attributable to the
last full fiscal year.
Such payment shall be made within thirty (30) days following
said termination.
10. Payment of Legal Fees and Expenses. The Company shall pay to
Employee all legal fees and expenses incurred by Employee in successfully
obtaining or enforcing any right or benefit provided under this Agreement.
11. Burden and Benefit. This Agreement shall be binding upon, and
shall inure to the benefit of, the Company and Employee, and their respective
heirs, personal and legal representatives, successors and permitted assigns.
Employee's rights and obligations may not be assigned without the proper
written consent of the Company.
12. Governing Law. It is understood and agreed that the
construction and interpretation of this Agreement shall at all times and in all
respects be governed by the laws of the State of Kansas.
13. Notice. Any notice required to be given shall be sufficient if
it is in writing and sent by certified or registered mail, return receipt
requested, first-class postage prepaid, to his last know residence in the case
of Employee, and to its principal office in the State of Kansas in the case of
the Company.
14. Severability. The provisions of this Agreement shall be deemed
severable, and the invalidity or unenforceability of any one or more of the
provisions of this Agreement shall not affect the validity and enforceability
of the other provisions.
15. Entire Agreement. This Agreement contains the entire agreement
and understanding by and between the Company and Employee with respect to the
employment of Employee, and no representations, promises, agreements, or
understandings, written or oral, not contained herein shall be of any force or
effect. No waiver of any provision of this Agreement shall be valid unless it
is in writing and signed by the party against whom the waiver is sought
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to be enforced. No valid waiver of any provision of this Agreement at any time
shall be deemed a waiver of any other provision of this Agreement at such time
or any other time.
16. Modification. No amendment, alteration or modification to any
of the provisions of this Agreement shall be valid unless made in writing and
signed by both parties.
17. Paragraph Headings. The paragraph headings have been inserted
for convenience only and are not to be considered when construing the
provisions of this Agreement.
18. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the Company and Employee have executed this
Agreement on the day and year first above written.
"COMPANY" "EMPLOYEE"
HUGOTON ENERGY CORPORATION
/s/ W. XXXX XXXXXX
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W. XXXX XXXXXX
BY: /s/ XXXXX X. XXXXXX
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NAME: Xxxxx X. Xxxxxx
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TITLE: President and CEO
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ATTEST:
/s/ [ILLEGIBLE]
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