EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This AGREEMENT (the "Agreement") by and between Carrizo Oil & Gas,
Inc., a Texas Corporation (the "Company") and Jeremy T. Greene (the
"Executive"), dated as of the 29th day of July, 2002 and to be effective as of
the Agreement Effective Date (as defined herein).
In entering into this Agreement, the Board of Directors of the Company
(the "Board") desires to provide the Executive with substantial incentives to
serve the Company as one of its senior executives performing at the highest
level of leadership and stewardship, without distraction or concern over minimum
compensation, benefits or tenure, to manage the Company's future growth and
development, and maximize the returns to the Company's stockholders.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period. As of the Agreement Effective Date (hereinafter
defined), the Company hereby agrees to employ the Executive and the Executive
hereby agrees to accept employment with the Company, in accordance with, and
subject to, the terms and provisions of this Agreement, for the period (the
"Employment Period") commencing on the Agreement Effective Date and ending on
the 2nd anniversary of the Agreement Effective Date; provided, on the first
anniversary of the Agreement Effective Date and on each day thereafter, the
Employment Period shall automatically be extended for an additional one day
without any further action by either the Company or the Executive, it being the
intention of the parties that there shall be continuously a remaining term of
not less than one year's duration of the Employment Period until an event has
occurred as described in, or one of the parties shall have made an appropriate
election and notification pursuant to, the provisions of Section 3.
2. Terms of Employment.
(a) Position and Duties. It is contemplated that initially Executive
shall be a full time employee and that upon commencement of his entitlement to
Base Salary under Section 2(b)(i) of this Agreement, during the Employment
Period, and excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees to devote full attention and time
during normal business hours to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform faithfully
and efficiently such responsibilities. During the Employment Period, it shall
not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational institutions and (C) manage
personal investments, so long as such
activities do not interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Agreement
Effective Date, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Agreement
Effective Date shall not thereafter be deemed to interfere with the performance
of the Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary. Commencing on the date on which Executive commences
full time employment with the Company and thereafter during his Employment
Period, the Executive shall receive an annual base salary of $165,000 ("Annual
Base Salary"), which shall be paid on a semimonthly basis. During the Employment
Period, the Annual Base Salary shall be reviewed at least annually and shall be
increased at any time and from time to time as shall be substantially consistent
with increases in base salary generally awarded in the ordinary course of
business to executives of the Company and its affiliated companies. Any increase
in Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. As used in this Agreement, the term
"affiliated companies" shall include, when used with reference to the Company,
any company controlled by, controlling or under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the Executive may
be awarded, for each fiscal year or portion thereof during the Employment
Period, an Annual Bonus (the "Annual Bonus"), in an amount comparable to the
Annual Bonus Award to other Company executives, taking into account Executive's
position, responsibilities, and accomplishments with the Company, prorated for
any period consisting of less than 12 full months.
(iii) Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all incentive, savings
and retirement plans that are tax-qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended ("Code"), and all plans that are supplemental
to any such tax-qualified plans, in each case to the extent that such plans are
applicable generally to other salaried employees of the Company and its
affiliated companies.
(iv) Welfare Benefit Plans. During the Employment Period, the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company or its affiliated
companies (including, without limitation, medical, prescription, dental, vision,
disability, salary continuance, group life and supplemental group life,
accidental death and travel accident insurance plans and programs) to the extent
applicable generally to other salaried employees of the Company and its
affiliated companies.
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(v) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the policies, practices and procedures of the
Company and its affiliated companies.
(vi) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the plans, policies, programs and
practices of the Company and its affiliated companies.
3. Termination of Employment.
(a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 12(d) of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For the purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for either (i) 180 consecutive business
days or (ii) in any two-year period 270 nonconsecutive business days as a result
of incapacity due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably.)
(b) Cause. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean for the Company's termination of the Executive's employment for any of the
following: (i) the Executive's final conviction of a felony crime that enriched
the Executive at the expense of the Company; provided, however, that after
indictment, the Company may suspend Executive from the rendition of services,
but without limiting or modifying in any other way the Company's obligations
under this Agreement; (ii) a breach by Executive of a fiduciary duty owed to the
Company; (iii) a breach by Executive of any of the covenants made by him in
Sections 8 and 10 hereof; (iv) the willful and gross neglect by Executive of the
duties specifically and expressly required by this Agreement; or (v) the
Executive's continuing failure to substantially perform his duties and
responsibilities hereunder (except by reason of the Executive's incapacity due
to physical or mental illness or injury) for a period of 45 days after the
Required Board Majority, as defined herein, has delivered to the Executive a
written demand for substantial performance hereunder which specifically
identifies the bases for the Required Board Majority's determination that the
Executive has not substantially performed his duties and responsibilities
hereunder (that period being the "Grace Period"); provided, that for purposes of
this clause (v), the Company shall not have Cause to terminate the
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Executive's employment unless (A) at a meeting of the Board called and held
following the Grace Period in the city in which the Company's principal
executive offices are located, of which the Executive was given not less than 10
days' prior written notice and at which the Executive was afforded the
opportunity to be represented by counsel, appear and be heard, the Required
Board Majority shall adopt a written resolution which (1) sets forth the
Required Board Majority's determination that the failure of the Executive to
substantially perform his duties and responsibilities hereunder has (except by
reason of his incapacity due to physical or mental illness or injury)continued
past the Grace Period and (2) specifically identifies the bases for that
determination, and (B) the Company, at the written direction of the Required
Board Majority, shall deliver to the Executive a Notice of Termination for Cause
to which a copy of that resolution, certified as being true and correct by the
secretary or any assistant secretary of the Company, is attached. "Required
Board Majority" means at any time a majority of the members of the Board at that
time which includes at least a majority of the Directors, each of whom has not
been an employee of the Company or any subsidiary of the Company.
(c) Good Reason; Window Period. The Executive's employment may be
terminated during the Employment Period by the Executive for Good Reason, or
during a Window Period by the Executive without any reason. For purposes of this
Agreement. "Window Period" shall mean the 60-day period immediately following
elapse of one year after any Change of Control as defined in Section 9 of this
Agreement. For purposes of this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties materially
inconsistent in any respect with the Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 2 of this Agreement, or any other
action by the Company which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(ii) any material failure by the Company to comply with any of the
provisions of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement;
(iv) any failure by the Company to comply with and satisfy the
requirements of Section 11 of this Agreement, provided that (A) the successor
described in Section 11(c) has received, at least 10 days prior to the Date of
Termination (as defined in subparagraph (e) below), written notice from the
Company or the Executive of the requirements of such provision and (B) such
failure to be in compliance and satisfy the requirements of Section 11 shall
continue as of the Date of Termination.
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(d) Notice of Termination. Any termination by the Company for Cause, or
by the Executive for Good Reason or without any reason during a Window Period,
shall be communicated by Notice of Termination to the other party hereto given
in accordance with Section 12(d) of this Agreement. The failure by the Executive
or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in enforcing
the Executive's or the Company's rights hereunder.
(e) Date of Termination. For purposes of this Agreement, the term "Date
of Termination" means (i) if the Executive's employment is terminated by the
Company for Cause, or by the Executive during a Window Period or for Good
Reason, the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the Executive's employment is
terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the Executive of
such termination and (iii) if the Executive's employment is terminated by reason
of death or Disability, the Date of Termination shall be the date of death of
the Executive or the Disability Effective Date, as the case may be.
4. Obligations of the Company upon Termination.
(a) Disability, Good Reason or During a Window Period; Other than for
Cause or Death (except during a Window Period). If, during the Employment
Period, (x) the Company shall terminate the Executive's employment other than
for Cause, including a termination by reason of Disability (but not by reason of
death), or (y) the Executive shall terminate employment for Good Reason or (z)
his employment shall be terminated during a Window Period by the Company for
Cause, by the Executive without any reason, or by reason of death:
(i) the Company shall pay or provide to or in respect of the Executive
the following amounts and benefits:
A. in a lump sum in cash, within 10 days after the Date of Termination,
an amount equal to the sum of (1) the Executive's Annual Base Salary through the
Date of Termination, (2) any deferred compensation previously awarded to or
earned by the Executive (together with any accrued interest or earnings thereon)
and (3) any compensation for unused vacation time for which the Executive is
eligible in accordance with the plans, policies, programs and practices of the
Company and its affiliated companies, in each case to the extent not theretofore
paid (the sum of the amounts described in clauses (1), (2) and (3) shall be
hereinafter referred to as (the "Accrued Obligation");
B. in a lump sum cash, discounted at 6%, within 10 days after the Date
of Termination, an amount equal to 125% of Annual Base Salary that would have
been paid annually to the Executive pursuant to this Agreement for the period
(the "Remaining Employment Period") beginning on the Date of Termination and
ending on the latest
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possible date of termination of the Employment Period in accordance with the
provisions of Section 1 hereof (the "Final Expiration Date") if the Executive's
employment had not been terminated; provided if the termination occurs after the
date a Change of Control occurs 175% shall be substituted for 125%;
C. effective as of the Date of Termination, (1) immediate vesting and
exercisability of, and termination of any restrictions on sale or transfer
(other than any such restriction arising by operation of law) with respect to,
each and every stock option, restricted stock award, restricted stock unit award
and other equity-based award and performance award (each, a "Compensatory
Award") that is outstanding as of a time immediately prior to the Date of
Termination and (2) the extension of the term during which each and every
Compensatory Award may be exercised by the Executive until the earlier of (x)
the first anniversary of the Date of Termination or (y) the date upon which the
right to exercise any Compensatory Award would have expired if the Executive had
continued to be employed by the Company under the terms of this Agreement until
the Final Expiration Date.
D. as soon as practicable following the calendar year of the date of
termination, an amount equal to the product of (x) the Annual Bonus that would
have been paid to Executive with respect to the year of termination had the Date
of Termination not occurred and (y) a fraction, the numerator of which is the
number of days in the fiscal year through the Date of Termination and the
denominator of which is 365;
Anything in this Agreement to the contrary notwithstanding, if a Change of
Control occurs and if the Executive's employment with the Company is terminated
prior to the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment (x) was at the
request of a third party who has taken steps reasonably calculated to effect the
Change of Control or (y) otherwise arose in connection with or anticipation of
the Change of Control, then for all purposes of this Agreement, the "date a
Change of Control occurs" shall mean the date immediately prior to the date of
such termination of employment.
(ii) for the Remaining Employment Period, or such longer period as any
plan, program, practice or policy may provide, the Company shall continue
benefits to the Executive and/or the Executive's family at least equal to those
which would have been provided to them in accordance with the plans, programs,
practices and policies described in Section 2(b)(iv) of this Agreement if the
Executive's employment had not been terminated in accordance with the plans,
practices, programs or policies of the Company and its affiliated companies
(such continuation of such benefits for the applicable period herein set forth
shall be hereinafter referred to as "Welfare Benefit Continuation"), but with
the Company's medical benefits coverages being secondary to any coverages
provided by another employer. For purposes of determining eligibility of the
Executive for retiree benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained employed until the
Final Expiration Date and to have retired on such date.
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(b) Death (except during a Window Period). If the Executive's
employment is terminated by reason of the Executive's death during the
Employment Period and other than during a Window Period in which event the
provisions of Section 4(a) shall govern, this Agreement shall terminate without
further obligations to the Executive's legal representatives under this
Agreement, other than (i) the payment of Accrued Obligations (which shall be
paid to the Executive's estate or beneficiary, as applicable, in a lump sum in
cash within 30 days of the Date of Termination), (ii) the payment of an amount
equal to the Annual Salary that would have been paid to the Executive pursuant
to this Agreement during the Remaining Employment Period if the Executive's
employment had not terminated by reason of death (which shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination) reduced by the amount payable in respect of
Executive's death under any life insurance policy (other than accidental death
and dismemberment or travel accident policies) but only to the extent such
amounts are attributable to premiums paid by the Company, (iii) during the
period beginning on the Date of Termination and ending on the first anniversary
thereof medical benefits coverage determined as if Executive's employment had
not terminated by reason of death, (iv) as soon as practicable following the
fiscal year in which death occurs, payment of an amount equal to the product of
(x) the Annual Bonus that would have been paid to Executive with respect to the
year of termination had the Date of Termination not occurred and (y) a fraction,
the numerator of which is the number of days in the fiscal year through the Date
of Termination and the denominator of which is 365 and (v) effective as of the
Date of Termination, (A) immediate vesting and exercisability of, and
termination of any restrictions on sale or transfer (other than any such
restriction arising by operation of law) with respect to, each and every
Compensatory Award outstanding as of a time immediately prior to the Date of
Termination, (B) the extension of the term during which each and every
Compensatory Award may be exercised or purchased by the Executive until the
earlier of (1) the first anniversary of the Date of Termination or (2) the date
upon which the right to exercise or purchase any Compensatory Award would have
expired if the Executive had continued to be employed by the Company under the
terms of this Agreement until the Final Expiration Date.
(c) Cause, Other than for Disability, Good Reason or During a Window
Period. If the Executive's employment shall be terminated for Cause during the
Employment Period and other than during a Window Period, in which event the
provisions of Section 4(a) shall govern, this Agreement shall terminate without
further obligations to the Executive other than for Accrued Obligations. If the
Executive terminates employment during the Employment Period, excluding a
termination for any Disability, Good Reason or without any reason during a
Window Period, in which event the provisions of Section 4(a) shall govern, this
Agreement shall terminate without further obligations to the Executive, other
than for the payment of Accrued Obligations. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination.
5. Non-exclusivity of Rights.Except as provided in Section 4 of this
Agreement, nothing in this Agreement shall prevent or limit the Executive's
continuing
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or future participation in any plan, program, policy or practice provided by the
Company or any of its affiliated companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as such plan, policy, practice or program is superseded by this
Agreement.
6. Full Settlement; Resolution of Disputes.
(a) The Company's obligation to make payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any setoff, counterclaim, recoupment, defense, mitigation or other
claim, right or action which the Company may have against the Executive or
others. The Company agrees to pay promptly as incurred, to the full extent
permitted by law, all legal fees and expenses which the Executive may reasonably
incur as a result of any contest (regardless of the outcome thereof) by the
Company, the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any such payment pursuant to this Agreement), plus in each case interest on
any delayed payment at the annual percentage rate which is three percentage
points above the interest rate shown as the Prime Rate in the Money Rates column
in the then most recently published edition of The Wall Street Journal
(Southwest Edition), or, if such rate is not then so published on at least a
weekly basis, the interest rate announced by JPMorgan Chase Bank (or its
successor), from time to time, as its Base Rate (or prime lending rate), from
the date those amounts were required to have been paid or reimbursed to the
Employee until those amounts are finally and fully paid or reimbursed; provided,
however, that in no event shall the amount of interest contracted for, charged
or received hereunder exceed the maximum non-usurious amount of interest allowed
by applicable law; provided, further, that if the Executive is not the
prevailing party in any such contest, then he shall, upon the conclusion
thereof, repay to the Company any amounts that were previously advanced pursuant
of this sentence by the Company as payment of legal fees and expenses.
(b) If there shall be any dispute between the Company and the Executive
concerning (i) in the event of any termination of the Executive's employment by
the Company, whether such termination was for Cause or Disability, or (ii) in
the event of any termination of employment by the Executive, whether Good Reason
existed or whether such termination occurred during a Window Period, then,
unless and until there is a final, nonappealable judgment by a court of
competent jurisdiction declaring that such termination was for Cause or
Disability or that the determination by the Executive of the existence of Good
Reason was note made in good faith or that the termination by the Executive did
not occur during a Window Period, the Company shall pay all amounts,
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and provide all benefits, to the Executive and/or the Executive's family or
other beneficiaries, as the case may be, that the Company would be required to
pay or provide pursuant to Section 4(a) hereof as though such termination were
by the Company without Cause or by the Executive with Good Reason or during a
Window Period; provided, however, that the Company shall not be required to pay
any disputed amounts pursuant to this paragraph except upon receipt of an
undertaking by or on behalf of the Executive to repay all such amounts to which
the Executive is ultimately adjudged by such court not to be entitled.
7. 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 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, but
determined without regard to any additional payments required under this Section
7 (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by the Executive 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 and 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 any interest and penalties
imposed with respect thereto) 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 Payments.
(b) Subject to the provisions of Section 7(c), all determinations
required to be made under this Section 7, including whether and when Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Ernst & Young
LLP (the "Accounting Firm"); provided, however, that the Accounting Firm shall
not determine that no Excise Tax is payable by the Executive unless it delivers
to the Executive a written opinion (the "Accounting 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. In the
event that Ernst & Young LLP has served, at any time during the two years
immediately preceding a Change in Control Date, as accountant or auditor for the
individual, entity or group that is involved in effecting or has any material
interest in the Change in Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations and perform the
other functions specified in this Section 7 (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Within 15 business days of
the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company, the Accounting Firm shall make all
determinations required under this Section 7, shall provide to the Company and
the Executive a written report setting forth such determinations, together with
detailed supporting calculations, and, if the Accounting Firm determines that no
Excise Tax is
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payable, shall deliver the Accounting Opinion to the Executive. Any Gross-Up
Payment, as determined pursuant to this Section 7, shall be paid by the Company
to the Executive within five days of the receipt of the Accounting Firm's
determination. Subject to the remainder of this Section 7, any determination by
the Accounting Firm 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 it is ultimately determined in
accordance with the procedures set forth in Section 7(c) that the Executive is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment 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 claims by
the Internal Revenue Service, that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than 30 days after the Executive actually receives
notice 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; provided,
however, that the failure of the Executive to notify the Company of such claim
(or to provide any required information with respect thereto) shall not affect
any rights granted to the Executive under this Section 7 except to the extent
that the Company is materially prejudiced in the defense of such claim as a
direct result of such failure. The Executive shall not pay such claim prior to
the expiration of the 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 or 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 selected by the Company and reasonably acceptable to the Executive;
(iii) cooperate with the Company in good faith in order effectively to
contest such claim; and
(iv) if the Company elects not to assume and control the defense of
such claim, 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
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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 Section 7(c), the Company
shall have the right, at its sole option, to assume the defense of and control
all proceedings in connection with such contest, in which case it may pursue or
forego any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim, and may 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 Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's right to assume the
defense of and control 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 Section 7(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 Section 7(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 Section 7(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 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
8. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement) (referred to herein as "Confidential Information"). After termination
of the Executive's employment with the Company, the Executive shall not, without
the prior written consent of the Company or as may
12
otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 8 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement. Also, within 14 days of
the termination of Executive's employment for any reason, Executive shall return
to Company all documents and other tangible items of or containing Company
information which are in Executive's possession, custody or control.
9. Change of Control.
As used in this Agreement, the terms set forth below shall have the
following respective meanings:
"Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement.
"Associate" shall mean, with reference to any Person, (a) any
corporation, firm, partnership, association, unincorporated organization or
other entity (other than the Company or a subsidiary of the Company) of which
such Person is an officer or general partner (or officer or general partner of a
general partner) or is, directly or indirectly, the Beneficial Owner of 10% or
more of any class of equity securities, (b) any trust or other estate in which
such Person has a substantial beneficial interest or as to which such Person
serves as trustee or in a similar fiduciary capacity and (c) any relative or
spouse of such Person, or any relative of such spouse, who has the same home as
such Person.
"Beneficial Owner" shall mean, with reference to any securities, any
Person if:
(a) such Person or any of such Person's Affiliates and Associates,
directly or indirectly, is the "beneficial owner" of (as determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the Exchange Act, as in
effect on the date of this Agreement) such securities or otherwise has the right
to vote or dispose of such securities, including pursuant to any agreement,
arrangement or understanding (whether or not in writing); provided, however,
that a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," any security under this subsection (a) as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (i) arises solely from a revocable proxy or
consent given in response to a public (i.e., not including a solicitation
exempted by Rule 14a-2(b)(2) of the General Rules and Regulations under the
Exchange Act) proxy or consent solicitation made pursuant to, and in accordance
with, the applicable provisions of the General Rules and Regulations under the
Exchange Act and (ii) is not then reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report);
(b) such Person or any of such Person's Affiliates and Associates,
directly or indirectly, has the right or obligation to acquire such securities
(whether such right or
13
obligation is exercisable or effective immediately or only after the passage of
time or the occurrence of an event) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of conversion
rights, exchange rights, other rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial Owner of, or
to "beneficially own," (i) securities tendered pursuant to a tender or exchange
offer made by such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange or (ii)
securities issuable upon exercise of Exempt Rights; or
(c) such Person or any such Person's Affiliates or Associates (i) has
any agreement, arrangement or understanding (whether or not in writing) with any
other Person (or any Affiliate or Associate thereof) that beneficially owns such
securities for the purpose of acquiring, holding, voting (except as set forth in
the proviso to subsection (a) of this definition) or disposing of such
securities or (ii) is a member of a group (as that term is used in Rule 13d-5(b)
of the General Rules and Regulations under the Exchange Act) that includes any
other Person that beneficially owns such securities;
provided, however, that nothing in this definition shall cause a Person engaged
in business as an underwriter of securities to be the Beneficial Owner of, or to
"beneficially own," any securities acquired through such Person's participation
in good faith in a firm commitment underwriting until the expiration of 40 days
after the date of such acquisition. For purposes hereof, "voting" a security
shall include voting, granting a proxy, consenting or making a request or demand
relating to corporate action (including, without limitation, a demand for
stockholder list, to call a stockholder meeting or to inspect corporate books
and records) or otherwise giving an authorization (within the meaning of Section
14(a) of the Exchange Act) in respect of such security.
The terms "beneficially own" and "beneficially owning" shall
have meanings that are correlative to this definition of the term "Beneficial
Owner".
"Change of Control" shall mean any of the following:
(a) any Person (other than an Exempt Person) shall become the
Beneficial Owner of 40% or more of the shares of Common Stock then outstanding
or 40% or more of the combined voting power of the Voting Stock of the Company
then outstanding; provided, however, that no Change of Control shall be deemed
to occur for purposes of this subsection (a) if such Person shall become a
Beneficial Owner of 40% or more of the shares of Common Stock or 40% or more of
the combined voting power of the Voting Stock of the Company solely as a result
of (i) an Exempt Transaction or (ii) an acquisition by a Person pursuant to a
reorganization, merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in clauses (i), (ii) and (iii)
of subsection (c) of this definition are satisfied; or
(b) individuals who, as of the Agreement Effective Date, constitute the
Board (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 the
14
Agreement Effective Date 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; provided, further, that there
shall be excluded, for this purpose, any such individual whose initial
assumption of office occurs as a result of any actual or threatened election
contest that is subject to the provisions of Rule 14a-11 under the Exchange Act;
or
(c) the Company engages in and completes a reorganization, merger or
consolidation, in each case, unless, following such reorganization, merger or
consolidation, (i) more than 85% of the then outstanding shares of common stock
of the corporation resulting from such reorganization, merger or consolidation
and the combined voting power of the then outstanding Voting Stock of such
corporation beneficially owned, directly or indirectly, by all or substantially
all of the Persons who were the Beneficial Owners of the outstanding Common
Stock immediately prior to such reorganization, merger, or consolidation in
substantially the same proportions as their ownership, immediately prior to such
reorganization, merger or consolidation, of the outstanding Common Stock, (ii)
no Person (excluding any Exempt Person or any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation, directly or
indirectly, 40% or more of the Common Stock then outstanding or 40% or more of
the combined voting power of the Voting Stock of the Company then outstanding)
beneficially owns, directly or indirectly, 40% or more of the then outstanding
shares of common stock of the corporation resulting from such reorganization,
merger or consolidation or the combined voting power of the then outstanding
Voting Stock of such corporation and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such reorganization,
merger or consolidation were members of the Incumbent Board at the time of the
execution of the initial agreement or initial action by the Board providing for
such reorganization, merger or consolidation; or
(d) the Company engages in and completes (i) a complete liquidation or
dissolution of the Company unless such liquidation or dissolution is approved as
part of a plan of liquidation and dissolution involving a sale or disposition of
all or substantially all of the assets of the Company to a corporation with
respect to which, following such sale or other disposition, all of the
requirements of clauses (ii) (A), (B) and (C) of this subsection (d) are
satisfied, or (ii) the sale or other disposition of all or substantially all of
the assets of the Company, other than to a corporation, with respect to which,
following such sale or other disposition, (A) more than 85% of the then
outstanding shares of common stock or such corporation and the combined voting
power of the Voting Stock of such corporation is then beneficially owned,
directly or indirectly, by all or substantially all of the Persons who were the
Beneficial Owners of the outstanding Common Stock immediately prior to such sale
or other disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the outstanding Common
Stock, (B) no Person (excluding any Exempt Person and any Person beneficially
owning, immediately prior to such sale or other disposition, directly or
indirectly, 40% or more of the Common Stock then outstanding or 40% or more of
the
15
combined voting power of the Voting Stock of the Company then outstanding)
beneficially owns, directly or indirectly, 40% or more of the then outstanding
shares of common stock of such corporation and the combined voting power of the
then outstanding Voting Stock of such corporation and (C) at least a majority of
the members of the board of directors of such corporation were members of the
Incumbent Board at the time of the execution of the initial agreement or initial
action of the Board providing for such sale or other disposition of assets of
the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exempt Person" shall mean the Company, any subsidiary of the Company,
any employee benefit plan of the Company or any subsidiary of the Company, and
any Person organized, appointed or established by the Company for or pursuant to
the terms of any such plan.
"Exempt Rights" shall mean any rights to purchase shares of Common
Stock or other Voting Stock of the Company if at the time of the issuance
thereof such rights are not separable from such Common Stock or other Voting
Stock (i.e., are not transferable otherwise than in connection with a transfer
of the underlying Common Stock or other Voting Stock) except upon the occurrence
of a contingency, whether such rights exist as of the Agreement Effective Date
or are thereafter issued by the Company as a dividend on shares of Common Stock
or other Voting Securities or otherwise.
"Exempt Transaction" shall mean an increase in the percentage of the
outstanding shares of Common Stock or the percentage of the combined voting
power of the outstanding Voting Stock of the Company beneficially owned by any
Person solely as a result of a reduction in the number of shares of Common Stock
then outstanding due to the repurchase of Common Stock or Voting Stock by the
Company, unless and until such time as (a) such Person or any Affiliate or
Associate of such Person shall purchase or otherwise become the Beneficial Owner
of additional shares of Common Stock constituting 1% or more of the then
outstanding shares of Common Stock or additional Voting Stock representing 1% or
more of the combined voting power of the then outstanding Voting Stock, or (b)
any other Person (or Persons) who is (or collectively are) the Beneficial Owner
of shares of Common Stock constituting 1% or more of the then outstanding shares
of Common Stock or Voting Stock representing 1% or more of the combined voting
power of the then outstanding Voting Stock shall become an Affiliate or
Associate of such Person.
"Person" shall mean any individual, firm, corporation, partnership,
association, trust, unincorporated organization or other entity.
"Voting Stock" shall mean, with respect to a corporation, all
securities of such corporation of any class or series that are entitled to vote
generally in the election of directors of such corporation (excluding any class
or series that would be entitled so to vote by reason of the occurrence of any
contingency, so long as such contingency has not occurred).
16
10. Covenant Not to Compete.
(a) Executive recognizes that in each of the highly competitive
businesses in which the Company is engaged, personal contact is of primary
importance in securing new customers and in retaining the accounts and goodwill
of present customers and protecting the business of the Company. The Executive,
therefore, agrees that during the Employment Period and, if the Date of
Termination occurs by reason of the Executive terminating his employment for
reasons other than Disability or Good Reason and other than during a Window
Period, for a period of two years after the Date of Termination, he will not,
either within 20 miles of any geographic location with respect to which he has
devoted substantial attention to the material business interests of the Company
or any of its affiliated companies or with respect to any immediate geologic
trends in which the Company or any of its affiliated companies is active as of
the Date of Termination without regard, in either case, to whether the Executive
has worked at such location (the "Relevant Geographic Area") (i) accept
employment or render service to any person that is engaged in a business
directly competitive with the business then engaged in by the Company or any of
its affiliated companies or (ii) enter into or take part in or lend his name,
counsel or assistance to any business, either as proprietor, principal,
investor, partner, director, officer, executive, consultant, advisor, agent,
independent contractor, or in any other capacity whatsoever, for any purpose
that would be competitive with the business of the Company or any of its
affiliated companies (all of the foregoing activities are collectively referred
to as the "Prohibited Activity").
(b) In addition to all other remedies at law or in equity which the
Company may have for breach of a provision of this Section 10 by the Executive,
it is agreed that in the event of any breach or attempted or threatened breach
of any such provision, the Company shall be entitled, upon application to any
court of proper jurisdiction, to a temporary restraining order or preliminary
injunction (without the necessity of (i) proving irreparable harm, (ii)
establishing that monetary damages are inadequate or (iii) posting any bond with
respect thereto) against the Executive prohibiting such breach or attempted or
threatened breach by proving only the existence of such breach or attempted or
threatened breach. If the provisions of this Section 10 should ever be deemed to
exceed the time, geographic or occupational limitations permitted by the
applicable law, the Executive and the Company agree that such provisions shall
be and are hereby reformed to the maximum time, geographic or occupational
limitations permitted by the applicable law.
(c) The covenants of the Executive set forth in this Section 10 are
independent of and severable from every other provision of this Agreement; and
the breach of any other provision of this Agreement by the Company or the breach
by the Company of any other agreement between the Company and the Executive
shall not affect the validity of the provisions of this Section 10 or constitute
a defense of the Executive in any suit or action brought by the Company to
enforce any of the provisions of this Section 10 or seek any relief for the
breach thereof by Executive.
17
(d) The Executive acknowledges, agrees and stipulates that: (i) the
terms and provisions of this Agreement are reasonable and constitute an
otherwise enforceable agreement to which the terms and provisions of this
Section 10 are ancillary or a part of as contemplated by TEX. BUS. & COM. CODE
ANN. Sections 15.50-15.52; (ii) the consideration provided by the Company under
this Agreement is not illusory; and (iii) the consideration given by the Company
under this Agreement, including, without limitation, the provision by the
Company of Confidential Information to the Executive as contemplated by Section
8, gives rise to the Company's interest in restraining and prohibiting the
Executive from engaging in the Prohibited Activity within the Relevant
Geographic Area as provided under this Section 10, and the Executive's covenant
not to engage in the Prohibited Activity within the Relevant Geographic Area
pursuant to this Section 10 is designed to enforce the Executive's consideration
(or return promises), including, without limitation, the Executive's promise to
not disclose Confidential Information under this Agreement.
11. Successors.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's heirs,
executors and other legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and may only be assigned to a successor described in Section 11(c).
(c) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.
12. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, without reference to principles of conflict
of laws that would require the application of the laws of any other state or
jurisdiction.
(b) The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.
(c) This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective successors
and heirs, executors and other legal representatives.
18
(d) All notices and other communications hereunder shall be in writing
and shall be given, if by the Executive to the Company, by telecopy or facsimile
transmission at the telecommunications number set forth below and, if by either
the Company or the Executive, either by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Name: Jeremy T. Greene
Carrizo Oil & Gas, Inc.
14701 St. Mary's Lane, Suite 800
Houston, Texas 77079
If to the Company:
Carrizo Oil & Gas, Inc.
14701 St. Mary's Lane, Suite 800
Houston, Texas 77079
Fax Number: 281-496-0884
Telephone Number: 281-496-1352
Attention: Corporate Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(e) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(f) The Company may withhold from any amounts payable under this
Agreement such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(g) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason or during a Window Period pursuant to Section 3(c) of
this Agreement, shall not be deemed to be a waiver of such provision or right or
any other provision or right of this Agreement.
(h) This Agreement contains the complete and total understanding of the
parties concerning the subject matter hereof and expressly supersedes any
previous agreement between the parties relating to the subject matter hereof.
(i) This Agreement shall become effective as of the date hereof (the
"Agreement Effective Date").
19
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all to be
effective as of August 12, 2002.
CARRIZO OIL & GAS, INC.
By: /s/ S.P. JOHNSON, IV
-------------------------------------
/s/ JEREMY T. GREENE
----------------------------------------
Jeremy T. Greene
20