<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to _______________________
Commission file number 1-9891
HADSON CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 31-0679954
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2777 Stemmons Freeway, Suite 700, Dallas, Texas 75356-9550
(Address of principal executive offices) (Zip Code)
214-640-6800
Registrant's telephone number, including area code
Former address: 101 Park Avenue, Fourteenth Floor, Oklahoma City, OK, 73102
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
--- ---
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X . No .
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Class Outstanding at March 31, 1994
Common Stock, par value $.01 25,690,444 shares
<PAGE> 2
HADSON CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PART I. Financial Information: Page
- - -------------------------------- ----
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited)
December 31, 1993 and March 31, 1994 2
Consolidated Statements of Operations (Unaudited)
Three Months Ended March 31, 1993 and 1994 3
Consolidated Statements of Cash Flow (Unaudited)
Three Months Ended March 31, 1993 and 1994 4
Notes to Consolidated Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6 - 9
PART II. Other Information:
- - -----------------------------
Item 6. Exhibits 10
</TABLE>
<PAGE> 3
HADSON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
December 31, March 31,
1993 1994
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $ 2,466 $ 2,113
Accounts receivable 85,097 112,503
Inventories 5,754 6,628
Prepaid expenses and other current assets 9,363 4,298
---------- ---------
Total current assets 102,680 125,542
---------- ---------
Property, equipment and improvements at cost, net 99,431 99,074
Gas supply contract 6,798 6,555
Other assets 2,732 2,896
---------- ---------
$ 211,641 $ 234,067
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current long-term debt $ 1,000 $ 6,000
Accounts payable 88,872 104,191
Accrued liabilities 4,289 3,245
Deferred revenue 4,385 6.290
---------- ---------
Total current liabilities 98,546 119,726
---------- ---------
Long-term debt 55,800 57,900
Other long-term liabilities 15,123 13,921
Deferred income taxes 2,699 2,699
Stockholders' equity:
Preferred stock, par value $.01 per share
Authorized, 25,000,000 shares:
Senior Cumulative, Series A; issued 2,080,000 shares,
at aggregate carrying value 49,000 49,000
Junior Exercisable Automatically Convertible,
Series B; issued 4,983,180 shares, at par value 50 50
Common stock, par value $.01 per share
Authorized, 35,000,000 shares; issued
25,689,147 and 25,690,444 shares 257 257
Additional paid-in capital 196,625 196,621
Accumulated deficit (206,459) (206,107)
---------- ---------
Total stockholders' equity 39,473 39,821
---------- ---------
$ 211,641 $ 234,067
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 4
HADSON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------
1993 1994
---------- ----------
<S> <C> <C>
Revenues:
Sales $ 131,829 $ 192,863
Equity in earnings of unconsolidated affiliate 407 -
Interest and other income 149 301
---------- ----------
132,385 193,164
---------- ----------
Expenses:
Cost of sales and services 127,824 185,215
Depreciation, depletion and amortization 1,526 2,580
Selling, general and administrative 3,947 3,853
Interest 881 1,164
---------- ----------
134,178 192,812
---------- ----------
Earnings (loss) before income taxes (1,793) 352
Income tax expense (benefit) - -
---------- ----------
Net earnings (loss) (1,793) 352
Preferred stock dividend requirements 397 1,378
Net loss attributable to common stock $ (2,190) $ (1,026)
========== ==========
Loss per common share and common equivalent share $ (.27) $ (.04)
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 5
HADSON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(In Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1993 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (1,793) $ 352
Items not affecting cash flow:
Depreciation, depletion and amortization 1,526 2,580
Equity in earnings of unconsolidated affiliate and other (313) -
Accruals of operating cash receipts and payments:
Change in trade receivables (3,674) (28,631)
Change in inventories 586 (874)
Change in prepaid expenses and other current assets (1,111) 2,290
Change in current liabilities 6,083 17,528
-------- --------
Cash flow provided (used) by operating activities 1,304 (6,755)
-------- --------
Cash flows from investing activities:
Additions to property, equipment and improvements (778) (1,840)
Dispositions of properties 28 2,500
Other (350) (10)
-------- --------
Cash flows provided (used) by investing activities (1,100) 650
-------- --------
Cash flows from financing activities:
Proceeds from borrowings from banks 274 7,100
Repayments of borrowings (100) -
Transaction costs related to restructuring (757) (1,348)
-------- --------
Cash flows provided (used) by financing activities (583) 5,752
-------- --------
Net decrease in cash and cash equivalents (379) (353)
Cash and cash equivalents at beginning of period 3,445 2,466
-------- --------
Cash and cash equivalents at end of period $ 3,066 $ 2,113
======== ========
Supplemental disclosures of cash flow information:
Cash paid for:
Interest (net of amounts capitalized and including amounts
attributable to discontinued operations) $ 1,090 1,357
Income taxes (net of refunds) (3) 143
-------- --------
$ 1,087 $ 1,500
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 6
HADSON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1994
(UNAUDITED)
1. The accompanying financial information includes the financial position of
Hadson Corporation and Subsidiaries (the "Company") as of December 31, 1993
and March 31, 1994, the results of operations for the three month periods
ended March 31, 1993 and 1994, and changes in cash flows for the three
month periods ended March 31, 1993 and 1994. The financial information is
prepared in conformity with generally accepted accounting principles and
such principles are applied on a basis consistent with those reflected in
the 1993 Form 10-K filed with the Securities and Exchange Commission. The
financial information included herein, other than the consolidated balance
sheet as of December 31, 1993, has been prepared by management without
audit by independent certified public accountants who do not express an
opinion thereon. The consolidated balance sheet as of December 31, 1993
has been derived from, but does not include all the disclosures contained
in, the audited consolidated financial statements for the year ended
December 31, 1993. The information furnished includes all adjustments and
accruals consisting of normal recurring accrual adjustments which are, in
the opinion of management, necessary for a fair presentation of results for
the interim period.
2. The results of operations for the three month period ended March 31, 1994
are not necessarily indicative of the results to be expected for the full
year.
3. For the three month periods ended March 31, 1993 and 1994, net loss per
common share is based upon the weighted average shares of common stock
outstanding of 8,260,312 and 25,689,989, respectively. The weighted
average shares of common stock are computed after giving effect to the
approximate one-for-15 reverse split of the Company's common stock that
occurred on December 14, 1993. Primary earnings per common share include
the effect of common stock equivalents which would arise from the exercise
of stock options and warrants, unless such effect would be anti-dilutive.
Fully diluted earnings per common share assume the conversion of
convertible debt and equity securities and common stock equivalents, unless
such items would be anti-dilutive. Primary and fully diluted earnings per
share are the same for all periods presented.
4. The Company and certain of its subsidiaries purchase natural gas from and
sell natural gas to Santa Fe Energy Resources, Inc. ("Santa Fe") and
certain of its subsidiaries. For the first quarter of 1993 and 1994,
purchases from Santa Fe totalled approximately $4,185,000 and $30,706,000,
respectively, while sales to Santa Fe totalled approximately $0 and
$5,065,000, respectively.
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<PAGE> 7
HADSON CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
A. MATERIAL CHANGES IN FINANCIAL CONDITION
For the three months ended March 31, 1994, the Company's earnings
before interest, taxes, depreciation and amortization amounted to $4,096,000 as
compared to $614,000 for the same period in 1993. This improvement is a result
of improvements in the Company's operations subsequent to the acquisition of
Adobe Gas Pipeline Company from Santa Fe (the "Acquisition") which was
completed in December, 1993. In addition to the cash flow provided from the
gas gathering, transmission and processing facilities which were acquired in
this transaction, the Company's natural gas marketing volumes have increased
significantly as more fully discussed below. This increase is due largely to
expanded capacity to acquire supplies of natural gas. As a result of the
Company's improved financial position subsequent to the transaction with Santa
Fe, the Company has been able to obtain increasing levels of trade credit
without security, such as stand-by letters of credit. As results of operations
improve, the Company expects this trend to continue in spite of the continued
general concerns within the natural gas industry over credit exposure.
Concurrently with the completion of the transaction with Santa Fe,
the Company's working capital facility with the Bank of Montreal was expanded
to $50,000,000 from $37,500,000, thereby increasing the Company's capacity to
issue letters of credit to support purchases of natural gas. Subsequent to
March 31,1994, the Company and Bank of Montreal completed the syndication of
this credit facility to four additional banks thereby expanding the total
capacity of the facility to $60,000,000.
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<PAGE> 8
HADSON CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
B. MATERIAL CHANGES IN RESULTS OF OPERATIONS
As an aid in understanding the Company's operating results, the
following table shows operating profit by line of business for the periods
indicated. Operating profit is defined as sales of energy products and
services less cost of sales which includes operating expenses.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1993 1994
-------- -------
(In Thousands)
<S> <C> <C>
Operating Profit:
Natural gas marketing $ 1,947 $ 5,416
Gas gathering, processing and transmission 1,344 1,727
Natural gas liquids ("NGL") marketing 715 505
-------- -------
$ 4,005 $ 7,648
======== =======
</TABLE>
Natural Gas Marketing
Average daily volumes and gross profit margins related to the
marketing of natural gas are provided below.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1993 1994
-------- -------
(In Thousands)
<S> <C> <C>
Natural Gas Marketing:
Sales Volumes (MMBTU/Day) 506 817
Average Gross Margin ($/MMBTU) .043 .074
</TABLE>
Natural gas volumes and margins have increased dramatically in the
first quarter of 1994 as compared to 1993. The increase in volumes results
primarily from the effects of the Acquisition which was completed in December,
1993, and the resulting increased access to natural gas supplies. These
additional supplies arose from a) production purchased from Santa Fe pursuant
to the gas purchase contract acquired as a part of the Acquistion, b)
additional letter of credit capacity to secure gas purchases and (c) greater
availability of open credit from suppliers. The Acquisition and debt and equity
recapitalization which was completed concurrently with the Acquisition have
strengthened the Company's financial position. This improved financial
position has led to increased open trade credit
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<PAGE> 9
HADSON CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
lines with certain suppliers. Record demand for natural gas during portions of
January and February in certain parts of the Country and the resulting
significant increases in natural gas prices in some instances provided the
Company the opportunity to enhance its margins in the first quarter of 1994.
Margins for the first quarter of 1993 were adversely affected by certain
contracts with small institutional and retail customers. These contracts were
renegotiated in the third quarter of 1993 and have returned to profitable
levels.
Gas Gathering, Processing and Transmission
Average daily natural gas throughput through the Company's
gathering and transmission systems, the Company's net share of average daily
NGL production from its processing plants and NGL prices are summarized in the
following table.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1993 1994
-------- -------
(In Thousands)
<S> <C> <C>
Gas gathering and transmission systems:
Natural gas throughput (MMBTU/Day) 67 110
Processing Plants:
NGL production (MGAL/day) 118 171
NGL sales price ($/GAL) $ .255 $ .201
</TABLE>
Natural gas throughput through the Company's gathering and
transmission systems and NGL production was higher in the first quarter of 1994
as compared to 1993 due to the acquisition of additional pipeline systems and
processing plants in December 1993. NGL sales prices were approximately 20%
lower in the first quarter of 1994 verses the first quarter of 1993. Thus, the
gross profit from NGL production is significantly lower in the first quarter of
1994.
NGL Marketing
Average daily volumes and gross profit margins relating to NGL
marketing are provided below.
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<PAGE> 10
HADSON CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1993 1994
-------- -------
(In Thousands)
<S> <C> <C>
NGLs:
Sales Volumes (MGAL/Day) 1,098 1,038
Average Gross Margin ($/GAL) .008 .005
</TABLE>
Sales volumes for NGL's have remained relatively consistent when
comparing the three months ended March 31, 1994 to the same period in 1993.
Gross margins have decreased because of continually increasing competition
which has led to compressed margins.
Interest Expense
Interest expense was slightly higher in the first quarter of 1994
as compared to 1993 due primarily to a higher interest rate on the Company's
senior secured debt. Such higher rate resulted from the debt and equity
recapitalization which was effected in December, 1993.
Other
Results for the first quarter of 1993 include equity in earnings
of unconsolidated affiliate of $407,000. The Company's sold its interest in
the affiliate in the third quarter of 1993.
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<PAGE> 11
HADSON CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
<TABLE>
<CAPTION>
Item 6. Exhibits
---------
<S> <C>
10.02 - Employment Agreement dated as March 31, 1994
between the Company and James Ervin Cannon
10.03 - Employment Agreement dated as of March 31, 1994
between the Company and Greg G. Jenkins
10.07 - Amended Restated Employment Agreement dated as of March 31, 1994
between the Company and Robert P. Capps
11.01 - Computation of Fully Diluted Earnings/Loss per Share.
</TABLE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT
OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF
BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.
HADSON CORPORATION
(REGISTRANT)
/s/ ROBERT P. CAPPS
ROBERT P. CAPPS
EXECUTIVE VICE PRESIDENT
CHIEF FINANCIAL OFFICER
/s/ MARTHA A. BURGER
MARTHA A. BURGER
VICE PRESIDENT - CONTROLLER
DATE MAY 10, 1994
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<PAGE> 1
EXHIBIT 10.02
EMPLOYMENT AGREEMENT DATED AS OF MARCH 31, 1994
BETWEEN THE COMPANY AND JAMES ERVIN CANNON
<PAGE> 2
Exhibit 10.02
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made effective as of
March 31, 1994 (the "Effective Date") by and between Hadson Corporation, a
Delaware corporation (the "Company"), and James Ervin Cannon ("Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ Employee in an executive
capacity on the terms and conditions, and for the consideration, hereinafter
set forth for the period provided herein commencing upon the Effective Date,
and Employee desires to be employed by the Company on such terms and conditions
and for such consideration;
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, the Company and Employee agree as
follows:
ARTICLE 1: EMPLOYMENT AND DUTIES
1.1 EMPLOYMENT. The Company agrees to employ Employee and
Employee agrees to be employed by the Company, beginning as of the Effective
Date and continuing for the period of time set forth in Article 2 of this
Agreement, on and subject to the terms and conditions of this Agreement.
1.2 POSITIONS AND DUTIES. The Company shall maintain Employee in
the position of Chairman of the Board of the Company, or in such other
positions as the parties hereto mutually may agree. Employee agrees (a) to
serve in the positions referred to in the preceding sentence as well as in such
additional executive officer positions of the Company or any of its affiliates
to which Employee is elected from time to time and (b) to perform diligently
and to the best of his abilities the duties and services appertaining to such
offices as set forth in the bylaws of the Company or such affiliate, as the
case may be, as the same may be amended from time to time, as well as such
additional duties and services which the parties hereto mutually may agree upon
from time to time or, subject to paragraph 2.3(a)(iii) hereof, which the Board
of Directors of the Company (the "Board of Directors") or of such affiliate may
prescribe. Employee shall at all times comply with and be subject to such
policies and procedures as the Company may establish from time to time that are
applicable to executive officers of the Company.
1.3 OTHER ACTIVITIES. During the period of his employment by the
Company, Employee shall devote his primary business time, energy and best
efforts to the business and affairs of the Company and its affiliates and shall
not engage, directly or indirectly, in any other business or businesses,
whether or not similar to that of the Company or its affiliates, except with
the consent of the Board of Directors or except to the extent that the Board of
<PAGE> 3
Directors or such affiliate may prescribe, or induce any employee of the
Company or any affiliate to terminate his or her employment with the Company or
such affiliate except on behalf of the Company or such affiliate. The parties
recognize and agree that Employee may engage in passive personal investments
and other activities that do not conflict with the business and affairs of the
Company or its affiliates or interfere with Employee's performance of his
duties hereunder.
ARTICLE 2: TERM AND TERMINATION OF EMPLOYMENT
2.1 TERM. Unless sooner terminated pursuant to other provisions
hereof, the Company shall employ Employee for a term beginning on the Effective
Date and ending on the second anniversary of the Effective Date. Such term may
be extended for successive one-year periods by the mutual written consent of
the Company and Employee executed at least 90 days prior to the anniversary of
the Effective Date on which such term would otherwise terminate.
Notwithstanding the preceding provisions of this paragraph, the term of
Employee's employment hereunder shall terminate upon his death.
2.2 TERMINATION BY THE COMPANY. The Company shall have the right
to terminate Employee's employment under this Agreement at any time prior to
the termination of this Agreement pursuant to paragraph 2.1 hereof for any of
the following reasons and only for the following reasons:
(a) Employee's continuing disability, which for purposes
of this Agreement shall mean Employee's becoming incapacitated by
accident, sickness or other circumstance which renders him mentally or
physically incapable, with reasonable accommodation (within the
meaning of the Americans with Disabilities Act of 1990, as amended),
of performing the essential functions of the duties and services
required of him hereunder for a period of more than 90 consecutive
days during any 12-month period;
(b) for cause, which for purposes of this Agreement shall
mean any of the following, in each case as determined in good faith by
the Board of Directors in its sole discretion: (i) Employee's gross
negligence or willful misconduct in performance of the duties and
services required of him pursuant to this Agreement; (ii) the willful
and continued failure by Employee to follow the reasonable
instructions of the Board of Directors after written notice of such
failure has been given to Employee by the Board of Directors; (iii)
the willful commission by Employee of acts that are dishonest and
demonstrably and materially injurious to the Company, monetarily or
otherwise; or (iv) Employee's final conviction of a felony or of a
misdemeanor involving moral turpitude; or
(c) Employee's material breach of any material provision
of this Agreement which, if correctable, remains uncorrected for 30
days following written notice to Employee by the Company of such
breach;
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<PAGE> 4
provided, however, that (i) if an event described in subparagraph (a) above
shall occur, Employee shall continue to be disabled as of the date of
termination by the Company of Employee's employment hereunder pursuant to such
subparagraph and (ii) if an event described in subparagraph (b) or (c) above
shall occur, the Company shall terminate Employee's employment hereunder within
90 days following, and by reason of, the occurrence of such event.
2.3 TERMINATION BY EMPLOYEE. Employee shall have the right to
terminate his employment under this Agreement at any time prior to the
termination of this Agreement pursuant to paragraph 2.1 hereof for any of the
following reasons and only for the following reasons:
(a) the occurrence, without Employee's express written
consent, of any one or more of the following events which, if
correctable, remains uncorrected for 30 days following written notice
of such occurrence by Employee to the Company: (i) a change in the
eligibility requirements under any bonus, incentive or compensation
plan, program or arrangement under which Employee is covered on the
Effective Date which adversely affects Employee, except as may be
required by law or to maintain the qualified status of any plan,
program or arrangement; (ii) the reduction of Employee's base salary,
as the same may hereafter be increased from time to time; (iii) the
assignment to Employee by the Board of Directors of duties materially
inconsistent with the duties associated with the positions described
in paragraph 1.2 hereof as such duties are constituted as of the
Effective Date (except (A) in connection with the termination of his
employment by the Company pursuant to paragraph 2.2 hereof or (B) as a
result of his disability); (iv) any action by the Company which
results in a material diminution in the position, duties or status of
Employee with the Company as contemplated by this Agreement, except
(A) for strategic reallocations of the personnel reporting to
Employee, (B) in connection with termination of his employment by the
Company pursuant to paragraph 2.2 hereof or (C) as a result of his
disability; or (v) the Company requiring Employee to be permanently
based anywhere other than within 50 miles of Dallas, Texas (Employee
shall not be deemed to be permanently based at any other location by
reason of temporary assignments for reasonable periods of times at
such other location if the Company or any of its subsidiaries or other
affiliates have a special need for Employee's services at such other
location); or
(b) a material breach by the Company of any material
provision of this Agreement which, if correctable, remains uncorrected
for 30 days following written notice by Employee to the Company of
such breach;
provided, however, that Employee shall terminate his employment hereunder
within 90 days following, and by reason of, the occurrence of such event.
2.4 NOTICE OF TERMINATION. If the Company or Employee desires to
terminate Employee's employment hereunder pursuant to paragraph 2.2 or 2.3
hereof, as the case may
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<PAGE> 5
be, it or he shall do so by giving written notice to the other party that it or
he has elected to terminate Employee's employment hereunder and stating the
effective date and reason for such termination, and upon the specified
effective date Employee's employment hereunder shall be so terminated; provided
that no such action shall alter or amend any provision hereof or rights arising
hereunder.
ARTICLE 3: COMPENSATION AND BENEFITS
3.1 BASE SALARY. During the term of his employment hereunder,
Employee shall receive a minimum annual base salary determined by the Board of
Directors consistent with its practices for executive officers of the Company,
but not less than $150,000 per year, payable in accordance with the customary
payroll practices of the Company with respect to its executive officers. If
Employee's base annual salary is increased at any time during the term of this
Agreement, it shall not thereafter be decreased during the term of this
Agreement.
3.2 BONUSES; INCENTIVE COMPENSATION PROGRAMS. (a) During the term
of his employment hereunder, Employee shall be entitled to participate in the
Company's Incentive Compensation Plan (the "Incentive Compensation Plan"). The
Company hereby agrees that Employee's ICP Level (as defined in such plan) shall
be 50%. Any bonus payable to Employee under the Incentive Compensation Plan
shall be paid to Employee in the calendar year following the calendar year in
which such amount would otherwise be paid pursuant to such plan, with interest
on such deferred amount, from the date such amount became payable until the
date such amount is paid, at a rate per annum equal to the rate established
from time to time by Bank of Montreal as its prime rate. Employee's right to
receive any such deferred amount shall not be subject to voluntary or
involuntary assignment, alienation or transfer by Employee. The Company's
obligation to pay any such deferred amount shall be unfunded and Employee's
right to receive any such amount shall be unsecured.
(b) The Company hereby represents to Employee, and Employee hereby
acknowledges, that the Compensation Committee of the Board of Directors has
granted to Employee, effective as of the Effective Date and pursuant to the
Company's 1992 Equity Incentive Plan as amended and restated as of March 9,
1994, an option to purchase 150,000 shares of the common stock, par value $.01
per share, of the Company ("Common Stock") at a per share exercise price equal
to the Fair Market Value (as defined in such plan) of one share of Common Stock
on the Effective Date and upon and subject to the terms and conditions set
forth in the form of Option Agreement attached hereto as Exhibit A, which grant
is subject to (i) the execution by Employee and the Company of this Agreement,
(ii) the execution by Employee of such Option Agreement and (iii) the approval
by the holders of the Common Stock of such plan. Employee further acknowledges
that the grant of additional awards to him, if any, under such plan shall be at
the sole discretion of such Committee.
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<PAGE> 6
3.3 VACATION AND SICK LEAVE, CLUB MEMBERSHIPS, ETC. During each
year of his employment hereunder:
(a) Employee shall be entitled to (i) four weeks of vacation at
full pay and (ii) sick leave, at full pay, equal to the maximum sick leave
available to any executive officer of the Company, in each case without regard
to the period of service that might otherwise be necessary to entitle Employee
to such vacation or sick leave under standard Company policy applicable to its
executive officers.
(b) The Company shall pay or reimburse Employee for the payment of
all fees and dues required to be paid by Employee with respect to Employee's
membership in any one business, luncheon, athletic or country club of
Employee's choosing.
(c) The Company shall pay or reimburse Employee for the payment of
the cost of an annual physical examination to be conducted by a doctor of
Employee's choosing, to the extent that such cost is not payable or
reimbursable to Employee under any health insurance plan maintained by the
Company.
3.4 OTHER COMPANY BENEFITS. During his employment hereunder,
Employee and, to the extent applicable, Employee's family, dependents and
beneficiaries, shall be allowed to participate in all employee benefit plans
and programs (including, without limitation, profit sharing, thrift, medical,
health and dental care, life insurance, disability insurance and pension plans,
but excluding any incentive compensation plans and programs other than those
referred to in paragraph 3.2 hereof), including improvements or modifications
of the same, available to similarly-situated Company employees on or after the
Effective Date, except for such benefit plans and programs which the Board of
Directors, in its sole discretion, shall adopt for select employees to
compensate them for special or extenuating circumstances.
3.5 OBLIGATIONS OF THE COMPANY REGARDING BENEFIT PLANS. The
Company shall not by reason of this Article 3 be obligated to institute,
maintain or refrain from changing, amending or discontinuing any incentive
compensation or employee benefit plan or program, so long as such actions are
applicable to covered executive officers of the Company generally. Except to
the extent specifically set forth in this Article 3 or in Article 4 hereof,
nothing in this Agreement is to be construed or interpreted to provide Employee
greater rights, participation, coverage or benefits under such benefit plans or
programs than provided to similarly situated employees pursuant to the terms
and conditions of such benefit plans and programs. Moreover, unless
specifically provided for in a written plan document adopted by the Board of
Directors, none of the benefits or arrangements described in this Article 3 or
in Article 4 hereof shall be secured or funded in any way, and each shall
instead constitute an unfunded and unsecured promise to pay money in the future
exclusively from the general assets of the Company.
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ARTICLE 4: EFFECT OF TERMINATION ON COMPENSATION
4.1 BY EXPIRATION. Upon the termination of Employee's employment
hereunder pursuant to paragraph 2.1 hereof, all compensation and all benefits
to Employee hereunder shall cease and terminate as of the date of such
termination, except that all health and dental benefits available to Employee
under the Company's group health and dental plans as of the date of such
termination shall continue to be made available to Employee for a period of
three years following such termination. In the event of such termination,
Employee shall be entitled to receive his base salary through the date of such
termination, together with the full amount of any bonus that would have been
payable to him for the year in which such termination occurred pursuant to the
Incentive Compensation Plan had he been employed by the Company at the end of
such year.
4.2 PRIOR TO EXPIRATION. (a) If Employee's employment hereunder
shall be terminated (i) by the Company pursuant to paragraph 2.2 hereof or (ii)
by Employee in breach of this Agreement, all compensation and all benefits to
Employee hereunder shall cease and terminate contemporaneously with such
termination of employment. Employee shall be entitled to receive his base
salary through the date of such termination, but shall not be entitled to any
bonus not yet paid under the Incentive Compensation Plan at the date of such
termination.
(b) If Employee's employment hereunder is terminated (i) by the
Company in breach of this Agreement or (ii) by Employee pursuant to paragraph
2.3 hereof, then (A) all compensation and all benefits to Employee hereunder
shall cease and terminate contemporaneously with such termination of
employment, except that all health and dental benefits available to Employee
under the Company's group health and dental plans as of the date of such
termination shall continue to be made available to Employee for a period of
three years following such termination, (B) Employee shall be entitled to
receive his base salary through the date of such termination, together with the
full amount of any bonus that would have been payable to him for the year in
which such termination occurred pursuant to the Incentive Compensation Plan had
he been employed by the Company at the end of such year, and (C) Employee shall
be entitled to be paid a severance payment equal to two times the total of (x)
the amount of his highest annual base salary plus (y) the amount of his highest
annual bonus during the term of this Agreement. For purposes of the preceding
clause (C), if no greater bonus has been paid to Employee during the term of
this Agreement, then the highest annual bonus shall be deemed to be an amount
equal to the maximum bonus available for payment to any employee of the Company
during the term of this Agreement under the Incentive Compensation Plan.
(c) As a condition to the receipt of any payment under paragraph
4.2(b) hereof, Employee shall first execute a release, in the form established
by the Company, releasing and forever discharging the Company and its
affiliates and the officers, directors, employees and agents of the Company and
its affiliates from any and all claims and from any and all causes of action of
any kind or character, including but not limited to all claims or causes of
action arising out of Employee's employment with the Company (or any of its
affiliates)
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or the termination of such employment. If Employee is entitled to and receives
the payments provided under paragraph 4.2(b) hereof, performance of the
obligations of the Company thereunder will constitute full settlement of all
claims that Employee might otherwise assert against the Company or its
affiliates on account of the termination of the employment relationship.
4.3 DATE OF PAYMENTS. Except as otherwise agreed to by the
parties hereto, any payment payable to Employee under paragraph 4.2(a) or
4.2(b) hereof (other than with respect to any health or dental benefits
referred to in such paragraphs) shall be paid within 30 days after the date of
termination of Employee's employment hereunder, provided that the payment of
the bonus referred to in paragraph 4.1 hereof and in clause (B) of paragraph
4.2(b) hereof shall be paid as provided in paragraph 3.2(a) hereof.
4.4 EFFECT OF TERMINATION ON COMPANY PLANS AND PROGRAMS. Except
to the extent specifically provided in this Article 4, the provisions of this
Article 4 shall not affect any rights or obligations of the Company or Employee
under any employee benefit plan or program. Notwithstanding the foregoing,
Employee shall not be entitled to any payment that would otherwise be payable
to him under any severance plan or policy of the Company in connection with the
termination of his employment hereunder.
4.5 LIMITATION ON CHANGE OF CONTROL ACTIONS. Notwithstanding the
provisions of Article 3 hereof and the preceding provisions of this Article 4,
any and all payments (including any benefit or transfer of property) in the
nature of compensation to or for the benefit of Employee under any arrangement
which is deemed to be contingent on a change of control for purposes of section
280G of the Internal Revenue Code ("change in control actions") shall be
collectively subject to an overall maximum limit. Such maximum limit shall be
$1.00 less than the largest amount under which no portion of the "change of
control actions" is considered a "parachute payment," within the meaning of
section 280G of the Internal Revenue Code (taking into account all of the
limitations, exceptions and exemptions contained therein). Accordingly, to the
extent that the change of control actions would be considered a parachute
payment, then the portions of such change of control actions shall be reduced
or eliminated in the following order until the remaining change of control
actions with respect to Employee is $1.00 less than the maximum allowable which
would not be considered a parachute payment under the Internal Revenue Code:
(a) first, any cash payment to Employee; and
(b) second, any change of control actions not described in
clause (a) of this paragraph 4.5.
As used in this paragraph 4.5, the term "arrangement" includes any agreement
between Employee and the Company or any affiliate of the Company and any and
all of the Company's and any affiliate's salary, bonus, incentive, compensation
or benefit plans, programs or arrangements, and shall include this Agreement.
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4.6 NO DUTY TO MITIGATE LOSSES. Employee shall have no duty to
find new employment following the termination of his employment (a) by Employee
pursuant to paragraph 2.3 hereof or (b) by the Company in breach of this
Agreement. Any salary, remuneration or other amounts received by Employee from
a third party for the providing of personal services (whether by employment or
by functioning as an independent contractor) or which might have been received
by Employee had he sought to provide such services to a third party shall not
reduce the Company's obligation to make any payments to Employee pursuant to
paragraph 4.2(b) hereof or the amount of such payments.
ARTICLE 5: CONFIDENTIAL INFORMATION
5.1 COMPANY INFORMATION. Employee acknowledges that the Company's
business is highly competitive and that the Company's books, records and
documents, the Company's technical information concerning its products,
equipment, services and processes, procurement procedures and pricing
techniques, the names of and other information (such as credit and financial
data) concerning the Company's customers and business associates and other
proprietary information, including, but not limited to, systems, procedures,
manuals and data as well as financial information concerning the Company's
products and services (including the revenues, costs or profits associated with
any such products and services), information with respect to the nature and
type of the Company's products and services, the equipment and methods used and
preferred by the Company's customers and the fees paid by such customers, all
comprise confidential business information and trade secrets of the Company
which are valuable, special and unique assets of the Company, which the Company
uses in its business to obtain a competitive advantage over the Company's
competitors which do not know or use this information. Employee further
acknowledges that protection of the Company's confidential business information
and trade secrets against unauthorized disclosure and use is of critical
importance to the Company in maintaining its competitive position.
Accordingly, Employee hereby agrees that he will not, at any time during, and
continuing until the second anniversary of the termination of, his employment
hereunder make or permit any unauthorized disclosure of any confidential
business information or trade secrets of the Company, or make or permit any use
thereof, except for the benefit of, and on behalf of, the Company. For the
purposes of this Article 5, the term "the Company" shall also include
affiliates of the Company.
5.2 THIRD PARTY INFORMATION. Employee acknowledges that, as a
result of his employment by the Company, he may from time to time have access
to, or knowledge of, confidential business information or trade secrets of
third parties, such as customers, suppliers, partners, joint venturers and the
like, of the Company. Employee agrees to preserve and protect the
confidentiality of such third party confidential information and trade secrets
to the same extent, and on the same basis, as confidential business information
and trade secrets of the Company.
5.3 RETURN OF DOCUMENTS. All written or magnetic materials,
records and other documents made by, or coming into the possession of, Employee
during the period of his
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employment by the Company which contain or disclose the Company confidential
business information or trade secrets shall be and remain the property of the
Company. Upon termination of Employee's employment hereunder for any reason or
upon the request of the Company at any time, Employee promptly shall deliver
the same, and all copies thereof, to the Company (for purposes of this
sentence, the term "the Company" shall not include affiliates of the Company).
5.4 INJUNCTIVE RELIEF. Without intending to limit the remedies
available to the Company and notwithstanding the provisions of paragraph 6.1
hereof, Employee acknowledges that a breach of any of the provisions of this
Article 5 would likely result in material irreparable injury to the Company
which would not, in whole or in part, be compensable in money damages and for
which the Company would have no adequate remedy at law. Accordingly, Employee
agrees that, in the event of such a breach or threat thereof, the Company shall
be entitled to obtain a temporary restraining order and/or a preliminary or
permanent injunction restraining Employee from engaging in activities
prohibited by this Article 5 or such other relief as may be available to
specifically enforce any of the provisions of this Article 5.
ARTICLE 6: MISCELLANEOUS
6.1 ARBITRATION. Subject to the provisions of paragraph 5.4
hereof, any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Dallas County, Texas
in accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction. Each party hereto shall bear his or its own costs of
arbitration, but if Employee is the prevailing party in such arbitration, he
shall be entitled to recover from the Company as part of any award entered his
reasonable expenses for attorneys' fees and disbursements.
6.2 WITHHOLDING. The Company may withhold from any compensation,
benefits or amounts payable under this Agreement all federal, state, city or
other taxes as may be required pursuant to any law or governmental regulation
or ruling.
6.3 NOTICES. For purposes of this Agreement, all notices and
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, addressed as follows:
If to the Company, to: Hadson Corporation
2777 Stemmons Freeway, Suite 700
Dallas, Texas 75207
Attention: President
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If to Employee, to: James Ervin Cannon
2777 Stemmons Freeway, Suite 700
Dallas, Texas 75207
or to such other address as either such party may furnish to the other in
writing in accordance herewith, except that notices of changes of address shall
be effective only upon receipt.
6.4 APPLICABLE LAW. This Agreement is entered into under, and
shall be governed by, and construed and interpreted in accordance with, the
laws of the State of Texas.
6.5 NO WAIVER. 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 or at any prior or
subsequent time.
6.6 SEVERABILITY. 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.
6.7 COUNTERPARTS. 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 instrument.
6.8 HEADINGS. The paragraph headings in this Agreement have been
inserted for purposes of convenience and shall not be used for interpretive
purposes.
6.9 AFFILIATE. As used in this Agreement, "affiliate" shall mean
any entity which, directly or indirectly, owns or controls, is owned or
controlled by, or is under common ownership or control with, the Company.
6.10 ASSIGNMENT. The rights and obligations of Employee hereunder
are personal and no right, benefit or obligation of Employee hereunder 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
Company. Subject to the provisions of the preceding sentence, this Agreement
shall be binding upon, and inure to the benefit of, the parties hereto and
their respective heirs, administrators, executors, successors and assigns.
6.11 TERM. This Agreement has a term co-extensive with the term of
employment specified in paragraph 2.1 hereof, provided that (a) except as
otherwise provided herein, termination shall not affect any right or obligation
of any party which is accrued or vested prior to or upon such termination and
(b) the provisions of Article 5 hereof shall survive the termination of this
Agreement.
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6.12 ENTIRE AGREEMENT. Except as provided in (a) written policies
and procedures promulgated by the Company that are applicable to executive
officers of the Company, (b) the written benefit plans and programs referenced
in Article 3 hereof or (c) any signed written agreements hereafter executed by
the Company and Employee, this Agreement constitutes the entire agreement of
the parties with regard to such subject matters, and contains all of the
covenants, promises, representations, warranties and agreements between the
parties with respect to such subject matters and replaces and merges previous
agreements and discussions pertaining to the employment relationship between
the Company and Employee. Any modification or waiver of any provision of this
Agreement will be effective only if it is in writing and signed by both of the
parties hereto.
IN WITNESS WHEREOF, the Company and Employee have executed this
Agreement effective as of the Effective Date.
HADSON CORPORATION
By: /s/ GREG G. JENKINS
Name: Greg G. Jenkins
Title: President & Chief Executive Officer
/s/ James Ervin Cannon
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<PAGE> 1
EXHIBIT 10.03
EMPLOYMENT AGREEMENT DATED AS OF MARCH 31, 1994
BETWEEN THE COMPANY AND GREG G. JENKINS
<PAGE> 2
Exhibit 10.03
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made effective as of
March 31, 1994 (the "Effective Date") by and between Hadson Corporation, a
Delaware corporation (the "Company"), and Greg G. Jenkins ("Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ Employee in an executive
capacity on the terms and conditions, and for the consideration, hereinafter
set forth for the period provided herein commencing upon the Effective Date,
and Employee desires to be employed by the Company on such terms and conditions
and for such consideration;
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, the Company and Employee agree as
follows:
ARTICLE 1: EMPLOYMENT AND DUTIES
1.1 EMPLOYMENT. The Company agrees to employ Employee and
Employee agrees to be employed by the Company, beginning as of the Effective
Date and continuing for the period of time set forth in Article 2 of this
Agreement, on and subject to the terms and conditions of this Agreement.
1.2 POSITIONS AND DUTIES. The Company shall maintain Employee in
the positions of President and Chief Operating Officer of the Company, or in
such other positions as the parties hereto mutually may agree. Employee agrees
(a) to serve in the positions referred to in the preceding sentence as well as
in such additional executive officer positions of the Company or any of its
affiliates to which Employee is elected from time to time and (b) to perform
diligently and to the best of his abilities the duties and services
appertaining to such offices as set forth in the bylaws of the Company or such
affiliate, as the case may be, as the same may be amended from time to time, as
well as such additional duties and services which the parties hereto mutually
may agree upon from time to time or, subject to paragraph 2.3(a)(iii) hereof,
which the Board of Directors of the Company (the "Board of Directors") or of
such affiliate may prescribe. Employee shall at all times comply with and be
subject to such policies and procedures as the Company may establish from time
to time that are applicable to executive officers of the Company.
1.3 OTHER ACTIVITIES. During the period of his employment by the
Company, Employee shall devote his primary business time, energy and best
efforts to the business and affairs of the Company and its affiliates and shall
not engage, directly or indirectly, in any other business or businesses,
whether or not similar to that of the Company or its affiliates, except with
the consent of the Board of Directors or except to the extent that the Board of
<PAGE> 3
Directors or such affiliate may prescribe, or induce any employee of the
Company or any affiliate to terminate his or her employment with the Company or
such affiliate except on behalf of the Company or such affiliate. The parties
recognize and agree that Employee may engage in passive personal investments
and other activities that do not conflict with the business and affairs of the
Company or its affiliates or interfere with Employee's performance of his
duties hereunder.
ARTICLE 2: TERM AND TERMINATION OF EMPLOYMENT
2.1 TERM. Unless sooner terminated pursuant to other provisions
hereof, the Company shall employ Employee for a term beginning on the Effective
Date and ending on the second anniversary of the Effective Date. On each
anniversary of the Effective Date, commencing with the second anniversary of
the Effective Date, the term of this Agreement shall be extended automatically
for successive one-year periods unless on or prior to the September 30
immediately preceding the last day of any such one-year period either the
Compensation Committee of the Board of Directors, on behalf of the Company, or
Employee shall give written notice to the other that no such automatic
extension shall occur, in which event this Agreement shall terminate on the
last day of such one-year period. Unless such notice shall specify that
Employee's employment with the Company shall terminate on the date of such
termination of this Agreement, the employment relationship between the Company
and Employee shall continue at-will following such termination.
Notwithstanding the preceding provisions of this paragraph, the term of
Employee's employment hereunder shall terminate upon his death.
2.2 TERMINATION BY THE COMPANY. The Company shall have the right
to terminate Employee's employment under this Agreement at any time prior to
the termination of this Agreement pursuant to paragraph 2.1 hereof for any of
the following reasons and only for the following reasons:
(a) Employee's continuing disability, which for purposes
of this Agreement shall mean Employee's becoming incapacitated by
accident, sickness or other circumstance which renders him mentally or
physically incapable, with reasonable accommodation (within the
meaning of the Americans with Disabilities Act of 1990, as amended),
of performing the essential functions of the duties and services
required of him hereunder for a period of more than 90 consecutive
days during any 12-month period;
(b) for cause, which for purposes of this Agreement shall
mean any of the following, in each case as determined in good faith by
the Board of Directors in its sole discretion: (i) Employee's gross
negligence or willful misconduct in performance of the duties and
services required of him pursuant to this Agreement; (ii) the willful
and continued failure by Employee to follow the reasonable
instructions of the Board of Directors after written notice of such
failure has been given to Employee by the Board of Directors; (iii)
the willful commission by Employee of acts that are
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dishonest and demonstrably and materially injurious to the Company,
monetarily or otherwise; or (iv) Employee's final conviction of a
felony or of a misdemeanor involving moral turpitude; or
(c) Employee's material breach of any material provision
of this Agreement which, if correctable, remains uncorrected for 30
days following written notice to Employee by the Company of such
breach;
provided, however, that (i) if an event described in subparagraph (a) above
shall occur, Employee shall continue to be disabled as of the date of
termination by the Company of Employee's employment hereunder pursuant to such
subparagraph and (ii) if an event described in subparagraph (b) or (c) above
shall occur, the Company shall terminate Employee's employment hereunder within
90 days following, and by reason of, the occurrence of such event.
2.3 TERMINATION BY EMPLOYEE. Employee shall have the right to
terminate his employment under this Agreement at any time prior to the
termination of this Agreement pursuant to paragraph 2.1 hereof for any of the
following reasons and only for the following reasons:
(a) the occurrence, without Employee's express written
consent, of any one or more of the following events which, if
correctable, remains uncorrected for 30 days following written notice
of such occurrence by Employee to the Company: (i) a change in the
eligibility requirements under any bonus, incentive or compensation
plan, program or arrangement under which Employee is covered on the
day immediately preceding the Effective Date which adversely affects
Employee, except as may be required by law or to maintain the
qualified status of any plan, program or arrangement; (ii) the
reduction of Employee's base salary, as the same may hereafter be
increased from time to time; (iii) the assignment to Employee by the
Board of Directors of duties materially inconsistent with the duties
associated with the positions described in paragraph 1.2 hereof as
such duties are constituted as of the day immediately preceding the
Effective Date (except (A) in connection with the termination of his
employment by the Company pursuant to paragraph 2.2 hereof or (B) as a
result of his disability); (iv) any action by the Company which
results in a material diminution in the position, duties or status of
Employee with the Company as contemplated by this Agreement, except
(A) for strategic reallocations of the personnel reporting to
Employee, (B) in connection with termination of his employment by the
Company pursuant to paragraph 2.2 hereof or (C) as a result of his
disability; or (v) the Company requiring Employee to be permanently
based anywhere other than within 50 miles of Dallas, Texas (Employee
shall not be deemed to be permanently based at any other location by
reason of temporary assignments for reasonable periods of times at
such other location if the Company or any of its subsidiaries or other
affiliates have a special need for Employee's services at such other
location); or
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(b) a material breach by the Company of any material
provision of this Agreement which, if correctable, remains uncorrected
for 30 days following written notice by Employee to the Company of
such breach;
provided, however, that if an event described in subparagraph (a) or (b) above
shall occur, Employee shall terminate his employment hereunder within 90 days
following, and by reason of, the occurrence of such event.
2.4 NOTICE OF TERMINATION. If the Company or Employee desires to
terminate Employee's employment hereunder pursuant to paragraph 2.2 or 2.3
hereof, as the case may be, it or he shall do so by giving written notice to
the other party that it or he has elected to terminate Employee's employment
hereunder and stating the effective date and reason for such termination, and
upon the specified effective date Employee's employment hereunder shall be so
terminated; provided that no such action shall alter or amend any provision
hereof or rights arising hereunder.
ARTICLE 3: COMPENSATION AND BENEFITS
3.1 BASE SALARY. During the term of his employment hereunder,
Employee shall receive a minimum annual base salary determined by the Board of
Directors consistent with its practices for executive officers of the Company,
but not less than $170,000 per year, payable in accordance with the customary
payroll practices of the Company with respect to its executive officers. If
Employee's base annual salary is increased at any time during the term of this
Agreement, it shall not thereafter be decreased during the term of this
Agreement.
3.2 BONUSES; INCENTIVE COMPENSATION PROGRAMS. During the term of
his employment hereunder, Employee (a) shall be paid such bonuses, if any, as
shall be determined by the Board of Directors consistent with its practices for
executive officers of the Company and (b) shall be entitled to participate, on
a basis commensurate with his positions with the Company, in all employee
incentive compensation programs maintained by the Company on or after the
Effective Date which are generally made available to executive officers of the
Company. If Employee is awarded any stock option or restricted stock grant
under the Company's Equity Incentive Plan during the term of this Agreement,
the agreement covering each such award shall provide that if Employee's
employment hereunder is terminated either by the Company in breach of this
Agreement or by Employee pursuant to paragraph 2.3 hereof, then all stock
options subject to such agreement shall become immediately exercisable in full
and all restrictions on all shares of restricted stock subject to such
agreement shall immediately lapse.
3.3 VACATION AND SICK LEAVE. During each year of his employment
hereunder, Employee shall be entitled to vacation and sick leave, at full pay,
equal to the maximum available to any executive officer of the Company, without
regard to the period of service
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that might otherwise be necessary to entitle Employee to such vacation or sick
leave under standard Company policy applicable to its executive officers.
3.4 OTHER COMPANY BENEFITS. During his employment hereunder,
Employee and, to the extent applicable, Employee's family, dependents and
beneficiaries, shall be allowed to participate in all employee benefit plans
and programs (including, without limitation, profit sharing, thrift, medical,
health and dental care, life insurance, disability insurance and pension
plans), including improvements or modifications of the same, available to
similarly-situated Company employees on or after the Effective Date, except for
such benefit plans and programs which the Board of Directors, in its sole
discretion, shall adopt for select employees to compensate them for special or
extenuating circumstances.
3.5 OBLIGATIONS OF THE COMPANY REGARDING BENEFIT PLANS. The
Company shall not by reason of this Article 3 be obligated to institute,
maintain or refrain from changing, amending or discontinuing any incentive
compensation or employee benefit plan or program, so long as such actions are
applicable to covered executive officers of the Company generally. Except to
the extent specifically set forth in this Article 3, nothing in this Agreement
is to be construed or interpreted to provide Employee greater rights,
participation, coverage or benefits under such benefit plans or programs than
provided to similarly situated employees pursuant to the terms and conditions
of such benefit plans and programs. Moreover, unless specifically provided for
in a written plan document adopted by the Board of Directors, none of the
benefits or arrangements described in this Article 3 or in Article 4 hereof
shall be secured or funded in any way, and each shall instead constitute an
unfunded and unsecured promise to pay money in the future exclusively from the
general assets of the Company.
ARTICLE 4: EFFECT OF TERMINATION ON COMPENSATION
4.1 BY EXPIRATION. Upon the termination of this Agreement
pursuant to paragraph 2.1 hereof, all compensation and all benefits to Employee
hereunder shall cease and terminate as of the date of such termination. In
such event, Employee shall be entitled to receive his base salary through the
date of such termination, together with a pro rata payment of any individual
bonuses or incentive compensation earned or accrued but not yet paid.
4.2 PRIOR TO EXPIRATION. (a) If Employee's employment hereunder
shall be terminated (i) by the Company pursuant to paragraph 2.2 hereof or (ii)
by Employee in breach of this Agreement, all compensation and all benefits to
Employee hereunder shall cease and terminate contemporaneously with such
termination of employment. Employee shall be entitled to receive his base
salary through the date of such termination, but shall not be entitled to any
individual bonuses or incentive compensation not yet paid at the date of such
termination.
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(b) If Employee's employment hereunder is terminated (i) by the
Company in breach of this Agreement or (ii) by Employee pursuant to paragraph
2.3 hereof, then (A) all compensation and all benefits to Employee hereunder
shall cease and terminate contemporaneously with such termination of
employment, (B) Employee shall be entitled to receive his base salary through
the date of such termination, together with the full amount of any individual
bonuses or incentive compensation that would have been payable to him for the
year in which such termination occurred pursuant to the terms of the applicable
bonus or incentive compensation plan had he been employed by the Company at the
end of such year, and (C) Employee shall be entitled to be paid a severance
payment equal to two times the total of (x) the amount of his highest annual
base salary plus (y) the amount of his highest annual bonus during the term of
this Agreement. For purposes of the preceding clause (C), if no greater bonus
has been paid to Employee during the term of this Agreement, then the highest
annual bonus shall be deemed to be an amount equal to the maximum bonus
available for payment to any employee of the Company during the term of this
Agreement under the Company's Incentive Compensation Plan.
(c) As a condition to the receipt of any payment under paragraph
4.2(b) hereof, Employee shall first execute a release, in the form established
by the Company, releasing and forever discharging the Company and its
affiliates and the officers, directors, employees and agents of the Company and
its affiliates from any and all claims and from any and all causes of action of
any kind or character, including but not limited to all claims or causes of
action arising out of Employee's employment with the Company (or any of its
affiliates) or the termination of such employment. If Employee is entitled to
and receives the payments provided under paragraph 4.2(b) hereof, performance
of the obligations of the Company thereunder will constitute full settlement of
all claims that Employee might otherwise assert against the Company or its
affiliates on account of the termination of the employment relationship.
4.3 DATE OF PAYMENTS. Any payment payable to Employee under
paragraph 4.2(a) or 4.2(b) hereof shall be paid within 30 days after the date
of termination of Employee's employment hereunder or at such other date as the
parties hereto agree.
4.4 EFFECT OF TERMINATION ON COMPANY PLANS AND PROGRAMS. Except
to the extent specifically provided in this Article 4, the provisions of this
Article 4 shall not affect any rights or obligations of the Company or Employee
under any employee benefit plan or program. Notwithstanding the foregoing,
Employee shall not be entitled to any payment that would otherwise be payable
to him under any severance plan or policy of the Company in connection with the
termination of his employment hereunder.
4.5 LIMITATION ON CHANGE OF CONTROL ACTIONS. Notwithstanding the
provisions of Article 3 hereof and the preceding provisions of this Article 4,
any and all payments (including any benefit or transfer of property) in the
nature of compensation to or for the benefit of Employee under any arrangement
which is deemed to be contingent on a change of control for purposes of section
280G of the Internal Revenue Code ("change in control actions") shall be
collectively subject to an overall maximum limit. Such maximum limit
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shall be $1.00 less than the largest amount under which no portion of the
"change of control actions" is considered a "parachute payment," within the
meaning of section 280G of the Internal Revenue Code (taking into account all
of the limitations, exceptions and exemptions contained therein). Accordingly,
to the extent that the change of control actions would be considered a
parachute payment, then the portions of such change of control actions shall be
reduced or eliminated in the following order until the remaining change of
control actions with respect to Employee is $1.00 less than the maximum
allowable which would not be considered a parachute payment under the Internal
Revenue Code:
(a) first, any cash payment to Employee; and
(b) second, any change of control actions not described in
clause (a) of this paragraph 4.5.
As used in this paragraph 4.5, the term "arrangement" includes any agreement
between Employee and the Company or any affiliate of the Company and any and
all of the Company's and any affiliate's salary, bonus, incentive, compensation
or benefit plans, programs or arrangements, and shall include this Agreement.
4.6 NO DUTY TO MITIGATE LOSSES. Employee shall have no duty to
find new employment following the termination of his employment (a) by Employee
pursuant to paragraph 2.3 hereof or (b) by the Company in breach of this
Agreement. Any salary, remuneration or other amounts received by Employee from
a third party for the providing of personal services (whether by employment or
by functioning as an independent contractor) or which might have been received
by Employee had he sought to provide such services to a third party shall not
reduce the Company's obligation to make any payments to Employee pursuant to
paragraph 4.2(b) hereof or the amount of such payments.
ARTICLE 5: CONFIDENTIAL INFORMATION
5.1 COMPANY INFORMATION. Employee acknowledges that the Company's
business is highly competitive and that the Company's books, records and
documents, the Company's technical information concerning its products,
equipment, services and processes, procurement procedures and pricing
techniques, the names of and other information (such as credit and financial
data) concerning the Company's customers and business associates and other
proprietary information, including, but not limited to, systems, procedures,
manuals and data as well as financial information concerning the Company's
products and services (including the revenues, costs or profits associated with
any such products and services), information with respect to the nature and
type of the Company's products and services, the equipment and methods used and
preferred by the Company's customers and the fees paid by such customers, all
comprise confidential business information and trade secrets of the Company
which are valuable, special and unique assets of the Company, which the Company
uses in its business to obtain a competitive advantage over the Company's
competitors which do not know or use this information. Employee further
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acknowledges that protection of the Company's confidential business information
and trade secrets against unauthorized disclosure and use is of critical
importance to the Company in maintaining its competitive position.
Accordingly, Employee hereby agrees that he will not, at any time during, and
continuing until the second anniversary of the termination of, his employment
hereunder make or permit any unauthorized disclosure of any confidential
business information or trade secrets of the Company, or make or permit any use
thereof, except for the benefit of, and on behalf of, the Company. For the
purposes of this Article 5, the term "the Company" shall also include
affiliates of the Company.
5.2 THIRD PARTY INFORMATION. Employee acknowledges that, as a
result of his employment by the Company, he may from time to time have access
to, or knowledge of, confidential business information or trade secrets of
third parties, such as customers, suppliers, partners, joint venturers and the
like, of the Company. Employee agrees to preserve and protect the
confidentiality of such third party confidential information and trade secrets
to the same extent, and on the same basis, as confidential business information
and trade secrets of the Company.
5.3 RETURN OF DOCUMENTS. All written or magnetic materials,
records and other documents made by, or coming into the possession of, Employee
during the period of his employment by the Company (whether before, on or after
the Effective Date) which contain or disclose the Company confidential business
information or trade secrets shall be and remain the property of the Company.
Upon termination of Employee's employment hereunder for any reason or upon the
request of the Company at any time, Employee promptly shall deliver the same,
and all copies thereof, to the Company (for purposes of this sentence, the term
"the Company" shall not include affiliates of the Company).
5.4 INJUNCTIVE RELIEF. Without intending to limit the remedies
available to the Company and notwithstanding the provisions of paragraph 6.1
hereof, Employee acknowledges that a breach of any of the provisions of this
Article 5 would likely result in material irreparable injury to the Company
which would not, in whole or in part, be compensable in money damages and for
which the Company would have no adequate remedy at law. Accordingly, Employee
agrees that, in the event of such a breach or threat thereof, the Company shall
be entitled to obtain a temporary restraining order and/or a preliminary or
permanent injunction restraining Employee from engaging in activities
prohibited by this Article 5 or such other relief as may be available to
specifically enforce any of the provisions of this Article 5.
ARTICLE 6: MISCELLANEOUS
6.1 ARBITRATION. Subject to the provisions of paragraph 5.4
hereof, any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Dallas County, Texas
in accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction. Each party hereto shall bear his or its
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own costs of arbitration, but if Employee is the prevailing party in such
arbitration, he shall be entitled to recover from the Company as part of any
award entered his reasonable expenses for attorneys' fees and disbursements.
6.2 WITHHOLDING. The Company may withhold from any compensation,
benefits or amounts payable under this Agreement all federal, state, city or
other taxes as may be required pursuant to any law or governmental regulation
or ruling.
6.3 NOTICES. For purposes of this Agreement, all notices and
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, addressed as follows:
If to the Company, to: Hadson Corporation
600 E. John Carpenter Freeway
Suite 201
Irving, Texas 75062-3977
Attention: President
If to Employee, to: Greg G. Jenkins
600 E. John Carpenter Freeway
Suite 201
Irving, Texas 75062-3977
or to such other address as either such party may furnish to the other in
writing in accordance herewith, except that notices of changes of address shall
be effective only upon receipt.
6.4 APPLICABLE LAW. This Agreement is entered into under, and
shall be governed by, and construed and interpreted in accordance with, the
laws of the State of Texas.
6.5 NO WAIVER. 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 or at any prior or
subsequent time.
6.6 SEVERABILITY. 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.
6.7 COUNTERPARTS. 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 instrument.
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6.8 HEADINGS. The paragraph headings in this Agreement have been
inserted for purposes of convenience and shall not be used for interpretive
purposes.
6.9 AFFILIATE. As used in this Agreement, "affiliate" shall mean
any entity which, directly or indirectly, owns or controls, is owned or
controlled by, or is under common ownership or control with, the Company.
6.10 ASSIGNMENT. The rights and obligations of Employee hereunder
are personal and no right, benefit or obligation of Employee hereunder 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
Company. Subject to the provisions of the preceding sentence, this Agreement
shall be binding upon, and inure to the benefit of, the parties hereto and
their respective heirs, administrators, executors, successors and assigns.
6.11 TERM. This Agreement has a term co-extensive with the term of
employment specified in paragraph 2.1 hereof (without giving effect to the
third sentence thereof), provided that (a) except as otherwise provided herein,
termination shall not affect any right or obligation of any party which is
accrued or vested prior to or upon such termination and (b) the provisions of
Article 5 hereof shall survive the termination of this Agreement.
6.12 ENTIRE AGREEMENT. Except as provided in (a) written policies
and procedures promulgated by the Company that are applicable to executive
officers of the Company, (b) the written benefit plans and programs referenced
in Article 3 hereof or (c) any signed written agreements hereafter executed by
the Company and Employee, this Agreement constitutes the entire agreement of
the parties with regard to such subject matters, and contains all of the
covenants, promises, representations, warranties and agreements between the
parties with respect to such subject matters and replaces and merges previous
agreements and discussions pertaining to the employment relationship between
the Company and Employee. Any modification or waiver of any provision of this
Agreement will be effective only if it is in writing and signed by both of the
parties hereto.
IN WITNESS WHEREOF, the Company and Employee have executed this
Agreement effective as of the Effective Date.
HADSON CORPORATION
By: /s/ ROBERT P. CAPPS
Robert P. Capps,
Executive Vice President
/s/ Greg G. Jenkins
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<PAGE> 1
EXHIBIT 10.07
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
DATED AS OF MARCH 31, 1994
BETWEEN THE COMPANY AND ROBERT P. CAPPS
<PAGE> 2
Exhibit 10.07
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is
made effective as of March 31, 1994 (the "Effective Date") by and between
Hadson Corporation, a Delaware corporation (the "Company"), and Robert P. Capps
("Employee").
W I T N E S S E T H:
WHEREAS, the Company and Employee are parties to an Employment
Agreement dated as of April 3, 1990 (the "Original Agreement"); and
WHEREAS, a "Change of Control," as defined in the Original Agreement,
occurred in connection with the merger of Adobe Gas Pipeline Company into the
Company effected on December 14, 1993 and, as a result, Employee is entitled to
certain severance payments if his employment with the Company is terminated
within one year of such "Change of Control"; and
WHEREAS, the Company desires to continue its employment of Employee in
an executive capacity on the terms and conditions, and for the consideration,
hereinafter set forth for the period provided herein commencing upon the
Effective Date, and Employee desires to continue employment with the Company on
such terms and conditions and for such consideration;
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, the Company and Employee agree as
follows:
ARTICLE 1: EMPLOYMENT AND DUTIES
1.1 EMPLOYMENT. The Company agrees to employ Employee and
Employee agrees to be employed by the Company, beginning as of the Effective
Date and continuing for the period of time set forth in Article 2 of this
Agreement, on and subject to the terms and conditions of this Agreement.
1.2 POSITIONS AND DUTIES. The Company shall maintain Employee in
the positions of Executive Vice President, Chief Financial Officer and
Treasurer of the Company, or in such other positions as the parties hereto
mutually may agree. Employee agrees (a) to serve in the positions referred to
in the preceding sentence as well as in such additional executive officer
positions of the Company or any of its affiliates to which Employee is elected
from time to time and (b) to perform diligently and to the best of his
abilities the duties and services appertaining to such offices as set forth in
the bylaws of the Company or such
<PAGE> 3
affiliate, as the case may be, as the same may be amended from time to time, as
well as such additional duties and services which the parties hereto mutually
may agree upon from time to time or, subject to paragraph 2.3(a)(iii) hereof,
which the Board of Directors of the Company (the "Board of Directors") or of
such affiliate may prescribe. Employee shall at all times comply with and be
subject to such policies and procedures as the Company may establish from time
to time that are applicable to executive officers of the Company.
1.3 OTHER ACTIVITIES. During the period of his employment by the
Company, Employee shall devote his primary business time, energy and best
efforts to the business and affairs of the Company and its affiliates and shall
not engage, directly or indirectly, in any other business or businesses,
whether or not similar to that of the Company or its affiliates, except with
the consent of the Board of Directors or except to the extent that the Board of
Directors or such affiliate may prescribe, or induce any employee of the
Company or any affiliate to terminate his or her employment with the Company or
such affiliate except on behalf of the Company or such affiliate. The parties
recognize and agree that Employee may engage in passive personal investments
and other activities that do not conflict with the business and affairs of the
Company or its affiliates or interfere with Employee's performance of his
duties hereunder.
ARTICLE 2: TERM AND TERMINATION OF EMPLOYMENT
2.1 TERM. Unless sooner terminated pursuant to other provisions
hereof, the Company shall employ Employee for a term beginning on the Effective
Date and ending on the second anniversary of the Effective Date. On each
anniversary of the Effective Date, commencing with the second anniversary of
the Effective Date, the term of this Agreement shall be extended automatically
for successive one-year periods unless on or prior to the September 30
immediately preceding the last day of any such one-year period either the
Compensation Committee of the Board of Directors, on behalf of the Company, or
Employee shall give written notice to the other that no such automatic
extension shall occur, in which event this Agreement shall terminate on the
last day of such one-year period. Unless such notice shall specify that
Employee's employment with the Company shall terminate on the date of such
termination of this Agreement, the employment relationship between the Company
and Employee shall continue at-will following such termination.
Notwithstanding the preceding provisions of this paragraph, the term of
Employee's employment hereunder shall terminate upon his death.
2.2 TERMINATION BY THE COMPANY. The Company shall have the right
to terminate Employee's employment under this Agreement at any time prior to
the termination of this Agreement pursuant to paragraph 2.1 hereof for any of
the following reasons and only for the following reasons:
(a) Employee's continuing disability, which for purposes
of this Agreement shall mean Employee's becoming incapacitated by
accident, sickness or other circumstance which renders him mentally or
physically incapable, with reasonable
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<PAGE> 4
accommodation (within the meaning of the Americans with Disabilities
Act of 1990, as amended), of performing the essential functions of the
duties and services required of him hereunder for a period of more
than 90 consecutive days during any 12-month period;
(b) for cause, which for purposes of this Agreement shall
mean any of the following, in each case as determined in good faith by
the Board of Directors in its sole discretion: (i) Employee's gross
negligence or willful misconduct in performance of the duties and
services required of him pursuant to this Agreement; (ii) the willful
and continued failure by Employee to follow the reasonable
instructions of the Board of Directors after written notice of such
failure has been given to Employee by the Board of Directors; (iii)
the willful commission by Employee of acts that are dishonest and
demonstrably and materially injurious to the Company, monetarily or
otherwise; or (iv) Employee's final conviction of a felony or of a
misdemeanor involving moral turpitude; or
(c) Employee's material breach of any material provision
of this Agreement which, if correctable, remains uncorrected for 30
days following written notice to Employee by the Company of such
breach;
provided, however, that (i) if an event described in subparagraph (a) above
shall occur, Employee shall continue to be disabled as of the date of
termination by the Company of Employee's employment hereunder pursuant to such
subparagraph and (ii) if an event described in subparagraph (b) or (c) above
shall occur, the Company shall terminate Employee's employment hereunder within
90 days following, and by reason of, the occurrence of such event.
2.3 TERMINATION BY EMPLOYEE. Employee shall have the right to
terminate his employment under this Agreement at any time prior to the
termination of this Agreement pursuant to paragraph 2.1 hereof for any of the
following reasons and only for the following reasons:
(a) the occurrence, without Employee's express written
consent, of any one or more of the following events which, if
correctable, remains uncorrected for 30 days following written notice
of such occurrence by Employee to the Company: (i) a change in the
eligibility requirements under any bonus, incentive or compensation
plan, program or arrangement under which Employee is covered on the
day immediately preceding the Effective Date which adversely affects
Employee, except as may be required by law or to maintain the
qualified status of any plan, program or arrangement; (ii) the
reduction of Employee's base salary, as the same may hereafter be
increased from time to time; (iii) the assignment to Employee by the
Board of Directors of duties materially inconsistent with the duties
associated with the positions described in paragraph 1.2 hereof as
such duties are constituted as of the day immediately preceding the
Effective Date (except (A) in connection with the termination of his
employment by the Company pursuant to paragraph 2.2 hereof or
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(B) as a result of his disability); (iv) any action by the Company
which results in a material diminution in the position, duties or
status of Employee with the Company as contemplated by this Agreement,
except (A) for strategic reallocations of the personnel reporting to
Employee, (B) in connection with termination of his employment by the
Company pursuant to paragraph 2.2 hereof or (C) as a result of his
disability; or (v) the Company requiring Employee to be permanently
based anywhere other than within 50 miles of Dallas, Texas (Employee
shall not be deemed to be permanently based at any other location by
reason of temporary assignments for reasonable periods of times at
such other location if the Company or any of its subsidiaries or other
affiliates have a special need for Employee's services at such other
location); or
(b) a material breach by the Company of any material
provision of this Agreement which, if correctable, remains uncorrected
for 30 days following written notice by Employee to the Company of
such breach;
provided, however, that if an event described in subparagraph (a) or (b) above
shall occur, Employee shall terminate his employment hereunder within 90 days
following, and by reason of, the occurrence of such event.
2.4 NOTICE OF TERMINATION. If the Company or Employee desires to
terminate Employee's employment hereunder pursuant to paragraph 2.2 or 2.3
hereof, as the case may be, it or he shall do so by giving written notice to
the other party that it or he has elected to terminate Employee's employment
hereunder and stating the effective date and reason for such termination, and
upon the specified effective date Employee's employment hereunder shall be so
terminated; provided that no such action shall alter or amend any provision
hereof or rights arising hereunder.
ARTICLE 3: COMPENSATION AND BENEFITS
3.1 BASE SALARY. During the term of his employment hereunder,
Employee shall receive a minimum annual base salary determined by the Board of
Directors consistent with its practices for executive officers of the Company,
but not less than $163,500 per year, payable in accordance with the customary
payroll practices of the Company with respect to its executive officers. If
Employee's base annual salary is increased at any time during the term of this
Agreement, it shall not thereafter be decreased during the term of this
Agreement.
3.2 BONUSES; INCENTIVE COMPENSATION PROGRAMS. During the term of
his employment hereunder, Employee (a) shall be paid such bonuses, if any, as
shall be determined by the Board of Directors consistent with its practices for
executive officers of the Company and (b) shall be entitled to participate, on
a basis commensurate with his positions with the Company, in all employee
incentive compensation programs maintained by the Company on or after the
Effective Date which are generally made available to
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executive officers of the Company. If Employee is awarded any stock option or
restricted stock grant under the Company's Equity Incentive Plan during the
term of this Agreement, the agreement covering each such award shall provide
that if Employee's employment hereunder is terminated either by the Company in
breach of this Agreement or by Employee pursuant to paragraph 2.3 hereof, then
all stock options subject to such agreement shall become immediately
exercisable in full and all restrictions on all shares of restricted stock
subject to such agreement shall immediately lapse.
3.3 VACATION AND SICK LEAVE. During each year of his employment
hereunder, Employee shall be entitled to vacation and sick leave, at full pay,
equal to the maximum available to any executive officer of the Company, without
regard to the period of service that might otherwise be necessary to entitle
Employee to such vacation or sick leave under standard Company policy
applicable to its executive officers.
3.4 OTHER COMPANY BENEFITS. During his employment hereunder,
Employee and, to the extent applicable, Employee's family, dependents and
beneficiaries, shall be allowed to participate in all employee benefit plans
and programs (including, without limitation, profit sharing, thrift, medical,
health and dental care, life insurance, disability insurance and pension
plans), including improvements or modifications of the same, available to
similarly-situated Company employees on or after the Effective Date, except for
such benefit plans and programs which the Board of Directors, in its sole
discretion, shall adopt for select employees to compensate them for special or
extenuating circumstances.
3.5 OBLIGATIONS OF THE COMPANY REGARDING BENEFIT PLANS. The
Company shall not by reason of this Article 3 be obligated to institute,
maintain or refrain from changing, amending or discontinuing any incentive
compensation or employee benefit plan or program, so long as such actions are
applicable to covered executive officers of the Company generally. Except to
the extent specifically set forth in this Article 3, nothing in this Agreement
is to be construed or interpreted to provide Employee greater rights,
participation, coverage or benefits under such benefit plans or programs than
provided to similarly situated employees pursuant to the terms and conditions
of such benefit plans and programs. Moreover, unless specifically provided for
in a written plan document adopted by the Board of Directors, none of the
benefits or arrangements described in this Article 3 or in Article 4 hereof
shall be secured or funded in any way, and each shall instead constitute an
unfunded and unsecured promise to pay money in the future exclusively from the
general assets of the Company.
ARTICLE 4: EFFECT OF TERMINATION ON COMPENSATION
4.1 BY EXPIRATION. Upon the termination of this Agreement
pursuant to paragraph 2.1 hereof, all compensation and all benefits to Employee
hereunder shall cease and terminate as of the date of such termination. In
such event, Employee shall be entitled to receive his base salary through the
date of such termination, together with a pro rata
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payment of any individual bonuses or incentive compensation earned or accrued
but not yet paid.
4.2 PRIOR TO EXPIRATION. (a) If Employee's employment hereunder
shall be terminated (i) by the Company pursuant to paragraph 2.2 hereof or (ii)
by Employee in breach of this Agreement, all compensation and all benefits to
Employee hereunder shall cease and terminate contemporaneously with such
termination of employment. Employee shall be entitled to receive his base
salary through the date of such termination, but shall not be entitled to any
individual bonuses or incentive compensation not yet paid at the date of such
termination.
(b) If Employee's employment hereunder is terminated (i) by the
Company in breach of this Agreement or (ii) by Employee pursuant to paragraph
2.3 hereof, then (A) all compensation and all benefits to Employee hereunder
shall cease and terminate contemporaneously with such termination of
employment, (B) Employee shall be entitled to receive his base salary through
the date of such termination, together with the full amount of any individual
bonuses or incentive compensation that would have been payable to him for the
year in which such termination occurred pursuant to the terms of the applicable
bonus or incentive compensation plan had he been employed by the Company at the
end of such year, and (C) Employee shall be entitled to be paid a severance
payment equal to two times the total of (x) the amount of his highest annual
base salary plus (y) the amount of his highest annual bonus during the term of
this Agreement. For purposes of the preceding clause (C), if no greater bonus
has been paid to Employee during the term of this Agreement, then the highest
annual bonus shall be deemed to be an amount equal to the maximum bonus
available for payment to any employee of the Company during the term of this
Agreement under the Company's Incentive Compensation Plan.
(c) As a condition to the receipt of any payment under paragraph
4.2(b) hereof, Employee shall first execute a release, in the form established
by the Company, releasing and forever discharging the Company and its
affiliates and the officers, directors, employees and agents of the Company and
its affiliates from any and all claims and from any and all causes of action of
any kind or character, including but not limited to all claims or causes of
action arising out of Employee's employment with the Company (or any of its
affiliates) or the termination of such employment. If Employee is entitled to
and receives the payments provided under paragraph 4.2(b) hereof, performance
of the obligations of the Company thereunder will constitute full settlement of
all claims that Employee might otherwise assert against the Company or its
affiliates on account of the termination of the employment relationship.
4.3 DATE OF PAYMENTS. Any payment payable to Employee under
paragraph 4.2(a) or 4.2(b) hereof shall be paid within 30 days after the date
of termination of Employee's employment hereunder or at such other date as the
parties hereto agree.
4.4 EFFECT OF TERMINATION ON COMPANY PLANS AND PROGRAMS. Except
to the extent specifically provided in this Article 4, the provisions of this
Article 4 shall not affect any
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rights or obligations of the Company or Employee under any employee benefit
plan or program. Notwithstanding the foregoing, Employee shall not be entitled
to any payment that would otherwise be payable to him under any severance plan
or policy of the Company in connection with the termination of his employment
hereunder.
4.5 LIMITATION ON CHANGE OF CONTROL ACTIONS. Notwithstanding the
provisions of Article 3 hereof and the preceding provisions of this Article 4,
any and all payments (including any benefit or transfer of property) in the
nature of compensation to or for the benefit of Employee under any arrangement
which is deemed to be contingent on a change of control for purposes of section
280G of the Internal Revenue Code ("change in control actions") shall be
collectively subject to an overall maximum limit. Such maximum limit shall be
$1.00 less than the largest amount under which no portion of the "change of
control actions" is considered a "parachute payment," within the meaning of
section 280G of the Internal Revenue Code (taking into account all of the
limitations, exceptions and exemptions contained therein). Accordingly, to the
extent that the change of control actions would be considered a parachute
payment, then the portions of such change of control actions shall be reduced
or eliminated in the following order until the remaining change of control
actions with respect to Employee is $1.00 less than the maximum allowable which
would not be considered a parachute payment under the Internal Revenue Code:
(a) first, any cash payment to Employee; and
(b) second, any change of control actions not described in
clause (a) of this paragraph 4.5.
As used in this paragraph 4.5, the term "arrangement" includes any agreement
between Employee and the Company or any affiliate of the Company and any and
all of the Company's and any affiliate's salary, bonus, incentive, compensation
or benefit plans, programs or arrangements, and shall include this Agreement.
4.6 NO DUTY TO MITIGATE LOSSES. Employee shall have no duty to
find new employment following the termination of his employment (a) by Employee
pursuant to paragraph 2.3 hereof or (b) by the Company in breach of this
Agreement. Any salary, remuneration or other amounts received by Employee from
a third party for the providing of personal services (whether by employment or
by functioning as an independent contractor) or which might have been received
by Employee had he sought to provide such services to a third party shall not
reduce the Company's obligation to make any payments to Employee pursuant to
paragraph 4.2(b) hereof or the amount of such payments.
ARTICLE 5: CONFIDENTIAL INFORMATION
5.1 COMPANY INFORMATION. Employee acknowledges that the Company's
business is highly competitive and that the Company's books, records and
documents, the Company's technical information concerning its products,
equipment, services and processes,
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procurement procedures and pricing techniques, the names of and other
information (such as credit and financial data) concerning the Company's
customers and business associates and other proprietary information, including,
but not limited to, systems, procedures, manuals and data as well as financial
information concerning the Company's products and services (including the
revenues, costs or profits associated with any such products and services),
information with respect to the nature and type of the Company's products and
services, the equipment and methods used and preferred by the Company's
customers and the fees paid by such customers, all comprise confidential
business information and trade secrets of the Company which are valuable,
special and unique assets of the Company, which the Company uses in its
business to obtain a competitive advantage over the Company's competitors which
do not know or use this information. Employee further acknowledges that
protection of the Company's confidential business information and trade secrets
against unauthorized disclosure and use is of critical importance to the
Company in maintaining its competitive position. Accordingly, Employee hereby
agrees that he will not, at any time during, and continuing until the second
anniversary of the termination of, his employment hereunder make or permit any
unauthorized disclosure of any confidential business information or trade
secrets of the Company, or make or permit any use thereof, except for the
benefit of, and on behalf of, the Company. For the purposes of this Article 5,
the term "the Company" shall also include affiliates of the Company.
5.2 THIRD PARTY INFORMATION. Employee acknowledges that, as a
result of his employment by the Company, he may from time to time have access
to, or knowledge of, confidential business information or trade secrets of
third parties, such as customers, suppliers, partners, joint venturers and the
like, of the Company. Employee agrees to preserve and protect the
confidentiality of such third party confidential information and trade secrets
to the same extent, and on the same basis, as confidential business information
and trade secrets of the Company.
5.3 RETURN OF DOCUMENTS. All written or magnetic materials,
records and other documents made by, or coming into the possession of, Employee
during the period of his employment by the Company (whether before, on or after
the Effective Date) which contain or disclose the Company confidential business
information or trade secrets shall be and remain the property of the Company.
Upon termination of Employee's employment hereunder for any reason or upon the
request of the Company at any time, Employee promptly shall deliver the same,
and all copies thereof, to the Company (for purposes of this sentence, the term
"the Company" shall not include affiliates of the Company).
5.4 INJUNCTIVE RELIEF. Without intending to limit the remedies
available to the Company and notwithstanding the provisions of paragraph 6.1
hereof, Employee acknowledges that a breach of any of the provisions of this
Article 5 would likely result in material irreparable injury to the Company
which would not, in whole or in part, be compensable in money damages and for
which the Company would have no adequate remedy at law. Accordingly, Employee
agrees that, in the event of such a breach or threat thereof, the Company shall
be entitled to obtain a temporary restraining order and/or a preliminary or
permanent injunction restraining Employee from engaging in activities
-8-
<PAGE> 10
prohibited by this Article 5 or such other relief as may be available to
specifically enforce any of the provisions of this Article 5.
ARTICLE 6: MISCELLANEOUS
6.1 ARBITRATION. Subject to the provisions of paragraph 5.4
hereof, any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Dallas County, Texas
in accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction. Each party hereto shall bear his or its own costs of
arbitration, but if Employee is the prevailing party in such arbitration, he
shall be entitled to recover from the Company as part of any award entered his
reasonable expenses for attorneys' fees and disbursements.
6.2 WITHHOLDING. The Company may withhold from any compensation,
benefits or amounts payable under this Agreement all federal, state, city or
other taxes as may be required pursuant to any law or governmental regulation
or ruling.
6.3 NOTICES. For purposes of this Agreement, all notices and
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, addressed as follows:
If to the Company, to: Hadson Corporation
600 E. John Carpenter Freeway
Suite 201
Irving, Texas 75062-3977
Attention: President
If to Employee, to: Robert P. Capps
600 E. John Carpenter Freeway
Suite 201
Irving, Texas 75062-3977
or to such other address as either such party may furnish to the other in
writing in accordance herewith, except that notices of changes of address shall
be effective only upon receipt.
6.4 APPLICABLE LAW. This Agreement is entered into under, and
shall be governed by, and construed and interpreted in accordance with, the
laws of the State of Texas.
6.5 NO WAIVER. 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
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<PAGE> 11
this Agreement shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
6.6 SEVERABILITY. 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.
6.7 COUNTERPARTS. 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 instrument.
6.8 HEADINGS. The paragraph headings in this Agreement have been
inserted for purposes of convenience and shall not be used for interpretive
purposes.
6.9 AFFILIATE. As used in this Agreement, "affiliate" shall mean
any entity which, directly or indirectly, owns or controls, is owned or
controlled by, or is under common ownership or control with, the Company.
6.10 ASSIGNMENT. The rights and obligations of Employee hereunder
are personal and no right, benefit or obligation of Employee hereunder 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
Company. Subject to the provisions of the preceding sentence, this Agreement
shall be binding upon, and inure to the benefit of, the parties hereto and
their respective heirs, administrators, executors, successors and assigns.
6.11 TERM. This Agreement has a term co-extensive with the term of
employment specified in paragraph 2.1 hereof (without giving effect to the
third sentence thereof), provided that (a) except as otherwise provided herein,
termination shall not affect any right or obligation of any party which is
accrued or vested prior to or upon such termination and (b) the provisions of
Article 5 hereof shall survive the termination of this Agreement.
6.12 ENTIRE AGREEMENT. Except as provided in (a) written policies
and procedures promulgated by the Company that are applicable to executive
officers of the Company, (b) the written benefit plans and programs referenced
in Article 3 hereof or (c) any signed written agreements hereafter executed by
the Company and Employee, this Agreement constitutes the entire agreement of
the parties with regard to such subject matters, and contains all of the
covenants, promises, representations, warranties and agreements between the
parties with respect to such subject matters and replaces and merges previous
agreements and discussions pertaining to the employment relationship between
the Company and Employee. Specifically, but not by way of limitation, the
Original Agreement is hereby cancelled and Employee hereby irrevocably waives
and renounces all of Employee's rights and claims under such Agreement. Any
modification or waiver of any provision of this Agreement will be effective
only if it is in writing and signed by both of the parties hereto.
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<PAGE> 12
IN WITNESS WHEREOF, the Company and Employee have executed this
Agreement effective as of the Effective Date.
HADSON CORPORATION
By: /s/ Greg G. Jenkins,
President
/s/ Robert P. Capps
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<PAGE> 1
EXHIBIT 11.01
COMPUTATION OF FULLY DILUTED EARNINGS/LOSS
PER SHARE
<PAGE> 2
Exhibit 11.01
COMPUTATION OF FULLY DILUTED EARNINGS/LOSS
PER SHARE (1)
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three months ended
March 31,
---------------------
1993 1994
------- ------
<S> <C> <C>
Net income (loss) as reported (1,793) 352
Preferred stock dividend requirements 397 1,378
Fully diluted net loss $(2,190) (1,026)
======= ======
Average number of common shares as
reported (primary) 8,260 25,690
Additional shares assumed issued:
Junior Preferred Stock 5,893
------- ------
Average number of common shares-
fully diluted 14,153 25,690
======= ======
Fully diluted earnings net loss per common
and common equivalent share $ (.15) (.04)
======= ======
</TABLE>
(1) This computation is submitted in accordance with Regulation S-K, item
601(b)(11) although it is contrary to paragraph 10 of APB Opinion No. 15
because it produces an anti-dilutive result.
