EXHIBIT 10.4(g)
---------------
EMPLOYMENT AGREEMENT
XXXXX ENERGY GROUP, INC. (the "Company") and XXXXX X. XXXXX ("Executive") agree
to enter into this EMPLOYMENT AGREEMENT dated as of April 1, 1999, as follows:
1. EMPLOYMENT.
The Executive is currently employed pursuant to an employment agreement dated
June 1, 1990 which the Company and Executive hereby terminate and enter into
this new agreement on such terms and as set forth herein.
The Company hereby agrees to employ Executive, and Executive hereby agrees to be
employed by the Company, upon the terms and subject to the conditions set forth
in this Agreement.
2. EMPLOYMENT TERM.
The period of Executive's employment under this Agreement shall be for a period
of three years commencing as of April 1, 1999 (the "Effective Date") and
continuing until April 1, 2004 and until terminated in accordance with Section 5
below (the "Employment Term").
3. DUTIES AND RESPONSIBILITIES.
(a) The Company will employ Executive as its Executive Vice President and
Managing Director. In such capacity, Executive shall perform the customary
duties and have the customary responsibilities of such position and such
other duties as may be assigned to Executive from time to time by the
Company or by the Company's Board of Directors (the "Board").
(b) Executive agrees to faithfully serve the Company, devote his full working
time, attention and energies to the business of the Company its
subsidiaries and affiliated entities, and perform the duties under this
Agreement to the best of his abilities. Executive may perform services
without direct compensation therefor in connection with the management of
personal investments, or in connection with charitable or civic
organizations. The Executive shall be excused from rendering his service
during reasonable vacation periods and during other reasonable temporary
absences as may be authorized by the Board.
(c) Executive agrees (i) to comply with all applicable laws, rules and
regulations, and all requirements of all applicable regulatory,
self-regulatory, and administrative bodies; (ii) to comply with the
Company's Policy of Business Conduct; and (iii) not to engage in any other
business or employment without the written consent of the Company except as
otherwise specifically provided herein.
4. COMPENSATION AND BENEFITS.
(a) BASE SALARY. During the Employment Term, the Company shall pay Executive a
base salary at the annual rate of $291,059 per year or such higher rate as
may be determined from time to
time by the Board ("Base Salary"). Such Base Salary shall be paid in
accordance with the Company's standard payroll practice for senior
executives.
(b) ANNUAL INCENTIVE BONUS. During the Employment Term, the Executive will be
eligible for an annual incentive bonus in such amount as may be determined
by the Board.
(c) EXPENSE REIMBURSEMENT. The Company shall promptly reimburse Executive for
the ordinary and necessary business expenses incurred by Executive in the
performance of the duties under this Agreement in accordance with the
Company's customary practices applicable to senior executives, PROVIDED
that such expenses are incurred and accounted for in accordance with the
Company's policy.
(d) OTHER BENEFIT PLANS, FRINGE BENEFITS AND VACATIONS. Executive shall be
eligible to participate in or receive benefits under any pension plan,
profit sharing plan, 401(k) plan, non-qualified deferred compensation plan,
medical and dental benefits plan, life insurance plan, short-term and
long-term disability plans, incentive compensation plans, vacations, or any
other fringe benefit plan, generally made available by the Company to
senior executives. Except as otherwise provided in this Agreement, any such
participation shall be in accordance with the provisions of such plans and
nothing contained in this Agreement is intended to, or shall be deemed to,
affect adversely any of Executive's rights as a participant under any such
plans. Nothing herein shall prevent the Board from modifying or
discontinuing any benefit plan on a consistent and non-discriminatory basis
applicable to all such executives.
5. TERMINATION OF EMPLOYMENT.
Executive's employment under this Agreement may be terminated under the
following circumstances:
(a) DEATH. Executive's employment shall terminate upon Executive's death.
(b) TOTAL DISABILITY. The Company may terminate Executive's employment upon his
becoming "Totally Disabled". For purposes of this Agreement, Executive
shall be "Totally Disabled" if he is physically or mentally incapacitated
so as to render him incapable of performing his usual and customary duties
under this Agreement. Executive's receipt of disability benefits under the
Company's long-term disability plan or receipt of Social Security
disability benefits shall be deemed conclusive evidence of Total Disability
for purpose of this Agreement.
(c) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate Executive's
employment for "Cause". Such termination shall be effective as of the date
specified in the written Notice of Termination provided to Executive.
Termination of employment by the Company for Cause shall be deemed to
have occurred only if such termination directly results from: (A) an
act or acts of dishonesty on Executive's part constituting a felony;
(B) Executive's willful and continued failure to devote the time,
attention, and effort necessary to substantially perform his duties as
an executive officer of the Company in a manner consistent with
Executive's past performance (other than any such failure resulting
from Executive's incapacity due to physical or mental illness or total
disability), after a demand for substantial performance is delivered
to Executive by the Board which specifically identifies the manner in
which the Board believes that Executive has not substantially
2
performed his duties and Executive is given a reasonable time after
such demand substantially to perform his duties; (C) gross misconduct
or gross negligence in connection with the business of the Company or
an affiliate which has a material adverse effect on the Company and
its subsidiaries, taken as a whole; or (D) a material breach of any of
the covenants set forth in Section 7 hereof.
(d) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may terminate
Executive's employment under this Agreement without Cause thirty (30) days
after providing Notice of Termination to Executive.
(e) TERMINATION BY EXECUTIVE. Executive may terminate his employment under this
Agreement at any time after providing Notice of Termination to the Company.
Such Notice shall state whether the Executive's termination is for "Good
Reason". Termination of employment by Executive for Good Reason shall be
deemed to have occurred, if Executive provides the Notice of Termination
within 60 days after the occurrence of any of the following:
(i) A change in Executive's responsibilities, status, title, or position,
which, in Executive's reasonable judgment, represents a diminution of
Executive's responsibilities, status, title, or position, or any
removal of Executive from, or any failure to re-elect Executive to,
any of such titles, offices, or positions, PROVIDED that this clause
shall not apply if Executive's -------- employment is terminated as a
result of: (A) Executive's death, (B) Executive's Total Disability in
accordance with Section 5(b), (C) Cause in accordance with Section
5(c), or (D) Executive's voluntary termination in accordance with this
Section 5(e) other than for Good Reason.
(ii) A reduction by the Company in Executive's Base Salary.
(iii) The failure by the Company to pay any material amount of current
compensation owing to Executive, or any material amount of
compensation deferred under any plan, agreement or arrangement of or
with the Company owing to Executive, within 20 days after the
Executive makes written demand for such amount.
(iv) The failure by the Company to obtain an assumption (in form and
substance reasonably satisfactory to the Executive, except in the case
of a merger or consolidation which does not constitute a Change in
Control for which no separate assumption is necessary) of the
obligations of the Company under this Agreement by any successor to
the Company.
(v) Any "Change in Control" of the Company as defined in Appendix A to
this Agreement.
(f) NOTICE OF TERMINATION. Any termination of Executive's employment by the
Company or by Executive (other than by reason of Executive's death) shall
be communicated by written Notice of Termination to the other party in
accordance with Section 15 below. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice in writing which shall indicate the
specific termination provision in this Agreement relied upon to terminate
Executive's employment and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
3
(g) TERMINATION DATE. Termination Date means (i) if Executive's employment is
terminated because of his death, the date of death, or (ii) if employment
is terminated for any other reason, the date specified in the Notice of
Termination.
6. COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT.
(a) TERMINATION BY REASON OF DEATH. In the event that Executive's employment is
terminated by reason of Executive's death, the Company shall pay the
following amounts to Executive's beneficiary or estate:
(i) EARNED BUT UNPAID COMPENSATION. Any accrued but unpaid Base Salary
for services rendered to the date of death, any accrued but unpaid
expenses required to be reimbursed under this Agreement and any
vacation accrued to the date of death.
(ii) LUMP SUM PAYMENT. An amount equal to the Base Salary (at the rate
in effect as of the date of Executive's death) which would have been
payable to Executive if Executive had continued in employment until
the last day of the month in which Executive's death occurs. Such
amount shall be paid in a single lump sum cash payment within 30 days
after Executive's death.
(iii) OTHER BENEFITS. Any benefits to which Executive may be entitled
pursuant to the plans, policies and arrangements referred to in
Section 4(d) hereof as determined and paid in accordance with the
terms of such plans, policies and arrangements.
(b) TERMINATION BY REASON OF TOTAL DISABILITY. In the event that Executive's
employment is terminated by reason of Executive's Total Disability prior to
the last day of the Employment Term as determined in accordance with
Section 5(b), the Company shall pay the following amounts to Executive:
(i) EARNED BUT UNPAID COMPENSATION. Any accrued but unpaid Base Salary
for services rendered to Executive's Termination Date, any accrued but
unpaid expenses required to be reimbursed under this Agreement, any
vacation accrued to the Termination Date.
(ii) CONTINUATION OF BASE SALARY. An amount equal to (A) the Base
Salary (at the rate in effect as of the date of Executive's Total
Disability) which would have been payable to Executive if Executive
had continued in active employment until the end of the 12-month
period following Executive's Termination Date, or such longer period
as may be determined by the Board, (B) reduced by amount of disability
insurance benefits payable to Executive during such period under any
employer-paid disability insurance plan. Payment shall be made at the
same time and in the same manner as such compensation would have been
paid if Executive had remained in active employment until the end of
such period.
(iii) OTHER BENEFITS. Any benefits to which Executive may be entitled
pursuant to the plans, policies and arrangements referred to in
Section 4(d) hereof shall be determined and paid in accordance with
the terms of such plans, policies and arrangements.
4
(c) TERMINATION FOR CAUSE OR TERMINATION BY EXECUTIVE FOR OTHER THAN GOOD
REASON. In the event that Executive's employment is terminated by the
Company for Cause pursuant to Section 5(c), or by Executive pursuant to
Section 5(e) for other than Good Reason, the Company shall pay the
following amounts to Executive:
(i) EARNED BUT UNPAID COMPENSATION. Any accrued but unpaid Base Salary
for services rendered to Executive's Termination Date, any accrued but
unpaid expenses required to be reimbursed under this Agreement and any
vacation accrued to Executive's Termination Date.
(ii) OTHER BENEFITS. Any benefits to which Executive may be entitled
pursuant to the plans, policies and arrangements referred to in
Section 4(d) hereof shall be determined and paid in accordance with
the terms of such plans, policies and arrangements.
(d) TERMINATION BY THE COMPANY WITHOUT CAUSE OR TERMINATION BY EXECUTIVE FOR
GOOD REASON. Executive shall be entitled to the benefits described in this
Section 6(d) in the event that Executive's employment is terminated (i) by
the Company pursuant to Section 5(d) for reasons other than death, Total
Disability, or Cause, or (ii) by Executive for Good Reason pursuant to
Section 5(e).
(i) EARNED BUT UNPAID COMPENSATION. The Company shall pay Executive
any accrued but unpaid Base Salary for services rendered to
Executive's Termination Date, any accrued but unpaid expenses required
to be reimbursed under this Agreement and any vacation accrued to
Executive's Termination Date.
(ii) LUMP SUM PAYMENT. The Company shall pay Executive an amount equal
to the product of five times the sum of (A) and (B) below:
(A) Executive's annualized Base Salary at the highest annual
rate in effect at any time prior to the Termination Date; and
(B) the highest amount of annual bonus payable to Executive
at any time prior to the Executive's Termination Date.
This amount will be paid to Executive in a single lump sum within
30 business days after the Termination Date.
(iii) OTHER BENEFITS. Any benefits to which Executive may be entitled
pursuant to the plans, policies and arrangements referred to in
Section 4(d) hereof shall be determined and paid in accordance with
the terms of such plans, policies and arrangements.
(iv) NO MITIGATION REQUIRED. Executive shall not be required to
mitigate the amount of any compensation provided for under this
Section 6(d) by seeking other employment or otherwise, nor shall the
amount of any payment provided for under this Agreement be reduced by
any compensation earned by the Employee as the result of
5
employment with another employer after the Termination Date or by any
other compensation.
(v) NON-COMPETITION COVENANT DOES NOT APPLY. The restrictive covenant
prohibiting competitive activity set forth in Section 7(b) below shall
not be applicable to Executive and shall be null and void.
(e) NO OTHER BENEFITS OR COMPENSATION. Except as may be provided under this
Agreement, under the terms of any incentive compensation, employee benefit,
or fringe benefit plan, applicable to Executive at the time of Executive's
termination or resignation of employment, Executive shall have no right to
receive any other compensation, or to participate in any other plan,
arrangement or benefit, with respect to future periods after such
termination or resignation.
7. RESTRICTIVE COVENANTS.
(a) PROTECTED INFORMATION. Executive recognizes and acknowledges that he will
have access to various confidential or proprietary information concerning
the Company and entities affiliated with the Company of a special and
unique value which may include, without limitation, (i) books and records
relating to operations, finance, accounting, sales, personnel and
management, (ii) policies and matters relating particularly to operations
such as customer service requirements, costs of providing service and
equipment, operating costs and pricing matters, and (iii) various trade or
business secrets, including business opportunities, marketing or business
diversification plans, business development and bidding techniques, methods
and processes, financial data and the like (collectively, the "Protected
Information"). Executive therefore covenants and agrees that he will not at
any time, either while employed by the Company or afterwards, knowingly
make any independent use of, or knowingly disclose to any other person or
organization (except as authorized by the Company) any of the Protected
Information.
(b) COMPETITIVE ACTIVITY. Executive covenants and agrees that at all times
during his period of employment with the Company, and for a period of two
(2) years after the date of termination of his employment by reason of (i)
termination by the Company for Cause in accordance with Section 5(c) above,
or (ii) termination by the Executive in accordance with Section 5(e) above
for other than Good Reason, he will not, directly or indirectly, engage in,
assist, or have any active interest or involvement whether as an employee,
agent, consultant, creditor, advisor, officer, director, stockholder
(excluding holding of less than 1% of the stock of a public company),
partner, proprietor or any type of principal whatsoever, in any person,
firm, or business entity which is engaged in the same business as that
conducted and principally carried on by the Company on the date of
Termination and continued thereafter, without the Company's specific
written consent to do so.
(c) RETURN OF DOCUMENTS AND OTHER MATERIALS. Executive shall promptly deliver
to the Company, upon termination of his employment, or at any other time as
the Company may so request, all customer lists, leads and refunds, data
processing programs and documentation, employee information, memoranda,
notes, records, reports, tapes, manuals, drawings, blueprints, programs,
and any other documents and other materials (and all copies thereof)
relating to the Company's business or that of its customers, and all
property associated therewith, which Executive may then possess or have
under his control.
6
8. ENFORCEMENT OF COVENANTS.
(a) RIGHT TO INJUNCTION. Executive acknowledges that a breach of the covenants
set forth in Section 7 hereof will cause irreparable damage to the Company
with respect to which the Company's remedy at law for damages will be
inadequate. Therefore, in the event of breach or anticipatory breach of the
covenants set forth in this section by Executive, Executive and the Company
agree that the Company shall be entitled to the following particular forms
of relief, in addition to remedies otherwise available to it at law or
equity, injunctions, both preliminary and permanent, enjoining or
retraining such breach or anticipatory breach and Executive hereby consents
to the issuance thereof forthwith and without bond by any court of
competent jurisdiction.
(b) SEPARABILITY OF COVENANTS. The covenants contained in Section 7 hereof
constitute a series of separate covenants, one for each applicable State in
the United States and the District of Columbia, and one for each applicable
foreign country. If in any judicial proceeding, a court shall hold that any
of the covenants set forth in Section 7 exceed the time, geographic, or
occupational limitations permitted by applicable laws, Executive and the
Company agree that such provisions shall and are hereby reformed to the
maximum time, geographic, or occupational limitations permitted by such
laws. Further, in the event a court shall hold unenforceable any of the
separate covenants deemed included herein, then such unenforceable covenant
or covenants shall be deemed eliminated from the provisions of this
Agreement for the purpose of such proceeding to the extent necessary to
permit the remaining separate covenants to be enforced in such proceeding.
Executive and the Company further agree that the covenants in Section 7
shall each be construed as a separate agreement independent of any other
provisions of this Agreement, and the existence of any claim or cause of
action by Executive against the Company whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement
by the Company of any of the covenants of Section 7.
9. CERTAIN PROPRIETARY RIGHTS.
Executive agrees to and hereby does assign to the Company all his right, title
and interest in and to all inventions, whether or not patentable, which are made
or conceived solely or jointly by him:
(a) at any time during the term of his employment by the Company in an
executive, managerial, or planning capacity (including development and
sales); or
(b) during the course of or in connection with his duties during the Employment
Term; or
(c) with the use of time or materials of the Company.
Executive agrees to communicate to the Company or its representatives all facts
known to him concerning such inventions, to sign all rightful papers, make all
rightful oaths and generally to do everything possible to aid the Company in
obtaining and enforcing proper patent protection for all such inventions in all
countries and in vesting title to such inventions in all countries and in
vesting title to such inventions and patents in the Company. For the purpose of
this Agreement, the subject matter of any application for patent naming Employee
as a sole or joint inventor filed during the course of employment or within one
year subsequent to the termination thereof shall be deemed to be an invention
made or conceived by him during the course of his employment by the Company and
7
assignable to the Company hereunder, unless Executive establishes by a
preponderance of the evidence that such invention was made or conceived by him
subsequent to termination of his employment hereunder. At the Company's request
(during or after the term of this Agreement) and expense, Executive will
promptly execute a specific assignment of title to the Company, and perform any
other acts reasonably necessary to implement the foregoing assignment.
10. WITHHOLDING OF TAXES.
The Company shall withhold from any compensation and benefits payable under this
Agreement all applicable federal, state, local, or other taxes.
11. SOURCE OF PAYMENTS.
All payments provided under this Agreement, other than payments made pursuant to
a plan which provides otherwise, shall be paid from the general funds of the
Company, and no special or separate fund shall be established, and no other
segregation of assets made, to assure payment. Executive shall have no right,
title or interest whatever in or to any investments which the Company may make
to aid the Company in meeting its obligations under this Agreement. To the
extent that any person acquires a right to receive payments from the Company
under this Agreement, such right shall be no greater than the right of an
unsecured creditor of the Company and its affiliates.
12. SUCCESSOR AND BINDING AGREEMENT.
(a) COMPANY SUCCESSOR. The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, by agreement in
form and substance satisfactory to Executive, expressly to assume and agree
to perform this Agreement in the same manner and to the same extent as the
Company would be required to perform it if no such succession had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement
and shall entitle Executive to compensation from the Company in the same
amount and on the same terms as Executive would be entitled to under this
Agreement if Executive had given Notice of Termination for Good Reason as
of the day immediately before such succession became effective and had
specified that day in the notice of termination. As used in this Agreement,
"Company" shall mean the Company as defined in the first sentence of this
Agreement and any successor to all or substantially all its business or
assets or which otherwise becomes bound by all the terms and provisions of
this Agreement, whether by the terms hereof, by operation of law or
otherwise.
(b) EXECUTIVE'S SUCCESSOR. This Agreement shall inure to the benefit of and be
enforceable by Executive and his personal or legal representatives and
successors in interest under this Agreement.
(c) FACILITY OF PAYMENT. In the event of Executive's legal incapacity, the
Company may make any payments due under this Agreement to his legal
representative. In the event of Executive's death, the Company may make any
payment due under this Agreement to his surviving spouse or, if none, to
Executive's estate. Any payment made in accordance with this provision
fully discharges the obligation of the Company therefor.
8
13. ASSIGNMENT BY EXECUTIVE.
The rights and benefits of Executive under this Agreement are personal to him
and no such right or benefit shall be subject to voluntary or involuntary
alienation, assignment or transfer; PROVIDED, however, that nothing in this
Section 13 shall preclude Executive from designating a beneficiary or
beneficiaries to receive any benefit payable on his death. In the event of a
dispute arising under this Agreement, the Company agrees to pay any and all
reasonable legal fees incurred by Executive in connection therewith.
14. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York applicable to agreements made and to be performed in that
State, without regard to its conflict of laws provisions.
15. NOTICES.
Any notice, consent, request or other communication made or given in connection
with this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by registered or certified mail, return receipt
requested, or by facsimile or by hand delivery, to those listed below at their
following respective addresses or at such other address as each may specify by
notice to the others:
To the Company:
Xxxxx Energy Group, Inc.
00 Xxxx Xxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: President
To Executive:
Xxxxx X. Xxxxx
00 Xxxxxxxx
Xxxxxxxxxx, XX 00000
16. MISCELLANEOUS.
(a) WAIVER. The failure of a party to insist upon strict adherence to any term
of this Agreement on any occasion shall not be considered a waiver thereof
or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.
(b) SEPARABILITY. If any term or provision of this Agreement is declared
illegal or unenforceable by any court of competent jurisdiction and cannot
be modified to be enforceable, such term or provision shall immediately
become null and void, leaving the remainder of this Agreement in full force
and effect.
9
(c) HEADINGS. Section headings are used herein for convenience of reference
only and shall not affect the meaning of any provision of this Agreement.
(d) RULES OF CONSTRUCTION. Whenever the context so requires, the use of the
singular shall be deemed to include the plural and vice versa.
(e) COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, and such
counterparts will together constitute but one Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year set forth below.
XXXXX CORPORATION EXECUTIVE
By By
----------------------------- --------------------------------
Xxxxx X. Xxxxxx, Xxxxx X. Xxxxx
President and Chief Operating
Officer
Date: ,1999 Date: ,1999
----------------------------- --------------------------------
10
APPENDIX A
DEFINITION OF CHANGE IN CONTROL
The following definition of "Change in Control" shall apply for purposes of
Paragraph 5(e)(v) of the Employment Agreement between Xxxxx Energy Group, Inc.
and Xxxxx X. Xxxxx.
CHANGE IN CONTROL. A "Change in Control" of the Company shall be deemed to have
occurred as of the first day any one or more of the following conditions shall
have been satisfied:
(a) Any person (other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or a corporation owned
directly or indirectly by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company), becomes
the beneficial owner, directly or indirectly, of securities of the Company,
representing more than twenty-five percent (25%) of the combined voting
power of the Company's then outstanding securities;
(b) Individuals who, as of May 20, 1998, constitute the Board of Directors of
the Company (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 May 20, 1998, 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, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on
behalf of a person other than the Board; or
(c) The stockholders of the Company approve: (i) a plan of complete liquidation
of the Company; or (ii) an agreement for the sale or disposition of all or
substantially all the Company's assets; or (iii) a merger, consolidation,
or reorganization of the Company with or involving any other corporation,
limited liability entity or similar person, other than a merger,
consolidation, or reorganization that would result in the voting securities
of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least seventy-five percent
(75%) of the combined voting power of the voting securities of the Company
(or such surviving entity) outstanding immediately after such merger,
consolidation, or reorganization.
11
