Exhibit 10.3
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement"), effective as of July 1, 1997
("Effective Date"), is by and between SEAGULL ENERGY CORPORATION, a Texas
corporation ("Seagull"), and ROBERT F. VAGT, an individual who resides in
Davidson, North Carolina ("Vagt").
W I T N E S S E T H :
WHEREAS, Vagt separated from employment with Seagull on June 30, 1997; and
WHEREAS, Seagull desires Vagt to perform certain professional services
after the termination of his employment with Seagull and Vagt is qualified by
experience and training and desires to perform such services for Seagull;
NOW THEREFORE, the parties, in consideration of the mutual promises,
covenants and obligations contained herein, do hereby agree as follows:
1. During the term of this Agreement, Vagt shall serve as a consultant to
the management of Seagull with respect to such areas as requested by the
management of Seagull, including the prosecution, defense, or other resolution
of any litigation, now pending or future. Further, during the term of this
Agreement, Vagt shall continue to serve as a director of Seagull and Texneft
Inc. ("Texneft"). It is understood that Vagt will be serving as President of
Davidson College during the term of this Agreement and, in using the services of
Vagt hereunder, Seagull will exercise due regard for other commitments of Vagt.
Vagt shall faithfully render his best efforts and professional judgment in
performance of these services consistent with good consulting practice and to
the promotion, advancement and successful conduct of the business of Seagull. In
providing such consultation, Vagt shall provide Seagull with such of his ideas,
assessments, and evaluations as Seagull may deem necessary. Vagt agrees to be
available for such meetings as Seagull deems necessary for proper communication
of his consultation.
2. In consideration for the services to be rendered pursuant to this
Agreement, Seagull agrees to the following:
(a) During the term of this Agreement, Seagull shall pay Vagt on the first
day of each calendar quarter (or as soon as administratively feasible
thereafter), a fee to be determined based upon the following schedule:
Quarter Beginning Quarterly Fee
July 1, 1997 $50,000
October 1, 1997 $50,000
January 1, 1998 $25,000
April 1, 1998 $25,000
July 1, 1998 $25,000
October 1, 1998 $25,000
January 1, 1999 $25,000
April 1, 1999 $25,000
(b) The Nonstatutory Stock Option Agreement dated July 9, 1992, between
Global Natural Resources Inc. and Vagt shall be amended pursuant to the
amendment attached hereto as Exhibit A to provide that the option granted
thereunder shall be fully exercisable until June 30, 1999.
(c) The Nonstatutory Stock Option Agreement dated January 23, 1997, between
Seagull and Vagt shall be amended pursuant to the amendment attached hereto as
Exhibit A to provide that the option granted thereunder shall be fully
exercisable until June 30, 1999.
Vagt acknowledges and hereby agrees that the compensation payable pursuant
to this Paragraph is for all services rendered pursuant to this Agreement and
that he shall receive no separate fees with respect to his services as a
director of Seagull and Texneft. Vagt further acknowledges and hereby agrees
that the compensation payable pursuant to this Paragraph is in lieu of his
participation in the Seagull 1997 Executive Incentive Plan.
3. Seagull agrees to retain the services of Vagt for a term of two years
beginning on the Effective Date of this Agreement; provided, however, that the
parties hereto may terminate Vagt's services prior to the end of such term
pursuant to Paragraphs (a) or (b) below.
(a) Seagull shall have the right to terminate Vagt's services under this
Agreement at any time for any of the following reasons:
(i) Upon Vagt's death;
(ii) Upon Vagt's becoming disabled as such term is defined under Seagull's
long-term disability plan;
(iii)For cause, which for purposes of this Agreement shall mean a finding
by the Board of Directors of Seagull of Vagt's gross negligence or
wilful misconduct in the rendering of services required of him
pursuant to this Agreement or Vagt's final conviction of a felony or
of a misdemeanor involving moral turpitude;
(iv) For Vagt's material breach of any material provision of this
Agreement, which, if correctable, remains uncorrected for 30 days
following written notice of such breach to Vagt by Seagull; or
(v) For any other reason whatsoever in the sole discretion of the Board of
Directors of Seagull.
(b) Vagt shall have the right to terminate his services under this
Agreement at any time for any of the following reasons:
(i) For Seagull's material breach of any material provision of this
Agreement, which, if correctable, remains uncorrected for 30 days
following written notice of such breach to Seagull by Vagt; or
(ii) For any other reason whatsoever in the sole discretion of Vagt.
(c) If Seagull or Vagt desires to terminate Vagt's services hereunder at
any time prior to the expiration of the term of this Agreement, it or he shall
do so by giving written notice to the other party that it or he has elected to
terminate Vagt's services hereunder and stating the effective date and reason
for such termination; provided that no such action shall alter or amend any
other provisions hereof or rights arising hereunder.
(d) In the event that Vagt's services are terminated by Seagull as provided
in (a) above prior to the expiration of the term of this Agreement, then, upon
such termination, the compensation payable pursuant to Paragraph 2(a) shall
terminate contemporaneously with the termination of such services, except that
if such termination shall be pursuant to (a)(i), (a)(ii) or (a)(v), such
compensation shall continue for the balance of the term of this Agreement.
(e) In the event that Vagt's services are terminated by Vagt as provided in
(b) above prior to the expiration of the term of this Agreement, then, upon such
termination, the compensation payable pursuant to Paragraph 2(a) shall terminate
contemporaneously with the termination of such services, except that if such
termination shall be pursuant to (b)(i), such compensation shall continue for
the balance of the term of this Agreement.
4. All reasonable out-of-pocket expenses incurred by Vagt in the
performance of his services hereunder and properly accounted for shall be borne
by Seagull. If not paid directly by Seagull, Vagt shall be reimbursed by Seagull
for the cost of such expenses.
5. Vagt acknowledges that Seagull's business is highly competitive and that
Seagull's methods, strategies, books, records, and documents, Seagull's
technical information concerning its products, equipment, services, and
processes, procurement procedures and pricing techniques, and the names of and
other information (such as credit and financial data) concerning Seagull's
customers, business affiliates, affairs, and operations all comprise
confidential business information and/or trade secrets ("Confidential
Information") of Seagull which are valuable, special, and unique assets of
Seagull which Seagull uses in its business to obtain a competitive advantage
over its competitors which do not know or use this information. Vagt further
acknowledges that protection of Seagull's Confidential Information against
unauthorized disclosure and use is of critical importance to Seagull in
maintaining its competitive position. Accordingly, Vagt hereby agrees that,
notwithstanding any other provisions of this Agreement other than those
contained in the following sentences, he will not at any time during the term of
this Agreement make any unauthorized disclosure of any Confidential Information
of Seagull or make any unauthorized use thereof. However, Vagt's obligations
under this paragraph shall not extend to:
(a) Information which is or becomes a part of the public domain or is
available to the public by publication or otherwise without disclosure by Vagt;
(b) Information which was within Vagt's knowledge or in his possession
prior to his initial employment by Seagull;
(c) Information which, either prior or subsequent to Seagull's disclosure
to Vagt, was disclosed to Vagt, without an obligation of confidentiality, by a
third party who did not acquire such information, directly or indirectly from
Vagt, Seagull, or from any third party who is under an obligation of
confidentiality; or
(d) Any disclosure of Confidential Information by Vagt which is required by
law, including deposition or trial testimony by Vagt pursuant to subpoena. If
Vagt is requested or required (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, Vagt will promptly notify
Seagull of such request or requirements so that Seagull may seek an appropriate
protective order or waive compliance with the provisions of this Agreement.
Vagt acknowledges and agrees that money damages would not be sufficient
remedy for any breach of this Paragraph concerning Confidential Information by
Vagt, and Seagull shall be entitled to seek specific performance and injunctive
relief as remedies for such breach or threatened breach, as well as reasonable
and necessary attorneys' fees, experts' fees, and costs incurred in the
connection with such breach or threatened breach. Such remedies shall not be
deemed the exclusive remedies for such a breach by Vagt but shall be in addition
to all remedies available at law or in equity to Seagull, including the recovery
of damages from Vagt. For purposes of this Paragraph, Seagull shall be construed
to include any parent, subsidiary, or other affiliate of Seagull.
6. Seagull shall, without further remuneration to Vagt, own, be entitled to
possession of, and have the right to use, publish, and disclose any results,
reports, product, or data developed by Vagt during the course of his services
hereunder, but identification of Vagt with such results, reports, or data shall
not be made without Vagt's express consent.
7. As part of the consideration for the compensation to be paid to Vagt
pursuant to Paragraph 2 hereunder; to protect the trade secrets and confidential
information of Seagull and its affiliates that have been and will in the future
be disclosed or entrusted to Vagt, the business good will of Seagull and its
affiliates that has been and will in the future be developed in Vagt, or the
business opportunities that have been and will in the future be disclosed or
entrusted to Vagt by Seagull and its affiliates; and as an additional incentive
for Seagull to enter into this Agreement, Seagull and Vagt agree to the
noncompetition obligations hereunder. Vagt shall not, directly or indirectly for
Vagt or for others, in any geographic area or market where Seagull or any of its
affiliates are conducting any business as of the Effective Date or have during
the previous twelve months conducted such business:
(a) engage in any business competitive with the business conducted by
Seagull;
(b) except as required in his capacity as a director of Monterey Resources,
Inc., render advice or services to, or otherwise assist, any other person,
association, or entity who is engaged, directly or indirectly, in any business
competitive with the business conducted by Seagull with respect to such
competitive business; or
(c) induce any employee of Seagull or any of its affiliates to terminate
his or her employment with Seagull or such affiliates, or hire or assist in the
hiring of any such employee by any person, association, or entity not affiliated
with Seagull.
These noncompetition obligations shall apply during the term of this
Agreement regardless of the termination of Vagt's services hereunder prior to
the end of such term. Vagt understands that the restrictions set forth in this
Paragraph may limit Vagt's ability to engage in certain businesses anywhere in
the world during the period provided for above, but acknowledges that Vagt will
receive sufficiently high remuneration under this Agreement to justify such
restriction. Vagt acknowledges that money damages would not be sufficient remedy
for any breach of this Paragraph by Vagt, and Seagull shall be entitled to
enforce the provisions of this Paragraph by terminating any payments then owing
to Vagt under this Agreement and/or to specific performance and injunctive
relief as remedies for such breach or any threatened breach. Such remedies shall
not be deemed the exclusive remedies for a breach of this Paragraph, but shall
be in addition to all remedies available at law or in equity to Seagull,
including without limitation, the recovery of damages from Vagt and Vagt's
agents involved in such breach and remedies available to Seagull pursuant to
other agreements with Vagt. It is expressly understood and agreed that Seagull
and Vagt consider the restrictions contained in this Paragraph to be reasonable
and necessary to protect the proprietary information of Seagull. Nevertheless,
if any of the aforesaid restrictions are found by a court having jurisdiction to
be unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such court so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.
8. As part of the consideration for the compensation to be paid to Vagt
pursuant to Paragraph 2 and as an additional incentive for Seagull to enter into
this Agreement, Vagt hereby agrees to execute a release, in the form established
by Seagull, releasing Seagull, its shareholders, partners, officers, directors,
employees and agents from any and all claims and from any and all causes of
action of any kind or character, including but not limited to all claims or
causes of action arising out of Vagt's employment with Seagull or his separation
therefrom.
9. Vagt is engaged by Seagull only for the purposes and to the extent set
forth in this Agreement, and his relationship to Seagull hereunder is that of an
independent contractor. Nothing in this Agreement is intended to create an
employer/employee relationship between Seagull and Vagt or to allow Seagull to
exercise control or direction over the manner or method by which Vagt performs
the services which are the subject matter of this Agreement. Vagt shall be
responsible for payment of all income, self-employment, or other taxes
attributable to all compensation paid hereunder by Seagull to Vagt, and Vagt
agrees to hold Seagull harmless for withholding or payment of such taxes.
10. For purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been duly
given when personally delivered or when mailed by United States, registered or
certified mail, return receipt requested, postage prepaid, if addressed as
follows:
If to Seagull, to: Seagull Energy Corporation
1700 First City Tower
1001 Fannin
Houston, Texas 77002
Attention: Chairman of the Board
If to Vagt, to: Mr. Robert F. Vagt
Davidson College
410 N. Main Street
Davidson, North Carolina 28036
or such other addresses as either party may furnish to the other in
writing, in accordance herewith, except that notices of changes of address shall
be effective only upon receipt.
11. This Agreement is entered into under and shall be governed for all
purposes by the laws of the State of Texas.
12. No failure by either party hereto at any time to give notice of any
breach by the other party of, or to require compliance with, any condition or
provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same time or at any prior or subsequent time.
13. If a court of competent jurisdiction determines that any provision of
this Agreement is invalid or unenforceable, then the invalidity or
unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.
14. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.
15. This Agreement and the rights and obligations of the parties hereunder
are personal, and neither this Agreement nor any right, benefit, or obligation
of either party hereto shall be subject to voluntary or involuntary assignment,
alienation, or transfer, whether by operation of law or otherwise, without the
prior written consent of the other party.
16. This Agreement represents the entire agreement between the parties
hereto with respect to the matters covered herein and may not be changed,
altered, or modified in any respect except by an instrument in writing signed by
both the parties hereto.
IN WITNESS WHEREOF, Seagull has caused this Agreement to be duly executed
by one of its officers thereunto duly authorized and Vagt has executed this
Agreement, effective as of the day and year first above written. SEAGULL ENERGY
CORPORATION
By:_____________________________________
_____________________________________
ROBERT F. VAGT
AMENDMENT TO
NONSTATUTORY STOCK OPTION AGREEMENTS
WHEREAS, SEAGULL ENERGY CORPORATION ("Seagull") has previously adopted the
SEAGULL ENERGY CORPORATION 1995 OMNIBUS STOCK PLAN (the "1995 Plan") and,
pursuant to the Agreement and Plan of Merger by and among Seagull Energy
Corporation, GNR Merger Corporation and Global Natural Resources Inc. dated as
of July 22, 1996 (the "Merger Agreement"), has assumed the GLOBAL NATURAL
RESOURCES INC. 1992 STOCK OPTION PLAN (the "1992 Plan"); and
WHEREAS, on July 9, 1992, ROBERT F. VAGT ("Vagt") was granted a
nonstatutory stock option to purchase 450,000 shares of the common stock of
GLOBAL NATURAL RESOURCES INC. under the 1992 Plan, which option was converted
into an option to purchase 396,000 shares of the common stock of Seagull
pursuant to the Merger Agreement, and which option is currently outstanding
under the 1992 Plan and is evidenced by a Nonstatutory Stock Option Agreement
(the "1992 Agreement"); and
WHEREAS, on January 23, 1997, Vagt was granted a nonstatutory stock option
to purchase 20,000 shares of the common stock of Seagull under the 1995 Plan,
which option is currently outstanding under the 1995 Plan and is evidenced by a
Nonstatutory Stock Option Agreement (the "1997 Agreement"); and
WHEREAS, in conjunction with, and as part of the consideration for, a
consulting agreement by and between Seagull and Vagt for consulting services to
be provided during the period beginning on July 1, 1997 and ending on June 30,
1999, Seagull desires to amend the 1992 Agreement and the 1997 Agreement
(jointly, the "Agreements") in certain respects;
NOW, THEREFORE, the Agreements shall be amended as follows, effective as of
June 30, 1997:
1. The option outstanding under the 1992 Agreement shall be exercisable in
full by Vagt, his estate or the person who acquires such option by will or the
laws of descent and distribution, at any time on or before June 30, 1999.
2. The vesting schedule contained in the 1997 Agreement shall be waived and
the option outstanding under such Agreement shall be exercisable in full by
Vagt, his estate or the person who acquires such option by will or the laws of
descent and distribution, at any time on or before June 30, 1999.
3. As amended hereby, the Agreements are specifically ratified and
reaffirmed.
IN WITNESS WHEREOF, the Company has caused this amendment to be duly
executed by one of its officers thereunto duly authorized, and Vagt has executed
this amendment, effective as of June 30, 1997.
SEAGULL ENERGY CORPORATION
By:_________________________________
_________________________________
ROBERT F. VAGT