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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
effective as of October 9, 1996 (the "Effective Date") between United Meridian
Corporation, a Delaware Corporation (the "Parent"), UMC Petroleum Corporation,
a Delaware corporation (the "Corporation") and James L. Dunlap (the "Officer").
The Parent and the Corporation are collectively referred to herein as "UMC."
1. Agreement to Serve.
1.1 Title. At the Effective Date, the Corporation shall
employ Officer and Officer shall serve in the employ of the Corporation as its
President and Chief Operating Officer or under such other comparable titles or
executive offices as shall be designated by the Board of Directors and/or the
Chief Executive Officer of the Parent and the Corporation during the term of
Officer's employment hereunder. Officer shall also serve as President and
Chief Operating Officer of the Parent and a member of the Board of Directors of
the Parent.
1.2 Duties. Officer shall assume and discharge the
responsibilities of the President and Chief Operating Officer, as well as such
other responsibilities as may be assigned to him by the Board of Directors
and/or Chief Executive Officer of the Parent and the Corporation. Officer
shall perform his responsibilities to the best of his abilities and shall
devote his entire normal business time and attention to the good faith best
efforts performance of his responsibilities. Officer will engage in no other
business or activity for compensation during the term of this Agreement except
with the prior written consent of the Corporation and except as a member of the
board of directors of Massachusetts Mutual Life Insurance Company. Officer
shall always be subject to the directions of the Board of Directors and/or
Chief Executive Officer of the Corporation and the Parent in the performance of
his responsibilities, and nothing herein shall affect the power of the Board of
Directors of the Parent and/or the Corporation to limit, alter, restrict, or
remove the authority of Officer.
2. Terms of Employment.
2.1 Basic Term. The term of Officer's employment under this
Agreement shall be for three (3) years from the Effective Date, unless
terminated earlier pursuant to this Section 2.
2.2 Termination for Cause. The Corporation and the Parent
shall have the right to terminate Officer for cause and said termination shall
be effected by written notification to Officer. Grounds for termination for
cause shall include, without limitation and determined in the sole discretion
of the Board of Directors of the Parent or the Corporation, (i) Officer's
material breach of any terms of this Agreement and failure to cure such breach
(if it is capable of being cured) within ten days' notice of such breach; (ii)
Officer's willful dishonesty towards, fraud upon, crime against, deliberate
injury or bad faith action with respect to, or deliberate or attempted injury
to the Parent or the Corporation; (iii) Officer's conviction for any felony
crime
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(whether in connection with the Corporation's affairs or otherwise); or (iv)
conduct by Officer constituting gross negligence or willful misconduct in the
performance of his duties.
2.3 Termination Without Cause. The Corporation and the Parent
shall have the right, upon written notification to Officer to terminate
Officer's employment without cause. Any termination not covered by Sections
2.2, 2.4, 2.5, 2.6 or 2.7 shall be deemed a termination without cause. Upon
any termination without cause, Officer shall be paid all accrued salary, bonus
compensation to the extent earned, vested deferred compensation (other than
pension plan or profit sharing plan benefits, which will be paid in accordance
with the applicable plan), any benefits then due under any plans of the
Corporation or the Parent in which Officer is a participant, accrued vacation
pay and any appropriate business expenses incurred by Officer in connection
with his duties hereunder, all to the date of termination (such payment, the
"Accrued Compensation"), and Officer shall be paid severance compensation as
provided in Section 4.
2.4 Disability. If, during the term of this Agreement,
Officer, in the reasonable judgment of the Board of Directors of the
Corporation or the Parent, has failed to perform his duties under this
Agreement on account of illness or physical or mental disability, which
condition renders Officer incapable of performing the duties required by this
Agreement, and such condition continues for a period of more than three (3)
months, the Corporation or the Parent shall have the right to terminate
Officer's employment hereunder by written notification to Officer and payment
to Officer of all Accrued Compensation to the date of termination, and
disability benefits as provided in any plans maintained by the Corporation or
the Parent for the benefit of their respective officers, but no other
compensation or reimbursement of any kind.
2.5 Death. In the event of Officer's death during the term of
this Agreement, Officer's employment shall be deemed to have terminated as of
the last day of the month during which his death occurs and the Corporation
shall pay to his estate all Accrued Compensation to the date of termination,
and death benefits as provided in any plans maintained by the Corporation or
the Parent for the benefit of their respective officers, but no other
compensation or reimbursement of any kind.
2.6 Voluntary Termination. Officer shall have the right to
voluntarily terminate his employment hereunder for any reason, at any time,
upon ten (10) days' written notification to the Parent and the Corporation. In
the event Officer voluntarily terminates his employment hereunder, the
Corporation shall immediately pay all Accrued Compensation to the date of
termination.
2.7 Good Reason. At any time from the date hereof, Officer
may terminate his employment for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean the occurrence, without Officer's express written
consent, of any one or more of the following events, which if correctable,
remains uncorrected for thirty (30) days following written notice of such
occurrence by Officer to the Parent and the Corporation: (i) a change in the
eligibility requirements under any bonus, incentive or compensation plan,
program or arrangement under which Officer is covered which adversely affects
Officer, except as may be required by law or to maintain the qualified status
of any plan, program or arrangement; (ii) the reduction of Officer's Base
Salary (as defined in Section 3.1 hereof); (iii) the assignment to Officer by
the Parent or the Corporation of duties materially inconsistent with the duties
associated with the
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positions of Officer; or (iv) any action by the Parent or the Corporation which
results in a material diminution in the position, duties or status of Officer
with the Parent or the Corporation except (A) for strategic reallocations of
the personnel reporting to Officer or (B) as a result of his disability. In
the event Officer terminates his employment for Good Reason, the Corporation
shall immediately pay all Accrued Compensation to the date of termination, and
Officer shall be entitled to the severance payments provided for in Section 4.
3. Compensation.
3.1 Base Salary. The Corporation agrees to pay Officer for
his services hereunder a salary at the rate of $350,000 per annum ("Base
Salary") payable in equal semimonthly installments. The Base Salary for each
fiscal year (or portion thereafter) shall be as determined by the Compensation
Committee of the Board of Directors of the Parent, but shall in no event be
less than $350,000 per annum.
3.2 Benefits. Officer shall be entitled to participate in any
of the Corporation's or the Parent's benefit, bonus and deferred compensation
plans as are from time to time available to the officers of the Corporation,
including, without limitation, profit sharing, medical, dental, health and
annual physical examination plans, life and disability insurance plans and
supplemental retirement programs (provided, however, that Officer's benefits
may be modified or Officer may be denied participation in any such plan because
of a condition or restriction imposed by law or regulation or third-party
insurer or other provider relating to participation of officers). Officer
shall participate at the 50%/100% level under the Corporation's incentive
compensation plan. Officer's bonus under the Corporation's incentive
compensation plan for the year ending December 31, 1996 shall be pro rated for
the period from the Effective Date to December 31, 1996 or Officer's date of
termination, whichever is earlier.
3.3 Stock Option. Simultaneously with the execution of this
Agreement, Officer shall be granted an option for shares of the Parent's stock
pursuant to the Parent's 1994 Employee Nonqualified Stock Option Plan. This
option is evidenced by the Option Agreement, entered into by the Parent and
Officer, attached hereto as Exhibit A.
4. Severance Compensation. In the event Officer's employment is
terminated under Sections 2.3 or 2.7 at any time prior to three (3) years from
the Effective Date, the parties acknowledge that Officer will sustain actual
damages, the amount of which are indefinite, uncertain and difficult of exact
ascertainment because of the uncertainties of successfully seeking a comparable
position. In order to avoid dispute as to the amount of such damages and the
mutual expense and inconvenience such dispute would entail, the Parent, the
Corporation and Officer have agreed to hereby stipulate and agree that the
Corporation shall pay to Officer a severance compensation in an amount equal to
two (2) times the sum of (i) Officer's Base Salary as of the date of
termination and (ii) Officer's bonus under the Corporation's incentive
compensation plan for the fiscal year preceding the fiscal year in which the
date of termination occurs; provided, however, to the extent that Officer's
employment is terminated prior to the time that his bonus for 1997 is
determined and paid, Officer's bonus for purposes of the calculation of the
severance compensation shall be the bonus of the Officer for the year ending
December 31, 1996 (as provided in Section 3.2) annualized as if Officer had
been employed by
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the Corporation for the entire year. It is hereby agreed that in the event of
such termination by the Corporation or the Parent, Officer shall receive such
amounts as herein provided, not as a penalty, but as Officer's agreed severance
compensation and sole damages for the termination of this Agreement, in lieu of
Officer's proof of his actual damages on that account. All severance
compensation shall be without prejudice to Officer's right to receive all
Accrued Compensation (as defined in Section 2.3) earned and unpaid up to the
time of termination.
5. Confidentiality. Officer shall not, during his employment by the
Corporation or at any time thereafter, directly or indirectly use, divulge,
furnish or make accessible to anyone other than the Corporation, its directors
or officers (otherwise than in the regular course of the business of the
Corporation), any knowledge or information regarding any confidential or secret
ideas, activities, projects, plans, techniques, methods, reports, customer
names or lists, financial or sales information or other material relating to
the business or activities of the Corporation.
6. Miscellaneous.
6.1 Effectiveness. This Agreement shall be effective at the
Effective Date.
6.2 Severability. Should a court or other body of competent
jurisdiction determine that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, so that it is enforceable to the maximum
extent possible, and all other provisions of the Agreement shall be deemed
valid and enforceable to the extent possible.
6.3 Withholdings. All compensation and benefits to Officer
hereunder shall be reduced by all federal, state, local and other withholdings
and similar taxes and payments required by applicable law.
6.4 Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or any alleged breach hereof, shall be settled by
arbitration. The parties hereto agree that any such controversy shall be
submitted to three (3) arbitrators. The Parent and the Corporation shall
jointly select one (1) arbitrator and Officer shall select a second arbitrator.
The two (2) arbitrators shall then choose a third arbitrator. The arbitration
shall be governed by the Rules of Commercial Arbitration of the American
Arbitration Association. The arbitrators shall be governed by and shall apply
the substantive laws of the State of Texas in making their determination and
their ruling shall be binding and conclusive upon the parties hereto. Any
arbitration shall occur in Houston, Texas.
6.5 Entire Agreement; Modifications. This Agreement
represents the entire agreement between the parties and may be amended,
modified, superseded, or cancelled, and any of the terms hereof may be waived,
only by a written instrument executed by each party hereto or, in the case of a
waiver, by the party waiving compliance. The failure of any party at any time
or times to require performance of any provisions hereof shall not affect the
right at a latter time to enforce the same. No waiver by any party of the
breach of any provision contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be or construed as
a further or continuing waiver of any such breach or of any other term of this
Agreement.
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6.6 Applicable Law. This Agreement shall be construed under
and governed by the laws of the State of Texas.
6.7 Termination. This Agreement shall terminate on October 9,
1999; provided, however, such termination shall not affect any rights accruing
prior to such termination.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of October 9, 1996.
UNITED MERIDIAN CORPORATION
By:/s/John B. Brock
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UMC PETROLEUM CORPORATION
By:/s/ John B. Brock
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OFFICER:
/s/ James L. Dunlap
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James L. Dunlap
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EXHIBIT A
1994 NONQUALIFIED STOCK OPTION AGREEMENT FOR EMPLOYEES
United Meridian Corporation (the "Company"), in consideration of the
value of the continuing services of James L. Dunlap (hereinafter called
"Optionee"), which continuing services the grant of this option is designed to
secure, and in consideration of the undertakings made herein by Optionee, and
pursuant to its 1994 Employee Nonqualified Stock Option Plan (the "Plan"),
hereby grants to Optionee an option, evidenced by this option agreement,
exercisable for the period and upon the terms hereinafter set out, to purchase
250,000 shares of Series A Voting Common Stock ("Common Stock") of the Company
at $____ per share.
1. Term of Option.
(a) This option is granted as of October 9, 1996 (sometimes
hereinafter called the "Date of Grant") and will terminate and expire,
to the extent not previously exercised, eleven (11) years after the Date
of Grant, or at such earlier time as may be specified in Sections 4 and
6 hereof.
(b) Except as otherwise provided in this Option Agreement,
Optionee shall have the right to acquire shares under this Option
Agreement as follows:
(i) As of the Date of Grant and thereafter, Optionee
may exercise rights to acquire 50% of the Option Shares;
(ii) As of the first anniversary of the Date of Grant
and thereafter, Optionee may exercise rights to acquire an
additional 25% of the Option Shares;
(iii) As of the second anniversary of the Date of Grant
and thereafter, Optionee may exercise rights to acquire an
additional 25% of the Option Shares.
2. Non-Transferability. This option is not assignable or
transferable otherwise than by will or by the laws of descent and distribution.
During the lifetime of the Optionee, this option shall be exercisable only by
him.
3. Manner of Exercise. Optionee (or other person entitled to
exercise this option) shall purchase shares of stock of the Company subject
hereto by the payment to the Company of the purchase price in full and the
amount of employment tax or withholding tax due, if any, upon the exercise of
the option (i) by certified or official bank check, (ii) by the delivery of a
number of shares of Common Stock (plus cash if necessary) having a fair market
value equal to the amount of such purchase price and employment or withholding
tax, or (iii) by delivery of the equivalent thereof acceptable to the Company.
This option may be exercised from time to time by written notice to the Company
stating the full number of shares to be purchased and the time of delivery
thereof, which shall be at least fifteen days after the giving of notice unless
an earlier date shall have been agreed upon between the Optionee (or other
person entitled to exercise this option) and the Company, accompanied by full
payment for the shares as described
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in the first sentence of this Section 3. The Company will, as soon as is
reasonably possible, notify the Optionee of the amount of employment tax and
other withholding tax, if any, that must be paid under federal, state and local
law due to the exercise of the option. The Company shall have no obligation to
deliver certificates for the shares purchased until the Optionee pays to the
Company the amount of employment tax or withholding tax specified in the
Company's notice as described in this Section 3 by payment terms set forth in
the first sentence of this Section 3. At the time of delivery, the Company
shall, without transfer or issue tax to the Optionee (or other person entitled
to exercise this option) deliver at the principal office of the Company, or at
such other place as shall be mutually agreed upon, a certificate or
certificates for such shares, provided, however, that the time of delivery may
be postponed by the Company for such period as may be required for it to comply
with reasonable diligence with any requirements of law.
4. Termination of Relationship.
(a) In the event that Optionee shall die before his
relationship with the Company (or an Affiliate) terminates, or if
Optionee's relationship with the Company (or an Affiliate) is terminated
because Optionee has become disabled within the meaning of Section
105(d)(4) of the Code, this option shall continue to vest in accordance
with the Plan and this option agreement for a period of twelve months
from the date of death of Optionee or termination of his relationship
due to disability, and Optionee, his estate or beneficiary shall have
the right to exercise this option at any time within such twelve month
period (if otherwise within the term of the option). Notwithstanding the
foregoing, the provisions of this Section 4(a) shall be subject to
Sections l(a) and 6 hereof, which may earlier terminate the option.
(b) In the event that the Optionee retires from service
from the Company (or its Affiliates) in accordance with the Company's
(or its Affiliates') retirement policies in effect from time to time,
this option shall continue to vest during the lifetime of the Optionee
in accordance with the terms of the Plan and this Option Agreement and
may be exercised at any time during the remaining term of the option.
If Optionee dies subsequent to his retirement during the term of this
option, this option shall continue to vest in accordance with the Plan
and this option agreement and may be exercised within twelve months of
Optionee's death (if otherwise within the option period), but not
thereafter. Notwithstanding the foregoing, the provisions of this
Section 4(b) shall be subject to Sections 1(a) and 6, which may earlier
terminate the option.
(c) In the event that Optionee's employment with the Company
is terminated without cause or the Optionee terminates his employment
with the Company for Good Reason (as such terms are defined in the
Employment Agreement dated October 9, 1996 between the Optionee, the
Company, and UMC Petroleum Corporation), this option shall automatically
vest and this Option Agreement may be exercised at any time within
ninety days after the date of such termination (if otherwise within the
option period). Notwithstanding the foregoing, the provisions of this
Section 4(c) shall be subject to Sections 1(a) and 6, which may earlier
terminate the option.
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(d) In the event that Optionee voluntarily terminates his
relationship with the Company and its Affiliates prior to the second
anniversary of the Date of Grant, this Option Agreement shall
immediately terminate and all rights to acquire Option Shares hereunder
shall terminate on the date of the termination of Optionee's employment.
In the event that Optionee voluntarily terminates his relationship with
the Company and its Affiliates on or subsequent to the second
anniversary of the Date of Grant and prior to the third anniversary of
the Date of Grant, this Option Agreement shall represent the right to
acquire the number of Option Shares, if any, equal to 62,500 Option
Shares less any Option Shares issued hereunder through the date of
termination of employment, and such Option Agreement may be exercised at
any time within ninety days after the date of such termination (if
otherwise within the option period). Notwithstanding the foregoing, the
provisions of this Section 4(d) shall be subject to Section 6, which may
earlier terminate the option.
(e) In the event that Optionee terminates or is terminated
from his relationship with the Company and its Affiliates, and the
provisions of Sections 4(a), 4(b), 4(c) and 4(d) hereof and Section 4(i)
of the Plan do not apply, this option shall continue to vest in
accordance with the Plan and this option agreement and may be exercised
at any time within ninety days after the date of such termination (if
otherwise within the option period).
5. Adjustments on Recapitalization. The number of shares of Common
Stock subject hereto and the exercise price per share shall be proportionately
adjusted for any increase or decrease in the number of issued shares of the
Common Stock resulting from the subdivision or consolidation of shares after
the Date of Grant, the payment of a stock dividend in shares of Common Stock
after the Date of Grant, or other decrease or increase in the shares of Common
Stock outstanding effected after the Date of Grant without receipt of
consideration by the Company, provided, however, that any option to purchase
fractional shares resulting from such adjustments shall be eliminated.
6. Adjustments on Reorganization. If the Company shall at any time
participate in a reorganization to which Section 425(a) of the Code applies and
(A) the Company is not the surviving entity or (B) the Company is the surviving
entity and the stockholders of Common Stock are required to exchange their
shares for property and/or securities, the Company shall give Optionee written
notice of such fact on or before fifteen (15) days before such reorganization,
and this option shall be exercisable in full after receipt of such notice and
prior to such reorganization; however, options not exercised prior to such
reorganization shall expire on the occurrence of such reorganization. A sale of
all or substantially all the assets of the Company for a consideration (apart
from the assumption or obligations) consisting primarily of securities shall be
deemed a reorganization for the foregoing purposes. Notwithstanding the
foregoing, the provisions of this Section 6 shall be subject to Section l(a).
7. Subject to Plan. This option is subject to all the terms and
conditions of the Plan, and specifically to the power of the Committee (as
defined in the Plan) to make interpretations of the Plan and of options granted
thereunder, and of the Board of Directors of the Company to alter, amend,
suspend or discontinue the Plan subject to the limitations expressed in the
Plan. By acceptance hereof, Optionee acknowledges receipt of a copy of the
Plan and recognizes and
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agrees that all determinations, interpretations or other actions respecting the
Plan may be made by a majority of the Board of Directors of the Company or of
the Committee, and that such determinations, interpretations or other actions
are final, conclusive and binding upon all parties, including Optionee.
Capitalized terms used but not otherwise defined in this option agreement shall
have the meanings ascribed to them by the Plan.
IN WITNESS WHEREOF, this Option Agreement is executed as of the 9th day
of October, 1996.
UNITED MERIDIAN CORPORATION
By: -------------------------------
Title:
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The undersigned Optionee hereby accepts the benefits of the foregoing
Nonqualified Stock Option Agreement.
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James L. Dunlap, Optionee
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