Exhibit 10.19
EMPLOYMENT AGREEMENT
This Agreement, executed and delivered as of January 1, 1995, by and
between ALAMCO, INC., a Delaware corporation (the "Company"), with its principal
offices at 200 West Main Street, Clarksburg, West Virginia 26301, and RICHARD R.
HOFFMAN, (the "Executive");
WITNESSETH THAT:
WHEREAS, the Executive is currently employed by the Company pursuant to the
terms of an employment agreement dated as of July 1, 1991, and amended in two
separate amendments as of January 1, 1994 (such agreement, as so amended, is
hereinafter referred to as the "Prior Agreement"); and
WHEREAS, the parties hereby amend and restate the terms of the Prior Agreement
in their entirety effective January 1, 1995, and subject to the terms and
conditions set forth in this Agreement, the Company wishes to continue to employ
the Executive and the Executive wishes to be so employed; and
WHEREAS, the execution and delivery of this Agreement has been duly authorized
by the Board of Directors of the Company (the "Board");
NOW, THEREFORE, the parties hereto, intending to be legally mutually bound, do
hereby covenant and agree as follows:
1. Employment.
The Company hereby employs the Executive as its Executive Vice
President and Chief Operating Officer, and the Executive agrees to be so
employed, on the terms and conditions set forth herein.
2. Term.
The initial term of this Agreement shall commence on January 1, 1995
and end on December 31, 1996. Such term shall be automatically renewed effec-
tive as of January 1, 1997, and each biennial (every two years) anniversary
thereof for additional consecutive terms of two (2) years unless notice of
termination is given by either party to the other party not less than ninety
(90) days prior to January 1, 1997, or any such biennial anniversary, subject to
earlier termination as provided herein, including Sections 7, 8 and 9 hereof.
3. Duties.
The Executive shall perform all the duties commonly performed by the
Chief Operating Officer of the Company, and shall be subject to such further
instructions as may be issued from time to time within the general scope of
those duties by the Board of Directors of the Company or its designated repre-
sentative. The Executive shall devote all his time, energies, and skills to
such duties during the terms hereof.
4. Compensation.
4.1 Base Salary. In consideration of the services to be rendered by
the Executive to the Company hereunder, the Company shall pay the Executive an
annual salary of $107,500 subject to any adjustments as may be mutually agreed
upon by the Executive and the Board of Directors of the Company.
4.2 In addition to the foregoing, the Company shall:
(a) reimburse the Executive for all expenses reasonably incurred
by the Executive in connection with performance of his duties on the Company's
behalf, including, without limitation, expenses incurred for travel, lodging,
and reasonable business entertainment;
(b) continue in effect the grant of stock options previously
awarded the Executive in the aggregate amount of 138,500 shares;
(c) pay the Executive an annual retainer and board meeting fees
equal to the same retainer and meeting fees paid other directors for their
service as directors of the Company, all payable in cash in substantially equal
monthly installments.
5. Location.
The Executive shall perform his duties hereunder generally in, and
shall not be obligated to maintain an office in any other place than, Clarks-
burg, West Virginia, or its environs; provided, however, that the Executive
shall conduct such travel outside of Clarksburg as may be reasonably necessary
in connection with the performance of his duties hereunder.
6. Trade Secrets.
(a) Acknowledgements. The Executive acknowledges that he has
heretofore acquired and hereafter anticipates acquiring detailed knowledge of
the Company's business and affairs. In view of the nature of the services the
Executive is capable of performing for the Company, the Executive also acknowl-
edges that those services will have peculiar value to the Company, the loss of
which cannot be adequately compensated by money damages.
(b) Nondisclosure. The Executive therefore shall not, during the
term of his employment hereunder or thereafter, divulge to any third party
information obtained in the course of his employment including, without limita-
tion, any information concerning the Company's business, operations, affairs,
rates, investors, customers, geological data, well logs, well locations,
acreage, reserves of gas or oil, finances, and plans or policies to the extent
the same are not already matters of public knowledge.
(c) Confidentiality. All such information shall be regarded as
secret, confidential, and proprietary to the Company and shall be used by the
Executive for no other purpose than to pursue the Company's business and
affairs.
(d) Non-competition. In view of his unique skills and knowledge,
the Executive shall not, without the Company's express prior written consent,
during the term hereof or, unless otherwise agreed in writing by the Board, for
a period of time equal to one (1) year following the termination or expiration
of this Agreement or any renewal or extension hereof, engage in any business (as
proprietor, employee, officer, director or shareholder) which is competitive
with the Company's oil and gas business; provided, however, that the foregoing
provision shall not prohibit the Executive from investing in a publicly held
company in which he owns less than one percent (1%) of the equity; and provided
further that the foregoing provision shall not apply in the event the Execu-
tive's employment hereunder shall terminate or be terminated as a result of or
in connection with a Change in Control in accordance with Paragraph 8 hereof.
(e) Equitable Relief. If the Executive competes with the Company in
violation of Paragraph 6(d) hereof or discloses or threatens to disclose any of
the information described in Paragraph 6(b) concerning the Company, the Company
shall be deemed to be subject to irreparable injury and shall be entitled to
immediate injunctive or other similar equitable relief to restrain the Executive
from so competing with the Company or from so disclosing its proprietary
information to a third party, including any competitor of the Company. The
foregoing relief shall be in addition to any other remedies to which the Company
may be entitled under law.
7. Termination.
If at any time during the term hereof or any extension or renewal
hereof, the Company's Board of Directors shall determine that the Executive has
engaged in willful misfeasance or malfeasance, disregard of his duties, or
negligence related to the performance of his duties, any one of which conditions
shall be deemed cause for dismissal, the Company shall promptly so advise the
Executive in writing, giving details of the alleged errors or omissions. The
Executive shall then be accorded a reasonable opportunity to refute the allega-
tions, including the right to meet with the full Board of Directors of the
Company or an appropriate committee thereof. The Executive shall be entitled to
be represented at any such meeting by legal counsel. In the event that the
Board of Directors of the Company continues to be of the opinion that the
Executive has given cause for dismissal, it may forthwith terminate his employ-
ment. In the event the Executive is terminated for cause, or in the event the
Executive resigns under circumstances other than those described in Section 8 or
Section 9, this Agreement shall immediately terminate and the Executive shall be
entitled only to his salary and other benefits accrued through the date of
termination.
8. Termination by the Company Other Than for Cause.
8.1 The Executive recognizes that the Company, acting through its
Board of Directors, has the legal right to remove him as Executive Vice Presi-
dent and Chief Operation Officer, either by termination of his employment or
reassignment to a position other than Executive Vice President and Chief
Operating Officer, if the best interests of the Company will be so served.
However, should such a removal either by Termination or reassignment occur,
unless the reassignment is to another position of comparable executive status as
designated by the Board of Directors or appropriate committee thereof for the
unexpired portion of the terms of this Agreement or any renewal hereof, not
constituting a termination for cause under Section 7 above or not in connection
with death or disability under Section 9, or should the Executive resign from
his employment with the Company at any time within six (6) months following
occurrence of a Change in Control (as defined in Section 8.2) the Executive
shall be entitled to receive in full satisfaction of the Company's obligations
hereunder (in addition to such other benefits as may be payable to the Execu-
tive): (a) as severance pay, an amount equal to the sum of, (i) $24,750, plus
(ii) one and one-half (1-1/2) times the salary under Section 4.1 as in effect on
the date of such removal or Change in Control, as the case may be, payable
within five (5) business days of such event.
8.2 For purposes hereof, the term "Change in Control" shall mean a
change in control of the Company of the nature that would be required to be
reported in response to Item 5(f) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934 (the "Exchange Act"); provided,
however, that, without limitation, such a Change in Control shall be deemed to
have occurred if, on or after the date hereof, any "person" (as such term is
under in Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes the
beneficial owner, directly or indirectly, of the securities of the Company
representing fifteen percent (15%) or more of the combined voting power of the
Company's then outstanding securities (determined without regard to any contrac-
tual restrictions limiting any stockholder in the exercise of voting rights with
respect to voting securities).
9. Death or Disability.
(a) If during the period of employment hereunder the Executive
shall have become disabled through illness or otherwise from performing his
duties hereunder, the Executive shall be entitled to a leave of absence with
full compensation for the duration of any such disability, reduced dollar for
dollar by the amount of any disability benefits paid to the Executive in accor-
dance with any disability policy or program of the Company for a period of up to
but not exceeding eight (8) consecutive months.
(b) If the Executive shall have become permanently disabled, as
herein defined, or if employment hereunder terminates by reason of the Executi-
ve's death, all future obligations of the Company hereunder shall, at the
Company's election, cease; provided, however, that any and all benefits and
rights theretofore vested under any pension, savings, profit-sharing, or
insurance plan of the Company shall remain unimpaired thereby.
(c) If the Executive's death shall have occurred after the termina-
tion of employment hereunder and if, but for his death, the Executive would have
been entitled to receive additional payments hereunder in respect of his
employment, such payments shall thereafter be paid as the Executive's last will
and testament shall direct, or failing such direction, to the Executive's
estate.
10. Failure to Renew.
If the Company shall fail to agree to extend the term of this
Agreement pursuant to Paragraph 2 hereof upon the expiration of its initial term
or any renewal term hereof, the Executive shall be entitled to receive as
severance pay (in addition to such other benefits as may be payable to the
Executive) an amount equal to, (i) the sum of $16,500 plus (ii) one (1) times
the highest annual salary under Section 4.1 as in effect on the date of such
expiration, payable within five (5) business days of such expiration.
11. Vacation.
During each calendar year of the term hereof, the Executive shall be
entitled to four (4) weeks vacation and three (3) days of personal leave with
pay. The Executive shall select such vacation periods with reasonable regard to
the needs of the business of the Company.
12. Employee Plan.
Nothing contained herein shall prevent the Executive from partici-
pation in any plan that may be provided by the Company for the benefit of its
executives or employees and for which the Executive may qualify. Benefits under
any such plan shall be determined in accordance with the respective provisions
thereof.
13. No Assignment or Attachment.
This Agreement and the rights, interests and benefits hereunder shall
not be assigned, transferred, pledged, or hypothecated in any way by the
Executive or by the Company and shall not be subject to execution, attachment,
or similar process. Any attempted assignment, transfer, pledge or hypothecation
or the levy of any execution, attachment or similar process thereon shall be
null and void and without effect.
14. Insurance.
The Executive shall be included within and covered by the presently
effective group health and accident insurance policies maintained by the Company
or such other plans as may in the future be made available to executive officers
of the Company.
15. Successors and Assigns.
This Agreement shall be binding on and inure to the benefits of the
parties hereto and their respective successors, heirs and assigns; provided,
however, that neither party may assign his or its rights hereunder without the
other's express prior written consent.
16. Notices.
Any notice required to be given hereunder shall be sufficient if in
writing and submitted by first class mail, postage prepaid, if to the Executive
to him as follows:
Richard R. Hoffman
602 Joseph Street
Clarksburg, West Virginia 26301
and if to the Company, to it at the address first above written, attention of
the Chief Executive Officer.
17. Effect of Prior Agreements.
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior employment agreement between the Company and the
Executive.
18. Amendment.
Any amendment hereof or supplement hereto shall be in writing and
signed by the parties hereto.
19. Severability.
Any provision of this Agreement that is invalid, illegal, or unen-
forceable in any respect in any jurisdiction shall be, as to such jurisdiction,
ineffective to the extent of such invalidity, illegality, or unenforceability
without affecting the remaining provisions hereof; and any such invalidity,
illegality, or unenforceability in any such jurisdiction shall not invalidate or
in any way affect the validity, legality or enforceability of such provision in
any other jurisdiction.
20. Jurisdiction and Governing Law.
This Agreement shall be governed by, construed under, and enforced in
accordance with the laws of the State of West Virginia applicable to contracts
made in such state by residents thereof and to be performed entirely within such
state.
21. Arbitration.
Any controversy or claim arising out of or relating to this Agree-
ment, shall be settled by arbitration in the City of Pittsburgh, Pennsylvania.
The arbitration shall be conducted in accordance with the rules of the American
Arbitration Association. Judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof.
22. Supplemental Leave.
In addition to other benefits provided by the Company, the Executive
shall be entitled to have two (2) weeks of Supplemental Leave with pay each year
herein over the term of this Agreement to be used solely at the Executive's
discretion; and the Executive shall be entitled to accumulate Supplemental Leave
that is unused in any particular year provided, that no more than four (4) weeks
of Supplemental Leave shall be taken in any calendar year. The Company shall
reimburse the Executive for all reasonable expenses, including travel, meals and
lodging, for the Executive to attend or reside at a health or fitness center of
the Executive's choice during the Supplemental Leave. No later than December
31 of any calendar year in which the Company reimburses the Executive for
expenses pursuant to this Section 22, the Company shall further pay to the
Executive an amount in cash which is sufficient to pay the Executive's federal,
state and local income taxes on the amount of such reimbursements for such
calendar year plus all federal, state and local income taxes on such cash
payments; provided, however, that the maximum amount per each two (2) week
period of such reimbursements and cash payments pursuant to this Section 22
shall be $3,500 in any calendar year in which this Agreement is in effect.
23. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by the Company
to or for the benefit of the Executive, whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Pay-
ments.
(b) Subject to the provisions of Paragraph 23(c), all determinations
required to be made under this Paragraph 23, including whether a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be used in arriving at such determinations, shall be made by the Company's
principal outside accounting firm (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Board and the Executive within
fifteen (15) business days of the Date of Termination. All fees and expenses of
the Accounting Firm shall be borne solely by the Company. The initial Gross-Up
Payment, if any, as determined pursuant to this Paragraph 23(b), shall be paid
by the Company to the Executive within five (5) days of the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive with a
written opinion that failure to report the Excise Tax on the Executive's
applicable federal income tax return would not result in the imposition of a
negligence or similar penalty. Any determination by the Accounting Firm under
this Paragraph 23 shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Paragraph 23(c) and the Executive thereafter is required to
make a payment of any Excise Tax, (including penalties and interest) the
Accounting Firm shall determine the amount of the Underpayment (including
penalties and interest) that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of an Underpayment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty (30)
day period following the date on which he gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim, the
Executive shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of
such representation and payment of costs and expenses. Without limitation on
the foregoing provisions of this Paragraph 23(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect to such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax, including interest or penalties with respect thereto,
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the Execu-
tive with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Paragraph 23(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of Paragraph 23(c)) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Paragraph 23(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid.
IN WITNESS WHEREOF, the parties hereto have hereunto affixed their respective
hands and seals the day and year first above written.
ATTEST:
(CORPORATE SEAL) ALAMCO, INC.
By: /s/ Jane Merandi By: /s/ John L. Schwager
Secretary President and
Chief Executive Officer
EXECUTIVE
/s/ Richard R. Hoffman