EXHIBIT 10.20
2004 AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS 2004 AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is
made and entered into effective as of the 1st day of July, 2004 (the "Effective
Date") by and between Belden & Blake Corporation, an Ohio corporation
("Employer"), and John L. Schwager ("Executive").
WHEREAS, Executive presently serves as Chief Executive Officer of Employer
pursuant to the terms of an Amended and Restated Employment Agreement, dated as
of July 1, 2001, as amended by the first and second amendment thereto (the
"Prior Agreement"); and
WHEREAS, Employer desires to continue to employ Executive as its Chief
Executive Officer as of and after the Effective Date and Executive desires to be
so employed by Employer, upon the terms and subject to the conditions set forth
in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Employer and Executive, intending
to be legally bound, agree as follows:
1. Employment. Employer hereby employs Executive as its Chief Executive
Officer upon the terms and conditions and for the compensation herein provided.
Executive hereby agrees to be so employed and to fulfill the duties of Chief
Executive Officer. Executive shall also serve as a member of Employer's Board of
Directors. This Agreement shall, as of the Effective Date, replace the Prior
Agreement in its entirety. The term of Executive's employment under this
Agreement shall commence on the Effective Date and end when terminated pursuant
to Section 4.
2. Duties and Power. Executive shall serve the Employer on a part-time
basis. For so long as Executive is employed by Employer, Executive agrees as
follows: to devote up to 50% of his business time and attention to the business
of Employer and of any subsidiaries or affiliates of Employer (excluding
reasonable sick leave in accordance with Employer's policies consistent with his
position) and to perform all duties in a professional and prudent manner.
Executive's employment will be based at his home in Ivins, Utah, but, upon
Employer's request, Executive shall spend up to one-third of his working time at
Employer's principal executive offices in Canton, Ohio. As Chief Executive
Officer, Executive shall report directly to the Board of Directors of Employer,
have no other officer or employee of Employer senior to him and have full power,
authority, duties and responsibilities customarily associated with the position
as Chief Executive Officer, including, without limitation, authority, direction
and control over day-to-day business, financial and personnel matters of
Employer, subject to the lawful and reasonable policies and guidelines as may be
established by the Board of Directors
of Employer. Executive agrees not to engage in any other activity or own any
interest that would conflict with the interest of Employer or would interfere
with his responsibilities to Employer and the performance of his duties
hereunder; provided, however, that: (i) passive investments of less than 5% of
the outstanding securities of any corporation shall be deemed not to violate
this provision; (ii) Executive may engage in activities involving charitable,
educational, religious, industry, trade and similar types of organizations,
speaking engagements and similar type activities to the extent that such other
activities do not detract from the performance by Executive of his duties and
obligations hereunder; and (iii) Executive may serve as an outside director of
other companies to the extent that such service does not involve a conflict of
interest and does not detract in any material respect from the performance by
Executive of his duties and obligations hereunder.
3. Compensation and Benefits. For all services rendered by Executive
pursuant to this Agreement, Employer shall compensate Executive as follows:
(a) Base Compensation. Subject to the terms and conditions set forth
herein, Employer (or, at Employer's option, any subsidiary or affiliate of
Employer for which Executive also provides services hereunder) shall pay to
Executive a salary of at least $200,000. Such annual compensation as it may be
increased from time to time shall be referred to herein as the "Base
Compensation." Executive's Base Compensation will be paid in accordance with
Employer's customary payroll practices (but not less frequently than monthly),
and will be prorated based upon the number of days elapsed in any partial year.
Subject to the minimum Base Compensation requirements set forth above, Base
Compensation shall be reviewed annually by the Compensation Committee of
Employer's Board of Directors and may be further increased at the sole
discretion of such Committee.
(b) Bonus. Executive shall be entitled to receive a Special Retention
Bonus of $1,000,000 to be paid on the closing date of any Change in Control
transaction that occurs prior to the date that is six (6) months following the
Termination Date (as defined below). For purposes of this Agreement, a "Change
in Control" shall mean the following and shall be deemed to occur if:
(i) As a result of any transaction, any of the following occur (1)
the Permitted Holders no longer beneficially own (within the meaning of
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended), in the aggregate, at least 25% of the outstanding shares of
common stock of Employer ("Outstanding Common Stock"), (2) the Permitted
Holders no longer beneficially own (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended), in the
aggregate, at least 50% of the combined voting power of Employer's then
outstanding securities entitled to vote generally in the election of
directors ("Employer Voting Securities"), or (3) any Person other than the
Permitted Holders becomes the beneficial owner (within the meaning of Rule
13d-3 promulgated under the Securities Exchange Act of 1934, as amended)
of an amount of Employer Voting Securities (as defined below) that is
greater than the amount of Employer Voting Securities that are
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then beneficially owned (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended), in the aggregate,
by the Permitted Holders; or
(ii) Prior to the occurrence of an underwritten public offering of
the Company's equity securities, any of the following events occurs:
(A) Any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended) (each, a "Person"), other than a Permitted Holder,
becomes the beneficial owner (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended)
of 50% or more of the Employer Voting Securities; or
(B) Consummation by Employer of the sale or other
disposition by Employer of all or substantially all of Employer's
assets or a merger, consolidation or other reorganization of
Employer with any other Person, other than:
(1) a merger, consolidation or other reorganization
that would result in the voting securities of Employer
outstanding immediately prior thereto (or, in the case of a
reorganization or merger or consolidation that is preceded or
accomplished by an acquisition or series of related
acquisitions by any person, by tender or exchange offer or
otherwise, of voting securities representing 50% or more of
the combined voting power of all securities of Employer,
immediately prior to such acquisition or the first acquisition
in such series of acquisitions) continuing to represent,
either by remaining outstanding or by being converted into
voting securities of another entity, more than 50% of the
combined voting power of the voting securities of Employer or
such other entity outstanding immediately after such
reorganization or merger or consolidation (or series of
related transactions involving such a reorganization or merger
or consolidation), or
(2) a merger, consolidation or other reorganization
effected to implement a recapitalization or reincorporation of
Employer (or similar transaction) that does not result in a
material change in beneficial ownership of the voting
securities of Employer or its successor; or
(iii) Following the occurrence of an underwritten public offering of
Employer's equity securities, any of the following events occur:
(A) the acquisition in one or more transactions by any
Pers on, other than a Permitted Holder, becomes the beneficial owner
(within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of
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1934, as amended) of greater than thirty percent (30%) of the
Employer Voting Securities; or
(B) the consummation of a merger, reorganization,
consolidation, share exchange, transfer of assets or other
transaction having similar effect involving Employer, unless,
following such transaction, stock possessing at least fifty percent
(50%) of the outstanding Employer Voting Securities of the
corporation resulting from such transaction is beneficially owned,
directly or indirectly, by Permitted Holders, or Persons who were
beneficial owners of the Employer Voting Securities immediately
prior to such transaction; or
(C) individuals who are members of the Board of Directors of
Employer as of the Effective Date of this Agreement (the "Incumbent
Directors") cease for any reason to constitute at least a majority
of the members of the Board; provided, however, that any individual
becoming a director subsequent to the date of this Agreement whose
appointment to the Board or nomination for election by Employer was
approved by a vote of at least a majority of the Incumbent Directors
then in office (unless such appointment or election was at the
request of an unrelated third party who has taken steps reasonably
calculated to result in a Change in Control as described in
paragraphs (w) or (x) above and who has indicated publicly an intent
to seek control of Employer) shall be treated from the date of his
or her appointment or election as an Incumbent Director; or
(D) consummation of a complete liquidation or dissolution of
Employer.
For purposes of this Agreement, "Permitted Holders" means (i) TPG
Partners II, L.P., TPG Parallel II, L.P. and TPG Investors II, L.P. (the
"Investors"), (ii) any investment partnership or fund management by the
principals of TPG II, (iii) any partners of the Investors, (iv) members of the
immediate family of the persons described in (iii) and trusts for the benefit of
members of their immediate family, (iv) the respective affiliates (within the
meaning ascribed to such term in Rule 405 of the Securities Act of 1933, as
amended) of Persons described in (i) through (iv), and (v) any Person acting in
the capacity of an underwriter in connection with a public or private offering
of Employer's equity securities.
(c) Benefits. Executive shall be entitled, as an employee of Employer,
to employee retirement and welfare benefits, perquisites and other executive
benefits substantially comparable to those employee benefits made available to
the senior executive management of Employer, including, but not limited to,
401(k) plan and medical benefit plan participation, but not including vacation
benefits. On or before June 30, 2004, Employer shall pay Executive in cash the
amount of his vacation pay that is accrued but unused and unpaid through such
date.
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(d) Certain Legal, Financial and Tax Reimbursements. Executive shall be
entitled to reimbursement by Employer for legal financial and tax planning
advisory services at rates customary to the local area and for uninsured
expenses associated with an annual physical examination by a physician selected
by him. Employer will also reimburse Executive for reasonable attorneys' fees
and expenses incurred in connection with review of this Agreement by Executive's
attorney. In addition, Employer shall pay Executive an amount determined by its
accountants to be equal to Executive's federal, state and local taxes on the
foregoing reimbursement (the "Legal Expense Tax Gross-up") and the federal,
state and local taxes on the Legal Expense Tax Gross-up, all to the end that
Executive be held harmless, on an after-tax basis, from the tax impact thereof.
Notwithstanding the foregoing, the total amount paid or reimbursed to Executive
under this Section 3(d) (not including any tax gross-up paid pursuant to this
Section 3(d)) shall not exceed a cumulative amount of $25,000 from the Effective
Date through the Termination Date (as defined below).
(e) Other Reimbursements. Executive shall be entitled to reimbursement
by Employer for (i) installation of high speed satellite internet service at his
Utah home plus the monthly cost of such internet service, (ii) reasonable living
expenses associated with his performing of services for the Company while in
Canton, Ohio, (iii) first-class air travel between his home in Utah and Canton,
Ohio and (iv) up to $1,000 in moving expenses for personal items he will keep in
his office while working in Canton, Ohio. In addition, Employer shall pay
Executive an amount determined by its accountants to be equal to Executive's
federal, state and local taxes on the foregoing reimbursements (the "Other
Reimbursements Tax Gross-up") and the federal, state and local taxes on the
Other Reimbursements Tax Gross-up, all to the end that Executive be held
harmless, on an after-tax basis, from the tax impact thereof.
(f) Automobile. As of the Effective Date, the Company shall purchase
Executive's personal automobile at its then-current market value. During his
employment with the Company, Executive shall be permitted to use such Company
car for his personal and business use.
(g) Expenses. Executive shall be entitled to reimbursement by Employer
for his ordinary and necessary business expenses incurred in the performance of
his duties under this Agreement if supported by reasonable documentation as
required by Employer in accordance with its usual practices.
(h) Liability for Taxes. Except as otherwise provided in Section 3(d),
3(e) and Section 4(c), Employer shall have no liability for any tax liability of
Executive attributable to any payment made under this Agreement except for
customary employer liability for federal and state employee taxes (e.g., social
security, Medicare, etc.). Employer may withhold from any such payment such
amounts as may be required by applicable provisions of the Internal Revenue
Code, other tax laws, and the rules and regulations of the Internal Revenue
Service and other tax agencies in effect at the time of any such payment.
4. Termination of Employment.
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(a) Termination and Notice. Notwithstanding any other provision
contained in this Agreement, either Executive or Employer may terminate
Executive's employment hereunder at any time for any reason at its or his
election upon at least thirty (30) days' prior written notice (a "Termination
Notice") to the other. A Termination Notice shall be effective upon delivery to
the other party and the termination shall be effective as of the date set forth
in such Termination Notice (hereinafter, the "Termination Date"). In the event
of Executive's death, the Termination Date shall be the date of death and no
Termination Notice shall be required.
(b) Executive's Entitlement Upon Termination. Upon any termination of
this Agreement as described in Section 4(a), Executive shall be entitled to the
following:
(i) Executive, or his heirs or legal representatives, in the event
of Executive's death, shall receive (A) the sum of (1)
Executive's Base Compensation through the Termination Date to
the extent not theretofore paid, (2) the amount of any bonus,
incentive compensation, deferred compensation and other cash
compensation accrued by Executive as of the Termination Date
to the extent not theretofore paid and (3) any vacation pay,
expense reimbursements and other cash entitlements accrued by
Executive as of the Termination Date to the extent not
theretofore paid and (B) all benefits accrued by him as of the
Termination Date under all qualified and nonqualified
retirement, pension, profit sharing and similar plans of the
Company to such extent, in such manner and at such time as are
provided under the terms of such plans and arrangements.
(ii) Executive and his spouse shall be entitled to continued health
benefits on the same basis as if Executive had continued as an
active employee of Employer; provided, however, that such
continued coverage shall cease with respect to Executive
whenever he attains Medicare benefit eligibility and shall
cease with respect to Executive's spouse whenever she attains
Medicare benefit eligibility. For two years following the
Termination Date, Employer shall bear the full cost thereof,
and thereafter Executive shall bear such cost at Employer's
COBRA rate. With the approval of Executive, which approval
shall not be unreasonably withheld, Employer may provide the
foregoing coverage through the acquisition of insurance or
other means provided that the benefits are substantially
similar to the benefits provided under Employer's health
benefit plans as in effect from time to time.
(iii) If a Change in Control occurs within six (6) months following
the Termination Date, Executive shall receive the $1,000,000
Special Retention Bonus on the closing date of such Change in
Control transaction.
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All of the above severance payments and benefits shall be subject to
normal withholding of taxes and other authorized deductions. Executive
acknowledges and agrees that the provisions of this Section 4(b) state his
entire and exclusive rights, entitlements and remedies against Employer, its
successors, assigns, affiliates, employees and representatives for termination
of his employment. The payments provided in this Section 4(b) are conditioned
upon and subject to the Executive complying with the restrictive covenants
provided in Sections 5 and 6 hereof and upon the Executive executing a general
release and waiver (in a form substantially similar to the form attached hereto
as Exhibit A). Except as provided in Section 4(c), if applicable, Employer shall
have no additional obligations under this Agreement.
(c) Certain Additional Obligations of Employer.
(i) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any economic benefit or
payment or distribution by Employer to or for the benefit of
the Employee, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code or any
Applicable Interest and Penalties (as defined below) with
respect to such excise tax (such excise tax, together with any
Applicable Interest and Penalties, are hereinafter
collectively referred to as the "Excise Tax"), then Executive
shall be entitled to receive an additional payment (a
"Gross-Up-Payment") in an amount such that after payment by
Executive of all taxes (including any Applicable Interest and
Penalties imposed with respect to such taxes), including any
Excise Tax imposed upon the Gross-Up Payment, Executive
retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments. For purposes of this Agreement,
"Applicable Interest and Penalties" means all interest and
penalties payable by Executive with respect to excise tax
imposed under Section 4999 of the Internal Revenue Code other
than interest or penalties determined by the Accounting Firm
(as defined below) to be primarily attributable to
unreasonable delay on the part of Executive.
(ii) Subject to the provisions of Section 4(c)(iii), all
determinations required to be made under this Section 4(c),
including whether a Gross-Up Payment is required and the
amount of such Gross-Up Payment, shall be made by Employer's
regular outside independent public accounting firm (the
"Accounting Firm") which shall provide detailed supporting
calculations both to Employer and Executive within 15 business
days of the Effective Date of Termination, if applicable, or
such earlier time as is requested by Employer. The initial
Gross-Up Payment, if any, as determined pursuant to this
Section 4(c)(ii), shall be paid to Executive within 5 days of
the receipt of the Accounting Firm's determination. Any
determination
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by the Accounting Firm shall be binding upon Employer and
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
Employer should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the
event that Employer exhausts its remedies pursuant to Section
4(c)(iii) and Executive thereafter 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 Employer to or for the
benefit of Executive.
(iii) Executive shall notify Employer in writing of any claim by the
Internal Revenue Service that, if successful, would require
the payment by Employer of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no
later than ten business days after the later of either (i) the
date Executive has actual knowledge of such claim, or (ii) ten
days after the Internal Revenue Service issues to Executive
either a written report proposing imposition of the Excise Tax
or a statutory notice of deficiency with respect thereto, and
shall apprise Employer of the nature of such claim and the
date on which such claim is requested to be paid. Executive
shall not pay such claim prior to the expiration of the
thirty-day period following the date on which he gives such
notice to Employer (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due).
If Employer notifies Executive in writing prior to the
expiration of such period that it desires to contest such
claim, Executive shall: (i) give Employer any information
reasonably requested by Employer relating to such claim, (ii)
take such action in connection with contesting such claim as
Employer shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by Employer, (iii) cooperate with Employer
in good faith in order effectively to contest such claim, (iv)
permit Employer to participate in any proceedings relating to
such claim; provided, however, that Employer shall bear and
pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and shall indemnify and hold 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 contest. Without limitation of the foregoing
provisions of this Section 4(c)(iii), Employer shall control
all proceedings taken in connection with such contest and, at
its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences
with the taxing
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authority in respect of such claim and may, at its sole
option, either direct Executive to request or accede to a
request for an extension of the statute of limitations with
respect only to the tax claimed, or pay the tax claimed and
sue for a refund or contest the claim in any permissible
manner, and 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 Employer shall determine; provided, however, that if
Employer directs Executive to pay such claim and sue for a
refund, Employer shall advance the amount of such payment to
Executive, on an interest-free basis and shall indemnify and
hold 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 requested or acceded to by Executive at Employer's
request and relating to payment of taxes for the taxable year
of Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount.
Furthermore, Employer's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and 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.
(iv) If, after the receipt by Executive of an amount advanced by
Employer pursuant to Section 4(c)(iii), Executive becomes
entitled to receive any refund with respect to such claim,
Executive shall (subject to Employer's complying with the
requirements of Section 4(c)(iii)) promptly pay to Employer
the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after
the receipt by Executive of an amount advanced by Employer
pursuant to Section 4(c)(iii), a determination is made that
Executive shall not be entitled to any refund with respect to
such claim and Employer does not notify Executive in writing
of its intent to contest such denial of refund prior to the
expiration of thirty 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.
(v) In the event that any state or municipality or subdivision
thereof shall subject any Payment to any special tax which
shall be in addition to the generally applicable income tax
imposed by such state, municipality, or subdivision with
respect to receipt of such
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Payment, the foregoing provisions of this Section 4(c) shall
apply, mutatis mutandis, with respect to such special tax.
(vi) Employer will reimburse Executive for reasonable attorneys'
fees and expenses incurred following the occurrence of a
Change in Control in connection with the enforcement of any of
Executive's rights under this Agreement provided that
Executive substantially prevails in such action. In addition,
Employer shall pay Executive an amount determined by its
accountants to be equal to Executive's federal, state and
local taxes on the foregoing reimbursement (the "Enforcement
Expense Tax Gross-up") and the federal, state and local taxes
on the Enforcement Expense Tax Gross-up, all to the end that
Executive be held harmless, on an after-tax basis, from the
tax impact thereof.
5. Nondisclosure.
(a) Confidential Information. Executive hereby acknowledges that in
connection with his employment by Employer he will be exposed to and may obtain
certain information (including, without limitation, procedures, memoranda,
notes, records and customer and supplier lists whether such information has been
or is made, developed or compiled by Executive or otherwise has been or is made
available to him) regarding the business and operations of Employer and its
subsidiaries or affiliates. Executive further acknowledges that such information
and procedures are unique, valuable, considered trade secrets and deemed
proprietary by Employer. For purposes of this Agreement, such information and
procedures shall be referred to as "Confidential Information," except that the
following shall not be considered Confidential Information: (i) information
disclosed on a non-confidential basis to third parties by Employer (but not by
Executive in violation of this Agreement), (ii) information released from
confidential treatment by written consent of Employer, and (iii) information
lawfully available to the general public.
(b) Use of Confidential Information. Executive agrees that all
Confidential Information is and will remain the property of Employer. Executive
further agrees, except as otherwise required by law and for disclosures
occurring in the good faith performance of his duties for Employer, while
employed by Employer hereunder and thereafter, to hold in the strictest
confidence all Confidential Information, and not to, directly or indirectly,
duplicate, sell, use, lease, commercialize, disclose or otherwise divulge to any
person or entity any portion of the Confidential Information or use any
Confidential Information for his own benefit or profit or allow any person,
entity or third party, other than Employer and authorized executives of the
same, to use or otherwise gain access to any Confidential Information.
(c) Trade Secret. It is the intention of the parties that to the extent
any Confidential Information may constitute a "trade secret" as defined by Ohio
law, then, in addition to the remedies set forth in this Agreement, Employer may
elect to bring an
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action against Executive in the case of any actual or threatened
misappropriation of any such trade secret by Executive.
(d) No Remedy at Law. Regardless of whether any of the Confidential
Information shall constitute a trade secret as defined by Ohio law, Executive
expressly recognizes and agrees that the restrictions contained in this Section
5 represent a reasonable and necessary protection of the legitimate interests of
Employer, that his failure to observe and comply with his covenants and
agreements herein will cause irreparable harm to Employer, that it is and will
continue to be difficult to ascertain the harm and damages to Employer that such
a failure by Executive could cause, and that a remedy at law for such failure by
Executive will be inadequate.
6. Non-Interference, Non-Solicitation and Non-Competition Covenants.
(a) Acknowledgment of Access. Pursuant to this Agreement, Executive has
agreed to serve as Chief Executive Officer of Employer and to comply with the
non-disclosure provisions contained in Section 5 hereof. Executive recognizes
and acknowledges that he will be given access to certain of Employer's
Confidential Information (as defined in Section 5(a)), and have access to and
authority to develop relationships with customers of Employer because of his
position and status as Employer's Chief Executive Officer, which he would not
otherwise attain. In consideration of the foregoing, Executive agrees to comply
with the terms of this Section 6.
(b) Restricted Period. The restraints imposed by this Section 6 shall
apply for a period of one year after the Termination Date (the "Restricted
Period"). In the event that any Court having jurisdiction should find that the
Restricted Period is so long and/or the scope (distance) (as set forth below) is
so broad as to constitute an undue hardship on Executive, then, in such event
only, the Restricted Period and area limitations shall be valid for the maximum
time and area for which they could be legally made and enforced.
(c) Covenant. During the Restricted Period, Executive shall not, as an
executive (other than as an executive of Employer or an affiliate thereof),
employee, employer, stockholder, officer, director, partner, consultant,
advisor, proprietor, lender, provider of capital or other ownership, operational
or management capacity, directly or indirectly, (i) solicit or hire any employee
of Employer or otherwise interfere with or disrupt the employment relationship
between Employer and any employee, (ii) solicit or do business with (A)
Employer's customers with whom Employer did business while Executive was
employed under this Agreement, or (B) individuals or entities who Executive met
as a result of his position with Employer while Executive was employed under
this Agreement, that (in the case of either clause (A) or (B)) results in
competition with Employer in any county, parish or other comparable jurisdiction
within a state, province or nation located in North America in which any of such
customers have operations (other than customers whose business relationship with
Employer has terminated for at least 90 days) or in which Employer has conducted
business while Executive was employed under this Agreement (collectively, the
"Restricted Area"), or
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(iii) be associated with any entity engaged in the business of oil and/or gas
exploration, development, production, distribution and/or marketing in the
Restricted Area that results in competition with Employer (but excluding
association due to ownership of less than 5% of the outstanding securities of
any such entity).
(d) Reasonableness. Executive expressly recognizes and agrees that the
restraints imposed by this Section 6 are (i) reasonable as to time, geographic
limitation and scope of activity to be restrained; (ii) reasonably necessary to
the enjoyment by Employer of the value of its assets and to protect its
legitimate interests; and (iii) not oppressive. Executive further expressly
recognizes and agrees that the restraints imposed by this Section 6 represent a
reasonable and necessary restriction for the protection of the legitimate
interests of Employer, that the failure by the Executive to observe and comply
with the covenants and agreements in this Section 6 will cause irreparable harm
to Employer, that it is and will continue to be difficult to ascertain the harm
and damages to Employer that such a failure by the Executive would cause, that
the consideration received by the Executive for entering into these covenants
and agreements is fair, that the covenants and agreements and their enforcement
will not deprive Executive of his ability to earn a reasonable living in the oil
and gas industry or otherwise, and that Executive has acquired knowledge and
skills in his field that will allow him to obtain employment without violating
these covenants and agreements. Executive further expressly acknowledges that he
has been encouraged to and has consulted independent counsel, and has reviewed
and considered this Agreement with that counsel before executing this Agreement.
7. Memoranda, Notes, Records, Etc. All memoranda, notes, records,
software, customer lists or other documents (including, but not limited to,
those in electronic form) made or compiled by Executive or otherwise made
available to him concerning the business of Employer or its subsidiaries or
affiliates shall be Employer's property and shall be delivered to Employer upon
the expiration or termination of Executive's employment hereunder or at any
other time upon request by Employer, and Executive shall retain no copies of
those documents; provided, however, that Executive may retain copies of personal
information and information concerning his compensation and benefits
entitlements and other employee rights. Executive shall never at any time have
or claim any right, title or interest in any material or matter of any sort
prepared for or used in connection with the business or promotion of Employer.
8. Enforcement. The parties hereto recognize that the covenants of
Executive hereunder are special, unique and of extraordinary character.
Accordingly, it is the intention of the parties that, in addition to any other
rights and remedies which Employer may have in the event of any breach of this
Agreement, Employer shall be entitled, and hereby is expressly and irrevocably
authorized by Executive, inter alia, to demand and obtain specific performance,
including without limitation temporary and permanent injunctive relief, and all
other appropriate equitable relief against Executive in order to enforce against
Executive, or in order to prevent any breach or any threatened breach by
Executive of, the covenants and agreements contained herein. In case of any
breach of this Agreement, nothing herein contained shall be construed to
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prevent Employer from seeking such other remedy in the courts as it may elect or
invoke.
9. Miscellaneous.
(a) Non-Delegation of Duties. Executive may not delegate the performance
of any of his obligations or duties hereunder, or assign any rights hereunder,
without the prior written consent of Employer. Any such purported delegation or
assignment in the absence of such written consent shall be null and void with no
force or effect. Notwithstanding the foregoing, nothing herein shall prevent
Executive from the appropriate delegation of tasks to other executives,
employees, assistants and other service providers.
(b) Binding Effect. This Agreement shall be binding on and inure to the
benefit of the parties hereto and their respective heirs, representatives,
successors and permitted assigns and any receiver, trustee in bankruptcy or
representative of the creditors of each such person. Employer shall require any
successor (whether direct or indirect, by purchase, merger, reorganization,
consolidation, acquisition of property or stock, liquidation, or otherwise) to
all or a significant portion of its assets, by agreement in form and substance
satisfactory to Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that Employer would be
required to perform this Agreement if no such succession had taken place.
Regardless whether such agreement is executed, this Agreement shall be binding
upon any successor of Employer in accordance with the operation of law and such
successor shall be deemed the "Employer" for purposes of this Agreement.
(c) Survival of Covenants. Notwithstanding anything contained in this
Agreement, in the event Executive's employment is terminated for any reason
whatsoever, the provisions of Sections 3, 4, 5, 6, 7, 8 and 9 hereof shall
survive any such termination and shall not lapse except as provided herein.
(d) Severability/Modification. If any term or provision of this
Agreement is held or deemed to be invalid or unenforceable, in whole or in part,
by a court of competent jurisdiction, such term or provision shall be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement.
(e) Governing Law. This Agreement is entered into in Ohio, and the
construction, validity and interpretation of this Agreement shall be governed by
the laws of the State of Ohio without regard to the laws of conflicts of laws
thereof.
(f) Arbitration. In the event of any dispute, controversy or claim
between Employer and Executive arising out of or relating to the interpretation,
application or enforcement of any provision of this Agreement (other than with
respect to provisions under Section 4(c) of this Agreement), either Employer or
Executive may, by written notice to the other, require such dispute or
difference to be submitted to arbitration. The arbitrator shall be selected by
agreement of the parties or, if they do not agree on an
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arbitrator within 30 days after one party has notified the other of his or its
desire to have the question settled by arbitration, then the arbitrator shall be
selected pursuant to the procedures of the American Arbitration Association (the
"AAA") in Canton, Ohio. The determination reached in such arbitration shall be
final and binding on all parties. Enforcement of the determination by such
arbitrator may be sought in any court of competent jurisdiction. Unless
otherwise agreed by the parties, any such arbitration shall take place in
Canton, Ohio, and shall be conducted in accordance with the Commercial
Arbitration Rules of the AAA.
(g) Effectiveness; Entire Agreement; Amendment. This Agreement contains
the entire understanding and agreement between the parties relating to the
subject matter hereof, and it supersedes all previous and contemporaneous
negotiations, commitments, writings and understandings. Neither this Agreement
nor any provision hereof may be waived, modified, amended, changed, discharged
or terminated, except by an agreement in writing signed by the party against
whom enforcement of any waiver, modification, change, amendment, discharge or
termination is sought.
(h) Notices. Any notice required or permitted to be given under the
provisions of this Agreement shall be in writing and shall be deemed to have
been duly given on the date of delivery if delivered personally to the party to
whom notice is to be given (or to the appropriate address below), or on the
third day after mailing if mailed to the party to whom notice is to be given by
certified or registered mail, return receipt requested, postage prepaid, or by
courier, addressed as follows, or to such other person at such other address as
any party may request in writing to the other party to this Agreement:
To Executive: John L. Schwager
837 Pavasiya Circle
Ivins, Utah 84738
To Employer: Belden & Blake Corporation
5200 Stoneham Road
North Canton, Ohio 47720
Any party may change its address for purposes of this paragraph by giving the
other parties written notice of the new address in the manner set forth above.
(i) Headings. The section headings herein are for convenience only and
shall not be used in interpreting or construing this Agreement.
(j) Indemnification. Employer shall defend and hold Executive harmless
to the fullest extent permitted by applicable law in connection with any civil
or criminal claim, action, suit, investigation or proceeding arising out of or
relating to performance by Executive of services for, or action of Executive as
a director, officer or employee of Employer, or of any other person or
enterprise at the request of Employer. Expenses incurred by Executive in
defending any such claim, action, suit, investigation or proceeding shall be
paid by Employer in advance of the final disposition thereof upon the receipt by
Employer of an undertaking by or on behalf of Executive to repay said
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amount if it shall ultimately be determined that Executive is not entitled to be
indemnified hereunder; provided, however, that this indemnification arrangement
shall not apply to a nonderivative action commenced by Employer against
Executive. The foregoing shall be in addition to, and shall not be deemed to
limit in any respect, any indemnification rights Executive may have by law,
contract, charter, by-law or otherwise.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement to be effective as of the Effective Date.
EXECUTIVE:
/s/ John L. Schwager
------------------------------------------
John L. Schwager
EMPLOYER:
BELDEN & BLAKE CORPORATION,
an Ohio Corporation
By: /s/ William S. Price
--------------------------------------
William S. Price III
Chairman of the Compensation Committee
of the Board of Directors
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EXHIBIT A
GENERAL RELEASE AND WAIVER
In consideration of the payments and benefits (the "Termination
Benefits") to which the undersigned (the "Executive") is entitled under Section
4(b) of the 2004 Amended and Restated Employment Agreement, dated July 1, 2004
(the "Employment Agreement"), by and between the Executive and Belden & Blake
Corporation (the "Employer"), and for other good and valuable consideration,
receipt of which is hereby acknowledged, the Executive agrees as follows:
1. Confirmation of Termination. The Executive's employment with
the Employer shall terminate as of____________________ (the "Termination Date").
2. General Release and Waiver
(a) EXECUTIVE HEREBY RELEASES, REMISES AND ACQUITS EMPLOYER AND
ALL OF ITS AFFILIATES, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
SUCCESSORS AND ASSIGNS (COLLECTIVELY REFERRED TO HEREIN AS THE "RELEASEES"),
JOINTLY AND SEVERALLY, FROM ANY AND ALL CLAIMS, KNOWN OR UNKNOWN, WHICH
EXECUTIVE OR EXECUTIVE'S HEIRS, SUCCESSORS OR ASSIGNS HAVE OR MAY HAVE AGAINST
ANY RELEASEE ARISING ON OR PRIOR TO THE DATE OF THIS GENERAL RELEASE AND WAIVER
(THIS "RELEASE") AND ANY AND ALL LIABILITY WHICH ANY SUCH RELEASEE MAY HAVE TO
EXECUTIVE, WHETHER DENOMINATED CLAIMS, DEMANDS, CAUSES OF ACTION, OBLIGATIONS,
DAMAGES OR LIABILITIES ARISING FROM ANY AND ALL BASES, HOWEVER DENOMINATED,
INCLUDING BUT NOT LIMITED TO THE AGE DISCRIMINATION IN EMPLOYMENT ACT, THE
AMERICANS WITH DISABILITIES ACT OF 1990, THE FAMILY AND MEDICAL LEAVE ACT OF
1993, TITLE VII OF THE UNITED STATES CIVIL RIGHTS ACT OF 1964, 42 U.S.C. Section
1981, THE OHIO CIVIL RIGHTS ACT, Sections 124, 4111, 4112 OR 4123 OF THE OHIO
REVISED CODE ANNOTATED, OHIO COMMON LAW OR ANY OTHER FEDERAL, STATE, OR LOCAL
LAW AND ANY WORKERS' COMPENSATION OR DISABILITY CLAIMS UNDER ANY SUCH LAWS. THIS
RELEASE IS FOR ANY AND ALL CLAIMS INCLUDING BUT NOT LIMITED TO CLAIMS ARISING
FROM AND DURING EXECUTIVE'S EMPLOYMENT RELATIONSHIP WITH EMPLOYER AND ITS
AFFILIATES OR AS A RESULT OF THE TERMINATION OF SUCH RELATIONSHIP. EXECUTIVE
FURTHER AGREES THAT EXECUTIVE WILL NOT FILE OR PERMIT TO BE FILED ON EXECUTIVE'S
BEHALF ANY SUCH CLAIM. NOTWITHSTANDING THE PRECEDING SENTENCE OR ANY OTHER
PROVISION OF THIS AGREEMENT, THIS RELEASE IS NOT INTENDED TO INTERFERE WITH
EXECUTIVE'S RIGHT TO FILE A CHARGE WITH THE EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION IN CONNECTION WITH ANY CLAIM HE BELIEVES HE MAY HAVE AGAINST ANY OF
THE RELEASEES. HOWEVER, BY EXECUTING THIS RELEASE, EXECUTIVE HEREBY WAIVES THE
RIGHT TO RECOVER IN ANY PROCEEDING EXECUTIVE MAY BRING BEFORE THE EQUAL
EMPLOYMENT OPPORTUNITY COMMISSION OR ANY STATE HUMAN RIGHTS
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COMMISSION OR IN ANY PROCEEDING BROUGHT BY THE EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION OR ANY STATE HUMAN RIGHTS COMMISSION ON EXECUTIVE'S BEHALF. THIS
RELEASE IS FOR ANY RELIEF, NO MATTER HOW DENOMINATED, INCLUDING, BUT NOT LIMITED
TO, INJUNCTIVE RELIEF, WAGES, BACK PAY, FRONT PAY, COMPENSATORY DAMAGES, OR
PUNITIVE DAMAGES. THIS RELEASE SHALL NOT APPLY TO ANY OBLIGATION OF EMPLOYER
PURSUANT TO SECTION 4(c) OR, IF APPLICABLE, 4(f) OF THE EMPLOYMENT AGREEMENT OR
RIGHTS OF EXECUTIVE, IF ANY, TO INDEMNIFICATION AND/OR INSURANCE WITH RESPECT TO
HIS SERVICE TO OR FOR THE BENEFIT OF THE EMPLOYER AND ITS AFFILIATES AS AN
EMPLOYEE, DIRECTOR OR IN ANY OTHER CAPACITY.
(b) EXECUTIVE ACKNOWLEDGES THAT THE TERMINATION BENEFITS HE IS
RECEIVING PURSUANT TO THE EMPLOYMENT AGREEMENT IN CONNECTION WITH THE FOREGOING
RELEASE ARE IN ADDITION TO ANYTHING OF VALUE TO WHICH EXECUTIVE ALREADY IS
ENTITLED FROM EMPLOYER.
3. Certain Forfeitures in Event of Breach
The Executive acknowledges and agrees that, notwithstanding any
other provision of this Agreement, in the event the Executive materially
breaches any of his obligations under this Agreement, the Executive will forfeit
his right to receive the Termination Benefits under the Employment Agreement to
the extent not theretofore paid to him as of the date of such breach and, if
already made as of the time of breach, the Executive agrees that he will
reimburse the Employer, immediately, for the amount of such payment.
4. No Admission
This Release does not constitute an admission of liability or
wrongdoing of any kind by the Employer or its affiliates.
5. Heirs and Assigns
The terms of this Release shall be binding on the Executive and his
successors and assigns.
6. Knowing and Voluntary Waiver
The Executive acknowledges that, by the Executive's free and
voluntary act of signing below, the Executive agrees to all of the terms of this
Release and intends to be legally bound thereby.
The Executive understands and acknowledges that he may consider
whether to agree to the terms contained herein for a period of twenty-one days
after the Termination Date. However, the Termination Benefits will be delayed
until this Release is executed and delivered to the Employer; provided that
there shall be no such delay with respect to any Termination Benefit that is due
to be paid upon the closing date of a
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Change in Control (as defined in the Employment Agreement). The Executive
acknowledges that he has been advised to consult with an attorney prior to
executing this Release.
This Release will become effective, enforceable and irrevocable on
the eighth day after the date on which it is executed by the Executive (the
"Release Effective Date"). During the seven-day period prior to the Effective
Date, the Executive may revoke his agreement to accept the terms hereof by
serving notice in writing to the Employer of his intention to revoke. If the
Executive exercises his right to revoke hereunder, he shall forfeit his right to
receive any of the Termination Benefits provided for herein, and to the extent
such Termination Benefits have already been provided, the Executive agrees that
he will immediately reimburse the Employer for the amounts of such payment.
_____________________________
John L. Schwager
Acknowledgment
STATE OF ___________________)
ss:
COUNTY OF__________________)
On the ____ day of _________, 20___, before me personally came John L. Schwager
who, being by me duly sworn, did depose and say that he resides at
_________________; and did acknowledge and represent that he has had an
opportunity to consult with attorneys and other advisers of his choosing
regarding the Release attached hereto, that he has reviewed all of the terms of
the Release and that he fully understands all of its provisions, including,
without limitation, the general release and waiver set forth therein.
__________________
Notary Public
Date:_____________
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