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EXHIBIT 10.3
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement"), effective as of May 1, 1996
("Effective Date"), is by and between SEAGULL ENERGY CORPORATION, a Texas
corporation ("Seagull"), and ROBERT W. SHOWER, an individual who resides in
Dallas, Texas ("Shower").
W I T N E S S E T H :
WHEREAS, Shower's employment with Seagull terminated on April 30, 1996;
and
WHEREAS, Seagull desires Shower to perform certain professional
services after the termination of his employment with Seagull and Shower 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, Shower shall serve as a
consultant to the management of Seagull with respect to such areas as requested
by the management of Seagull. It is understood that Shower may be rendering
services to others during the term of this Agreement and, in using the services
of Shower hereunder, Seagull will exercise due regard for other commitments of
Shower. Shower 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, Shower shall provide
Seagull with such of his ideas, assessments, and evaluations as Seagull may deem
necessary. Further, Shower agrees to be available for such meetings as Seagull
deems necessary for proper communication of his consultation.
2. In consideration for the consulting services to be rendered pursuant
to this Agreement, Seagull agrees to the following:
(a) During the term of this Agreement, Seagull shall pay Shower on
the first day of each calendar quarter, a fee to be determined
based upon the following schedule:
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Payment Date Quarterly Fee
July 1, 1996 $25,000
October 1, 1996 $25,000
January 1, 1997 $15,000
April 1, 1997 $15,000
July 1, 1997 $10,000
October 1, 1997 $10,000
January 1, 1998 $10,000
April 1, 1998 $10,000
(b) The Restricted Stock Agreement dated March 17, 1995, between
Seagull and Shower shall be amended pursuant to the amendment
attached hereto as Exhibit A to provide that the forfeiture
restrictions thereunder shall lapse as of March 17, 1998
if Shower performs substantial services pursuant to this
Agreement or, if earlier, the date Shower dies or becomes
disabled (as such term is defined under Seagull's long-term
disability plan) or the date the Compensation Committee of the
Board of Directors of Seagull in its sole discretion waives
such forfeiture restrictions.
(c) The Nonstatutory Stock Option Agreement dated March 20, 1992,
between Seagull and Shower shall be amended pursuant to the
amendment attached hereto as Exhibit B to provide that the
option granted thereunder shall be fully exercisable during
the period beginning on the Effective Date of this Agreement
and ending on January 31, 1998.
3. Unless sooner terminated pursuant to other provisions hereof,
Seagull agrees to retain the services of Shower for the period beginning on the
Effective Date of this Agreement and ending on April 30, 1998.
(a) Notwithstanding the provisions of the preceding sentence of this
Paragraph, Seagull shall have the right to terminate this Agreement and Shower's
services hereunder at any time for any of the following reasons:
(i) Upon Shower's death;
(ii) Upon Shower'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
Shower's gross negligence or wilful misconduct in the
rendering of services required of him pursuant to this
Agreement or Shower's final conviction of a felony or
of a misdemeanor involving moral turpitude;
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(iv) For Shower'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 Shower by Seagull; or
(v) For any other reason whatsoever in the sole discretion
of the Board of Directors of Seagull.
(b) Notwithstanding the provisions of the first sentence of this
Paragraph, Shower shall have the right to terminate this Agreement and his
services hereunder 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 Shower; or
(ii) For any other reason whatsoever in the sole discretion
of Shower.
(c) If Seagull or Shower desires to terminate Shower'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 Shower'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 shower'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 shower's services are terminated by shower 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. During the term of this Agreement, Shower shall be entitled to use
the nonresident membership in his name at the River Oaks Country Club, Houston,
Texas, but Shower shall not be reimbursed by Seagull for the membership fees,
dues or assessments with respect to such membership.
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5. All reasonable out-of-pocket expenses incurred by Shower in the
performance of his services hereunder and properly accounted for shall be borne
by Seagull. If not paid directly by Seagull, Shower shall be reimbursed by
Seagull for the cost of such expenses.
6. Shower 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. Shower 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, Shower 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, Shower'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 Shower;
(b) Information which was within Shower's knowledge or in his
possession prior to his employment by Seagull;
(c) Information which, either prior or subsequent to Seagull's
disclosure to Shower, was disclosed to Shower, without an
obligation of confidentiality, by a third party who did not
acquire such information, directly or indirectly from Shower,
Seagull, or from any third party who is under an obligation of
confidentiality; or
(d) Any disclosure of Confidential Information by Shower which is
required by law, including deposition or trial testimony by
Shower pursuant to subpoena. If Shower 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, if reasonably
possible under the circumstances as determined in good faith by
Shower, Shower 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.
Money damages would not be sufficient remedy for any breach of this Paragraph
concerning Confidential Information by Shower, and Seagull shall be entitled to
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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 Shower but shall be in addition to all remedies available at law or in
equity to Seagull, including the recovery of damages from Shower. For purposes
of this Paragraph, Seagull shall be construed to include any parent, subsidiary,
or other affiliate of Seagull.
7. Seagull shall, without further remuneration to Shower, own, be
entitled to possession of, and have the right to use, publish, and disclose any
results, reports, product, or data developed by Shower during the course of his
services hereunder, but identification of Shower with such results, reports, or
data shall not be made without Shower's express consent.
8. Shower 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 Shower or to allow Seagull to
exercise control or direction over the manner or method by which Shower performs
the services which are the subject matter of this Agreement. Shower shall be
responsible for payment of all income, self-employment, or other taxes
attributable to all compensation paid hereunder by Seagull to Shower, and Shower
agrees to hold Seagull harmless for withholding or payment of such taxes.
9. 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 Shower, to: Mr. Robert W. Shower
7224 Village Lane
Dallas, Texas 75248-6047
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.
10. This Agreement is entered into under and shall be governed for all
purposes by the laws of the State of Texas.
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11. 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.
12. 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.
13. 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.
14. 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.
15. 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 Shower has
executed this Agreement, all as of the day and year first above written.
SEAGULL ENERGY CORPORATION
By:
ROBERT W. SHOWER
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EXHIBIT A
AMENDMENT TO
RESTRICTED STOCK AGREEMENT
WHEREAS, SEAGULL ENERGY CORPORATION ("Seagull") entered into a
restricted stock agreement (the "Agreement") with ROBERT W. SHOWER ("Shower")
effective March 17, 1995; and
WHEREAS, in conjunction with, and as part of the consideration for, a
consulting agreement by and between Seagull and Shower for consulting services
to be provided during the period beginning on May 1, 1996 and ending on April
30, 1998, Seagull desires to amend the Agreement in certain respects;
NOW THEREFORE, the Agreement shall be amended as follows, effective as
of May 1, 1996:
1. All references to the term "Employee" in the Agreement shall be
deleted and the term "Consultant" shall be substituted therefor.
2. Paragraph 2 of the Agreement shall be deleted and the following
shall be substituted therefor:
"2. Forfeiture Restrictions. The Stock issued and/or disposed
of to Consultant pursuant to this Agreement may not be sold, assigned,
pledged, exchanged, hypothecated or otherwise transferred, encumbered
or disposed of to the extent then subject to the Forfeiture
Restrictions (as hereinafter defined) and upon the occurrence of a
Performance Forfeiture Event (as hereinafter defined), Consultant
shall, for no consideration, forfeit to the Company all Stock to the
extent then subject to the Forfeiture Restrictions. The prohibition
against transfer and the obligation to forfeit and surrender Stock to
the Company upon Consultant's failure to perform substantial services
under the Consulting Agreement are herein referred to as 'Forfeiture
Restrictions,' and the shares which are then subject to the Forfeiture
Restrictions are herein sometimes referred to as 'Restricted Shares'
The Forfeiture Restrictions shall be binding upon and enforceable
against any transferee of the Stock. For purposes of this Agreement, a
'Performance Forfeiture Event' shall occur upon a good faith
determination by the Compensation Committee of the Board of Directors
(the 'Committee') that Consultant has failed to perform substantial
services under the Consulting Agreement effective May 1, 1996, by and
between the Company and Consultant (the 'Consulting Agreement') for
any reason (other than as described in (2) and (3) below). The
Forfeiture Restrictions shall lapse as to all Stock issued to
Consultant pursuant to this Agreement on the earlier of (1) the third
anniversary of the date of this Agreement, (2) the date Consultant
dies or becomes disabled (as such term is defined under the Company's
long-term disability plan) or (3) the date, if any, the Committee
in its sole discretion waives the Forfeiture Restrictions."
3. Paragraph 8 of the Agreement shall be deleted and the following
shall be substituted therefor:
'8. Consulting Relationship. Any question as to whether
Consultant has provided or failed to provide substantial services
under the Consulting Agreement shall be determined by the Committee,
and its determination shall be final."
4. As amended hereby, the Agreement is 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 Shower has
executed this amendment, effective as of May 1, 1996.
SEAGULL ENERGY CORPORATION
By _______________________
ROBERT W. SHOWER
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EXHIBIT B
AMENDMENT TO
NONSTATUTORY STOCK OPTION AGREEMENT
WHEREAS, SEAGULL ENERGY CORPORATION ("Seagull") has previously adopted
the SEAGULL ENERGY CORPORATION 1990 STOCK OPTION PLAN (the "Option Plan"); and
WHEREAS, a certain nonstatutory stock option (the "Option") to
purchase 90,000 shares of the common stock of Seagull was granted to ROBERT W.
SHOWER ("Shower"), an employee of Seagull, on March 20, 1992, and such Option is
currently outstanding under the Option Plan and is evidenced by a Nonstatutory
Stock Option Agreement (the "Agreement"); and
WHEREAS, in conjunction with, and as part of the consideration for, a
consulting agreement by and between Seagull and Shower for consulting services
to be provided during the period beginning on May 1, 1996 and ending on April
30, 1998, Seagull desires to amend the Agreement in certain respects;
NOW, THEREFORE, the Agreement shall be amended as follows, effective
as of May 1, 1996:
1. The vesting schedule contained in the Agreement shall be waived and
the Option outstanding under such Agreement shall be exercisable in full by
Shower, his estate or the person who acquires the Option by will or the laws of
descent and distribution, at any time on or before January 31, 1998.
2. As amended hereby, the Agreement is 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 Shower has
executed this amendment, effective as of May 1, 1996.
SEAGULL ENERGY CORPORATION
By ______________________
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ROBERT W. SHOWER