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EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made between Xxxxxxx
Exploration Company, a Delaware corporation (the "COMPANY"), and Xxx X. Xxxxxxx
("EMPLOYEE");
W I T N E S S E T H:
WHEREAS, the Company has been recently created and organized to serve
as the holding company of Xxxxxxx Oil & Gas, L.P., a Delaware limited
partnership ("PARTNERSHIP") and Xxxxxxx, Inc., a Texas corporation ("GENERAL
PARTNER") in connection with a reorganization in which the Company will acquire
all of the limited partnership interests of the Partnership and all of the
outstanding shares of the capital stock of the General Partner;
WHEREAS, Employee has been employed by the Partnership pursuant to an
Employment Agreement with the Partnership (the "PARTNERSHIP EMPLOYMENT
AGREEMENT");
WHEREAS, the Company desires to employ Employee effective as of the
date on which the Company completes an initial public offering of shares of its
Common Stock (a "PUBLIC OFFERING"), and Employee desires to be employed by the
Company, subject to and upon the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties, intending to be legally bound, agree as follows:
1. Effective Date; Termination of Partnership Employment
Agreement. This Agreement shall become effective as of the date on which the
Company successfully completes the Public Offering (the "EFFECTIVE DATE"). The
Partnership Employment Agreement shall terminate and be of no further force and
effect as of the Effective Date.
2. Employment and Duties. Subject to the terms hereof, the
Company agrees to employ Employee to render full-time services to the Company
as President and Chief Executive Officer of the Company. Employee shall have
such duties as are customarily associated with such position, together with
such other duties as may be assigned to Employee from time to time by the Board
of Directors of the Company. Employee agrees to devote his full time and
attention to the performance and fulfillment of such duties, functions and
responsibilities as are necessary to discharge such duties, functions and
responsibilities, except for service for civic, charitable or non-profit
organizations and other non-competitive endeavors not interfering with his
duties hereunder.
3. Base Compensation.
(a) Salary. The Company shall pay Employee for his services under
this Agreement a base annual salary of $275,000 (before Federal and state
withholdings). Employee shall be eligible for additional increases in his
annual base salary, not less frequently than once each fiscal year of the
Company, in such amounts as shall be determined by the Board of Directors of
the Company. The base salary shall be payable
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semi-monthly or in such other installments as shall be consistent with the
Company's general payroll practices.
(b) Bonus. In addition to his annual base salary, Employee shall
be entitled to an annual cash bonus in an amount, not to exceed seventy-five
percent (75%) of Employee's then-current annual base salary, two-thirds of
which is to be determined by reference to the Company's satisfaction of certain
performance-based criteria established by the Board of Directors of the Company
by November 30 of the preceding year and one-third of which shall be determined
at the Board's discretion.
4. Fringe Benefits. During the term hereof Employee shall be
entitled to participate in any benefit programs and incentive plans applicable
to all employees or to executive employees of the Company on the same basis as
such benefits and plans are customarily made available by the Company from time
to time, including without limitation all employee retirement, insurance,
vacation, sick leave, long-term disability and other benefit programs, and
grants of rights or options to acquire equity interests or other awards
provided for under the Company's incentive plans, as such benefits and plans
may be modified, amended or terminated from time to time. In addition,
Employee shall receive a Petroleum Club membership at the expense of the
Company at all times during the term of this Agreement.
5. Business Expenses. Employee shall be reimbursed by the
Company for expenses reasonably paid or incurred by him in connection with the
performance of his duties hereunder upon presentation of expense statements,
receipts or vouchers or such other supporting information reasonably evidencing
such expenses.
6. Term. The term of Employee's employment by the Company
hereunder shall initially be for a period of five (5) years commencing on the
Effective Date of this Agreement. Beginning on the second anniversary of the
Effective Date of this Agreement, and on each subsequent anniversary thereof
(each such anniversary being referred to as an "Extension Date"), the term of
this Agreement shall be extended for an additional one year period, unless
either party provides written notice to the other prior to an Extension Date
that the term of this Agreement shall not be extended. It is the express
intent of both parties to this Agreement that the provisions of this Section 6
are intended to ensure that upon notice of an election not to extend the term
of this Agreement, the remaining term of this Agreement will at all times be
not less than three (3) years.
7. Termination. Employee's employment with the Company shall
terminate upon the first to occur of the (i) expiration of the term of this
Agreement (as extended pursuant to Section 6 hereof), (ii) death of Employee,
(iii) disability of Employee, but only upon compliance with the provisions of
Section 9 hereof, (iv) termination of Employee for Cause (as defined below),
(v) termination by Employee pursuant to Section 11 hereof, or (vi) written
consent of all parties to this Agreement.
8. Death of Employee. The employment of Employee hereunder shall
cease on the date of his death. The Company will purchase life insurance on
the life of Employee in
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an amount mutually agreeable to the Company and Employee, the benefits of which
will be payable to Employee's beneficiary (as defined below). Employee's
"beneficiary" is the person or persons (who may be designated concurrently,
successively or contingently) designated by Employee in his last effective
writing filed with the Company prior to his death, or if Employee shall have
failed to make an effective designation, Employee's beneficiary is his spouse,
if living at the time of each payment, and otherwise his surviving children.
Employee shall assist the Company in procuring such insurance by submitting to
such examinations and by signing such applications and other instruments as may
be reasonable and as may be required by the insurance carriers to which
application is made for any such insurance. Employee represents that, to the
best of his knowledge, he is currently insurable at standard premium rates for
life insurance policies.
9. Disability of Employee. If, as a result of Employee's
incapacity due to physical or mental illness, Employee shall have been absent
from his duties hereunder on a full-time basis for the entire period of six
consecutive months, and within thirty (30) days after written notice of
termination is given (which may occur before or after the end of such six-month
period) shall not have returned to the performance of his duties hereunder on a
full-time basis, employment of Employee hereunder shall cease.
The Company shall purchase disability insurance to cover such a
contingency with coverage and benefits mutually agreeable to the Company and
Employee. Employee shall assist the Company in procuring such insurance by
submitting to such examinations and by signing such applications and other
instruments as may be reasonable and as may be required by the insurance
carriers to which application is made for any such insurance. Employee
represents that, to the best of his knowledge, he is currently insurable at
standard premium rates for life insurance policies. During any period prior to
termination during which Employee fails to perform his duties hereunder as a
result of incapacity due to physical or mental illness ("disability period"),
Employee shall continue to receive his full salary at the rate then in effect
for such period until his employment terminates pursuant to this Section 9.
If employment of Employee hereunder terminates because of Employee's
incapacity, Employee (or, in the event of his legal incapacity, a
court-appointed guardian for his benefit) shall receive those benefits payable
under the disability policy or policies (purchased in compliance with the
foregoing provisions) in effect at such time.
10. Termination for Cause. The Company may terminate Employee's
employment hereunder for Cause. For purposes of this Agreement, the Company
shall have "Cause" to terminate Employee's employment hereunder upon (A) the
willful and continued failure by Employee to substantially perform his duties
hereunder (other than any such failure resulting from Employee's incapacity due
to physical or mental illness or infirmity), after demand for substantial
performance is delivered by the Company that specifically identifies the manner
in which the Company believes Employee has not substantially performed his
duties or (B) the willful engaging by Employee in misconduct which is
materially injurious to the Company, monetarily or otherwise. For purposes of
this section, no act, or failure to act, on Employee's part shall be considered
"willful" unless done, or omitted to be done, by him not in good faith and
without reasonable belief that his action or omission was in or not opposed to
the best interest of the Company. Notwithstanding the foregoing, Employee
shall not be
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deemed to have been terminated for Cause without (i) reasonable notice to
Employee setting forth the reasons for the Company's intention to terminate for
Cause, (ii) an opportunity for Employee, together with his counsel, to be heard
before the Board of Directors of the Company, and (iii) delivery to Employee of
a Notice of Termination as defined in Section 12 hereof from the Board of
Directors, finding that in the good faith opinion of such Board of Directors
that Employee was guilty of conduct set forth above in clause (A) or (B) of the
preceding sentence, and specifying the particulars thereof in detail.
11. Termination by Employee. Employee may terminate his
employment hereunder (i) for Good Reason, or (ii) for any other reason upon
providing at least 30 days advance written notice.
For purposes of this Agreement, "Good Reason" shall mean (A) a failure
by the Company to comply with any material provision of this Agreement which
has not been cured within thirty (30) working days after notice of such
noncompliance has been given by Employee to the Company, (B) any purported
termination of Employee's employment which is not effected pursuant to a valid
Notice of Termination satisfying the requirements of Section 12 hereof (and for
purposes of this Agreement no such purported termination shall be effective),
or (C) a material reduction or diminution of Employee's position, titles,
offices, responsibilities or status with the Company without Cause and without
Employee's express written consent.
An election by Employee to terminate for Good Reason shall not be
deemed a voluntary termination of employment by Employee for the purpose of
this Agreement or any plan or practice of the Company.
12. Notice of Termination. Any termination of Employee's
employment by the Company or by Employee pursuant to Sections 9, 10 or 11 shall
be communicated by written Notice of Termination to the other party hereto.
For purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provisions in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed or provide a basis for termination of Employee's
employment under the provision so indicated.
13. Termination of Employment for Cause or Without Good Reason.
If Employee shall voluntarily terminate his employment other than for Good
Reason or if the Company shall terminate Employee's employment for Cause, then
upon such termination all rights, benefits and compensation of Employee under
this Agreement shall immediately terminate, except that equity options, if any,
shall continue to be governed in accordance with their terms. The rights and
remedies of the Company as set forth in this Section 13, in case of termination
of employment by the Company for Cause, shall be cumulative with and shall be
in addition to (i) any and all other relief available to the Company for breach
by Employee of any other provision of this Agreement, and (ii) any and all
other general or equitable relief to which the Company may be entitled by
reason of such breach.
14. Other Termination of Employment. If Employee shall terminate
his employment for Good Reason under Section 11 hereof or if the employment of
Employee
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hereunder is terminated under any circumstances other than those set forth in
Sections 8, 9, 10 or 13 hereof, then (i) within 30 days following such
termination, the Company shall pay to Employee a sum equal to (A) the amount of
Employee's annual base salary (as in effect at the time of termination) that
Employee would have received during the remainder of Employee's employment term
hereunder, plus (B) an amount equal to the average annual bonus received by
Employee pursuant to Section 3(b) hereof during the immediately preceding two
(2) years, multiplied by the number of years (with portions of a year expressed
as a fraction) in the remainder of Employee's employment term hereunder, (ii)
Employee shall be entitled to continue to participate in all benefit programs
and incentive plans as provided in Section 4 of this Agreement during a period
equal to the remainder of Employee's employment term hereunder, and (iii) all
restricted stock, options or other rights with respect to equity interests in
the Company and/or its affiliates granted to Employee on or before such date of
termination shall immediately vest as of the date of such termination; provided
that, the Company shall also pay to Employee those amounts provided in Sections
8 and 9 pursuant to the terms thereof.
15. Confidentiality: Ownership of Patentable Inventions.
(a) Employee will maintain the confidentiality of, and will not
disclose without the Company's express consent, any and all proprietary or
confidential information of the Company. The provisions of this section will
be deemed to encompass any and all confidential or proprietary information of
the Company that was obtained by Employee since the commencement of Employee's
employment with the Partnership. This section will continue after, and will
not be deemed to be extinguished or terminated by, the termination of this
Agreement or of Employee's employment by the Company. For purposes of this
section "proprietary or confidential information" of the Company does not
include (i) information that is or becomes generally available to the public
other than as a result of disclosure by Employee in breach of this Agreement,
(ii) information that was or is available to Employee on a non-confidential
basis, (iii) any non-patentable information that is or was conceived, created
or independently developed by Employee, or (iv) information that is disclosed
by Employee to others on behalf of the Company or to further the business
opportunities or best interests of the Company.
(b) Employee agrees that any patentable invention, design or
process made, invented or discovered by Employee in the course of his
employment hereunder shall be the property of the Company and Employee shall
execute and deliver all documents necessary and proper to make all such
patentable inventions, designs or processes the property of the Company.
16. Non-Competition.
(a) Employee agrees that during the term of this Agreement he will
not, directly or indirectly, for Employee's own account or for the benefit of
any other person or party engage or become, without the prior consent of the
Company, an owner, director, manager, officer, partner, operator, employee or
agent of, or render services to or invest in, any business or enterprise
competing with the primary business of the Company.
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(b) In addition to the agreement in Section 16(a), for a period of
three years after the term of this Agreement Employee agrees not to compete
with the Company with respect to any prospect established with respect to
Company properties owned at the time of termination of this Agreement, or any
other specific matter or opportunity, which was specifically identified by the
Company to Employee in writing as of the date of such termination.
Notwithstanding the foregoing, nothing in this Agreement shall
prohibit Employee from being a passive investor in (i) any Fortune 500
companies, or (ii) any other business or enterprise (A) not in direct
competition with the business of the Company and (B) not an entity which is a
party to an exploration agreement with the Company. Provided, however, that
with respect to any investment in a business or enterprise engaged in the oil
and gas industry (other than any Fortune 500 companies), Employee shall obtain
the prior consent of the Board of Directors of the Company, which consent shall
not be unreasonably withheld.
If Employee intentionally breaches any provisions of Section 15 or
this Section 16 (collectively the "Restrictive Covenants") in a material way,
the Company shall have the right to have the Restrictive Covenants specifically
enforced by any court having equity jurisdiction it being acknowledged and
agreed that any such breach will cause irreparable injury to the Company and
that money damages will not provide adequate remedy to the Company. The
Company's right of specific performance hereunder shall be independent of, and
in addition to, any other rights and remedies available to the Company under
law or in equity.
If any court determines that any of the Restrictive Covenants or any
part thereof is invalid or unenforceable, the remainder of the Restrictive
Covenants shall not thereby be affected and shall be given full effect, without
regard to the invalid portions. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographic scope of such provision, such court shall have the power
to reduce the duration or geographical scope of such provision, as the case may
be and, in its reduced form, such provision shall then be enforceable and shall
be enforced.
17. Miscellaneous. (a) Notices. Any notice or communication
required or permitted hereunder shall be given in writing and shall be (i) sent
by first class registered or certified United States mail, postage prepaid,
(ii) sent by overnight or express mail or expedited delivery service, (iii)
delivered by hand or (iv) transmitted by facsimile transmission, to the address
or fax number for the party as set forth opposite such party's name on the
signature page hereof, or to such other address or to the attention of such
other person as hereafter shall be designated in writing by the applicable
party in accordance herewith. Any such notice or communication shall be deemed
to have been given as of the date of first attempted delivery at the address or
fax number and in the manner provided above.
(b) Successors and Assigns. This Agreement is personal in nature
and neither of the parties hereto shall, without the consent of the other,
assign or transfer this Agreement or any rights or obligations hereunder;
provided, however, that in the event of a merger,
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consolidation or transfer or sale of all or substantially all of the assets of
the Company, this Agreement shall be binding upon the successor to the
Company's business and assets.
(c) Interpretation. When the context in which words are used in
this Agreement indicates that such is the intent, words in the singular number
shall include the plural and vice versa, and the words in masculine gender
shall include the feminine and neuter genders and vice versa.
(d) Severability. Every provision in this Agreement is intended
to be severable. In the event that any provision of this Agreement shall be
held to be invalid, the same shall not affect in any respect whatsoever the
validity of the remaining provisions of this Agreement.
(e) Captions. Any section or paragraph titles or captions
contained in this Agreement are for convenience only and shall not be deemed a
part of the context of this Agreement.
(f) Entire Agreement. This Agreement together with the
Partnership Agreement contains the entire understanding and agreement between
the parties and supersedes any prior written or oral agreements between them
respecting the subject matter contained herein. There are no representations,
agreements, arrangements or understandings, oral or written, between and among
the parties hereto relating to the subject matter of this Agreement which are
not fully expressed herein or therein.
(g) No Waiver. The failure of any party to insist upon strict
performance of a covenant hereunder or of any obligation hereunder,
irrespective of the length of time for which such failure continues, shall not
be a waiver of such party's right to demand strict compliance in the future.
No consent or waiver, express or implied, to or of any breach or default in the
performance of any obligation hereunder shall constitute a consent or waiver to
or of any other breach or default in the performance of the same or any
obligation hereunder.
(h) Amendment. This Agreement may be changed, modified or amended
only by an instrument in writing duly executed by all of the parties hereto.
Any such amendment shall be effective as of such date as may be determined by
the parties hereto.
(i) Enforcement. The Company may enforce this Agreement pursuant
to the provisions of the Agreement of Limited Partnership of the Partnership,
provided that in the event of a dispute, either General Partner of the Company
shall have the right to enforce the provisions hereof.
(j) Choice of Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY TEXAS LAW.
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IN WITNESS WHEREOF, the parties have executed this Agreement or caused
the same to be executed by their duly authorized corporate officers, all as of
the day and year first above written.
"Employee"
/s/ XXX X. XXXXXXX
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Xxx X. Xxxxxxx
"Company" Xxxxxxx Exploration Company
By: /s/ XXXXX X. XXXXXXX
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Name: Xxxxx X. Xxxxxxx
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Title: Vice President -
Finance and Treasurer
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