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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported):
September 1, 1998
PETROQUEST ENERGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 1-9020 98-0115468
(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
625 E. Kaliste Saloom Road, Suite 400
Lafayette, Louisiana 70508
(Address of Registrant's principal executive offices)
(318) 232-7028
(Registrant's telephone number, including area code)
Optima Petroleum Corporation
#600 595 Home Street
Vancouver, British Columbia V6C2T5
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
Optima Petroleum Corporation, a company originally organized under the
Canada Business Corporation Act (the "Company"), held a special meeting of
shareholders on August 21, 1998 (the "Special Meeting"). The following matters
were acted upon at the Special Meeting and were the subject of a proxy statement
filed by the Company with the Securities and Exchange Commission, which was
mailed to the Company's Shareholders on or about July 20, 1998:
1. The Company's shareholders approved the Plan and Agreement of Merger
by and among the Company, Optima Energy (U.S.) Corporation, a wholly owned
subsidiary of the Company, and Goodson Exploration Company ("Goodson"), NAB
Financial, L.L.C. ("NAB") and Dexco Energy, Inc. ("Dexco"), pursuant to which
the Company acquired 100% of the ownership interests of American Explorer L.L.C.
(the "Merger"), all of which were owned by Goodson, NAB and Dexco. In connection
with the Merger, the Company issued to the owners of Goodson, NAB and Dexco
7,335,001 shares of Company Common Stock (as defined below) and 1,667,001
Contingent Stock Issue Rights (the "CSIR"). The CSIRs entitle the holders to
receive an additional 1,667,001 shares of Company Common Stock at such time as
the trading price for the Company's Common Stock is $5.00 or higher for 20
consecutive trading days.
The shares of Common Stock and CSIRs issued in the Merger were issued
to the following persons, each of whom is an officer and director of the Company
upon completion of the Merger:
CSIRs
-------
Charles T. Goodson 2,567,250 583,450
Alfred J. Thomas II(1) 1,309,298 297,560
Ralph J. Daigle 2,200,500 500,000
----------------------------
(1) Does not include 487,778 shares and 110,856 CSIRs issued to Mr.
Thomas' spouse and an aggregate of 770,175 shares and 175,035 CSIRs issued to
Mr. Thomas' adult children.
In addition, Robert R. Brooksher, who became a director and Chief Financial
Officer and Secretary of the Company upon completion of the Merger, holds a
three year option to acquire 5% of the shares of Common Stock and CSIRs issued
in connection with the Merger.
2. The shareholders approved the Company's continuation and
domestication from a Canadian corporation to a Delaware corporation (the
"Continuation") and
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approved the Company's change of name. Subsequent to the Special Meeting, the
Company filed with the Secretary of State of Delaware a Certificate of
Incorporation (the "Certificate of Incorporation") to effectuate the
Continuation pursuant to Section 388 of the Delaware General Corporate law
changing its jurisdiction of incorporation from a Canadian corporation to a
Delaware corporation, changing its name to "PetroQuest Energy, Inc.", and
adopting a new certificate of incorporation.
3. The following individuals were elected by the shareholders as
additional directors of the Company. Upon completion of the Merger, certain of
these individuals will also serve as the executive officers of the Company as
set forth below. William C. Leuschner and Robert L. Hodgkinson will continue to
serve as directors of the Company after the Merger.
<TABLE>
<S> <C> <C>
Charles T. Goodson -- President, Chief Executive Officer and Director
--
Alfred J. Thomas, II -- Chief Operating Officer and Director
--
Ralph J. Daigle -- Senior Vice President-Exploration and Director
--
Robert R. Brooksher -- Chief Financial Officer, Secretary and Director
--
Daniel G. Fournerat -- Director
--
</TABLE>
4. The shareholders approved a new stock option plan covering 1,800,000
shares of Common Stock, and approved the amendment of 465,000 currently
outstanding options to change their exercise price and expiry date and the
cancellation of all other options outstanding under the Company's prior stock
option plans.
5. The shareholders approved the acquisition of a 5% working interest
in an oil and gas prospect.
As a result of the Merger, the Company's Common Stock will continue to
be listed and traded on the Toronto Stock Exchange and the NASDAQ National
Market. However, the Company's Common Stock will now trade under the symbols
"PQU" and "PQUE", respectively. The Company has also relocated its principal
executive offices to Lafayette, Louisiana. The Company's new address and
telephone number is:
625 E. Kaliste Saloom Road, Suite 400
Lafayette, Louisiana 70508
(318) 232-7028
Pursuant to the new Certificate of Incorporation, the authorized
capital stock as of the Merger consists of 75,000,000 shares of common stock,
par value $0.001 per share (the "Common Stock"), and 5,000,000 shares of
preferred stock, par value $0.001 per share (the "Preferred Stock"). At the time
of the Merger, there will be 18,337,347 shares of issued and outstanding Common
Stock, and no shares of Preferred Stock will be outstanding.
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The following is a description of the Company's capital stock.
COMMON STOCK. Each share of Common Stock is entitled to one vote in any
matter submitted for a vote to the holders of the capital stock of the Company.
The Common Stock does not have cumulative voting rights. Subject to the superior
rights of any series of Preferred Stock, the holders of Common Stock may receive
dividends if, when and as declared by the Board of Directors of the Company (the
"Board of Directors") and, upon liquidation of the Company, are entitled to all
assets remaining after the satisfaction of liabilities. The Common Stock has no
preemptive or other subscription rights.
PREFERRED STOCK. The Board of Directors is empowered, without the
approval of the stockholders, to authorize the issuance of Preferred Stock in
one or more series, to establish the number of shares included in each series,
and to fix the relative rights, powers, preferences and limitations of each
series. As a result, the Board of Directors has the power to afford the holders
of any series of Preferred Stock greater rights, powers, preferences and
limitations than the holders of Common Stock. The ability of the Board of
Directors to establish the rights, powers, preferences and limitations and to
issue Preferred Stock could be used as an anti-takeover device.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) AND (b) All financial statements and pro forma financials required in
connection with the consummation of the Merger have been previously filed by the
Company on a Form 8-K, as amended.
(c) EXHIBITS
4.1 Certificate of Incorporation
4.2 Bylaws
4.3 Form of Certificate of Contingent Stock Issue Right
4.4 Certificate of Domestication
10.1 1998 Incentive Plan
10.2 Employment Agreement -- Charles T. Goodson
10.3 Employment Agreement -- Alfred J. Thomas, II
10.4 Employment Agreement -- Ralph J. Daigle
10.5 Employment Agreement -- Robert R. Brooksher
99.1 Registration Rights Agreement
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SIGNATURE
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.
Date: September 16, 1998
PETROQUEST ENERGY, INC.
(formerly Optima Petroleum Corporation)
By: /s/ ROBERT R. BROOKSHER
----------------------------------
Robert R. Brooksher, Chief Financial
Officer and Secretary
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INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
4.1 Certificate of Incorporation
4.2 Bylaws
4.3 Form of Certificate of Contingent Stock Issue Right
4.4 Certificate of Domestication
10.1 1998 Incentive Plan
10.2 Employment Agreement -- Charles T. Goodson
10.3 Employment Agreement -- Alfred J. Thomas, II
10.4 Employment Agreement -- Ralph J. Daigle
10.5 Employment Agreement -- Robert R. Brooksher
99.1 Registration Rights Agreement
</TABLE>
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EXHIBIT 4.1
CERTIFICATE OF INCORPORATION
OF
PETROQUEST ENERGY, INC.
The undersigned, a natural person acting as incorporator of a
corporation under the General Corporation Law of the State of Delaware, as the
same exists or may hereafter from time to time be amended (the "DGCL"), hereby
makes this Certificate of Incorporation for such corporation.
ARTICLE I
NAME
The name of the corporation is PetroQuest Energy, Inc. (the
"Corporation").
ARTICLE II
REGISTERED OFFICE AND AGENT
The address of its registered office in the State of Delaware is The
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, New
Castle County. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE III
PURPOSES
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the DGCL.
ARTICLE IV
AUTHORIZED CAPITAL STOCK
The aggregate number of shares of all classes of stock which the
Corporation shall have authority to issue is 80,000,000 shares, consisting of:
(i) 75,000,000 shares of common stock, par value $.001 per share (the "Common
Stock"), and (ii) 5,000,000 shares of preferred stock, par value $.001 per share
(the "Preferred Stock"). Shares of any class of capital stock of the Corporation
may be issued for such consideration and for such corporate purposes as the
Board of Directors of the Corporation (the "Board of Directors") may from time
to time determine. Each share of Common Stock shall be entitled to one vote.
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A. Preferred Stock. The Preferred Stock may be divided into and issued
from time to time in one or more series as may be fixed and determined by the
Board of Directors. The relative rights and preferences of the Preferred Stock
of each series shall be such as shall be stated in any resolution or resolutions
adopted by the Board of Directors setting forth the designation of the series
and fixing and determining the relative rights and preferences thereof (a
"Directors' Resolution"). The Board of Directors is hereby authorized to fix and
determine the powers, designations, preferences, and relative, participating,
optional or other rights, including, without limitation, voting powers, full or
limited, preferential rights to receive dividends or assets upon liquidation,
rights of conversion or exchange into Common Stock, Preferred Stock of any
series or other securities, any right of the Corporation to exchange or convert
shares into Common Stock, Preferred Stock of any series or other securities, or
redemption provision or sinking fund provisions, as between series and as
between the Preferred Stock or any series thereof and the Common Stock, and the
qualifications, limitations or restrictions thereof, if any, all as shall be
stated in a Directors' Resolution, and the shares of Preferred Stock or any
series thereof may have full or limited voting powers, or be without voting
powers, all as shall be stated in a Directors' Resolution. Except where
otherwise set forth in the Directors' Resolution providing for the issuance of
any series of Preferred Stock, the number of shares comprising such series may
be increased or decreased (but not below the number of shares then outstanding)
from time to time by like action of the Board of Directors. The shares of
Preferred Stock of any one series shall be identical with the other shares in
the same series in all respects except as to the dates from and after which
dividends thereon shall cumulate, if cumulative.
B. Reacquired Shares of Preferred Stock. Shares of any series of any
Preferred Stock that have been redeemed (whether through the operation of a
sinking fund or otherwise), purchased by the Corporation, or which, if
convertible or exchangeable, have been converted into, or exchanged for, shares
of stock of any other class or classes or any evidences of indebtedness shall
have the status of authorized and unissued shares of Preferred Stock and may be
reissued as a part of the series of which they were originally a part or may be
reclassified and reissued as part of a new series of Preferred Stock or as part
of any other series of Preferred Stock, all subject to the conditions or
restrictions on issuance set forth in the Directors' Resolution providing for
the issuance of any series of Preferred Stock and to any filing required by law.
C. Increase in Authorized Preferred Stock. The number of authorized
shares of Preferred Stock may be increased or decreased by the affirmative vote
of the holders of a majority of the stock of the Corporation entitled to vote
without the separate vote of holders of Preferred Stock as a class.
ARTICLE V
EXISTENCE
The existence of the Corporation is to be perpetual.
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ARTICLE VI
NO PREEMPTIVE RIGHTS
No stockholder shall be entitled, as a matter of right, to subscribe
for or acquire additional, unissued or treasury shares of any class of capital
stock of the Corporation whether now or hereafter authorized, or any bonds,
debentures or other securities convertible into, or carrying a right to
subscribe to or acquire such shares, but any shares or other securities
convertible into, or carrying a right to subscribe to or acquire such shares may
be issued or disposed of by the Board of Directors to such persons and on such
terms as in its discretion it shall deem advisable.
ARTICLE VII
NO CUMULATIVE VOTING
At each election of directors, every stockholder entitled to vote at
such election shall have the right to vote in person or by proxy the number of
shares owned by him for as many persons as there are directors to be elected and
for whose election he has a right to vote. No stockholder shall have the right
to cumulate his votes in any election of directors.
ARTICLE VIII
NO STOCKHOLDER ACTION WITHOUT A MEETING
Except as otherwise required by law, any action required or permitted
to be taken by the stockholders of the Corporation must be effected at an annual
or special meeting of stockholders of the Corporation and may not be effected by
any consent in writing by such stockholders. A special meeting of stockholders
of the Corporation may be called only by the Chairman of the Board, the Chief
Executive Officer, the President or the Board of Directors by the written order
of a majority of the entire Board of Directors, and not by the stockholders
except as otherwise provided by law or the Bylaws of the Corporation ("Bylaws").
ARTICLE IX
BOARD OF DIRECTORS
The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. In addition to the authority and
powers conferred upon the Board of Directors by the DGCL or by the other
provisions of this Certificate of Incorporation (this "Certificate of
Incorporation"), the Board of Directors is hereby authorized and empowered to
exercise all such
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powers and do all such acts and things as may be exercised or done by the
Corporation, subject to the provisions of the DGCL, this Certificate of
Incorporation and the Bylaws; provided, however, that no Bylaws hereafter
adopted by the stockholders of the Corporation, or any amendments thereto, shall
invalidate any prior act of the Board of Directors that would have been valid if
such Bylaws or amendment had not been adopted.
A. Number, Election and Terms of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed from time to
time by a majority of the directors then in office. Each director shall hold
office until the next annual meeting and shall serve until his successor shall
have been duly elected and qualified or until his earlier death, resignation or
removal. Election of directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide.
B. Removal of Directors. No director of the Corporation shall be
removed from office as a director by vote or other action of the stockholders or
otherwise except for cause, and then only by the affirmative vote of the holders
of at least a majority of the voting power of all outstanding shares of capital
stock of the Corporation generally entitled to vote in the election of
directors, voting together as a single class. Except as may otherwise be
provided by law, cause of removal of a director shall be deemed to exist only
if: (i) the director whose removal is proposed has been convicted, or where a
director is granted immunity to testify where another has been convicted, of a
felony by a court of competent jurisdiction and such conviction is no longer
subject to direct appeal; (ii) such director has been found by the affirmative
vote of a majority of the entire Board of Directors at any regular or special
meeting of the Board of Directors called for that purpose or by a court of
competent jurisdiction to have been grossly negligent or guilty of misconduct in
the performance of his duties to the Corporation in a matter of substantial
importance to the Corporation; or (iii) such director has been adjudicated by a
court of competent jurisdiction to be mentally incompetent, which mental
incompetency directly affects his ability as a director of the Corporation.
C. Vacancies. Newly created directorships resulting from any increase
in the number of directors and any vacancies on the Board of Directors resulting
from death, resignation, removal or other cause shall be filled by the
affirmative vote of a majority of the remaining directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such director's successor shall have
been elected and qualified or until his earlier death, resignation or removal.
No decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
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ARTICLE X
INDEMNIFICATION
A. Mandatory Indemnification. Each person who at any time is or was a
director or officer of the Corporation, and is threatened to be or is made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative (a
"Proceeding"), by reason of the fact that such person is or was a director or
officer of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, partner, venturer, proprietor, member,
employee, trustee, agent or similar functionary of another domestic or foreign
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other for-profit or non-profit enterprise, whether the basis of
a Proceeding is an alleged action in such person's official capacity or in
another capacity while holding such office, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the DGCL, or any
other applicable law as may from time to time be in effect (but, in the case of
any such amendment or enactment, only to the extent that such amendment or law
permits the Corporation to provide broader indemnification rights than such law
prior to such amendment or enactment permitted the Corporation to provide),
against all expense, liability and loss (including, without limitation, court
costs and attorneys' fees, judgments, fines, excise taxes or penalties, and
amounts paid or to be paid in settlement) actually and reasonably incurred or
suffered by such person in connection with a Proceeding, and such
indemnification shall continue as to a person who has ceased to be a director or
officer of the Corporation or a director, officer, partner, venturer,
proprietor, member, employee, trustee, agent or similar functionary of another
domestic or foreign corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other for-profit or non-profit
enterprise, and shall inure to the benefit of such person's heirs, executors and
administrators. The Corporation's obligations under this Section A include, but
are not limited to, the convening of any meeting, and the consideration of any
matter thereby, required by statute in order to determine the eligibility of any
person for indemnification.
B. Prepayment of Expenses. Expenses incurred by a director or officer
of the Corporation in defending a Proceeding shall be paid by the Corporation in
advance of the final disposition of such Proceeding to the fullest extent
permitted by, and only in compliance with, the DGCL or any other applicable laws
as may from time to time be in effect, including, without limitation, any
provision of the DGCL which requires, as a condition precedent to such expense
advancement, the delivery to the Corporation of an undertaking, by or on behalf
of such director or officer, to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is not entitled to be
indemnified under Section A of this Article X or otherwise. Repayments of all
amounts so advanced shall be upon such terms and conditions, if any, as the
Corporation's Board of Directors deems appropriate.
C. Vesting. The Corporation's obligation to indemnify and to prepay
expenses under Sections A and B of this Article X shall arise, and all rights
granted to the Corporation's directors and officers hereunder shall vest, at the
time of the occurrence of the transaction or event to which a Proceeding
relates, or at the time that the action or conduct to which such Proceeding
relates was
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first taken or engaged in (or omitted to be taken or engaged in), regardless of
when such Proceeding is first threatened, commenced or completed.
Notwithstanding any other provision of this Certificate of Incorporation or the
Bylaws of the Corporation, no action taken by the Corporation, either by
amendment of this Certificate of Incorporation or the Bylaws of the Corporation
or otherwise, shall diminish or adversely affect any rights to indemnification
or prepayment of expenses granted under Sections A and B of this Article X which
shall have become vested as aforesaid prior to the date that such amendment or
other corporate action is effective or taken, whichever is later.
D. Enforcement. If a claim under Section A or Section B or both
Sections A and B of this Article X is not paid in full by the Corporation within
thirty (30) days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit in a court of competent
jurisdiction against the Corporation to recover the unpaid amount of the claim
and, if successful in whole or in part, the claimant shall also be entitled to
be paid the expense of prosecuting such claim. It shall be a defense to any such
suit (other than a suit brought to enforce a claim for expenses incurred in
defending any Proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the DGCL or other applicable law to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation. The
failure of the Corporation (including its Board of Directors, independent legal
counsel, or stockholders) to have made a determination prior to the commencement
of such suit as to whether indemnification is proper in the circumstances based
upon the applicable standard of conduct set forth in the DGCL or other
applicable law shall neither be a defense to the action nor create a presumption
that the claimant has not met the applicable standard of conduct. The
termination of any Proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which such
person reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal Proceeding, had reasonable cause
to believe that his conduct was unlawful.
E. Nonexclusive. The indemnification provided by this Article X shall
not be deemed exclusive of any other rights to which a person seeking
indemnification may be entitled under any statute, bylaw, other provisions of
this Certificate of Incorporation, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.
F. Permissive Indemnification. The rights to indemnification and
prepayment of expenses which are conferred to the Corporation's directors and
officers by Sections A and B of this Article X may be conferred upon any
employee or agent of the Corporation if, and to the extent, authorized by the
Board of Directors.
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G. Insurance. The Corporation shall have power to purchase and maintain
insurance, at its expense, on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, partner, venturer,
proprietor, member, employee, trustee, agent or similar functionary of another
domestic or foreign corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other for-profit or non-profit
enterprise against any expense, liability or loss asserted against such person
and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the
provisions of this Article X, the Corporation's Bylaws, the DGCL or other
applicable law.
H. Implementing Arrangements. Without limiting the power of the
Corporation to procure or maintain insurance or other arrangement on behalf of
any of the persons as described in Section G of this Article X, the Corporation
may, for the benefit of persons eligible for indemnification by the Corporation,
(i) create a trust fund, (ii) establish any form of self-insurance, (iii) secure
its indemnity obligation by grant of a security interest or other lien on the
assets of the Corporation, or (iv) establish a letter of credit, guaranty or
surety arrangement.
ARTICLE XI
LIMITED DIRECTOR LIABILITY
No director of the Corporation shall be personally liable to the
Corporation or to its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that this Article XI shall not eliminate or limit
the liability of a director: (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL, as it may hereafter be amended from
time to time, for any unlawful payment of a dividend or unlawful stock purchase
or redemption, or (iv) for any transaction from which the director derived an
improper personal benefit.
If the DGCL is amended to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the DGCL, as so amended. No amendment to or repeal of this
Article XI will apply to, or have any effect on, the liability or alleged
liability of any director of the Corporation for or with respect to any acts or
omissions of the director occurring prior to such amendment or repeal.
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ARTICLE XII
BYLAWS
The Board of Directors is expressly authorized to adopt, amend or
repeal the Bylaws of the Corporation, or adopt new Bylaws, without any action on
the part of the stockholders, except as may be otherwise provided by applicable
law or the Bylaws of the Corporation.
ARTICLE XIII
ARRANGEMENTS WITH CREDITORS
Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for the Corporation under
Section 291 of Title 8 of the Delaware Code, order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If the majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders, of the Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of the Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of the Corporation, as the case
may be, and also on the Corporation.
ARTICLE XIV
INITIAL BOARD OF DIRECTORS
The names and mailing addresses of the initial members of the Board of
Directors are:
Charles T. Goodson
625 East Kaliste Saloom Road
Lafayette, Louisiana 70508
Alfred J. Thomas, II
625 East Kaliste Saloom Road
Lafayette, Louisiana 70508
Ralph J. Daigle
625 East Kaliste Saloom Road
Lafayette, Louisiana 70508
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Robert R. Brooksher
625 East Kaliste Saloom Road
Lafayette, Louisiana 70508
Daniel G. Fournerat
Onebane, Bernard, Torian,
Diaz, McNamara & Abell
Suite 600, Versailles Centre
102 Versailles Boulevard
Lafayette, Louisiana 70502
William C. Leuschner
Optima Petroleum Corporation
600-595 Howe Street
Vancouver, B.C.
Canada, V6C 2T5
Robert L. Hodgkinson
Optima Petroleum Corporation
600-595 Howe Street
Vancouver, B.C.
Canada, V6C 2T5
ARTICLE XV
INCORPORATOR
The name and mailing address of the incorporator, the powers and
authority of whom shall cease upon the filing of this Certificate of
Incorporation, is:
Robert G. Reedy, Esq.
Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002
ARTICLE XVI
DOMESTICATION
The Corporation (formerly named "Lathwell Resources" until February 5,
1988, and "Optima Energy Corporation" until July 9, 1992 and "Optima Petroleum
Corporation" until the date of filing of this Certificate of Incorporation) was
incorporated under the laws of British Columbia, Canada, on April 11, 1983, and
was continued as a federal Canadian corporation on June 14, 1994. Simultaneously
with the filing of this Certificate of Incorporation, the Corporation has filed
its Certificate of Domestication with the Secretary of State of the State of
Delaware in order to
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domesticate itself in the State of Delaware. This Certificate of Incorporation
amends and supersedes in all respects the previously adopted Articles of
Incorporation, as amended to date, of the Corporation. Each share of the common
stock of the Corporation outstanding on the effective date of this Certificate
of Incorporation is hereby converted into one share of the Common Stock without
any further action by the Corporation or any stockholder, and the currently
outstanding share certificate representing such share of common stock
outstanding on the effective date of this Certificate of Incorporation shall
represent one share of the Common Stock until such share certificate is
surrendered for transfer or reissue.
ARTICLE XVII
SECTION 203 ELECTION
The Corporation expressly elects not to be governed by Section 203 of
the DGCL.
I, the undersigned, being the incorporator, for the purpose of forming
a corporation pursuant to the DGCL, do make this Certificate of Incorporation,
hereby declaring under the penalties of perjury that this is my act and deed and
that the facts stated herein are true, and accordingly has executed this
Certificate of Incorporation on August 21, 1998.
/s/ Robert G. Reedy
-----------------------------------
Robert G. Reedy, Esq.
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EXHIBIT 4.2
BYLAWS
OF
PETROQUEST ENERGY, INC.
ARTICLE I
OFFICES
Section 1. Principal Office. The principal office of PetroQuest
Energy, Inc. (the "Corporation") will be in Lafayette, Louisiana. The Board of
Directors of the Corporation (the "Board of Directors") may elect to relocate
the principal office of the Corporation from time to time as it shall deem
necessary and proper.
Section 2. Other Offices. The Corporation may also have offices at
such other places within or without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of the stockholders will
be held at the principal office of the Corporation, or at such other place
within or without the State of Delaware as may be determined by the Board of
Directors and stated in the notice of the meeting or in a duly executed waiver
of notice thereof.
Section 2. Annual Meetings. An annual meeting of Stockholders shall
be held for the election of directors at such date, time and place, either
within or without the State of Delaware, as may be designated by resolution of
the Board of Directors from time to time; provided that each successive annual
meeting shall be held on a date within 13 months after the date of the preceding
annual meeting. Only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before an annual
meeting, business must be (a) specified in the notice of meeting given by or at
the direction of the Board of Directors, (b) otherwise properly brought before
the meeting or at the direction of the Board of Directors, or (c) otherwise
properly brought before the meeting by a stockholder of the Corporation. For
business to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the Secretary of
the Corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation, no
less than 60 days nor more than 120 days prior to the anniversary date of the
immediately preceding annual meeting; provided, however, that in the event that
the date of the annual meeting is changed by more than 30 days from such
anniversary date, notice by the
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stockholder to be timely must be received not later than the close of business
on the tenth day following the earlier of the date on which a written statement
setting forth the date of such meeting was mailed to stockholders or the date on
which it is first disclosed to the public. A stockholder's notice to the
Secretary shall set forth as to each matter the stockholder proposes to bring
before the annual meeting: (a) a brief description of the business desired to be
brought before the annual meeting, (b) the name and address, as they appear on
the Corporation's books, of the stockholder proposing such proposal, (c) the
class and number of shares of the Corporation that are beneficially owned by the
stockholder, and (d) any material interest of the stockholder in such business.
In addition, if the stockholder's ownership of shares of the Corporation, as set
forth in the notice, is solely beneficial, documentary evidence of such
ownership must accompany the notice. Notwithstanding anything else in these
Bylaws to the contrary, no business shall be conducted at an annual meeting
except in accordance with the procedures set forth in this Section 2. The
presiding officer of an annual meeting shall, if the facts warrant, determine
and declare to the meeting that any business that was not properly brought
before the meeting is out of order and shall not be transacted at the meeting.
Section 3. Notice of Annual Meeting. Written or printed notice of
the annual meeting, stating the place, day and hour thereof, will be served upon
or mailed to each stockholder entitled to vote thereat at such address as
appears on the books of the Corporation, not less than ten days nor more than
sixty days before the date of the meeting.
Section 4. Special Meeting. Except as otherwise required by law or
the Certificate of Incorporation, special meetings of the stockholders of the
Corporation may be called only by the Chairman of the Board of Directors (the
"Chairman of the Board"), the Chief Executive Officer, the President, the Board
of Directors by the written order of a majority of the entire Board of Directors
or upon the written request of stockholders owning not less than two-thirds of
the shares of capital stock of the Corporation issued, outstanding and entitled
to vote at such meeting delivered to the President or Secretary that states the
purpose or purposes of the proposed meeting.
Section 5. Notice of Special Meeting. Written notice of a special
meeting of stockholders, stating the place, day and hour and purpose or purposes
thereof, will be served upon or mailed to each stockholder entitled to vote
thereat at such address as appears on the books of the Corporation, not less
than ten days nor more than sixty days before the date of the meeting.
Section 6. Business at Special Meeting. Business transacted at all
special meetings will be confined to the purpose or purposes stated in the
notice.
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Section 7. Stockholder List. At least ten days before each meeting
of stockholders, a complete list of the stockholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, will be prepared by the
Secretary. Such list, for a period of ten days prior to such meeting, will be
kept on file at the registered office of the Corporation and will be subject to
inspection by any stockholder at any time during usual business hours. Such list
will also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any stockholder during the whole time of
the meeting.
Section 8. Quorum. The holders of at least one-half of the shares
of capital stock issued and outstanding and entitled to vote thereat,
represented in person or by proxy, will constitute a quorum at all meetings of
the stockholders for the transaction of business except as otherwise provided by
law, the Certificate of Incorporation or these Bylaws. If, however, such quorum
is not present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, represented in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
any such adjourned meeting at which a quorum is represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 9. Voting. Unless otherwise provided by law, the
Certificate of Incorporation or these Bylaws, each stockholder will have one
vote for each share of stock having voting power, registered in his name on the
books of the Corporation. When a quorum is present at any meeting, the vote of
the holders of a majority of the shares having voting power represented in
person or by proxy will decide any question brought before such meeting, unless
the question is one upon which, by express provision of law, the Certificate of
Incorporation or these Bylaws, a different vote is required, in which case such
express provision will govern and control the decision of such question. In the
case of a matter submitted for a vote of the stockholders as to which a
stockholder approval requirement is applicable under the stockholder approval
policy of any stock exchange or quotation system on which the capital stock of
the Corporation is traded or quoted, the requirements under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any provisions of the
Internal Revenue Code, in each case for which no higher voting requirement is
specified by the DGCL, the Certificate of Incorporation or these Bylaws, the
vote required for approval shall be the requisite vote specified in such
stockholder approval policy, the Exchange Act or Internal Revenue Code
provision, as the case may be (or the highest such requirement if more than one
is applicable). Unless otherwise provided in the Certificate of Incorporation or
these Bylaws in accordance with the DGCL, directors shall be elected by a
plurality of the votes cast by the holders of
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outstanding shares of capital stock of the Corporation entitled to vote in the
election of directors at a meeting of stockholders at which a quorum is present.
Section 10. Proxies. At any meeting of the stockholders every
stockholder having the right to vote will be entitled to vote in person, or by
proxy appointed by an instrument in writing subscribed by such stockholder or
his duly authorized attorney in fact and bearing a date not more than eleven
months prior to said meeting.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Powers. The business and affairs of the Corporation will
be managed by a Board of Directors. The Board of Directors may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
law, by the Certificate of Incorporation or these Bylaws directed or required to
be exercised or done by the stockholders.
Section 2. Number of Directors. The number of directors which
constitute the whole Board of Directors will be no more than twelve, as such
number shall be determined by resolution of the Board of Directors from time to
time; provided, however, that no decrease in the number of directors shall have
the effect of shortening the term of any incumbent director; provided further,
however, that from and after the first date as of which the Corporation has a
class or series of capital stock registered under the Exchange Act, the number
of directors which shall constitute the whole Board of Directors shall be not
less than three.
Section 3. Nomination. Only persons who are nominated in accordance
with the procedures set forth in these Bylaws shall be eligible to serve as
directors. Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of stockholders (a) by or at the direction
of the Board of Directors or (b) by any stockholder of the Corporation who is a
stockholder of record at the time of giving of notice provided for in this
Section 3, who shall be entitled to vote for the election of directors at the
meeting and who complies with the notice procedures set forth in this Section 3.
Nominations by stockholders shall be made pursuant to timely notice
in writing to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to or mailed and received at the principal executive
offices of the Corporation (a) in the case of an annual meeting, not less than
60 days nor more than 120 days prior to the first anniversary of the preceding
year's annual meeting; provided, however, that in the event that the date of the
annual meeting is changed by more than 30 days from such anniversary date,
notice by the
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stockholder to be timely must be so received not later than the close of
business on the tenth day following the earlier of the date on which a written
statement setting forth the date of such meeting was mailed to stockholders or
the date on which it is first disclosed to the public, and (b) in the case of a
special meeting at which directors are to be elected, not later than the close
of business on the tenth day following the earlier of the date on which a
written statement setting forth the date of such meeting was mailed to
stockholders or the date on which it is first disclosed to the public. Such
stockholder's notice shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or reelection as a director all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Exchange Act (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); (b) as to the stockholder giving the notice
(i) the name and address, as they appear on the Corporation's books, of such
stockholder and (ii) the class and number of shares of the Corporation which are
beneficially owned by such stockholder and which are owned of record by such
stockholder; and (c) as to the beneficial owner, if any, on whose behalf the
nomination is made, (i) the name and address of such person and (ii) the class
and number of shares of the Corporation which are beneficially owned by such
person. At the request of the Board of Directors, any person nominated by the
Board of Directors for election as a director shall furnish to the Secretary of
the Corporation that information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee.
The presiding officer of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by this Section 3 and he shall so
declare to the meeting, and the defective nomination shall be disregarded.
Section 4. Election and Term. Subject to the requirements of the
Certificate of Incorporation, the directors of each class shall be elected at
the annual meeting of stockholders, except as provided in Section 5, and each
director elected shall hold office until the expiration of his term and until
his successor shall be elected and shall qualify. Directors need not be
residents of Delaware or stockholders of the Corporation.
Section 5. Vacancies. If any vacancy occurs in the Board of
Directors caused by death, resignation, retirement, disqualification, or removal
from office of any director, or otherwise, or if any new directorship is created
by an increase in the authorized number of directors, a majority of the
directors then in office, though less than a quorum, or a sole remaining
director, may choose a successor or fill the newly created directorship; and a
director so chosen shall hold office
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until his term expires and until his successor shall be duly elected and shall
qualify, unless sooner displaced.
Section 6. Resignation; Removal. Any director may resign at any
time. Unless otherwise prescribed by law or the Certificate of Incorporation, a
director may be removed from office only for cause and then only by the
affirmative vote of the holders of at least a majority of the voting power of
all outstanding shares of capital stock of the Corporation generally entitled to
vote in the election of directors, voting together as a single class. Except as
may otherwise be provided by law, cause of removal of a director shall be deemed
to exist only if: (i) the director whose removal is proposed has been convicted,
or where a director is granted immunity to testify where another has been
convicted, of a felony by a court of competent jurisdiction and such conviction
is no longer subject to direct appeal; (ii) such director has been found by the
affirmative vote of a majority of the entire Board of Directors at any regular
or special meeting of the Board of Directors called for that purpose or by a
court of competent jurisdiction to have been grossly negligent or guilty of
misconduct in the performance of his duties to the Corporation in a matter of
substantial importance to the Corporation; or (iii) such director has been
adjudicated by a court of competent jurisdiction to be mentally incompetent,
which mental incompetency directly affects his ability as a director of the
Corporation.
ARTICLE IV
MEETINGS OF THE BOARD
Section 1. First Meeting. The Board of Directors may hold its first
meeting for the purpose of organization and the transaction of business, if a
quorum is present, immediately after and at the same place as the annual meeting
of the stockholders, and no notice of such meeting shall be necessary; or the
Board of Directors may meet at such place and time as is fixed by the consent in
writing of all the directors.
Section 2. Regular Meetings. Regular meetings of the Board of
Directors may be held at such time and place either within or without the State
of Delaware and with such notice or without notice as is determined from time to
time by the Board of Directors.
Section 3. Special Meetings. Special meetings of the Board of
Directors may be called by the President or the Chairman of the Board on one
days notice to each director, either personally or by mail or telegram. Special
meetings will be called by the President or the Chairman of the Board in like
manner and on like notice upon the written request of a majority of the Board of
Directors.
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Section 4. Quorum and Voting. At all meetings of the Board of
Directors, a majority of the directors will be necessary and sufficient to
constitute a quorum for the transaction of business; and the act of a majority
of the directors present at any meeting at which there is a quorum will be the
act of the Board of Directors, except as may be otherwise specifically provided
by law, the Certificate of Incorporation or these Bylaws. If a quorum is not
present at any meeting of directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present.
Section 5. Telephone Meetings. The Board of Directors may hold
meetings in any manner permitted by law. Without limitation, at any meeting of
the Board of Directors, a director may attend by telephone, radio, television,
interactive media or similar means of communication by means of which all
participants can hear each other which permits him to participate in the
meeting, and a director so attending will be deemed present at the meeting for
all purposes including the determination of whether a quorum is present.
Section 6. Action by Written Consent. Any action required or
permitted to be taken by the Board of Directors or any committee of the Board of
Directors under applicable statutory provisions, the Certificate of
Incorporation, or these Bylaws, may be taken without a meeting if a consent in
writing, setting forth the action so taken, is signed by all the members of the
Board of Directors or such committee, as the case may be, and filed with the
minutes of the meetings of the Board of Directors or such committee, as the case
may be.
ARTICLE V
COMMITTEES
Section 1. Committees of Directors. The Board of Directors may
establish an Audit Committee and a Compensation Committee, and may establish an
Executive Committee and such other committees as may be established by
resolution of a majority of the whole Board of Directors. Each of such
committees shall consist of one or more members of the Board of Directors and
shall have a chairman that is selected by the Board of Directors. Members of
committees of the Board of Directors shall be elected annually by vote of a
majority of the Board of Directors. The Chief Executive Officer shall be an
ex-officio nonvoting member of each committee (except the Audit and Compensation
Committees) of which he is not an official voting member. With respect to any
committee (including the Audit and Compensation Committees) of which the Chief
Executive Officer is not an official voting member, the Chief Executive Officer
shall be given notice of all committee meetings at the same time notice is given
to committee members, and the Chief Executive Officer shall be afforded the
opportunity to speak at the committee meeting. Presence of a majority of the
committee members (not
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counting any ex-officio nonvoting members) shall constitute a quorum. Committees
may act by majority vote of the voting members present at a meeting. Each of
such committees shall have and may exercise such of the powers of the Board of
Directors in the management of the business and affairs of the Corporation as
may be provided in these Bylaws or by resolution of the Board of Directors. Each
of such committees may authorize the seal of the Corporation to be affixed to
any document or instrument. The Board of Directors may designate one or more
directors as alternate members of any such committee, who may replace any absent
or disqualified member at any meeting of such committee. Meetings of committees
may be called by the chairman of the committee by written, telegraphic or
telephonic notice to all members of the committee and the Chief Executive
Officer and shall be at such time and place as shall be stated in the notice of
such meeting. Any member of a committee may participate in any meeting by means
of conference telephone or similar communications equipment. In the absence or
disqualification of a member of any committee the chairman of such committee
may, if deemed advisable, appoint another member of the Board of Directors to
act at the meeting in the place of the disqualified or absent member. The
chairman of the committee may fix such other rules and procedures governing
conduct of meetings as he shall deem appropriate.
Section 2. Audit Committee. The Audit Committee shall consist of
not less than two members of the Board of Directors. The Audit Committee shall
be responsible for recommending to the entire Board of Directors engagement and
discharge of independent auditors of the financial statements of the
Corporation, shall review the professional service provided by the independent
auditors, shall review the independence of independent auditors, shall review
with the auditors the plan and results of the auditing engagement, shall
consider the range of audit and non-audit fees, shall review the adequacy of the
Corporation's system of internal audit controls, shall review the results of
procedures for internal auditing and shall consult with the internal auditor of
the Corporation with respect to all aspects of the Corporation's internal
auditing program. In addition, the Audit Committee shall direct and supervise
special investigations as deemed necessary by the Audit Committee.
Section 3. Compensation Committee. The Compensation Committee shall
consist of not less than two members of the Board of Directors. The Compensation
Committee shall recommend to the Board of Directors the compensation to be paid
to officers and key employees of the Corporation and the compensation of the
Board of Directors. Except as otherwise provided in any specific plan adopted by
the Board of Directors, the Compensation Committee shall be responsible for
administration of executive compensation plans, stock option plans and other
forms of direct or indirect compensation of officers and key employees, and each
member of the Compensation Committee shall have the power and authority to
execute and bind the Corporation to such documents,
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agreements and instruments related to such plans and compensation as are
approved by the Compensation Committee. In the alternative, the Compensation
Committee may authorize any officer of the Corporation to execute such
documents, agreements and instruments on behalf of the Corporation. In addition,
the Compensation Committee shall review levels of pension benefits and insurance
programs for officers and key employees.
Section 4. Other Committees. The Board of Directors may similarly
create other committees for such terms and with such powers and duties as the
Board of Directors deems appropriate except as provided to the contrary by law,
the Certificate of Incorporation, or these Bylaws.
Section 5. Advisory Directors. The Board of Directors may, by
majority vote, appoint one or more advisory directors. Advisory directors shall
serve at the Board of Directors' convenience solely to advise the Board of
Directors, and shall have no formal responsibilities. No advisory director shall
be entitled to vote at meetings of the Board of Directors, nor shall any
advisory director be counted when determining whether there is a quorum at
meetings of the Board of Directors. Advisory directors shall not be, by virtue
of their position as advisory directors, agents of the Corporation, and they
shall not have the power to bind the Corporation.
ARTICLE VI
COMPENSATION OF DIRECTORS
Directors, as such, shall receive such compensation for their
services and such reimbursement of expenses as shall be determined by the Board
of Directors.
ARTICLE VII
NOTICES
Section 1. Methods of Notice. Whenever any notice is required to be
given to any stockholder or director under the provisions of any law, the
Certificate of Incorporation or these Bylaws, it will not be construed to
require personal notice, but such notice may be given in writing by mail
addressed to such stockholder or director at such address as appears on the
books of the Corporation, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail with postage
thereon prepaid. Notice to directors may also be given by telegram, by
facsimile, by telephone or in person, and notice given by such means shall be
deemed given at the time it is delivered.
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Section 2. Waiver of Notice. Whenever any notice is required to be
given to any stockholder or director under the provisions of any law, the
Certificate of Incorporation or these Bylaws, a waiver thereof in writing signed
by the person or persons entitled to said notice, whether before or after the
time stated therein, will be deemed equivalent to the giving of such notice.
Attendance at any meeting will constitute a waiver of notice thereof except as
otherwise provided by law.
ARTICLE VIII
OFFICERS
Section 1. Executive Officers. The officers of the Corporation will
consist of either a Chief Executive Officer or a President, Vice President and
Secretary, each of whom shall be elected by the Board of Directors. The Board of
Directors may also elect a Chairman of the Board, a Chief Executive Officer, a
Chief Operating Officer, additional vice presidents, a Treasurer, a Controller
and one or more assistant secretaries and assistant treasurers. Any two or more
offices may be held by the same person.
Section 2. Election and Qualification. The Board of Directors at
its first meeting after each annual meeting of stockholders will elect the
President, one or more Vice Presidents, a Secretary and a Treasurer, none of
whom need be a member of the Board of Directors.
Section 3. Other Officers and Agents. The Board of Directors may
elect or appoint such other officers, assistant officers and agents as it deems
necessary, who will hold their offices for such terms and shall exercise such
powers and perform such duties as determined from time to time by the Board of
Directors.
Section 4. Salaries. The salaries of all officers of the
Corporation will be fixed by the Board of Directors except as otherwise directed
by the Board of Directors.
Section 5. Term, Removal and Vacancies. The officers of the
Corporation will hold office until their resignation or their successors are
chosen and qualify. Any officer, agent or member of the Executive Committee
elected or appointed by the Board of Directors may be removed at any time by the
Board of Directors; provided, however, that such removal shall be without
prejudice to the contract rights, if any, of such removed party. If any such
office becomes vacant for any reason, the vacancy will be filled by the Board of
Directors.
Section 6. Chairman of the Board. The Chairman of the Board, if one
is elected, shall preside at meetings of the Board of Directors and stockholders
and shall have such other powers and duties as may from time to time be
prescribed by duly adopted resolutions of the Board of Directors.
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Section 7. Chief Executive Officer. The Chief Executive Officer, if
one is elected, shall preside at meetings of the Board of Directors and
stockholders if there is no Chairman of the Board, and shall supervise and have
overall responsibility for the business, administration and operations of the
Corporation. In general, he shall perform all duties as from time to time may be
assigned to him by the Board of Directors. He shall from time to time make such
reports of the affairs of the Corporation as the Board of Directors may require.
Section 8. President. The President, if one is elected, shall,
subject to the Board of Directors, have general executive charge, management and
control of the properties and operations of the Corporation in the ordinary
course of its business with all such powers with respect to such
responsibilities including the powers of general manager; and the president
shall see that all orders and resolutions of the Board of Directors are carried
into effect. The president shall have such other powers and duties as may from
time to time be prescribed by duly adopted resolution of the Board of Directors.
Section 9. Chief Operating Officer. The Chief Operating Officer, if
one is elected, shall perform such duties as the Board of Directors and Chief
Executive Officer or President, if one or the other is elected, may prescribe.
Section 10. Vice President. The Vice Presidents in the order
determined by the Board of Directors will, in the absence or disability of the
President, perform the duties and exercise the powers of the President, and will
perform such other duties as the Board of Directors and President may prescribe.
Section 11. Secretary. The Secretary will attend all meetings of
the Board of Directors and all meetings of the stockholders and record all votes
and the minutes of all proceedings in a book to be kept for that purpose and
will perform like duties for the standing committees when required. He will
give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, and will perform such other duties
as may be prescribed by the Board of Directors and President. He will keep in
safe custody the seal of the Corporation and, when authorized by the Board of
Directors, affix the same to any instrument requiring it, and when so affixed it
shall be attested by his signature or by the signature of an assistant
secretary.
Section 12. Assistant Secretaries. The assistant secretaries in the
order determined by the Board of Directors will perform, in the absence or
disability of the Secretary, the duties and exercise the powers of the Secretary
and will perform such other duties as the Board of Directors and President may
prescribe.
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Section 13. Treasurer. The Treasurer will have the custody of the
corporate funds and securities and will keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and will
deposit all monies and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He will disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and will
render to the Board of Directors and President, whenever they may require it, an
account of all of his transactions as Treasurer and of the financial condition
of the Corporation.
Section 14. Assistant Treasurers. The Assistant Treasurers in the
order determined by the Board of Directors, in the absence or disability of the
Treasurer, perform the duties and exercise the powers of the Treasurer and will
perform such other duties as the Board of Directors and President may prescribe.
Section 15. Officer's Bond. If required by the Board of Directors,
any officer will give the Corporation a bond (to be renewed as the Board of
Directors may require) in such sum and with such surety or sureties as is
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
ARTICLE IX
SHARES AND STOCKHOLDERS
Section 1. Certificates Representing Shares. The certificates
representing shares of capital stock of the Corporation will be numbered and
entered in the books of the Corporation as they are issued. They will exhibit
the holder's name and number of shares and will be signed by the Chief Executive
Officer, President or Vice-President and the Secretary or an Assistant
Secretary. The signature of any such officer may be facsimile if the certificate
is countersigned by a transfer agent or registered by a registrar, other than
the Corporation itself or an employee of the Corporation. In case any officer
who has signed or whose facsimile signature has been placed upon such
certificate has ceased to be such officer before such certificate is issued, it
may be issued by the Corporation with the same effect as if he were such officer
at the date of its issuance.
Section 2. Transfer of Shares. Upon surrender to the Corporation of
a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it will be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books. Notwithstanding
the
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foregoing, no transfer will be recognized by the Corporation if such transfer
would violate federal or state securities laws, the Certificate of
Incorporation, or any stockholders' agreements which may be in effect at the
time of the purported transfer. The Corporation may, prior to any such transfer,
require an opinion of counsel to the effect that any such transfer does not
violate applicable securities laws requiring registration or an exemption from
registration prior to any such transfer.
Section 3. Fixing Record Date. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of stockholders for any other proper purpose, the
Board of Directors may provide that the stock transfer books be closed for a
stated period but not to exceed, in any case, sixty days. If the stock transfer
books are closed for the purpose of determining stockholders entitled to notice
of or to vote at a meeting of stockholders, such books must be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date as the record
date for any such determination of stockholders, such date, in any case, to be
not more than sixty days and, in case of a meeting of stockholders, not less
than ten days prior to the date on which the particular action requiring such
determination of stockholders is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of stockholders
entitled to notice of or to vote at a meeting of stockholders, or stockholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, will be the record date
for such determination of stockholders. When a determination of stockholders
entitled to vote at any meeting of stockholders has been made as herein
provided, such determination will apply to any adjournment thereof except where
the determination has been made through the closing of stock transfer books and
the stated period of closing has expired.
Section 4. Registered Stockholders. The Corporation is entitled to
recognize the exclusive right of a person registered on its books as the owner
of the share to receive dividends, and to vote as such owner, and for all other
purposes as such owner; and the Corporation is not bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it has express or other notice thereof, except
as otherwise provided by the laws of Delaware.
Section 5. Lost Certificate. The Board of Directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate to be
13
<PAGE> 14
lost or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representatives, to advertise the same
in such manner as it shall require and/or give the Corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost or
destroyed.
ARTICLE X
GENERAL
Section 1. Dividends. The Board of Directors may from time to time
declare, and the Corporation pay, dividends on its outstanding shares of capital
stock in cash, in property, or in its own shares, except when the declaration or
payment thereof would be contrary to law, the Certificate of Incorporation or
these Bylaws. Such dividends may be declared at any regular or special meeting
of the Board of Directors, and the declaration and payment will be subject to
all applicable provisions of law, the Certificate of Incorporation and these
Bylaws.
Section 2. Reserves. Before payment of any dividend, there may be
set aside out of any funds of the Corporation available for dividends such sum
or sums as the Board of Directors from time to time, in its absolute discretion,
deems proper as a reserve fund to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the Board of Directors may determine to be in the
interest of the Corporation, and the Board of Directors may modify or abolish
any such reserve in the manner in which it was created.
Section 3. Directors' Annual Statement. The Board of Directors will
present at each annual meeting and when called for by vote of the stockholders
at any special meeting of the stockholders, a full and clear statement of the
business and condition of the Corporation.
Section 4. Checks. All checks or demands for money and notes of the
Corporation will be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 5. Corporate Records. The Corporation will keep at its
registered office or principal place of business, or at the office of its
transfer agent or registrar, a record of its stockholders giving the names and
addresses of all stockholders and the number and class of shares held by each.
All other books and records of the Corporation may be kept at such place or
places within or without the State of Delaware as the Board of Directors may
from time to time determine.
14
<PAGE> 15
Section 6. Seal. The corporate seal will have inscribed thereon the
name of the Corporation. The seal may be used by causing it or a facsimile
thereof to be impressed, affixed or reproduced.
Section 7. Amendment. The Board of Directors shall have the power
to make, alter, amend and repeal the Bylaws. Any Bylaws made by the Board of
Directors under the powers conferred hereby may be altered, amended or repealed
by the directors or by the stockholders; provided, however, that the Bylaws
shall not be altered, amended or repealed and no provision inconsistent
therewith shall be adopted by stockholder action without the affirmative vote of
at least two-thirds of the voting power of the then outstanding shares entitled
to vote generally in the election of directors, voting together as a single
class.
Section 8. Indemnification. Each director, officer and former
director or officer of the Corporation, and any person who may have served or
who may hereafter serve at the request of the Corporation as a director or
officer of another corporation in which it owns shares of capital stock or of
which it is a creditor, is hereby indemnified by the Corporation against
expenses actually and necessarily incurred by him in connection with the defense
of any action, suit or proceeding in which he is made a party by reason of being
or having been such director or officer, except in relation to matters as to
which he shall be adjudged in such action, suit or proceeding to be liable for
negligence or misconduct in the performance of duty. Such indemnification will
not be deemed exclusive of any other rights to which such director, officer or
other person may be entitled under any agreement, vote of stockholders, or
otherwise. Without limitation, nothing in this section shall limit any
indemnification provisions in the Certificate of Incorporation.
Adopted August 26, 1998
15
<PAGE> 1
EXHIBIT 4.3
No.
---------------------------
CERTIFICATE OF CONTINGENT INTEREST
IN COMMON STOCK $0.001 PAR VALUE OF
OPTIMA PETROLEUM CORPORATION
ISSUED PURSUANT TO PLAN AND AGREEMENT OF MERGER
DATED AS OF
FEBRUARY __, 1998,
BY AND AMONG
OPTIMA PETROLEUM CORPORATION,
OPTIMA ENERGY (U.S.) CORPORATION,
GOODSON EXPLORATION COMPANY,
NAB FINANCIAL, L.L.C.,
DEXCO ENERGY, INC. and
AMERICAN EXPLORER, L.L.C.
READ THIS CERTIFICATE CAREFULLY
THIS CERTIFICATE IS NOT
TRANSFERABLE OR ASSIGNABLE EXCEPT AS HEREIN PROVIDED
This is to certify that ______________________ is the registered holder
of _____________ Units of Contingent Interest with respect to shares of Common
Stock, $0.001 par value, of Optima Petroleum Corporation, a Delaware corporation
("Optima Common Stock"), issued pursuant to the provisions of the Plan and
Agreement of Merger dated as of February __, 1998. Each Unit of Contingent
Interest represents the right to receive the number of shares of Optima Common
Stock, if any, that may be distributable upon the terms and subject to the
conditions hereinafter set forth.
OPTIMA PETROLEUM CORPORATION
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Dated: , 1998
------------
<PAGE> 2
This Certificate is one of the Contingent Interest Certificates for an aggregate
of 1,667,001 Units of Contingent Interest ("Contingent Stock Issue Rights")
issued pursuant to the Plan and Agreement of Merger (the "Merger Agreement")
dated as of February ___, 1998, among Optima Petroleum Corporation, a Delaware
corporation and previously a corporation constituted under the Canadian Business
Corporation Act ("Optima"), Optima Energy (U.S.) Corporation, a Louisiana
corporation and wholly-owned subsidiary of Optima and previously a Nevada
corporation ("Acquisition Subsidiary"), Goodson Exploration Corporation, a
Louisiana corporation ("Goodson"), NAB Financial, L.L.C., a Louisiana limited
liability company ("NAB"), Dexco Energy, Inc., a Louisiana corporation ("Dexco")
(Goodson, NAP and Dexco collectively referred to herein as the "Target
Corporations") and American Explorer, L.L.C., a Louisiana limited liability
company and whose membership interests are 100% owned by the Target Corporations
(the "Operating Company"), and pursuant to which the Target Corporations were
merged (the "Mergers") with and into Acquisition Subsidiary. The terms and
conditions upon which the registered holder of this Certificate may become
entitled to shares of common stock, $0.001 par value, of Optima ("Optima Common
Stock") are set forth below. Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Merger Agreement.
SECTION 1. RIGHTS TO OPTIMA COMMON STOCK
Subject to the terms hereof, and subject to the satisfaction of the
conditions provided herein, each Unit of Contingent Stock Issue Rights shall
entitle the holder thereof to receive, and shall automatically be converted into
that number of shares of Optima Common Stock, if any, determined as follows:
(i) if an Optima Triggering Event (as hereinafter defined)
occurs at any time on or before the third anniversary of the date of
issuance of these Contingent Stock Issue Rights (the "Third
Anniversary"), each Unit of Contingent Stock Issue Right shall entitle
the holder thereof to receive one share of Optima Common Stock on the
date the Optima Triggering Event occurs; and
(ii) if an Optima Triggering Event does not occur on or before
the Third Anniversary, then this Contingent Stock Issue Right shall not
entitle the holder to receive any shares of Optima Common Stock and
these Contingent Stock Issue Rights shall terminate and be of no
further force or effect.
For the purposes of this Section 1:
(i) an Optima Triggering Event shall have occurred if the
Optima Common Stock has a Fair Market Value at or above U.S. $5.00 per
share (as adjusted for stock splits, combinations and other similar
corporate events) for a period of 20 consecutive trading days; and
(ii) the "Fair Market Value" of one share of Optima Common
Stock shall mean, for any trading day, (w) the closing sale price for a
share of Optima Common
2
<PAGE> 3
Stock on such trading day on the Nasdaq National Market System, or (x)
if no sale takes place on such day, the average of the closing bid and
asked prices on the Toronto Stock Exchange, or (y) if no such sale
takes place on either of such exchanges on such day, the average of the
closing bid and asked prices of a share of Optima Common Stock on such
trading day as quoted on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), or (z) if not quoted on NASDAQ
or such exchanges on such day, the average of the closing bid and asked
prices for a share of Optima Common Stock as quoted on any other
recognized stock exchange on which such shares are then listed.
Upon satisfaction of the conditions specified in Section 1,
the registered holder of this Certificate shall be considered a record
holder of the number of shares of Optima Common Stock specified in this
Section 1. Upon satisfaction of the conditions specified in Section 1,
Optima shall issue to the holder of this Certificate, upon surrender of
this Certificate to Optima or an agent designated by Optima, that
number of shares of Optima Common Stock issuable upon conversion of the
number of Contingent Stock Issue Rights represented by this
Certificate.
SECTION 2. DIVIDENDS
No dividends shall be payable with respect to the Optima Common Stock
represented by this Certificate until a record date has occurred after the
issuance thereof.
SECTION 3. REPLACEMENT OF CERTIFICATES
Upon receipt of evidence satisfactory to Optima or its agent of the
loss, theft, destruction, or mutilation of any Certificate and upon receipt of
indemnity reasonable satisfactory to Optima or its agent, Optima shall deliver a
new Certificate for the number of Contingent Stock Issue Rights represented by
the Certificate so lost, stolen, destroyed, or mutilated.
SECTION 4. HOLDER NOT STOCKHOLDER
This Certificate does not entitle the holder thereof to any voting or
other rights as a stockholder of Optima.
SECTION 5. ADJUSTMENT OF OPTIMA COMMON STOCK
5.1 Stock Dividends, Etc. In case Optima shall (1) pay a dividend in
shares of Optima Common Stock; (2) subdivide outstanding shares of Optima Common
Stock; (3) combine outstanding shares of Optima Common Stock into a smaller
number of shares; or (4) issue by reclassification any shares of Common Stock,
the number of shares of Optima Common Stock issuable upon conversion of the
Contingent Stock Issue Rights represented by this Certificate
shall be proportionately adjusted.
3
<PAGE> 4
5.2 Merger, Etc. In case of (1) any consolidation or merger of Optima
or any of its affiliates with or into another corporation or (2) any sale,
transfer, or other disposition of all or substantially all of the property,
assets, or business of Optima or its affiliates, as a result of which property
(cash or otherwise) shall be payable or distributable to the holders of Optima
Common Stock, the Certificate shall thereafter represent the number and class of
shares or other securities or property of Optima, or of the corporation or other
entity resulting from such consolidation or merger or to which such sale,
transfer, or other disposition shall have been made for or into which the Optima
Common Stock underlying this Certificate would have been exchanged or converted
upon such event if outstanding at the time thereof, with appropriate adjustments
to the Triggering Event conditions so as to maintain as nearly as reasonably
practicable the intent of the parties hereunder and which adjustments shall be
determined in good faith by the Optima Board of Directors. The terms of any such
consolidation, merger, sale, transfer, or other disposition shall include
appropriate provisions in accordance with the provisions of this Section 5.2.
The provisions of this Section 5.2 shall similarly apply to successive
consolidations, mergers, sales, transfers, or other dispositions as aforesaid.
5.3 Notice. Whenever an adjustment is made as provided in this Section
5, Optima shall promptly mail to the holder of this Certificate, at the address
appearing below unless changed by written notice by the holder, a statement
setting forth the adjustment and the facts giving rise thereto.
SECTION 6. TRANSFER OF CERTIFICATES
Except for transfers to Robert R. Brooksher, this Certificate is not
transferable or assignable except by the laws of descent and distribution, by
will or by operation of law.
SECTION 7. INITIAL ADDRESS FOR NOTICE
Notice may be given at the following address:
---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
SECTION 8. GOVERNING LAW
This Certificate shall be governed by and construed in accordance with
the laws of the State of Delaware.
4
<PAGE> 1
EXHIBIT 4.4
CERTIFICATE OF DOMESTICATION
OF
OPTIMA PETROLEUM CORPORATION
The undersigned, Ronald P. Bourgeois, Secretary and Chief Financial
Officer of Optima Petroleum Corporation (the "Corporation"), a corporation
organized and existing under the laws of Canada, in accordance with the
provisions of Section 388 of Title 8 of the Delaware Code, does hereby certify
as follows:
FIRST: The Corporation was first formed on April 11, 1983, in British
Columbia, Canada, and was continued as a federal Canadian corporation on June
14, 1994.
SECOND: The name of the Corporation immediately prior to the filing of
this Certificate of Domestication was Optima Petroleum Corporation.
THIRD: The name of the Corporation under which it is filing a
Certificate of Incorporation is PetroQuest Energy, Inc.
FOURTH: The jurisdiction that constituted the seat, siege social,
principal place of business or central administration for the corporation
immediately prior to the filing of this Certificate of Domestication was
Vancouver, B.C., Canada.
FIFTH: A Certificate of Incorporation of PetroQuest Energy, Inc. is
being filed contemporaneously with this Certificate of Domestication.
IN WITNESS WHEREOF, I being the Secretary and Treasurer of the
Corporation, and being duly authorized to sign this Certificate of Domestication
on behalf of the Corporation have made, signed and sealed this Certificate of
Domestication on this 21st day of August, 1998.
OPTIMA PETROLEUM CORPORATION
By: /s/ Ronald P. Bourgeois
-------------------------------------
Ronald P. Bourgeois, Secretary and
Chief Financial Officer
<PAGE> 1
EXHIBIT 10.1
PETROQUEST ENERGY, INC.
1998 INCENTIVE PLAN
(AS EFFECTIVE AUGUST 21, 1998)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1. GENERAL PROVISIONS RELATING TO PLAN GOVERNANCE, COVERAGE AND BENEFITS........................1
1.1 Purpose......................................................................................1
1.2 Definitions..................................................................................2
(a) Appreciation........................................................................2
(b) Authorized Officer..................................................................2
(c) Board...............................................................................2
(d) Cause...............................................................................2
(e) Change in Control...................................................................2
(f) Code................................................................................2
(g) Committee...........................................................................2
(h) Common Stock........................................................................3
(i) Company.............................................................................3
(j) Consultant..........................................................................3
(k) Covered Employee....................................................................3
(l) Disability..........................................................................3
(m) Employee............................................................................4
(n) Employment..........................................................................4
(o) Exchange Act........................................................................4
(p) Fair Market Value...................................................................5
(q) Grantee.............................................................................5
(r) Incentive Award.....................................................................5
(s) Incentive Agreement.................................................................5
(t) Incentive Stock Option..............................................................5
(u) Independent SAR.....................................................................5
(v) Insider.............................................................................5
(w) Nonstatutory Stock Option...........................................................6
(x) Option Price........................................................................6
(y) Outside Director....................................................................6
(z) Parent..............................................................................6
(aa) Plan................................................................................6
(bb) Publicly Held Corporation...........................................................6
(cc) Retirement..........................................................................6
(dd) Share...............................................................................6
(ee) Share Pool..........................................................................6
(ff) Spread..............................................................................6
(gg) Stock Appreciation Right or SAR.....................................................6
(hh) Stock Option or Option..............................................................7
(ii) Subsidiary..........................................................................7
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
(jj) Tandem SAR..........................................................................7
1.3 Plan Administration..........................................................................7
(a) Authority of the Committee..........................................................7
(b) Meetings............................................................................7
(c) Decisions Binding...................................................................7
(d) Modification of Outstanding Incentive Awards........................................8
(e) Delegation of Authority.............................................................8
(f) Expenses of Committee...............................................................8
(g) Surrender of Previous Incentive Awards..............................................8
(h) Indemnification.....................................................................9
1.4 Shares of Common Stock Available for Incentive Awards........................................9
1.5 Share Pool Adjustments for Awards and Payouts...............................................10
1.6 Common Stock Available. ...................................................................11
1.7 Participation...............................................................................11
(a) Eligibility........................................................................11
(b) Incentive Stock Option Eligibility.................................................11
1.8 Types of Incentive Awards...................................................................12
1.9 Maximum Term................................................................................12
SECTION 2. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.................................................12
2.1 Grant of Stock Options......................................................................12
2.2 Stock Option Terms..........................................................................12
(a) Written Agreement..................................................................12
(b) Number of Shares...................................................................12
(c) Exercise Price.....................................................................12
(d) Term...............................................................................13
(e) Exercise...........................................................................13
(f) $100,000 Annual Limit on Incentive Stock Options...................................13
2.3 Stock Option Exercises......................................................................14
(a) Method of Exercise and Payment.....................................................14
(b) Restrictions on Share Transferability..............................................15
(c) Notification of Disqualifying Disposition of Shares from Incentive Stock Options...15
(d) Proceeds of Option Exercise........................................................15
2.4 Stock Appreciation Rights in Tandem with Nonstatutory Stock Options.........................15
(a) Grant..............................................................................15
(b) General Provisions.................................................................16
(c) Exercise...........................................................................16
(d) Settlement.........................................................................16
2.5 Stock Appreciation Rights Independent of Nonstatutory Stock Options.........................16
(a) Grant..............................................................................16
(b) General Provisions.................................................................16
(c) Exercise...........................................................................16
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
(d) Settlement.........................................................................17
2.6 Reload Options..............................................................................17
SECTION 3. PROVISIONS RELATING TO PLAN PARTICIPATION...................................................17
3.1 Plan Conditions.............................................................................17
(a) Incentive Agreement................................................................17
(b) No Right to Employment.............................................................18
(c) Securities Requirements............................................................18
3.2 Transferability.............................................................................19
(a) Non-Transferable Awards and Options................................................19
(b) Ability to Exercise Rights.........................................................19
3.3 Rights as a Stockholder.....................................................................19
(a) No Stockholder Rights..............................................................19
(b) Representation of Ownership........................................................20
3.4 Listing and Registration of Shares of Common Stock..........................................20
3.5 Change in Stock and Adjustments.............................................................20
(a) Changes in Law or Circumstances....................................................20
(b) Exercise of Corporate Powers.......................................................21
(c) Recapitalization of the Company....................................................21
(d) Reorganization of the Company......................................................21
(e) Issue of Common Stock by the Company...............................................22
(f) Acquisition of the Company.........................................................22
(g) Assumption of Outstanding Incentive Awards under the Plan..........................22
(h) Assumption of Incentive Awards by a Successor......................................23
3.6 Termination of Employment, Death, Disability and Retirement.................................23
(a) Termination of Employment..........................................................23
(b) Termination of Employment for Cause................................................24
(c) Retirement.........................................................................24
(d) Disability or Death................................................................24
(e) Continuation.......................................................................25
3.7 Change in Control...........................................................................25
3.8 Exchange of Incentive Awards................................................................27
3.9 Financing...................................................................................27
SECTION 4. GENERAL.....................................................................................27
4.1 Effective Date and Grant Period.............................................................27
4.2 Funding and Liability of Company............................................................28
4.3 Withholding Taxes...........................................................................28
(a) Tax Withholding....................................................................28
(b) Share Withholding..................................................................28
(c) Incentive Stock Options............................................................28
(d) Loans..............................................................................29
4.4 No Guarantee of Tax Consequences............................................................29
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
4.5 Designation of Beneficiary by Participant...................................................29
4.6 Deferrals...................................................................................29
4.7 Amendment and Termination...................................................................29
4.8 Requirements of Law.........................................................................30
4.9 Rule 16b-3 Securities Law Compliance........................................................30
4.10 Compliance with Code Section 162(m).........................................................31
4.11 Successors..................................................................................31
4.12 Miscellaneous Provisions....................................................................31
4.13 Severability................................................................................32
4.14 Gender, Tense and Headings..................................................................32
4.15 Governing Law...............................................................................32
</TABLE>
iv
<PAGE> 6
PETROQUEST ENERGY, INC.
1998 INCENTIVE PLAN
SECTION 1.
GENERAL PROVISIONS RELATING TO
PLAN GOVERNANCE, COVERAGE AND BENEFITS
1. Purpose
The purpose of the Plan is to foster and promote the long-term
financial success of PetroQuest Energy, Inc. (the "Company") and its
Subsidiaries and to increase stockholder value by: (a) encouraging the
commitment of selected key Employees, Consultants and Outside Directors, (b)
motivating superior performance of key Employees, Consultants and Outside
Directors by means of long-term performance related incentives, (c) encouraging
and providing key Employees, Consultants and Outside Directors with a program
for obtaining ownership interests in the Company which link and align their
personal interests to those of the Company's stockholders, (d) attracting and
retaining key Employees, Consultants and Outside Directors by providing
competitive incentive compensation opportunities, and (e) enabling key
Employees, Consultants and Outside Directors to share in the long-term growth
and success of the Company.
The Plan provides for payment of various forms of incentive
compensation and it is not intended to be a plan that is subject to the Employee
Retirement Income Security Act of 1974, as amended (ERISA). The Plan shall be
interpreted, construed and administered consistent with its status as a plan
that is not subject to ERISA.
Subject to approval by the Company's stockholders pursuant to Section
4.1, the Plan shall become effective as of August 21, 1998 (the "EFFECTIVE
DATE"). The Plan shall commence on the Effective Date, and shall remain in
effect, subject to the right of the Board to amend or terminate the Plan at any
time pursuant to Section 4.7, until all Shares subject to the Plan have been
purchased or acquired according to its provisions. However, in no event may an
Incentive Award be granted under the Plan after the expiration of ten (10) years
from the Effective Date. Any Incentive Award granted prior to the Effective Date
shall be subject to the subsequent receipt of stockholder approval of the Plan
pursuant to Section 4.1.
<PAGE> 7
2. Definitions
The following terms shall have the meanings set forth below:
i. APPRECIATION. The
difference between the option
exercise price per share of the
Nonstatutory Stock Option to which a
Tandem SAR relates and the weighted
average of the Fair Market Value of
a share of Common Stock for the five
trading days immediately preceding
the date of exercise of the Tandem
SAR.
ii. AUTHORIZED OFFICER. The
Chairman of the Board or the Chief
Executive Officer of the Company or
any other senior officer of the
Company to whom either of them
delegate the authority to execute
any Incentive Agreement for and on
behalf of the Company. No officer or
director shall be an Authorized
Officer with respect to any
Incentive Agreement for himself.
iii. BOARD. The Board of
Directors of the Company.
iv. CAUSE. When used in
connection with the termination of a
Grantee's Employment, shall mean the
termination of the Grantee's
Employment by the Company by reason
of (i) the conviction of the Grantee
by a court of competent jurisdiction
as to which no further appeal can be
taken of a crime involving moral
turpitude or a felony; (ii) the
proven commission by the Grantee of
an act of fraud upon the Company;
(iii) the willful and proven
misappropriation of any funds or
property of the Company by the
Grantee; (iv) the willful, continued
and unreasonable failure by the
Grantee to perform the material
duties assigned to him; (v) the
knowing engagement by the Grantee in
any direct, material conflict of
interest with the Company without
compliance with the Company's
conflict of interest policy, if any,
then in effect; or (vi) the knowing
engagement by the Grantee, without
the written approval of the Board,
in any activity which competes with
the business of the Company or which
would result in a material injury to
the business, reputation or goodwill
of the Company.
v. CHANGE IN CONTROL. Any of
the events described in and subject
to Section 3.7.
2
<PAGE> 8
vi. CODE. The Internal Revenue
Code of 1986, as amended, and the
regulations and other authority
promulgated thereunder by the
appropriate governmental authority.
References herein to any provision
of the Code shall refer to any
successor provision thereto.
vii. COMMITTEE. A committee
appointed by the Board consisting of
not less than two directors as
appointed by the Board to administer
the Plan. However, if the Company is
a Publicly Held Corporation, the
Plan shall be administered by a
committee appointed by the Board
consisting of not less than two
directors who fulfill the
"non-employee director" requirements
of Rule 16b-3 under the Exchange Act
and the "outside director"
requirements of Section 162(m) of
the Code. In either case, the
Committee may be the Compensation
Committee of the Board, or any
subcommittee of the Compensation
Committee, provided that the members
of the Committee satisfy the
requirements of the previous
provisions of this paragraph. The
Board shall have the power to fill
vacancies on the Committee arising
by resignation, death, removal or
otherwise. The Board, in its sole
discretion, may bifurcate the powers
and duties of the Committee among
one or more separate committees, or
retain all powers and duties of the
Committee in a single Committee. The
members of the Committee shall serve
at the discretion of the Board.
Notwithstanding the preceding paragraph, the term "Committee"
as used in the Plan with respect to any Incentive Award for an Outside
Director shall refer to the Board. In the case of an Incentive Award
for an Outside Director, the Board shall have all the powers and
responsibilities of the Committee hereunder as to such Incentive Award,
and any actions as to such Incentive Award may be acted upon only by
the Board (unless it otherwise designates in its discretion). When the
Board exercises its authority to act in the capacity as the Committee
hereunder with respect to an Incentive Award for an Outside Director,
it shall so designate with respect to any action that it undertakes in
its capacity as the Committee.
viii. COMMON STOCK. The common
stock of the Company, $.001 par
value per share, and any class of
common stock into which such common
shares may hereafter be converted,
reclassified or recapitalized.
3
<PAGE> 9
ix. COMPANY. PetroQuest Energy,
Inc., a corporation organized under
the laws of the State of Delaware,
and any successor in interest
thereto.
x. CONSULTANT. An independent
agent, consultant, attorney, an
individual who has agreed to become
an Employee, or any other individual
who is not an Outside Director or
employee of the Company (or any
Parent or Subsidiary) and who
provides ongoing management or
consulting services to the Company
(or any Parent or Subsidiary).
xi. COVERED EMPLOYEE. Only if
the Company is a Publicly Held
Corporation, a named executive
officer who is one of the group of
covered employees as defined in
Section 162(m) of the Code and
Treasury Regulation Section
1.162-27(c) (or its successor).
xii. DISABILITY. As determined
by the Committee in its discretion
exercised in good faith, a physical
or mental condition of the Employee
that would entitle him to payment of
disability income payments under the
Company's long term disability
insurance policy or plan for
employees, as then effective, if
any; or in the event that the
Grantee is not covered, for whatever
reason, under the Company's
long-term disability insurance
policy or plan, "Disability" means a
permanent and total disability as
defined in Section 22(e)(3) of the
Code. A determination of Disability
may be made by a physician selected
or approved by the Committee and, in
this respect, the Grantee shall
submit to an examination by such
physician upon request.
xiii. EMPLOYEE. Any employee of
the Company (or any Parent or
Subsidiary) within the meaning of
Section 3401(c) of the Code who, in
the opinion of the Committee, is one
of a select group of executive
officers, other officers, or other
key personnel of the Company (or any
Parent or Subsidiary), who is in a
position to contribute materially to
the growth and development and to
the financial success of the Company
(or any Parent or Subsidiary),
including, without limitation,
officers who are members of the
Board.
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xiv. EMPLOYMENT. Employment by
the Company (or any Parent or
Subsidiary), or by any corporation
issuing or assuming an Incentive
Award in any transaction described
in Section 424(a) of the Code, or by
a parent corporation or a subsidiary
corporation of such corporation
issuing or assuming such Incentive
Award, as the parent-subsidiary
relationship shall be determined at
the time of the corporate action
described in Section 424(a) of the
Code. In this regard, neither the
transfer of a Grantee from
Employment by the Company to
Employment by any Parent or
Subsidiary, nor the transfer of a
Grantee from Employment by any
Parent or Subsidiary to Employment
by the Company, shall be deemed to
be a termination of Employment of
the Grantee. Moreover, the
Employment of a Grantee shall not be
deemed to have been terminated
because of an approved leave of
absence from active Employment on
account of temporary illness,
authorized vacation or granted for
reasons of professional advancement,
education, health, or government
service, or during military leave
for any period (if the Grantee
returns to active Employment within
90 days after the termination of
military leave), or during any
period required to be treated as a
leave of absence by virtue of any
applicable statute, Company
personnel policy or agreement.
Whether an authorized leave of
absence shall constitute termination
of Employment hereunder shall be
determined by the Committee in its
discretion.
Unless otherwise provided in the Incentive Agreement, the term
"Employment" for purposes of the Plan will also include compensatory
services performed by a Consultant for the Company (or any Parent or
Subsidiary) as well as membership on the Board by an Outside Director.
xv. EXCHANGE ACT. The Securities
Exchange Act of 1934, as amended.
xvi. FAIR MARKET VALUE. If the
Company is not a Publicly Held
Corporation at the time a
determination of the Fair Market
Value of the Common Stock is
required to be made hereunder, the
determination of Fair Market Value
for purposes of the Plan shall be
made by the Committee in its
discretion exercised in good faith.
In this respect, the
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Committee may rely on such financial
data, valuations or experts as it
deems advisable under the
circumstances.
If the Company is a Publicly Held Corporation, the Fair Market
Value of one share of Common Stock on the date in question is deemed to
be (i) the closing sales price of a share of Common Stock as reported
on the principal securities exchange on which Shares are then listed or
admitted to trading, or (ii) if not so reported, the average of the
closing bid and asked prices for a Share as quoted on the National
Association of Securities Dealers Automated Quotation System
("NASDAQ"), or (iii) if not quoted on NASDAQ, the average of the
closing bid and asked prices for a Share as quoted by the National
Quotation Bureau's "Pink Sheets" or the National Association of
Securities Dealers' OTC Bulletin Board System. If there was no public
trade of Common Stock on the date in question, Fair Market Value shall
be determined by reference to the last preceding date on which such a
trade was so reported.
xvii. GRANTEE. Any Employee, Consultant or Outside Director
who is granted an Incentive Award under the Plan.
xviii. INCENTIVE AWARD. A grant of an award under the Plan to
a Grantee, including any Nonstatutory Stock Option, Incentive Stock
Option, Reload Option and Stock Appreciation Right.
xix. INCENTIVE AGREEMENT. The written agreement entered into
between the Company and the Grantee setting forth the terms and
conditions pursuant to which an Incentive Award is granted under the
Plan, as such agreement is further defined in Section 3.1(a).
xx. INCENTIVE STOCK OPTION. A Stock Option granted by the
Committee to an Employee under Section 2 which is designated by the
Committee as an Incentive Stock Option and intended to qualify as an
Incentive Stock Option under Section 422 of the Code.
xxi. INDEPENDENT SAR. A Stock Appreciation Right described
in Section 2.5.
xxii. INSIDER. To the extent that the Company is a Publicly
Held Corporation, an individual who is, on the relevant date, an
officer, director or ten percent (10%) beneficial owner of any class of
the Company's equity securities that is registered pursuant to Section
12 of the Exchange Act, all as defined under Section 16 of the Exchange
Act.
xxiii. NONSTATUTORY STOCK OPTION. A Stock Option granted by
the Committee to a Grantee under Section 2 which is not designated by
the Committee as an Incentive Stock Option.
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xxiv. OPTION PRICE. The exercise price at which a Share may
be purchased by the Grantee of a Stock Option.
xxv. OUTSIDE DIRECTOR. A member of the Board who is not,
at the time of grant of an Incentive Award, an employee of the Company
or any Parent or Subsidiary.
xxvi. PARENT. Any corporation (whether now or hereafter
existing) which constitutes a "parent" of the Company, as defined in
Section 424(e) of the Code.
xxvii. PLAN. The PetroQuest Energy, Inc. 1998 Incentive Plan
as set forth herein and as it may be amended from time to time.
xxviii. PUBLICLY HELD CORPORATION. A corporation issuing any
class of common equity securities required to be registered under
Section 12 of the Exchange Act.
xxix. RETIREMENT. The voluntary termination of Employment
from the Company or any Parent or Subsidiary constituting retirement
for age on any date after the Employee attains the normal retirement
age of 65 years, or such other age as may be designated by the
Committee in the Employee's Incentive Agreement.
xxx. SHARE. A share of the Common Stock of the Company.
xxxi. SHARE POOL. The number of shares authorized for
issuance under Section 1.4, as adjusted for awards and payouts under
Section 1.5 and as adjusted for changes in corporate capitalization
under Section 3.5.
xxxii. SPREAD. The difference between the exercise price per
Share specified in any Independent SAR grant and the weighted average
of the Fair Market Value of a Share for the five trading days
immediately preceding the date of exercise of the Independent SAR.
xxxiii. STOCK APPRECIATION RIGHT OR SAR. A Tandem SAR
described in Section 2.4 or an Independent SAR described in Section
2.5.
xxxiv. STOCK OPTION OR OPTION. Pursuant to Section 2, (i) an
Incentive Stock Option granted to an Employee, or (ii) a Nonstatutory
Stock Option granted to an Employee, Consultant or Outside Director,
whereunder such option the Grantee has the right to purchase Shares of
Common Stock. In accordance with Section 422 of the Code, no Consultant
or Outside Director shall be granted an Incentive Stock Option.
xxxv. SUBSIDIARY. Any corporation (whether now or hereafter
existing) which constitutes a "subsidiary" of the Company, as defined
in Section 424(f) of the Code.
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xxxvi. TANDEM SAR. A Stock Appreciation Right that is granted
in connection with a related Stock Option pursuant to Section 2.4, the
exercise of which shall require forfeiture of the right to purchase a
Share under the related Stock Option (and when a Share is purchased
under the Stock Option, the Tandem SAR shall similarly be canceled).
a. PLAN ADMINISTRATION
i. AUTHORITY OF THE COMMITTEE. Except as may be limited by
law and subject to the provisions herein, the Committee shall have full
power to (i) select Grantees who shall participate in the Plan; (ii)
determine the sizes, duration and types of Incentive Awards; (iii)
determine the terms and conditions of Incentive Awards and Incentive
Agreements; (iv) determine whether any Shares subject to Incentive
Awards will be subject to any restrictions on transfer; (v) construe
and interpret the Plan and any Incentive Agreement or other agreement
entered into under the Plan; and (vi) establish, amend, or waive rules
for the Plan's administration. Further, the Committee shall make all
other determinations which may be necessary or advisable for the
administration of the Plan.
ii. MEETINGS. The Committee shall designate a chairman from
among its members who shall preside at all of its meetings, and shall
designate a secretary, without regard to whether that person is a
member of the Committee, who shall keep the minutes of the proceedings
and all records, documents, and data pertaining to its administration
of the Plan. Meetings shall be held at such times and places as shall
be determined by the Committee and the Committee may hold telephonic
meetings. The Committee may take any action otherwise proper under the
Plan by the affirmative vote, taken with or without a meeting, of a
majority of its members. The Committee may authorize any one or more of
their members or any officer of the Company to execute and deliver
documents on behalf of the Committee.
iii. DECISIONS BINDING. All determinations and decisions
made by the Committee shall be made in its discretion pursuant to the
provisions of the Plan, and shall be final, conclusive and binding on
all persons including the Company, its shareholders, Employees,
Grantees, and their estates and beneficiaries. The Committee's
decisions and determinations with respect to any Incentive Award need
not be uniform and may be made selectively among Incentive Awards and
Grantees, whether or not such Incentive Awards are similar or such
Grantees are similarly situated.
iv. MODIFICATION OF OUTSTANDING INCENTIVE AWARDS. Subject
to the stockholder approval requirements of Section 4.7 if applicable,
the Committee may, in its discretion, provide for the extension of the
exercisability of an Incentive Award, accelerate the vesting or
exercisability of an Incentive Award, eliminate or make less
restrictive any restrictions contained in an Incentive Award, waive any
restriction or other provisions of an Incentive Award, or otherwise
amend or modify an Incentive Award in any manner that is either (i) not
adverse to the Grantee to whom such Incentive Award was granted or (ii)
consented to by
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such Grantee. The Committee may grant an Incentive Award to an
individual who it expects to become an Employee within the next six
months, with such Incentive Award being subject to such individual
actually becoming an Employee within such time period, and subject to
such other terms and conditions as may be established by the Committee
in its discretion.
v. DELEGATION OF AUTHORITY. The Committee may delegate to
the Chief Executive Officer and to other senior officers of the Company
its duties under this Plan pursuant to such conditions or limitations
as the Committee may establish from time to time, except that, if the
Company is a Publicly Held Corporation, the Committee may not delegate
to any person the authority to (i) grant Incentive Awards, or (ii) take
any action which would contravene the requirements of Rule 16b-3 under
the Exchange Act or the Performance-Based Exception under Section
162(m) of the Code.
vi. EXPENSES OF COMMITTEE. The Committee may employ legal
counsel, including, without limitation, independent legal counsel and
counsel regularly employed by the Company, and other agents as the
Committee may deem appropriate for the administration of the Plan. The
Committee may rely upon any opinion or computation received from any
such counsel or agent. All expenses incurred by the Committee in
interpreting and administering the Plan, including, without limitation,
meeting expenses and professional fees, shall be paid by the Company.
vii. SURRENDER OF PREVIOUS INCENTIVE AWARDS. The Committee
may, in its absolute discretion, grant Incentive Awards to Grantees on
the condition that such Grantees surrender to the Committee for
cancellation such other Incentive Awards (including, without
limitation, Incentive Awards with higher exercise prices) as the
Committee directs. Incentive Awards granted on the condition precedent
of surrender of outstanding Incentive Awards shall not count against
the limits set forth in Section 1.4 until such time as such previous
Incentive Awards are surrendered and canceled. Any decision of the
Committee to grant Incentive Awards on such a condition precedent shall
be deemed an amendment to the Plan and shall be subject to the
requirements of Section 4.7 of the Plan regarding approvals of
Regulatory Authorities (as defined therein).
viii. INDEMNIFICATION. Each person who is or was a member of
the Committee, or of the Board, shall be indemnified by the Company
against and from any damage, loss, liability, cost and expense that may
be imposed upon or reasonably incurred by him in connection with or
resulting from any claim, action, suit, or proceeding to which he may
be a party or in which he may be involved by reason of any action taken
or failure to act under the Plan, except for any such act or omission
constituting willful misconduct or gross negligence. Such person shall
be indemnified by the Company for all amounts paid by him in settlement
thereof, with the Company's approval, or paid by him in satisfaction of
any judgment in any such action, suit, or proceeding against him,
provided he shall give the Company an opportunity, at its own expense,
to handle and defend the same before he undertakes to handle and defend
it on his own behalf. The foregoing right of indemnification
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<PAGE> 15
shall not be exclusive of any other rights of indemnification to which
such persons may be entitled under the Company's Articles of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power
that the Company may have to indemnify them or hold them harmless.
b. SHARES OF COMMON STOCK AVAILABLE FOR INCENTIVE AWARDS
Subject to adjustment under Section 3.5, there shall be available for
Incentive Awards under this Plan granted wholly or partly in Common Stock
(including rights or Options that may be exercised for or settled in Common
Stock) an aggregate of 1,800,000 Shares of Common Stock, of which an aggregate
of not more than 500,000 Shares shall be available for Incentive Awards granted
to Outside Directors and the remainder shall be available for Incentive Awards
to Employees and Consultants. No more than 1,800,000 Shares of Common Stock
shall be available for Incentive Stock Options. The number of Shares of Common
Stock that are the subject of Incentive Awards under this Plan, that are
forfeited or terminated, expire unexercised, are settled in cash in lieu of
Common Stock or in a manner such that all or some of the Shares covered by an
Incentive Award are not issued to a Grantee or are exchanged for Incentive
Awards that do not involve Common Stock, shall again immediately become
available for Incentive Awards hereunder. The Committee may from time to time
adopt and observe such procedures concerning the counting of Shares against the
Plan maximum as it may deem appropriate. The Board and the appropriate officers
of the Company shall from time to time take whatever actions are necessary to
file any required documents with governmental authorities, stock exchanges and
transaction reporting systems to ensure that Shares are available for issuance
pursuant to Incentive Awards.
If the Company is a Publicly Held Corporation, then unless and until
the Committee determines that a particular Incentive Award granted to a Covered
Employee is not intended to comply with the Performance-Based Exception, the
following rules shall apply to grants of Incentive Awards to Covered Employees:
i. Subject to adjustment as provided in Section 3.5, the
maximum aggregate number of Shares of Common Stock (including Stock
Options and SARs) that may be granted or that may vest, as applicable,
in any calendar year pursuant to any Incentive Award held by any
individual Covered Employee shall be 500,000 Shares. In addition, the
number of Shares of Common Stock that are subject to Incentive Awards
granted under the Plan to any one Grantee will not exceed 5% of the
Company's issued and outstanding shares of Common Stock.
ii. The maximum aggregate cash payout (in SARs) with
respect to Incentive Awards granted in any calendar year which may be
made to any Covered Employee shall be $5,000,000.
iii. With respect to any Stock Option or Stock Appreciation
Right granted to a Covered Employee that is canceled or repriced, the
number of Shares subject to such Stock
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Option or Stock Appreciation Right shall continue to count against the
maximum number of Shares that may be the subject of Stock Options or
Stock Appreciation Rights granted to such Covered Employee hereunder
and, in this regard, such maximum number shall be determined in
accordance with Section 162(m) of the Code.
iv. The limitations of subsections (a), (b) and (c) above
shall be construed and administered so as to comply with the
Performance-Based Exception.
c. SHARE POOL ADJUSTMENTS FOR AWARDS AND PAYOUTS.
The following Incentive Awards and payouts shall reduce, on a one Share
for one Share basis, the number of Shares authorized for issuance under the
Share Pool:
i. Stock Option; and
ii. SAR (except a Tandem SAR).
The following transactions shall restore, on a one Share for one Share
basis, the number of Shares authorized for issuance under the Share Pool:
(a) A Payout of an SAR or Tandem SAR in the form of cash;
(b) A cancellation, termination, expiration, forfeiture, or
lapse for any reason (with the exception of the termination of a Tandem
SAR upon exercise of the related Stock Option, or the termination of a
related Stock Option upon exercise of the corresponding Tandem SAR) of
any Shares subject to an Incentive Award; and
(c) Payment of an Option Price with previously acquired
Shares or by withholding Shares which otherwise would be acquired on
exercise (i.e., the Share Pool shall be increased by the number of
Shares turned in or withheld as payment of the Option Price).
d. COMMON STOCK AVAILABLE.
The Common Stock available for issuance under the Plan shall be made
available from Shares now or hereafter (i) held in the treasury of the Company
or (ii) authorized but unissued shares. No fractional shares shall be issued
under the Plan; payment for fractional shares shall be made in cash.
e. PARTICIPATION
i. ELIGIBILITY. The Committee shall from time to time
designate those Employees, Consultants and/or Outside Directors, if
any, to be granted Incentive Awards under the Plan, the type of
Incentive Awards granted, the number of Shares, Stock Options, rights
or units, as the case may be, which shall be granted to each such
person, and any other
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terms or conditions relating to the Incentive Awards as it may deem
appropriate to the extent consistent with the provisions of the Plan. A
Grantee who has been granted an Incentive Award may, if otherwise
eligible, be granted additional Incentive Awards at any time.
ii. INCENTIVE STOCK OPTION ELIGIBILITY. No Consultant or
Outside Director shall be eligible for the grant of any Incentive Stock
Option. In addition, no Employee shall be eligible for the grant of any
Incentive Stock Option who owns or would own immediately before the
grant of such Incentive Stock Option, directly or indirectly, stock
possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company, or any Parent or
Subsidiary. This restriction does not apply if, at the time such
Incentive Stock Option is granted, the Incentive Stock Option exercise
price is at least one hundred and ten percent (110%) of the Fair Market
Value on the date of grant and the Incentive Stock Option by its terms
is not exercisable after the expiration of five (5) years from the date
of grant. For the purpose of the immediately preceding sentence, the
attribution rules of Section 424(d) of the Code shall apply for the
purpose of determining an Employee's percentage ownership in the
Company or any Parent or Subsidiary. This paragraph shall be construed
consistent with the requirements of Section 422 of the Code.
f. TYPES OF INCENTIVE AWARDS
The types of Incentive Awards under the Plan are Stock Options and
Stock Appreciation Rights, or any combination of the foregoing.
g. MAXIMUM TERM
The maximum term for any Incentive Award granted under the Plan is ten
years from the date of grant.
SECTION 2.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
a. GRANT OF STOCK OPTIONS
The Committee is authorized to grant (a) Nonstatutory Stock Options to
Employees, Consultants and/or Outside Directors and (b) Incentive Stock Options
to Employees only, in accordance with the terms and conditions of the Plan, and
with such additional terms and conditions, not inconsistent with the Plan, as
the Committee shall determine in its discretion. Successive grants may be made
to the same Grantee whether or not any Stock Option previously granted to such
person remains unexercised.
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b. STOCK OPTION TERMS
i. WRITTEN AGREEMENT. Each grant of an Stock Option shall
be evidenced by a written Incentive Agreement. Among its other
provisions, each Incentive Agreement shall set forth the extent to
which the Grantee shall have the right to exercise the Stock Option
following termination of the Grantee's Employment. Such provisions
shall be determined in the discretion of the Committee, shall be
included in the Grantee's Incentive Agreement, need not be uniform
among all Stock Options issued pursuant to the Plan.
ii. NUMBER OF SHARES. Each Stock Option shall specify the
number of Shares of Common Stock to which it pertains.
iii. EXERCISE PRICE. The exercise price per Share of Common
Stock under each Stock Option shall be determined by the Committee;
provided, however, that in the case of an Incentive Stock Option, such
exercise price shall not be less than 100% of the Fair Market Value per
Share on the business day immediately preceding the day the Incentive
Stock Option is granted. To the extent that the Company is a Publicly
Held Corporation and the Stock Option is intended to qualify for the
Performance-Based Exception, the exercise price shall not be less than
100% of the Fair Market Value per Share on the date the Stock Option is
granted. Each Stock Option shall specify the method of exercise which
shall be consistent with the requirements of Section 2.3(a).
iv. TERM. In the Incentive Agreement, the Committee shall
fix the term of each Stock Option which shall be not more than ten (10)
years from the date of grant. In the event no term is fixed, such term
shall be ten (10) years from the date of grant.
v. EXERCISE. The Committee shall determine the time or
times at which a Stock Option may be exercised in whole or in part.
Each Stock Option may specify the required period of continuous
Employment and/or the performance objectives to be achieved before the
Stock Option or portion thereof will become exercisable. Each Stock
Option, the exercise of which, or the timing of the exercise of which,
is dependent, in whole or in part, on the achievement of designated
performance objectives, may specify a minimum level of achievement in
respect of the specified performance objectives below which no Stock
Options will be exercisable and a method for determining the number of
Stock Options that will be exercisable if performance is at or above
such minimum but short of full achievement of the performance
objectives. All such terms and conditions shall be set forth in the
Incentive Agreement.
vi. $100,000 ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS.
Notwithstanding any contrary provision in the Plan, to the extent that
the aggregate Fair Market Value (determined as of the time the
Incentive Stock Option is granted) of the Shares of Common Stock with
respect to which Incentive Stock Options are exercisable for the first
time by any Grantee during any single calendar year (under the Plan and
any other stock option plans of the
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Company and its Subsidiaries or Parent) exceeds the sum of $100,000,
such Incentive Stock Option shall be treated as a Nonstatutory Stock
Option to the extent in excess of the $100,000 limit, and not an
Incentive Stock Option, but all other terms and provisions of such
Stock Option shall remain unchanged. This paragraph shall be applied by
taking Incentive Stock Options into account in the order in which they
are granted and shall be construed in accordance with Section 422(d) of
the Code. In the absence of such regulations or other authority, or if
such regulations or other authority require or permit a designation of
the Options which shall cease to constitute Incentive Stock Options,
then Incentive Stock Options, only to the extent of such excess and in
the order in which they were granted, shall automatically be deemed to
be Nonstatutory Stock Options but all other terms and conditions of
such Incentive Stock Options, and the corresponding Incentive
Agreement, shall remain unchanged.
c. STOCK OPTION EXERCISES
i. METHOD OF EXERCISE AND PAYMENT. Stock Options shall be
exercised by the delivery of a signed written notice of exercise to the
Company as of a date set by the Company in advance of the effective
date of the proposed exercise. The notice shall set forth the number of
Shares with respect to which the Option is to be exercised, accompanied
by full payment for the Shares.
The Option Price upon exercise of any Stock Option shall be
payable to the Company in full either: (i) in cash or its equivalent,
or (ii) subject to prior approval by the Committee in its discretion,
by tendering previously acquired Shares having an aggregate Fair Market
Value at the time of exercise equal to the total Option Price (provided
that the Shares which are tendered must have been held for at least six
(6) months prior to their tender to satisfy the Option Price), or (iii)
subject to prior approval by the Committee in its discretion, by
withholding Shares which otherwise would be acquired on exercise having
an aggregate value equal to the total Option Price, with such value per
share being equal to the weighted average of the Fair Market Value of a
share of Common Stock for the five trading days immediately preceding
the exercise of the Option, or (iv) subject to prior approval by the
Committee in its discretion, by a combination of (i), (ii), and (iii)
above. Any payment in Shares of Common Stock shall be effected by the
delivery of such Shares to the Secretary of the Company, duly endorsed
in blank or accompanied by stock powers duly executed in blank,
together with any other documents as the Secretary shall require from
time to time.
The Committee, in its discretion, also may allow (i) "cashless
exercise" as permitted under Federal Reserve Board's Regulation T, 12
CFR Part 220 (or its successor), and subject to applicable securities
law restrictions and tax withholdings, or (ii) by any other means which
the Committee, in its discretion, determines to be consistent with the
Plan's purpose and applicable law.
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As soon as practicable after receipt of a written notification
of exercise and full payment, the Company shall deliver to or on behalf
of the Grantee, in the name of the Grantee or other appropriate
recipient, Share certificates for the number of Shares purchased under
the Stock Option. Such delivery shall be effected for all purposes when
a stock transfer agent of the Company shall have deposited such
certificates in the United States mail, addressed to Grantee or other
appropriate recipient.
During the lifetime of a Grantee, each Option granted to him
shall be exercisable only by the Grantee (or his legal guardian in the
event of his Disability) or by a broker-dealer acting on his behalf
pursuant to a cashless exercise under the foregoing provisions of this
Section 2.3(a). No Option shall be assignable or transferable by
Grantee otherwise than by will or by the laws of descent and
distribution.
ii. RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee
may impose such restrictions on any Shares acquired pursuant to the
exercise of a Stock Option as it may deem advisable, including, without
limitation, restrictions under (i) any buy/sell agreement or right of
first refusal, (ii) any applicable federal securities laws, (iii) the
requirements of any stock exchange or market upon which such Shares are
then listed and/or traded, or (iv) any blue sky or state securities law
applicable to such Shares. Any certificate issued to evidence Shares
issued upon the exercise of an Incentive Award may bear such legends
and statements as the Committee shall deem advisable to assure
compliance with federal and state laws and regulations.
Any Grantee or other person exercising an Incentive Award may
be required by the Committee to give a written representation that the
Incentive Award and the Shares subject to the Incentive Award will be
acquired for investment and not with a view to public distribution;
provided, however, that the Committee, in its sole discretion, may
release any person receiving an Incentive Award from any such
representations either prior to or subsequent to the exercise of the
Incentive Award.
iii. NOTIFICATION OF DISQUALIFYING DISPOSITION OF SHARES
FROM INCENTIVE STOCK OPTIONS. Notwithstanding any other provision of
the Plan, a Grantee who disposes of Shares of Common Stock acquired
upon the exercise of an Incentive Stock Option by a sale or exchange
either (i) within two (2) years after the date of the grant of the
Incentive Stock Option under which the Shares were acquired or (ii)
within one (1) year after the transfer of such Shares to him pursuant
to exercise, shall promptly notify the Company of such disposition, the
amount realized and his adjusted basis in such Shares.
iv. PROCEEDS OF OPTION EXERCISE. The proceeds received by
the Company from the sale of Shares pursuant to Stock Options exercised
under the Plan shall be used for general corporate purposes.
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d. STOCK APPRECIATION RIGHTS IN TANDEM WITH NONSTATUTORY STOCK OPTIONS
i. GRANT. The Committee may, at the time of grant of a
Nonstatutory Stock Option, or at any time thereafter during the term of
the Nonstatutory Stock Option, grant Stock Appreciation Rights with
respect to all or any portion of the Shares of Common Stock covered by
such Nonstatutory Stock Option. A Stock Appreciation Right in tandem
with a Nonstatutory Stock Option is referred to herein as a "Tandem
SAR."
ii. GENERAL PROVISIONS. The terms and conditions of each
Tandem SAR shall be evidenced by an Incentive Agreement. The Option
Price per Share of a Tandem SAR shall be fixed in the Incentive
Agreement and shall not be less than one hundred percent (100%) of the
exercise price per share of the Nonstatutory Stock Option to which it
relates.
iii. EXERCISE. A Tandem SAR may be exercised at any time the
Nonstatutory Stock Option to which it relates is then exercisable, but
only to the extent such Nonstatutory Stock Option is exercisable, and
shall otherwise be subject to the conditions applicable to such
Nonstatutory Stock Option. When a Tandem SAR is exercised, the
Nonstatutory Stock Option to which it relates shall terminate to the
extent of the number of Shares with respect to which the Tandem SAR is
exercised. Similarly, when a Nonstatutory Stock Option is exercised,
the Tandem SARs relating to the Shares covered by such Nonstatutory
Stock Option exercise shall terminate. Any Tandem SAR which is
outstanding on the last day of the term of the related Nonstatutory
Stock Option shall be automatically exercised on such date for cash,
without the need for any action by the Grantee, to the extent of any
Appreciation.
iv. SETTLEMENT. Upon exercise of a Tandem SAR, the holder
shall receive, for each Share with respect to which the Tandem SAR is
exercised, an amount equal to the Appreciation. The Appreciation shall
be payable in cash, Common Stock, or a combination of both, as
specified in the Incentive Agreement (or in the discretion of the
Committee if not so specified). The Appreciation shall be paid within
30 calendar days of the exercise of the Tandem SAR. The number of
Shares of Common Stock which shall be issuable upon exercise of a
Tandem SAR shall be determined by dividing (1) by (2), where (1) is the
number of Shares as to which the Tandem SAR is exercised multiplied by
the Appreciation in such shares and (2) is the Fair Market Value of a
Share on the exercise date.
e. STOCK APPRECIATION RIGHTS INDEPENDENT OF NONSTATUTORY STOCK OPTIONS
i. GRANT. The Committee may grant Stock Appreciation
Rights independent of Nonstatutory Stock Options ("Independent SARs").
ii. GENERAL PROVISIONS. The terms and conditions of each
Independent SAR shall be evidenced by an Incentive Agreement. The
exercise price per share of Common Stock shall be not less than one
hundred percent (100%) of the Fair Market Value of a Share
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of Common Stock on the business day immediately preceding the day of
grant of the Independent SAR. The term of an Independent SAR shall be
determined by the Committee.
iii. EXERCISE. Independent SARs shall be exercisable at such
time and subject to such terms and conditions as the Committee shall
specify in the Incentive Agreement for the Independent SAR grant.
iv. SETTLEMENT. Upon exercise of an Independent SAR, the
holder shall receive, for each Share specified in the Independent SAR
grant, an amount equal to the Spread. The Spread shall be payable in
cash, Common Stock, or a combination of both, in the discretion of the
Committee or as specified in the Incentive Agreement. The Spread shall
be paid within 30 calendar days of the exercise of the Independent SAR.
The number of Shares of Common Stock which shall be issuable upon
exercise of an Independent SAR shall be determined by dividing (1) by
(2), where (1) is the number of Shares as to which the Independent SAR
is exercised multiplied by the Spread in such Shares and (2) is the
Fair Market Value of a Share on the exercise date.
f. RELOAD OPTIONS
At the discretion of the Committee, the Grantee may be granted under an
Incentive Agreement, replacement Stock Options that permit the Grantee to
purchase an additional number of Shares equal to the number of previously owned
Shares surrendered by the Grantee to pay all or a portion of the Option Price
upon exercise of his Stock Options. All such replacement Stock Options shall
have an exercise price of not less than 100% of the Fair Market Value of a Share
on the business day immediately preceding the day of grant of such replacement
Stock Options.
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SECTION 3.
PROVISIONS RELATING TO PLAN PARTICIPATION
a. PLAN CONDITIONS
i. INCENTIVE AGREEMENT. Each Grantee to whom an Incentive
Award is granted shall be required to enter into an Incentive Agreement
with the Company, in such a form as is provided by the Committee. The
Incentive Agreement shall contain specific terms as determined by the
Committee, in its discretion, with respect to the Grantee's particular
Incentive Award. Such terms need not be uniform among all Grantees or
any similarly-situated Grantees. The Incentive Agreement may include,
without limitation, vesting, forfeiture and other provisions particular
to the particular Grantee's Incentive Award, as well as, for example,
provisions to the effect that the Grantee (i) shall not disclose any
confidential information acquired during Employment with the Company,
(ii) shall abide by all the terms and conditions of the Plan and such
other terms and conditions as may be imposed by the Committee, (iii)
shall not interfere with the employment or other service of any
employee, (iv) shall not compete with the Company or become involved in
a conflict of interest with the interests of the Company, (v) shall
forfeit an Incentive Award if terminated for Cause, (vi) shall not be
permitted to make an election under Section 83(b) of the Code when
applicable, and (vii) shall be subject to any other agreement between
the Grantee and the Company regarding Shares that may be acquired under
an Incentive Award including, without limitation, an agreement
restricting the transferability of Shares by Grantee. An Incentive
Agreement shall include such terms and conditions as are determined by
the Committee, in its discretion, to be appropriate with respect to any
individual Grantee. The Incentive Agreement shall be signed by the
Grantee to whom the Incentive Award is made and by an Authorized
Officer.
ii. NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any
instrument executed pursuant to the Plan shall create any Employment
rights (including without limitation, rights to continued Employment)
in any Grantee or affect the right of the Company to terminate the
Employment of any Grantee at any time without regard to the existence
of the Plan.
iii. SECURITIES REQUIREMENTS. The Company shall be under no
obligation to effect the registration pursuant to the Securities Act of
1933 of any Shares of Common Stock to be issued hereunder or to effect
similar compliance under any state laws. Notwithstanding anything
herein to the contrary, the Company shall not be obligated to cause to
be issued or delivered any certificates evidencing Shares pursuant to
the Plan unless and until the Company is advised by its counsel that
the issuance and delivery of such certificates is in compliance with
all applicable laws, regulations of governmental authorities, and the
requirements of any securities exchange on which Shares are traded. The
Committee may require, as a condition of the issuance and delivery of
certificates evidencing Shares of Common Stock pursuant to the terms
hereof, that the recipient of such Shares make such covenants,
agreements and representations, and that such certificates bear such
legends, as the Committee, in its discretion, deems necessary or
desirable.
If the Shares issuable on exercise of an Incentive Award are
not registered under the Securities Act of 1933, the Company may
imprint on the certificate for such Shares the
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following legend or any other legend which counsel for the Company
considers necessary or advisable to comply with the Securities Act of
1933:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT UPON SUCH REGISTRATION OR UPON RECEIPT BY
THE CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION, IN FORM AND SUBSTANCE SATISFACTORY TO THE
CORPORATION, THAT REGISTRATION IS NOT REQUIRED FOR SUCH SALE
OR TRANSFER.
The Shares issuable on exercise of an Incentive Award shall
bear the restrictive legends required by the rules of any stock
exchange outside of the United States on which the Shares are traded
from time to time, including the following:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON
THE TORONTO STOCK EXCHANGE, HOWEVER, SAID SECURITIES CANNOT BE
TRADED THROUGH THE FACILITIES OF SUCH EXCHANGE SINCE THEY ARE
NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE
REPRESENTING SUCH SECURITIES IS NOT "GOOD DELIVERY" IN
SETTLEMENT OF TRANSACTIONS ON THE TORONTO STOCK EXCHANGE.
b. TRANSFERABILITY
i. NON-TRANSFERABLE AWARDS AND OPTIONS. No Incentive Award
and no right under the Plan, contingent or otherwise, will be (i)
assignable, saleable, or otherwise transferable by a Grantee except by
will or by the laws of descent and distribution, or (ii) subject to any
encumbrance, pledge, lien, assignment or charge of any nature.
No transfer by will or by the laws of descent and distribution
shall be effective to bind the Company unless the Committee has been
furnished with a copy of the deceased Grantee's enforceable will or
such other evidence as the Committee deems necessary to establish the
validity of the transfer. Any attempted transfer in violation of this
Section 3.2(a) shall be void and ineffective.
ii. ABILITY TO EXERCISE RIGHTS. Subject to a beneficiary
designation pursuant to Section 4.5, only the Grantee (or his legal
guardian in the event of Grantee's Disability), or in the event of his
death, his estate, may exercise Stock Options, receive cash payments
and deliveries of Shares, and otherwise assume the rights of the
Grantee.
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c. RIGHTS AS A STOCKHOLDER
i. NO STOCKHOLDER RIGHTS. A Grantee of an Incentive Award
(or a permitted transferee of such Grantee) shall have no rights as a
stockholder with respect to any Shares of Common Stock until the
issuance of a stock certificate for such Shares.
ii. REPRESENTATION OF OWNERSHIP. In the case of the
exercise of an Incentive Award by a person or estate acquiring the
right to exercise such Incentive Award by reason of the death or
Disability of a Grantee, the Committee may require reasonable evidence
as to the ownership of such Incentive Award or the authority of such
person and may require such consents and releases of taxing authorities
as the Committee may deem advisable.
d. LISTING AND REGISTRATION OF SHARES OF COMMON STOCK
The exercise of any Incentive Award granted hereunder shall only be
effective at such time as counsel to the Company shall have determined that the
issuance and delivery of Shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authorities and
the requirements of any securities exchange on which Shares of Common Stock are
traded. The Committee may, in its discretion, defer the effectiveness of any
exercise of an Incentive Award in order to allow the issuance of Shares of
Common Stock to be made pursuant to registration or an exemption from
registration or other methods for compliance available under federal or state
securities laws. The Committee shall inform the Grantee in writing of its
decision to defer the effectiveness of the exercise of an Incentive Award.
During the period that the effectiveness of the exercise of an Incentive Award
has been deferred, the Grantee may, by written notice to the Committee, withdraw
such exercise and obtain the refund of any amount paid with respect thereto.
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e. CHANGE IN STOCK AND ADJUSTMENTS
i. CHANGES IN LAW OR CIRCUMSTANCES. Subject to Section 3.7
(which only applies in the event of a Change in Control), in the event
of any change in applicable laws or any change in circumstances which
results in or would result in any dilution of the rights granted under
the Plan, or which otherwise warrants equitable adjustment because it
interferes with the intended operation of the Plan, then, if the
Committee should determine, in its absolute discretion, that such
change equitably requires an adjustment in the number or kind of shares
of stock or other securities or property theretofore subject, or which
may become subject, to issuance or transfer under the Plan or in the
terms and conditions of outstanding Incentive Awards, such adjustment
shall be made in accordance with such determination. Such adjustments
may include changes with respect to (i) the aggregate number of Shares
that may be issued under the Plan, (ii) the number of Shares subject to
Incentive Awards, and (iii) the price per Share for outstanding
Incentive Awards. Any adjustment under this paragraph of an outstanding
Incentive Stock Option shall be made only to the extent not
constituting a "modification" within the meaning of Section 424(h)(3)
of the Code unless otherwise agreed to by the Grantee in writing. The
Committee shall give notice to each applicable Grantee of such
adjustment which shall be effective and binding.
ii. EXERCISE OF CORPORATE POWERS. The existence of the Plan
or outstanding Incentive Awards hereunder shall not affect in any way
the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalization, reorganization or
other changes in the Company's capital structure or its business or any
merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stocks ahead of or affecting
the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part
of its assets or business, or any other corporate act or proceeding
whether of a similar character or otherwise.
iii. RECAPITALIZATION OF THE COMPANY. Subject to Section
3.7, if while there are Incentive Awards outstanding, the Company shall
effect any subdivision or consolidation of Shares of Common Stock or
other capital readjustment, the payment of a stock dividend, stock
split, combination of Shares, recapitalization or other increase or
reduction in the number of Shares outstanding, without receiving
compensation therefor in money, services or property, then the number
of Shares available under the Plan and the number of Incentive Awards
which may thereafter be exercised shall (i) in the event of an increase
in the number of Shares outstanding, be proportionately increased and
the Fair Market Value of the Incentive Awards awarded shall be
proportionately reduced; and (ii) in the event of a reduction in the
number of Shares outstanding, be proportionately reduced, and the Fair
Market Value of the Incentive Awards awarded shall be proportionately
increased. The Committee shall take such action and whatever other
action it deems appropriate, in its discretion, so that the value of
each outstanding Incentive Award to the Grantee shall not be adversely
affected by a corporate event described in this subsection (c).
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iv. REORGANIZATION OF THE COMPANY. Subject to Section .4,
if the Company is reorganized, merged or consolidated, or is a party to
a plan of exchange with another corporation, pursuant to which
reorganization, merger, consolidation or exchange, stockholders of the
Company receive any Shares of Common Stock or other securities or
property, or if the Company should distribute securities of another
corporation to its stockholders, each Grantee shall be entitled to
receive, in lieu of the number of unexercised Incentive Awards
previously awarded, the number of Stock Options or Stock Appreciation
Rights with a corresponding adjustment to the Fair Market Value of said
Incentive Awards, to which he would have been entitled if, immediately
prior to such corporate action, such Grantee had been the holder of
record of a number of Shares equal to the number of the outstanding
Incentive Awards payable in Shares that were previously awarded to him.
In this regard, the Committee shall take whatever other action it deems
appropriate to preserve the rights of Grantees holding outstanding
Incentive Awards.
v. ISSUE OF COMMON STOCK BY THE COMPANY. Except as
hereinabove expressly provided in this Section 3.5 and subject to
Section 3.7, the issue by the Company of shares of stock of any class,
or securities convertible into shares of stock of any class, for cash
or property, or for labor or services, either upon direct sale or upon
the exercise of rights or warrants to subscribe therefor, or upon any
conversion of shares or obligations of the Company convertible into
such shares or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number of, or Fair
Market Value of, any Incentive Awards then outstanding under previously
granted Incentive Awards.
vi. ACQUISITION OF THE COMPANY. Subject to Section 3.7, in
the case of any sale of assets, merger, consolidation or combination of
the Company with or into another corporation other than a transaction
in which the Company is the continuing or surviving corporation and
which does not result in the outstanding Shares being converted into or
exchanged for different securities, cash or other property, or any
combination thereof (an "Acquisition"), in the absolute discretion of
the Committee, any Grantee who holds an outstanding Incentive Award
shall have the right (subject to any limitation applicable to the
Incentive Award) thereafter and during the term of the Incentive Award,
to receive upon exercise thereof the Acquisition Consideration (as
defined below) receivable upon the Acquisition by a holder of the
number of Shares which would have been obtained upon exercise of the
Incentive Award immediately prior to the Acquisition. The term
"Acquisition Consideration" shall mean the kind and amount of shares of
the surviving or new corporation, cash, securities, evidence of
indebtedness, other property or any combination thereof receivable in
respect of one Share upon consummation of an Acquisition. The
Committee, in its discretion, shall have the authority to take whatever
action it deems appropriate to effectuate the provisions of this
subsection (f).
vii. ASSUMPTION OF OUTSTANDING INCENTIVE AWARDS UNDER THE
PLAN. Notwithstanding any other provision of the Plan, the Committee,
in its absolute discretion, may
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authorize the assumption and continuation under the Plan of outstanding
and unexercised stock options or other types of stock-based incentive
awards that were granted under a stock option plan (or other type of
stock incentive plan or agreement) that is or was maintained by a
corporation or other entity that was merged into, consolidated with, or
whose stock or assets were acquired by, the Company as the surviving
corporation. Any such action shall be upon such terms and conditions as
the Committee, in its discretion, may deem appropriate, including
provisions to preserve the holder's rights under the previously granted
and unexercised stock option or other stock-based incentive award, such
as, for example, retaining an existing exercise price under an
outstanding stock option. Any such assumption and continuation of any
such previously granted and unexercised incentive award shall be
treated as an outstanding Incentive Award under the Plan and shall thus
count against the number of Shares reserved for issuance pursuant to
Section 1.4. With respect to an incentive stock option (as described in
Section 422 of the Code) subject to this subsection (g), no adjustment
to such option shall be made to the extent constituting a
"modification" within the meaning of Section 424(h)(3) of the Code
unless otherwise agreed to by the optionee in writing.
viii. ASSUMPTION OF INCENTIVE AWARDS BY A SUCCESSOR. In the
event of a dissolution or liquidation of the Company, a sale of all or
substantially all of the Company's assets, a merger or consolidation
involving the Company in which the Company is not the surviving
corporation, or a merger or consolidation involving the Company in
which the Company is the surviving corporation but the holders of
Shares of Common Stock receive securities of another corporation and/or
other property, including cash, the Committee shall, in its absolute
discretion, have the right and power to:
(i) cancel, effective immediately prior to the
occurrence of such corporate event, each outstanding Incentive
Award (whether or not then exercisable), and, in full
consideration of such cancellation, pay to the Grantee to whom
such Incentive Award was granted an amount in cash equal to
the excess of (A) the value, as determined by the Committee,
in its absolute discretion, of the property (including cash)
received by the holder of a Share of Common Stock as a result
of such event over (B) the exercise price of such Incentive
Award, if any; or
(ii) provide for the exchange of each Incentive
Award outstanding immediately prior to such corporate event
(whether or not then exercisable) for an incentive award on
some or all of the property for which such Incentive Award is
exchanged and, incident thereto, make an equitable adjustment
as determined by the Committee, in its absolute discretion, in
the exercise price of the incentive award, if any, or the
number of shares or amount of property (including cash)
subject to the incentive award or, if appropriate, provide for
a cash payment to the Grantee to whom such Incentive Award was
granted in consideration for the exchange of the Incentive
Award.
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The Committee, in its discretion, shall have the authority to take
whatever action it deems appropriate to effectuate the provisions of
this subsection (h).
f. TERMINATION OF EMPLOYMENT, DEATH, DISABILITY AND RETIREMENT
i. TERMINATION OF EMPLOYMENT. Unless otherwise expressly
provided in the Grantee's Incentive Agreement, if the Grantee's
Employment is terminated for any reason other than due to his death,
Disability, Retirement or for Cause, any non-vested portion of any
Stock Option or other applicable Incentive Award at the time of such
termination shall automatically expire and terminate and no further
vesting shall occur. In such event, except as otherwise expressly
provided in his Incentive Agreement, the Grantee shall be entitled to
exercise his rights only with respect to the portion of the Incentive
Award that was vested as of the termination date for a period that
shall end on the earlier of (i) the expiration date set forth in the
Incentive Agreement with respect to the vested portion of such
Incentive Award or (ii) the date that occurs ninety (90) calendar days
after his termination date.
ii. TERMINATION OF EMPLOYMENT FOR CAUSE. Unless otherwise
expressly provided in the Grantee's Incentive Agreement, in the event
of the termination of a Grantee's Employment for Cause, all vested and
non-vested Stock Options and other Incentive Awards granted to such
Grantee shall immediately expire, and shall not be exercisable, as of
the commencement of business on the date of such termination.
iii. RETIREMENT. Unless otherwise expressly provided in the
Grantee's Incentive Agreement, upon the Retirement of any Employee who
is a Grantee:
(1) any non-vested portion of any outstanding
Option or other Incentive Award shall immediately terminate
and no further vesting shall occur; and
(2) any vested Option or other Incentive Award
shall expire on the earlier of (A) the expiration date set
forth in the Incentive Agreement for such Incentive Award; or
(B) the expiration of (1) one year after the date of
Retirement in the case of any Incentive Award other than an
Incentive Stock Option, or (2) three months after the date of
Retirement in the case of an Incentive Stock Option.
iv. DISABILITY OR DEATH. Unless otherwise expressly
provided in the Grantee's Incentive Agreement, upon termination of
Employment as a result of the Grantee's Disability or death:
(1) any nonvested portion of any outstanding Option
or other applicable Incentive Award shall immediately
terminate upon termination of Employment, as applicable, and
no further vesting shall occur; and
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(2) any vested Incentive Award shall expire upon
the earlier of either (A) the expiration date set forth in the
Incentive Agreement or (B) the first anniversary of the
Grantee's termination of Employment, as applicable, as a
result of his Disability or death.
In the case of any vested Incentive Stock Option held by an
Employee following termination of Employment, notwithstanding the
definition of "Disability" in Section 1.2, whether the Employee has
incurred a "Disability" for purposes of determining the length of the
Option exercise period following termination of Employment under this
paragraph (d) shall be determined by reference to Section 22(e)(3) of
the Code to the extent required by Section 422(c)(6) of the Code. The
Committee shall determine whether a Disability for purposes of this
subsection (d) has occurred.
v. CONTINUATION. Subject to the conditions and limitations
of the Plan and applicable law and regulation in the event that a
Grantee ceases to be an Employee, Outside Director or Consultant, as
applicable, for whatever reason, the Committee and Grantee may mutually
agree with respect to any outstanding Option or other Incentive Award
then held by the Grantee (i) for an acceleration or other adjustment in
any vesting schedule applicable to the Incentive Award, (ii) for a
continuation of the exercise period following termination for a longer
period than is otherwise provided under such Incentive Award, or (iii)
to any other change in the terms and conditions of the Incentive Award.
In the event of any such change to an outstanding Inventive Award, a
written amendment to the Grantee's Incentive Agreement shall be
required.
g. CHANGE IN CONTROL
Notwithstanding any contrary provision in the Plan, in the event of a
Change in Control (as defined below), all of the Stock Options and Stock
Appreciation Rights then outstanding shall become 100% vested and immediately
and fully exercisable as of the day immediately preceding the Change in Control
date unless expressly provided otherwise in the Grantee's Incentive Agreement.
Notwithstanding any other provision of this Plan, unless expressly
provided otherwise in the Grantee's Incentive Agreement, the provisions of this
Section 3.7 may not be terminated, amended, or modified to adversely affect any
Incentive Award theretofore granted under the Plan without the prior written
consent of the Grantee with respect to his outstanding Incentive Awards subject,
however, to the last paragraph of this Section 3.7.
For all purposes of this Plan, a "CHANGE IN CONTROL" of the Company
shall mean:
(a) The acquisition by an individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act
(a "PERSON") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of thirty percent (30%) or more of
the total voting power of all the Company's then outstanding securities
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entitled to vote generally in the election of directors to the Board;
provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change in Control: (i)
any acquisition by the Company or its Parent or Subsidiaries, (ii) any
acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or its Parent or Subsidiaries, or (iii)
any acquisition consummated with the prior approval of the Board.
(b) During the period of two consecutive calendar years,
individuals who at the beginning of such period constitute the Board,
and any new director(s) whose election by the Board or nomination for
election by the Company's shareholders was approved by a vote of at
least two-thirds of the directors then still in office, who either were
directors at the beginning of the two-year period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board; or
(c) The Company becomes a party to a merger, plan of
reorganization, consolidation or share exchange in which either (i) the
Company will not be the surviving corporation or (ii) the Company will
be the surviving corporation and any outstanding shares of the
Company's common stock will be converted into shares of any other
company (other than a reincorporation or the establishment of a holding
company involving no change of ownership of the Company) or other
securities, cash or other property (excluding payments made solely for
fractional shares); or
(d) The shareholders of the Company approve a merger, plan
of reorganization, consolidation or share exchange with any other
corporation, and immediately following such merger, plan of
reorganization, consolidation or share exchange the holders of the
voting securities of the Company outstanding immediately prior thereto
hold securities representing fifty percent (50%) or less of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger, plan of
reorganization, consolidation or share exchange; provided, however,
that notwithstanding the foregoing, no Change in Control shall be
deemed to have occurred if one-half (1/2) or more of the members of the
Board of the Company or such surviving entity immediately after such
merger, plan of reorganization, consolidation or share exchange is
comprised of persons who served as directors of the Company immediately
prior to such merger, plan of reorganization, consolidation or share
exchange or who are otherwise designees of the Company; or
(e) Upon approval by the Company's stockholders of a
complete liquidation and dissolution of the Company or the sale or
other disposition of all or substantially all of the assets of the
Company other than to a Parent or Subsidiary; or
(f) Any other event that a majority of the Board, in its
sole discretion, shall determine constitutes a Change in Control.
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Notwithstanding the occurrence of any of the foregoing events of this
Section 3.7 which would otherwise result in a Change in Control, the Board may
determine in its discretion, if it deems it to be in the best interest of the
Company, that an event or events otherwise constituting a Change in Control
shall not be considered a Change in Control. Such determination shall be
effective only if it is made by the Board prior to the occurrence of an event
that otherwise would be or probably would lead to a Change in Control; or after
such event if made by the Board a majority of which is composed of directors who
were members of the Board immediately prior to the event that otherwise would be
or probably would lead to a Change in Control.
h. EXCHANGE OF INCENTIVE AWARDS
The Committee may, in its discretion, permit any Grantee to surrender
outstanding Incentive Awards in order to exercise or realize his rights under
other Incentive Awards or in exchange for the grant of new Incentive Awards, or
require holders of Incentive Awards to surrender outstanding Incentive Awards
(or comparable rights under other plans or arrangements) as a condition
precedent to the grant of new Incentive Awards.
i. FINANCING
The Company may extend and maintain, or arrange for and guarantee, the
extension and maintenance of financing to any Grantee to purchase Shares
pursuant to exercise of an Incentive Award upon such terms as are approved by
the Committee in its discretion.
SECTION 4.
GENERAL
a. EFFECTIVE DATE AND GRANT PERIOD
This Plan is adopted by the Board effective as of February 11, 1998
(the "EFFECTIVE DATE"), and was approved by the stockholders of the Company on
August 21, 1998. Incentive Awards may be granted under the Plan at any time
prior to receipt of such stockholder approval; provided, however, if the
requisite stockholder approval is not obtained then any Incentive Awards granted
hereunder shall automatically become null and void and of no force or effect.
Unless sooner terminated by the Board, no Incentive Award shall be granted under
the Plan after ten (10) years from the Effective Date.
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b. FUNDING AND LIABILITY OF COMPANY
No provision of the Plan shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made, or otherwise
to segregate any assets. In addition, the Company shall not be required to
maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for
purposes of the Plan. Although bookkeeping accounts may be established with
respect to Grantees who are entitled to cash, Common Stock or rights thereto
under the Plan, any such accounts shall be used merely as a bookkeeping
convenience. The Company shall not be required to segregate any assets that may
at any time be represented by cash, Common Stock or rights thereto. The Plan
shall not be construed as providing for such segregation, nor shall the Company,
the Board or the Committee be deemed to be a trustee of any cash, Common Stock
or rights thereto. Any liability or obligation of the Company to any Grantee
with respect to an Incentive Award shall be based solely upon any contractual
obligations that may be created by this Plan and any Incentive Agreement, and no
such liability or obligation of the Company shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company. Neither the Company,
the Board nor the Committee shall be required to give any security or bond for
the performance of any obligation that may be created by the Plan.
c. WITHHOLDING TAXES
i. TAX WITHHOLDING. The Company shall have the power and
the right to deduct or withhold, or require a Grantee to remit to the
Company, an amount sufficient to satisfy federal, state, and local
taxes, domestic or foreign, required by law or regulation to be
withheld with respect to any taxable event arising as a result of the
Plan or an Incentive Award hereunder.
ii. SHARE WITHHOLDING. With respect to tax withholding
required upon the exercise of Stock Options or SARs or upon any other
taxable event arising as a result of any Incentive Awards, Grantees may
elect, subject to the approval of the Committee in its discretion, to
satisfy the withholding requirement, in whole or in part, by having the
Company withhold Shares having a Fair Market Value on the date the tax
is to be determined equal to the minimum statutory total tax which
could be imposed on the transaction. All such elections shall be made
in writing, signed by the Grantee, and shall be subject to any
restrictions or limitations that the Committee, in its discretion,
deems appropriate.
iii. INCENTIVE STOCK OPTIONS. With respect to Shares
received by a Grantee pursuant to the exercise of an Incentive Stock
Option, if such Grantee disposes of any such Shares within (i) two
years from the date of grant of such Option or (ii) one year after the
transfer of such shares to the Grantee, the Company shall have the
right to withhold from any salary, wages or other compensation payable
by the Company to the Grantee an amount
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sufficient to satisfy federal, state and local tax withholding
requirements attributable to such disqualifying disposition.
iv. LOANS. The Committee may provide for loans, on either a
short term or demand basis, from the Company to a Grantee who is an
Employee or Consultant to permit the payment of taxes required by law.
d. NO GUARANTEE OF TAX CONSEQUENCES
Neither the Company nor the Committee makes any commitment or guarantee
that any federal, state or local tax treatment will apply or be available to any
person participating or eligible to participate hereunder.
e. DESIGNATION OF BENEFICIARY BY PARTICIPANT
Each Grantee may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his death before he receives any
or all of such benefit. Each such designation shall revoke all prior
designations by the same Grantee, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Grantee in writing with
the Committee during the Grantee's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Grantee's death shall be paid to
the Grantee's estate.
f. DEFERRALS
The Committee may permit a Grantee to defer such Grantee's receipt of
the payment of cash or the delivery of Shares that would, otherwise be due to
such Grantee by virtue of the lapse or waiver of restrictions with respect to
Restricted Stock, or the satisfaction of any requirements or goals with respect
to Performance Units, Performance Shares or Other Stock-Based Awards. If any
such deferral election is permitted, the Committee shall, in its discretion,
establish rules and procedures for such payment deferrals to the extent
consistent with the Code.
g. AMENDMENT AND TERMINATION
The Board shall have complete power and authority to terminate or amend
the Plan at any time; provided, however, that the Board shall not, without the
approval of the stockholders of the Company within the time period required by
applicable law, (a) except as provided in Section 3.5, increase the maximum
number of Shares which may be issued under the Plan pursuant to Section 1.4, (b)
amend the requirements as to the class of Employees eligible to purchase Common
Stock under the Plan, (c) to the extent applicable, increase the maximum limits
on Incentive Awards to Covered Employees as set for compliance with the
Performance-Based Exception, (d) extend the term of the Plan, or (e) to the
extent applicable, decrease the authority granted to the Committee under the
Plan in contravention of Rule 16b-3 under the Exchange Act.
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No termination, amendment, or modification of the Plan shall adversely
affect in any material way any outstanding Incentive Award previously granted to
a Grantee under the Plan, without the written consent of such Grantee or other
designated holder of such Incentive Award.
This Plan and any amendments hereto are subject to all necessary
approvals of the applicable "Regulatory Authorities" and stockholders.
"Regulatory Authorities" means all stock exchanges and other organized trading
facilities on which the Shares are listed and all securities commissions or
similar securities regulatory bodies having jurisdiction over the Company. To
the extent that the Committee determines that (a) the listing or qualification
requirements of any Regulatory Authority, or (b) the Code (or regulations
promulgated thereunder), require stockholder approval in order to maintain
compliance with such listing or qualification requirements or to maintain any
favorable tax advantages or qualifications, then the Plan shall not be amended
in such respect without approval of such Regulatory Authority and/or the
Company's stockholders.
h. REQUIREMENTS OF LAW
The granting of Incentive Awards and the issuance of Shares under the
Plan shall be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or national securities exchanges as
may be required. Certificates evidencing shares of Common Stock delivered under
this Plan (to the extent that such shares are so evidenced) may be subject to
such stop transfer orders and other restrictions as the Committee may deem
advisable under the rules and regulations of the Securities and Exchange
Commission, any securities exchange or transaction reporting system upon which
the Common Stock is then listed or to which it is admitted for quotation, and
any applicable federal or state securities law, if applicable. The Committee may
cause a legend or legends to be placed upon such certificates (if any) to make
appropriate reference to such restrictions.
i. RULE 16b-3 SECURITIES LAW COMPLIANCE
With respect to Insiders to the extent applicable, transactions under
the Plan are intended to comply with all applicable conditions of Rule 16b-3
under the Exchange Act. Any ambiguities or inconsistencies in the construction
of an Incentive Award or the Plan shall be interpreted to give effect to such
intention. However, to the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void to the extent
permitted by law and deemed advisable by the Committee in its discretion.
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j. COMPLIANCE WITH CODE SECTION 162(m)
If the Company is a Publicly Held Corporation, then unless otherwise
determined by the Committee with respect to any particular Incentive Award, it
is intended that the Plan comply fully with and meet all the requirements of
Section 162(m) of the Code so that any applicable types of Incentive Awards that
are granted to Covered Employees shall qualify for the Performance-Based
Exception. If any provision of the Plan or an Incentive Agreement would
disqualify the Plan or would not otherwise permit the Plan or Incentive Award to
comply with the Performance-Based Exception as so intended, such provision shall
be construed or deemed amended to conform to the requirements of the
Performance-Based Exception to the extent permitted by applicable law and deemed
advisable by the Committee; provided that no such construction or amendment
shall have an adverse effect on the prior grant of an Incentive Award or the
economic value to a Grantee of any outstanding Incentive Award.
k. SUCCESSORS
All obligations of the Company under the Plan with respect to Incentive
Awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.
l. MISCELLANEOUS PROVISIONS
i. No Employee, Consultant, Outside Director, or other
person shall have any claim or right to be granted an Incentive Award
under the Plan. Neither the Plan, nor any action taken hereunder, shall
be construed as giving any Employee, Consultant, or Outside Director
any right to be retained in the Employment or other service of the
Company or any Parent or Subsidiary.
ii. No Shares of Common Stock shall be issued hereunder
unless counsel for the Company is then reasonably satisfied that such
issuance will be in compliance with federal and state securities laws,
if applicable.
iii. The expenses of the Plan shall be borne by the Company.
iv. By accepting any Incentive Award, each Grantee and each
person claiming by or through him shall be deemed to have indicated his
acceptance of the Plan.
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m. SEVERABILITY
In the event that any provision of this Plan shall be held illegal,
invalid or unenforceable for any reason, such provision shall be fully
severable, but shall not affect the remaining provisions of the Plan, and the
Plan shall be construed and enforced as if the illegal, invalid, or
unenforceable provision was not included herein.
n. GENDER, TENSE AND HEADINGS
Whenever the context so requires, words of the masculine gender used
herein shall include the feminine and neuter, and words used in the singular
shall include the plural. Section headings as used herein are inserted solely
for convenience and reference and constitute no part of the interpretation or
construction of the Plan.
o. GOVERNING LAW
The Plan shall be interpreted, construed and constructed in accordance
with the laws of the State of Delaware without regard to its conflicts of law
provisions, except as may be superseded by applicable laws of the United States.
IN WITNESS WHEREOF, PetroQuest Energy, Inc. has caused this Plan to be
duly executed in its name and on its behalf by its duly authorized officer.
ATTEST: PETROQUEST ENERGY, INC.
By:/s/ Robert R. Brooksher By: /s/ Charles T. Goodson
--------------------------------- ---------------------------------------
Name: Robert R. Brooksher Name: Charles T. Goodson
------------------------------- -------------------------------------
Title: Chief Financial Officer Title: President & Chief Executive Officer
------------------------------ ------------------------------------
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<PAGE> 1
EXHIBIT 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into this 1st day of
September, 1998 between PetroQuest Energy, Inc., a Delaware corporation
having its principal executive office at 625 E. Kaliste Saloom Road, Suite 400,
Lafayette, Louisiana 70508 (hereinafter referred to as the "Company"), and
Charles T. Goodson (hereinafter referred to as the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Employee in an executive
capacity and the Employee desires to enter the Company's employ.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Employee hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
have the meanings prescribed below:
Affiliate is used in this Agreement to define a relationship to a
person or entity and means a person or entity who, directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, such person or entity.
Annual Bonus shall have the meaning assigned thereto in Section 4.2
hereof.
Base Salary shall have the meaning assigned thereto in Section 4.1
hereof.
Beneficial Owner shall have the meaning assigned thereto in Rule
13(d)-3 under the Exchange Act; provided, however, and without limitation, that
any individual, corporation, partnership, group, association or other person or
entity that has the right to acquire any Voting Stock at any time in the future,
whether such right is (a) contingent or absolute or (b) exercisable presently or
at any time in the future, pursuant to any agreement or understanding or upon
the exercise or conversion of rights, options or warrants, or otherwise, shall
be the Beneficial Owner of such Voting Stock.
Cause shall have the meaning assigned thereto in Section 5.3 hereof.
Common Stock means the Company's common stock, par value $.001 per
share.
Confidential Information shall have the meaning assigned thereto in
Section 8.2 hereof.
<PAGE> 2
Date of Termination means the earliest to occur of (i) the date of the
Employee's death, (ii) the date on which the Employee terminates this Agreement
for any reason or (iii) the date of receipt of the Notice of Termination, or
such later date as may be prescribed in the Notice of Termination in accordance
with Section 5.5 hereof.
Disability means an illness or other disability which prevents the
Employee from discharging his responsibilities under this Agreement for a period
of 180 consecutive calendar days, or an aggregate of 180 calendar days in any
calendar year, during the Employment Period, all as determined in good faith by
the Board of Directors of the Company (or a committee thereof).
Effective Date means the date of execution hereof.
Employee means Charles T. Goodson, whose business address is 625 E.
Kaliste Saloom Road, Suite 400, Lafayette, Louisiana 70508.
Exchange Act means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the Securities and Exchange Commission
thereunder, all as in effect from time to time during the Employment Period.
Company means PetroQuest Energy, Inc., a Delaware corporation, the
principal executive office of which is located at 625 E. Kaliste Saloom Road,
Suite 400, Lafayette, Louisiana 70508.
Employment Period shall have the meaning assigned thereto in Section 3
hereof.
Initial Term shall have the meaning assigned thereto in Section 3
hereof.
Notice of Termination shall have the meaning assigned thereto in
Section 5.5 hereof.
Unexpired Term shall have the meaning assigned thereto in Section
6.3(c) hereof.
Voting Stock means all outstanding shares of capital stock of the
Company entitled to vote generally in an election of directors; provided,
however, that if the Company has shares of Voting Stock entitled to more or less
than one vote per share, each reference to a proportion of the issued and
outstanding shares of Voting Stock shall be deemed to refer to the proportion of
the aggregate votes entitled to be cast by the issued and outstanding shares of
Voting Stock.
Without Cause shall have the meaning assigned thereto in Section 5.4
hereof.
2. General Duties of Company and Employee.
2.1 The Company agrees to employ the Employee, and the Employee agrees
to accept employment by the Company and to serve the Company as President and
Chief Executive Officer, and shall also serve as a director of the Company. The
authority, duties and responsibilities of the
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<PAGE> 3
Employee shall include those described in Exhibit A to this Agreement, and such
other or additional duties as may from time to time be assigned to the Employee
by the Board of Directors (or a committee thereof) and agreed to by the
Employee. While employed hereunder, the Employee shall devote full time and
attention during normal business hours to the affairs of the Company and use his
best efforts to perform faithfully and efficiently his duties and
responsibilities. The Employee may (i) serve on corporate, civic or charitable
boards or committees, (ii) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (iii) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Employee's duties and responsibilities.
2.2 The Employee agrees and acknowledges that he owes a fiduciary duty
of loyalty, fidelity and allegiance to act at all times in the best interests of
the Company and to do no act and to make no statement, oral or written, which
would injure Company's business, its interests or its reputation.
2.3 The Employee agrees to comply at all times during the Employment
Period with all applicable policies, rules and regulations of the Company,
including, without limitation, the Company's Code of Ethics and the Company's
policy regarding trading in the Common Stock, as each is in effect from time to
time during the Employment Period.
3. Term. Unless sooner terminated pursuant to other provisions hereof, the
Employee's period of employment under this Agreement shall be a period of three
years beginning on the Effective Date (the "Initial Term"). After the expiration
of the Initial Term, the Employee's period of employment under this Agreement
shall be automatically renewed for successive one-year terms on each anniversary
of the Effective Date (the Initial Term and any and all renewals thereof are
referred to herein collectively as the "Employment Period").
4. Compensation and Benefits.
4.1 Base Salary. As compensation for services to the Company, the
Company shall pay to the Employee until the Date of Termination an annual base
salary of $210,000 (the "Base Salary"). The Board of Directors (or a committee
thereof), in its discretion, may increase the Base Salary based upon relevant
circumstances. The Base Salary shall be payable in equal semi-monthly
installments or in accordance with the Company's established policy, subject
only to such payroll and withholding deductions as may be required by law and
other deductions applied generally to employees of the Company for insurance and
other employee benefit plans.
4.2 Bonus. In addition to the Base Salary, the Employee may be awarded,
for each fiscal year until the Date of Termination, an annual bonus (either
pursuant to a bonus or incentive plan or program of the Company or otherwise) in
an amount to be determined by the Board of Directors (or a committee thereof),
in its sole discretion (the "Annual Bonus"). Each such Annual Bonus shall be
payable at a time to be determined by the Board of Directors (or a committee
thereof) in its sole discretion.
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<PAGE> 4
4.3 Incentive, Savings and Retirement Plans. Until the Date of
Termination, the Employee shall be eligible to participate in and shall receive
all benefits under all executive incentive, savings and retirement plans
(including 401(k) plans) and programs currently maintained or hereinafter
established by the Company for the benefit of its executive officers and/or
employees.
4.4 Welfare Benefit Plan. Until the Date of Termination, the Employee
and/or the Employee's family, as the case may be, shall be eligible to
participate in and shall receive all benefits under each welfare benefit plan of
the Company currently maintained or hereinafter established by the Company for
the benefit of its employees. Such welfare benefit plans may include, without
limitation, medical, dental, disability, group life, accidental death and travel
accident insurance plans and programs.
4.5 Reimbursement of Expenses. The Employee may from time to time until
the Date of Termination incur various business expenses customarily incurred by
persons holding positions of like responsibility, including, without limitation,
travel, entertainment and similar expenses incurred for the benefit of the
Company, and will receive a Company credit card for use for such expenses.
Subject to the Company's policy regarding the reimbursement of such expenses as
in effect from time to time during the Employment Period, which does not
necessarily allow reimbursement of all such expenses, the Company shall
reimburse the Employee for such expenses from time to time, at the Employee's
request, and the Employee shall account to the Company for all such expenses.
4.6 Life Insurance. The Company shall provide to the Executive life
insurance on terms that are mutually agreeable to the Company and the Executive.
4.7 Relocation. The Company and the Executive agree that if the
Executive is asked to relocate from Lafayette, Louisiana to Houston, Texas, the
Company will provide to Executive reimbursement for out of pocket moving
expenses incurred in connection with such move, and it will also reimburse the
Executive for any loss incurred by the Executive on the sale of his personal
residence in Lafayette, Louisiana, with such loss being calculated on the basis
of the difference between the Executive's actual costs less the net sales price.
5. Termination.
5.1 Death. This Agreement shall terminate automatically upon the death
of the Employee.
5.2 Disability. The Company may terminate this Agreement, upon written
notice to the Employee delivered in accordance with Sections 5.5 and 12.1
hereof, upon the Disability of the Employee.
5.3 Cause. The Company may terminate this Agreement, upon written
notice to the Employee delivered in accordance with Sections 5.5 and 12.1
hereof, for Cause. For purposes of
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<PAGE> 5
this Agreement, "Cause" means (i) the conviction of the Employee of a felony
(which, through lapse of time or otherwise, is not subject to appeal), (ii) the
Employee's willful refusal, without proper legal cause, to perform his duties
and responsibilities as contemplated in this Agreement or (iii) the Employee's
willful engaging in activities which would (A) constitute a breach of any term
of this Agreement, the Company's Code of Ethics, the Company's policies
regarding trading in the Common Stock or reimbursement of business expenses or
any other applicable policies, rules or regulations of the Company, or (B)
result in a material injury to the business, condition (financial or otherwise),
results of operations or prospects of the Company or its Affiliates (as
determined in good faith by the Board of Directors of the Company or a committee
thereof).
5.4 Without Cause. The Company may terminate this Agreement Without
Cause, upon written notice to the Employee delivered in accordance with Sections
5.5 and 12.1 hereof. For purposes of this Agreement, the Employee will be deemed
to have been terminated "Without Cause" if the Employee is terminated by the
Company for any reason other than Cause, Disability or death.
5.5 Notice of Termination. Any termination of this Agreement by the
Company for Cause, Without Cause or as a result of the Employee's Disability
shall be communicated by Notice of Termination to the Employee given in
accordance with this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Employee's employment under the provision so indicated and (iii) specifies the
termination date, if such date is other than the date of receipt of such notice
(which termination date shall not be more than 15 days after the giving of such
notice).
6. Obligations of Company upon Termination.
6.1 Cause by Employee. If this Agreement shall be terminated either by
the Company for Cause or by the Employee for any reason, the Company shall pay
to the Employee, in a lump sum in cash within 30 days after the Date of
Termination, the aggregate of the Employee's Base Salary (as in effect on the
Date of Termination) through the Date of Termination, if not theretofore paid,
and, in the case of compensation previously deferred by the Employee, all
amounts of such compensation previously deferred and not yet paid by the
Company. All other obligations of the Company and rights of the Employee
hereunder shall terminate effective as of the Date of Termination.
6.2 Death or Disability.
(a) Subject to the provisions of this Section 6.2, if this
Agreement is terminated as a result of the Employee's death or
Disability, the Company shall pay to the Employee or his estate, in
equal semi-monthly installments, the Employee's Base Salary (as in
effect on the Date of Termination) for 12 months after such Date of
Termination. The Company may purchase insurance to cover all or any
part of the obligation contemplated in the foregoing
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<PAGE> 6
sentence, and the Employee agrees to submit to a physical examination
to facilitate the procurement of such insurance.
(b) Whenever compensation is payable to the Employee hereunder
during a period in which he is partially or totally disabled, and such
Disability would (except for the provisions hereof) entitle the
Employee to Disability income or salary continuation payments from the
Company according to the terms of any plan or program presently
maintained or hereafter established by the Company, the Disability
income or salary continuation paid to the Employee pursuant to any such
plan or program shall be considered a portion of the payment to be made
to the Employee pursuant to this Section 6.2 and shall not be in
addition hereto. If Disability income is payable directly to the
Employee by an insurance company under the terms of an insurance policy
paid for by the Company, the amounts paid to the Employee by such
insurance company shall be considered a portion of the payment to be
made to the Employee pursuant to this Section 6.2 and shall not be in
addition hereto.
6.3 Without Cause. If this Agreement shall be terminated by the
Company Without Cause:
(a) the Company shall pay to the Employee, in a lump sum
in cash within 30 days after the Date of Termination, the aggregate of
the following amounts:
(1) if not theretofore paid, the Employee's Base
Salary (as in effect on the Date of Termination) through the
Date of Termination; and
(2) in the case of compensation previously deferred
by the Employee, all amounts of such compensation previously
deferred and not yet paid by the Company;
(b) the Company shall, promptly upon submission by the
Employee of supporting documentation, pay or reimburse to the Employee
any costs and expenses (including moving and relocation expenses) paid
or incurred by the Employee which would have been payable under Section
4.5 of this Agreement if the Employee's employment had not terminated;
and
(c) for the 12-month period commencing on the Date of
Termination, the Company shall continue benefits to the Employee and/or
the Employee's family at least equal to those which would have been
provided to them under Section 4.4 if the Employee's employment had not
been terminated; and
(d) the Company shall pay to the Employee, in equal
semi-monthly installments, the Employee's Base Salary (as in effect on
the Date of Termination) for 12 months after the Date of Termination.
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<PAGE> 7
7. Employee's Obligation to Avoid Conflicts of Interest.
7.1 In keeping with the Employee's fiduciary duties to the
Company, the Employee agrees that he shall not knowingly become involved in a
conflict of interest with the Company, or upon discovery thereof, allow such a
conflict to continue. The Employee further agrees to disclose to the Company,
promptly after discovery, any facts or circumstances which might involve a
conflict of interest with the Company.
7.2 The Company and the Employee recognize that it is impossible
to provide an exhaustive list of actions or interests which constitute a
"conflict of interest." Moreover, the Company and the Employee recognize that
there are many borderline situations. In some instances, full disclosure of
facts by the Employee to the Company is all that is necessary to enable the
Company to protect its interests. In others, if no improper motivation appears
to exist and the Company's interests have not suffered, prompt elimination of
the outside interest will suffice. In still others, it may be necessary for the
Company to terminate the employment relationship. The Company and the Employee
agree that the Company's determination as to whether or not a conflict of
interest exists shall be conclusive. The Company reserves the right to take such
action as, in its judgment, will end the conflict of interest.
7.3 In this connection, it is agreed that any direct or indirect
interest in, connection with or benefit from any outside activities,
particularly commercial activities, which interest might in any way adversely
affect the Company or its Affiliates, involves a possible conflict of interest.
Circumstances in which a conflict of interest on the part of the Employee would
or might arise, and which should be reported immediately to the Company,
include, but are not limited to, the following:
(a) Ownership of a material interest in any lender, supplier,
contractor, subcontractor, customer or other entity with which the
Company does business.
(b) Acting in any capacity, including director, officer,
partner, consultant, employee, distributor, agent or the like, for any
lender, supplier, contractor, subcontractor, customer or other entity
with which the Company does business.
(c) Acceptance, directly or indirectly, of payments, services
or loans from a lender, supplier, contractor, subcontractor, customer
or other entity with which the Company does business, including,
without limitation, gifts, trips, entertainment or other favors of more
than a nominal value, but excluding loans from publicly held insurance
companies and commercial or savings banks at market rates of interest.
(d) Use of information or facilities to which the Employee
has access in a manner which will be detrimental to the Company's
interests, such as use for the Employee's own benefit of know-how or
information developed through the Company's business activities.
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<PAGE> 8
(e) Disclosure or other misuse of information of any kind
obtained through the Employee's connection with the Company.
(f) Acquiring or trading in, directly or indirectly, oil and
gas properties or interests for his own account or the account of his
Affiliates without the prior written consent of the Board of Directors.
8. Employee's Confidentiality Obligation.
8.1 The Employee hereby acknowledges, understands and agrees that
all Confidential Information is the exclusive and confidential property of the
Company and its Affiliates which shall at all times be regarded, treated and
protected as such in accordance with this Section 8. The Employee acknowledges
that all such Confidential Information is in the nature of a trade secret.
8.2 For purposes of this Agreement, "Confidential Information"
means information, which is used in the business of the Company or its
Affiliates and (i) is proprietary to, about or created by the Company or its
Affiliates, (ii) gives the Company or its Affiliates some competitive business
advantage or the opportunity of obtaining such advantage or the disclosure of
which could be detrimental to the interests of the Company or its Affiliates,
(iii) is designated as Confidential Information by the Company or its
Affiliates, is known by the Employee to be considered confidential by the
Company or its Affiliates, or from all the relevant circumstances should
reasonably be assumed by the Employee to be confidential and proprietary to the
Company or its Affiliates, or (iv) is not generally known by non-Company
personnel. Such Confidential Information includes, without limitation, the
following types of information and other information of a similar nature
(whether or not reduced to writing or designated as confidential):
(a) Internal personnel and financial information of the
Company or its Affiliates, information regarding oil and gas properties
including reserve information, vendor information (including vendor
characteristics, services, prices, lists and agreements), purchasing
and internal cost information, internal service and operational
manuals, and the manner and methods of conducting the business of the
Company or its Affiliates;
(b) Marketing and development plans, price and cost data,
price and fee amounts, pricing and billing policies, bidding, quoting
procedures, marketing techniques, forecasts and forecast assumptions
and volumes, and future plans and potential strategies (including,
without limitation, all information relating to any oil and gas
prospect and the identity of any key contact within the organization of
any acquisition prospect) of the Company or its Affiliates which have
been or are being discussed;
(c) Names of customers and their representatives, contracts
(including their contents and parties), customer services, and the
type, quantity, specifications and content of products and services
purchased, leased, licensed or received by customers of the Company or
its Affiliates; and
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<PAGE> 9
(d) Confidential and proprietary information provided to the
Company or its Affiliates by any actual or potential customer,
government agency or other third party (including businesses,
consultants and other entities and individuals).
8.3 As a consequence of the Employee's acquisition or anticipated
acquisition of Confidential Information, the Employee shall occupy a position of
trust and confidence with respect to the affairs and business of the Company and
its Affiliates. In view of the foregoing and of the consideration to be provided
to the Employee, the Employee agrees that it is reasonable and necessary that
the Employee make each of the following covenants:
(a) At any time during the Employment Period and thereafter,
the Employee shall not disclose Confidential Information to any person
or entity, either inside or outside of the Company, other than as
necessary in carrying out his duties and responsibilities as set forth
in Section 2 hereof, without first obtaining the Company's prior
written consent (unless such disclosure is compelled pursuant to court
orders or subpoena, and at which time the Employee shall give notice of
such proceedings to the Company).
(b) At any time during the Employment Period and thereafter,
the Employee shall not use, copy or transfer Confidential Information
other than as necessary in carrying out his duties and responsibilities
as set forth in Section 2 hereof, without first obtaining the Company's
prior written consent.
(c) On the Date of Termination, the Employee shall promptly
deliver to the Company (or its designee) all written materials, records
and documents made by the Employee or which came into his possession
prior to or during the Employment Period concerning the business or
affairs of the Company or its Affiliates, including, without
limitation, all materials containing Confidential Information.
9. Disclosure of Information, Ideas, Concepts, Improvements, Discoveries
and Inventions.
As part of the Employee's fiduciary duties to the Company, the Employee
agrees that during his employment by the Company and for a period of three years
following the Date of Termination, the Employee shall promptly disclose in
writing to the Company all information, ideas, concepts, improvements,
discoveries and inventions, whether patentable or not, and whether or not
reduced to practice, which are conceived, developed, made or acquired by the
Employee, either individually or jointly with others, and which relate to the
business, products or services of the Company or its Affiliates, irrespective of
whether the Employee used the Company's time or facilities and irrespective of
whether such information, idea, concept, improvement, discovery or invention was
conceived, developed, discovered or acquired by the Employee on the job, at
home, or elsewhere. This obligation extends to all types of information, ideas
and concepts, including information, ideas and concepts relating to new types of
services, corporate opportunities, acquisition prospects, the identity of key
representatives within acquisition prospect organizations, prospective names or
service marks for the Company's business activities, and the like.
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10. Ownership of Information, Ideas, Concepts, Improvements, Discoveries
and Inventions, and all Original Works of Authorship.
10.1 All information, ideas, concepts, improvements, discoveries and
inventions, whether patentable or not, which are conceived, made, developed or
acquired by the Employee or which are disclosed or made known to the Employee,
individually or in conjunction with others, during the Employee's employment by
the Company and which relate to the business, products or services of the
Company or its Affiliates (including, without limitation, all such information
relating to corporate opportunities, research, financial and sales data, pricing
and trading terms, evaluations, opinions, interpretations, acquisition
prospects, the identity of customers or their requirements, the identity of key
contacts within the customers' organizations or within the organization of
acquisition prospects, marketing and merchandising techniques, and prospective
names and service marks) are and shall be the sole and exclusive property of the
Company. Furthermore, all drawings, memoranda, notes, records, files,
correspondence, manuals, models, specifications, computer programs, maps and all
other writings or materials of any type embodying any of such information,
ideas, concepts, improvements, discoveries and inventions are and shall be the
sole and exclusive property of the Company.
10.2 In particular, the Employee hereby specifically sells, assigns,
transfers and conveys to the Company all of his worldwide right, title and
interest in and to all such information, ideas, concepts, improvements,
discoveries or inventions, and any United States or foreign applications for
patents, inventor's certificates or other industrial rights which may be filed
in respect thereof, including divisions, continuations, continuations-in-part,
reissues and/or extensions thereof, and applications for registration of such
names and service marks. The Employee shall assist the Company and its nominee
at all times, during the Employment Period and thereafter, in the protection of
such information, ideas, concepts, improvements, discoveries or inventions, both
in the United States and all foreign countries, which assistance shall include,
but shall not be limited to, the execution of all lawful oaths and all
assignment documents requested by the Company or its nominee in connection with
the preparation, prosecution, issuance or enforcement of any applications for
United States or foreign letters patent, including divisions, continuations,
continuations-in-part, reissues and/or extensions thereof, and any application
for the registration of such names and service marks.
10.3 In the event the Employee creates, during the Employment Period,
any original work of authorship fixed in any tangible medium of expression which
is the subject matter of copyright (such as, videotapes, written presentations
on acquisitions, computer programs, drawings, maps, architectural renditions,
models, manuals, brochures or the like) relating to the Company's business,
products or services, whether such work is created solely by the Employee or
jointly with others, the Company shall be deemed the author of such work if the
work is prepared by the Employee in the scope of his employment; or, if the work
is not prepared by the Employee within the scope of his employment but is
specially ordered by the Company as a contribution to a collective work, as a
part of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a
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compilation or as an instructional text, then the work shall be considered to be
work made for hire, and the Company shall be the author of such work. If such
work is neither prepared by the Employee within the scope of his employment nor
a work specially ordered and deemed to be a work made for hire, then the
Employee hereby agrees to sell, transfer, assign and convey, and by these
presents, does sell, transfer, assign and convey, to the Company all of the
Employee's worldwide right, title and interest in and to such work and all
rights of copyright therein. The Employee agrees to assist the Company and its
Affiliates, at all times, during the Employment Period and thereafter, in the
protection of the Company's worldwide right, title and interest in and to such
work and all rights of copyright therein, which assistance shall include, but
shall not be limited to, the execution of all documents requested by the Company
or its nominee and the execution of all lawful oaths and applications for
registration of copyright in the United States and foreign countries.
11. Employee's Non-Competition Obligation.
11.1 (a) Until the Date of Termination, the Employee shall not,
acting alone or in conjunction with others, directly or indirectly, in
any of the business territories in which the Company or any of its
Affiliates is presently or from time to time during the Employment
Period conducting business, invest or engage, directly or indirectly,
in any business which is competitive with that of the Company or accept
employment with or render services to such a competitor as a director,
officer, agent, employee or consultant, or take any action inconsistent
with the fiduciary relationship of an employee to his employer;
provided, however, that the beneficial ownership by the Employee of up
to three percent of the Voting Stock of any corporation subject to the
periodic reporting requirements of the Exchange Act shall not violate
this Section 11.1(a).
(b) In addition to the other obligations agreed to by the
Employee in this Agreement, the Employee agrees that until the Date of
Termination, he shall not at any time, directly or indirectly, (i)
induce, entice or solicit any employee of the Company to leave his
employment, (ii) contact, communicate or solicit any customer or
acquisition prospect of the Company derived from any customer list,
customer lead, mail, printed matter or other information secured from
the Company or its present or past employees or (iii) in any other
manner use any customer lists or customer leads, mail, telephone
numbers, printed material or other information of the Company relating
thereto.
11.2 (a) If this Agreement is terminated either by the Company for
Cause or by the Employee for any reason, then for a period of one year
following the Date of Termination, the Employee shall not, acting alone
or in conjunction with others, directly or indirectly, in any of the
business territories in which the Company or any of its Affiliates is
presently or at the Date of Termination conducting business, invest or
engage, directly or indirectly, in any business which is competitive
with that of the Company as of the Date of Termination or accept
employment with or render services to such a competitor as a director,
officer, agent, employee or consultant, or take any action inconsistent
with the fiduciary relationship of an employee to his employer;
provided, however, that the beneficial ownership by the
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Employee of up to three percent of the Voting Stock of any corporation
subject to the periodic reporting requirements of the Exchange Act
shall not violate this Section 11.2(a).
(b) In addition to the other obligations agreed to by the
Employee in this Agreement, the Employee agrees that if this Agreement
is terminated either by the Company for Cause or by the Employee for
any reason, then for a period of one year following the Date of
Termination, he shall not at any time, directly or indirectly, (i)
induce, entice or solicit any employee of the Company to leave his
employment, (ii) contact, communicate or solicit any customer or
acquisition prospect of the Company derived from any customer list,
customer lead, mail, printed matter or other information secured from
the Company or its present or past employees or (iii) in any other
manner use any customer lists or customer leads, mail, telephone
numbers, printed material or other information of the Company relating
thereto.
11.3 If this Agreement is terminated either by the Company Without
Cause, then the Employee shall not be subject to any non-competition obligation.
12. Miscellaneous.
12.1 Notices. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when delivered by hand or
mailed by registered or certified mail, return receipt requested, as follows
(provided that notice of change of address shall be deemed given only when
received):
If to the Company to:
625 E. Kaliste Saloom Road
Suite 400
Lafayette, Louisiana 70508
If to the Employee to:
625 E. Kaliste Saloom Road
Suite 400
Lafayette, Louisiana 70508
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section 12.1.
12.2 Waiver of Breach. The waiver by any party hereto of a breach
of any provision of this Agreement shall neither operate nor be construed as a
waiver of any subsequent breach by any party.
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12.3 Assignment. This Agreement shall be binding upon and inure to the
benefit of the Company, its successors, legal representatives and assigns, and
upon the Employee, his heirs, executors, administrators, representatives and
assigns; provided, however, the Employee agrees that his rights and obligations
hereunder are personal to him and may not be assigned without the express
written consent of the Company.
12.4 Entire Agreement; No Oral Amendments. This Agreement, together
with any exhibit attached hereto and any document, policy, rule or regulation
referred to herein, replaces and merges all previous agreements and discussions
relating to the same or similar subject matter between the Employee and the
Company and constitutes the entire agreement between the Employee and the
Company with respect to the subject matter of this Agreement. This Agreement may
not be modified in any respect by any verbal statement, representation or
agreement made by any employee, officer, or representative of the Company or by
any written agreement unless signed by an officer of the Company who is
expressly authorized by the Company to execute such document.
12.5 Enforceability. If any provision of this Agreement or application
thereof to anyone or under any circumstances shall be determined to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.
12.6 Jurisdiction; Arbitration. The laws of the State of Louisiana
shall govern the interpretation, validity and effect of this Agreement without
regard to the place of execution or the place for performance thereof. Any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, shall be settled by arbitration located in Houston, Texas administered
by the American Arbitration Association in accordance with its applicable
arbitration rules, and the judgment on the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof, which judgment shall be
binding upon the parties hereto.
12.7 Injunctive Relief. The Company and the Employee agree that a
breach of any term of this Agreement by the Employee would cause irreparable
damage to the Company and that, in the event of such breach, the Company shall
have, in addition to any and all remedies of law, the right to any injunction,
specific performance and other equitable relief to prevent or to redress the
violation of the Employee's duties or responsibilities hereunder.
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IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first written above.
PETROQUEST ENERGY, INC.
By: /s/ Alfred J. Thomas, II
---------------------------------------
Name: Alfred J. Thomas, II
-------------------------------------
Title Chief Operating Officer
-------------------------------------
EMPLOYEE:
By: /s/ Charles T. Goodson
---------------------------------------
Charles T. Goodson
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EXHIBIT 10.3
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into this 1st day of September, 1998
between PetroQuest Energy, Inc., a Delaware corporation having its principal
executive office at 625 E. Kaliste Saloom Road, Suite 400, Lafayette, Louisiana
70508 (hereinafter referred to as the "Company"), and Alfred J. Thomas, II
(hereinafter referred to as the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Employee in an executive
capacity and the Employee desires to enter the Company's employ.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Employee hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
have the meanings prescribed below:
Affiliate is used in this Agreement to define a relationship to a
person or entity and means a person or entity who, directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, such person or entity.
Annual Bonus shall have the meaning assigned thereto in Section 4.2
hereof.
Base Salary shall have the meaning assigned thereto in Section 4.1
hereof.
Beneficial Owner shall have the meaning assigned thereto in Rule
13(d)-3 under the Exchange Act; provided, however, and without limitation, that
any individual, corporation, partnership, group, association or other person or
entity that has the right to acquire any Voting Stock at any time in the
future, whether such right is (a) contingent or absolute or (b) exercisable
presently or at any time in the future, pursuant to any agreement or
understanding or upon the exercise or conversion of rights, options or
warrants, or otherwise, shall be the Beneficial Owner of such Voting Stock.
Cause shall have the meaning assigned thereto in Section 5.3 hereof.
Common Stock means the Company's common stock, par value $.001 per
share.
Confidential Information shall have the meaning assigned thereto in
Section 8.2 hereof.
<PAGE> 2
Date of Termination means the earliest to occur of (i) the date of the
Employee's death, (ii) the date on which the Employee terminates this Agreement
for any reason or (iii) the date of receipt of the Notice of Termination, or
such later date as may be prescribed in the Notice of Termination in accordance
with Section 5.5 hereof.
Disability means an illness or other disability which prevents the
Employee from discharging his responsibilities under this Agreement for a
period of 180 consecutive calendar days, or an aggregate of 180 calendar days
in any calendar year, during the Employment Period, all as determined in good
faith by the Board of Directors of the Company (or a committee thereof).
Effective Date means the date of execution hereof.
Employee means Alfred J. Thomas, II, whose business address is 625 E.
Kaliste Saloom Road, Suite 400, Lafayette, Louisiana 70508.
Exchange Act means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the Securities and Exchange Commission
thereunder, all as in effect from time to time during the Employment Period.
Company means PetroQuest Energy, Inc., a Delaware corporation, the
principal executive office of which is located at 625 E. Kaliste Saloom Road,
Suite 400, Lafayette, Louisiana 70508.
Employment Period shall have the meaning assigned thereto in Section 3
hereof.
Initial Term shall have the meaning assigned thereto in Section 3
hereof.
Notice of Termination shall have the meaning assigned thereto in
Section 5.5 hereof.
Unexpired Term shall have the meaning assigned thereto in Section
6.3(c) hereof.
Voting Stock means all outstanding shares of capital stock of the
Company entitled to vote generally in an election of directors; provided,
however, that if the Company has shares of Voting Stock entitled to more or
less than one vote per share, each reference to a proportion of the issued and
outstanding shares of Voting Stock shall be deemed to refer to the proportion
of the aggregate votes entitled to be cast by the issued and outstanding shares
of Voting Stock.
Without Cause shall have the meaning assigned thereto in Section 5.4
hereof.
2. General Duties of Company and Employee.
2.1 The Company agrees to employ the Employee, and the Employee
agrees to accept employment by the Company and to serve the Company as Chief
Operating Officer, and shall also serve as a director of the Company. The
authority, duties and responsibilities of the Employee shall
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<PAGE> 3
include those described in Exhibit A to this Agreement, and such other or
additional duties as may from time to time be assigned to the Employee by the
Board of Directors (or a committee thereof) and agreed to by the Employee.
While employed hereunder, the Employee shall devote full time and attention
during normal business hours to the affairs of the Company and use his best
efforts to perform faithfully and efficiently his duties and responsibilities.
The Employee may (i) serve on corporate, civic or charitable boards or
committees, (ii) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (iii) manage personal investments, so long as such
activities do not significantly interfere with the performance of the
Employee's duties and responsibilities.
2.2 The Employee agrees and acknowledges that he owes a fiduciary
duty of loyalty, fidelity and allegiance to act at all times in the best
interests of the Company and to do no act and to make no statement, oral or
written, which would injure Company's business, its interests or its
reputation.
2.3 The Employee agrees to comply at all times during the
Employment Period with all applicable policies, rules and regulations of the
Company, including, without limitation, the Company's Code of Ethics and the
Company's policy regarding trading in the Common Stock, as each is in effect
from time to time during the Employment Period.
3. Term. Unless sooner terminated pursuant to other provisions hereof,
the Employee's period of employment under this Agreement shall be a period of
three years beginning on the Effective Date (the "Initial Term"). After the
expiration of the Initial Term, the Employee's period of employment under this
Agreement shall be automatically renewed for successive one-year terms on each
anniversary of the Effective Date (the Initial Term and any and all renewals
thereof are referred to herein collectively as the "Employment Period").
4. Compensation and Benefits.
4.1 Base Salary. As compensation for services to the Company, the
Company shall pay to the Employee until the Date of Termination an annual base
salary of $210,000 (the "Base Salary"). The Board of Directors (or a committee
thereof), in its discretion, may increase the Base Salary based upon relevant
circumstances. The Base Salary shall be payable in equal semi-monthly
installments or in accordance with the Company's established policy, subject
only to such payroll and withholding deductions as may be required by law and
other deductions applied generally to employees of the Company for insurance
and other employee benefit plans.
4.2 Bonus. In addition to the Base Salary, the Employee may be
awarded, for each fiscal year until the Date of Termination, an annual bonus
(either pursuant to a bonus or incentive plan or program of the Company or
otherwise) in an amount to be determined by the Board of Directors (or a
committee thereof), in its sole discretion (the "Annual Bonus"). Each such
Annual Bonus shall be payable at a time to be determined by the Board of
Directors (or a committee thereof) in its sole discretion.
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<PAGE> 4
4.3 Incentive, Savings and Retirement Plans. Until the Date of
Termination, the Employee shall be eligible to participate in and shall receive
all benefits under all executive incentive, savings and retirement plans
(including 401(k) plans) and programs currently maintained or hereinafter
established by the Company for the benefit of its executive officers and/or
employees.
4.4 Welfare Benefit Plan. Until the Date of Termination, the
Employee and/or the Employee's family, as the case may be, shall be eligible to
participate in and shall receive all benefits under each welfare benefit plan
of the Company currently maintained or hereinafter established by the Company
for the benefit of its employees. Such welfare benefit plans may include,
without limitation, medical, dental, disability, group life, accidental death
and travel accident insurance plans and programs.
4.5 Reimbursement of Expenses. The Employee may from time to time
until the Date of Termination incur various business expenses customarily
incurred by persons holding positions of like responsibility, including,
without limitation, travel, entertainment and similar expenses incurred for the
benefit of the Company, and will receive a Company credit card for use for such
expenses. Subject to the Company's policy regarding the reimbursement of such
expenses as in effect from time to time during the Employment Period, which
does not necessarily allow reimbursement of all such expenses, the Company
shall reimburse the Employee for such expenses from time to time, at the
Employee's request, and the Employee shall account to the Company for all such
expenses.
4.6 Life Insurance. The Company shall provide to the Executive
life insurance on terms that are mutually agreeable to the Company and the
Executive.
4.7 Relocation. The Company and the Executive agree that if the
Executive is asked to relocate from Lafayette, Louisiana to Houston, Texas, the
Company will provide to Executive reimbursement for out of pocket moving
expenses incurred in connection with such move, and it will also reimburse the
Executive for any loss incurred by the Executive on the sale of his personal
residence in Lafayette, Louisiana, with such loss being calculated on the basis
of the difference between the Executive's actual costs less the net sales
price.
5. Termination.
5.1 Death. This Agreement shall terminate automatically upon the
death of the Employee.
5.2 Disability. The Company may terminate this Agreement, upon
written notice to the Employee delivered in accordance with Sections 5.5 and
12.1 hereof, upon the Disability of the Employee.
5.3 Cause. The Company may terminate this Agreement, upon written
notice to the Employee delivered in accordance with Sections 5.5 and 12.1
hereof, for Cause. For purposes of
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<PAGE> 5
this Agreement, "Cause" means (i) the conviction of the Employee of a felony
(which, through lapse of time or otherwise, is not subject to appeal), (ii) the
Employee's willful refusal, without proper legal cause, to perform his duties
and responsibilities as contemplated in this Agreement or (iii) the Employee's
willful engaging in activities which would (A) constitute a breach of any term
of this Agreement, the Company's Code of Ethics, the Company's policies
regarding trading in the Common Stock or reimbursement of business expenses or
any other applicable policies, rules or regulations of the Company, or (B)
result in a material injury to the business, condition (financial or
otherwise), results of operations or prospects of the Company or its Affiliates
(as determined in good faith by the Board of Directors of the Company or a
committee thereof).
5.4 Without Cause. The Company may terminate this Agreement
Without Cause, upon written notice to the Employee delivered in accordance with
Sections 5.5 and 12.1 hereof. For purposes of this Agreement, the Employee
will be deemed to have been terminated "Without Cause" if the Employee is
terminated by the Company for any reason other than Cause, Disability or death.
5.5 Notice of Termination. Any termination of this Agreement by
the Company for Cause, Without Cause or as a result of the Employee's
Disability shall be communicated by Notice of Termination to the Employee given
in accordance with this Agreement. For purposes of this Agreement, a "Notice
of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee's employment under the provision so indicated and
(iii) specifies the termination date, if such date is other than the date of
receipt of such notice (which termination date shall not be more than 15 days
after the giving of such notice).
6. Obligations of Company upon Termination.
6.1 Cause by Employee. If this Agreement shall be terminated
either by the Company for Cause or by the Employee for any reason, the Company
shall pay to the Employee, in a lump sum in cash within 30 days after the Date
of Termination, the aggregate of the Employee's Base Salary (as in effect on
the Date of Termination) through the Date of Termination, if not theretofore
paid, and, in the case of compensation previously deferred by the Employee, all
amounts of such compensation previously deferred and not yet paid by the
Company. All other obligations of the Company and rights of the Employee
hereunder shall terminate effective as of the Date of Termination.
6.2 Death or Disability.
(a) Subject to the provisions of this Section 6.2, if
this Agreement is terminated as a result of the Employee's death or
Disability, the Company shall pay to the Employee or his estate, in
equal semi-monthly installments, the Employee's Base Salary (as in
effect on the Date of Termination) for 12 months after such Date of
Termination. The Company may purchase insurance to cover all or any
part of the obligation contemplated in the foregoing
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<PAGE> 6
sentence, and the Employee agrees to submit to a physical examination
to facilitate the procurement of such insurance.
(b) Whenever compensation is payable to the Employee
hereunder during a period in which he is partially or totally
disabled, and such Disability would (except for the provisions hereof)
entitle the Employee to Disability income or salary continuation
payments from the Company according to the terms of any plan or
program presently maintained or hereafter established by the Company,
the Disability income or salary continuation paid to the Employee
pursuant to any such plan or program shall be considered a portion of
the payment to be made to the Employee pursuant to this Section 6.2
and shall not be in addition hereto. If Disability income is payable
directly to the Employee by an insurance company under the terms of an
insurance policy paid for by the Company, the amounts paid to the
Employee by such insurance company shall be considered a portion of
the payment to be made to the Employee pursuant to this Section 6.2
and shall not be in addition hereto.
6.3 Without Cause. If this Agreement shall be terminated by the
Company Without Cause:
(a) the Company shall pay to the Employee, in a lump sum
in cash within 30 days after the Date of Termination, the aggregate of
the following amounts:
(1) if not theretofore paid, the Employee's Base
Salary (as in effect on the Date of Termination) through the
Date of Termination; and
(2) in the case of compensation previously
deferred by the Employee, all amounts of such compensation
previously deferred and not yet paid by the Company;
(b) the Company shall, promptly upon submission by the
Employee of supporting documentation, pay or reimburse to the Employee
any costs and expenses (including moving and relocation expenses) paid
or incurred by the Employee which would have been payable under
Section 4.5 of this Agreement if the Employee's employment had not
terminated; and
(c) for the 12-month period commencing on the Date of
Termination, the Company shall continue benefits to the Employee
and/or the Employee's family at least equal to those which would have
been provided to them under Section 4.4 if the Employee's employment
had not been terminated; and
(d) the Company shall pay to the Employee, in equal
semi-monthly installments, the Employee's Base Salary (as in effect on
the Date of Termination) for 12 months after the Date of Termination.
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7. Employee's Obligation to Avoid Conflicts of Interest.
7.1 In keeping with the Employee's fiduciary duties to the
Company, the Employee agrees that he shall not knowingly become involved in a
conflict of interest with the Company, or upon discovery thereof, allow such a
conflict to continue. The Employee further agrees to disclose to the Company,
promptly after discovery, any facts or circumstances which might involve a
conflict of interest with the Company.
7.2 The Company and the Employee recognize that it is impossible
to provide an exhaustive list of actions or interests which constitute a
"conflict of interest." Moreover, the Company and the Employee recognize that
there are many borderline situations. In some instances, full disclosure of
facts by the Employee to the Company is all that is necessary to enable the
Company to protect its interests. In others, if no improper motivation appears
to exist and the Company's interests have not suffered, prompt elimination of
the outside interest will suffice. In still others, it may be necessary for
the Company to terminate the employment relationship. The Company and the
Employee agree that the Company's determination as to whether or not a conflict
of interest exists shall be conclusive. The Company reserves the right to take
such action as, in its judgment, will end the conflict of interest.
7.3 In this connection, it is agreed that any direct or indirect
interest in, connection with or benefit from any outside activities,
particularly commercial activities, which interest might in any way adversely
affect the Company or its Affiliates, involves a possible conflict of interest.
Circumstances in which a conflict of interest on the part of the Employee would
or might arise, and which should be reported immediately to the Company,
include, but are not limited to, the following:
(a) Ownership of a material interest in any lender,
supplier, contractor, subcontractor, customer or other entity with
which the Company does business.
(b) Acting in any capacity, including director, officer,
partner, consultant, employee, distributor, agent or the like, for any
lender, supplier, contractor, subcontractor, customer or other entity
with which the Company does business.
(c) Acceptance, directly or indirectly, of payments,
services or loans from a lender, supplier, contractor, subcontractor,
customer or other entity with which the Company does business,
including, without limitation, gifts, trips, entertainment or other
favors of more than a nominal value, but excluding loans from publicly
held insurance companies and commercial or savings banks at market
rates of interest.
(d) Use of information or facilities to which the
Employee has access in a manner which will be detrimental to the
Company's interests, such as use for the Employee's own benefit of
know-how or information developed through the Company's business
activities.
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(e) Disclosure or other misuse of information of any kind
obtained through the Employee's connection with the Company.
(f) Acquiring or trading in, directly or indirectly, oil
and gas properties or interests for his own account or the account of
his Affiliates without the prior written consent of the Board of
Directors.
8. Employee's Confidentiality Obligation.
8.1 The Employee hereby acknowledges, understands and agrees that
all Confidential Information is the exclusive and confidential property of the
Company and its Affiliates which shall at all times be regarded, treated and
protected as such in accordance with this Section 8. The Employee acknowledges
that all such Confidential Information is in the nature of a trade secret.
8.2 For purposes of this Agreement, "Confidential Information"
means information, which is used in the business of the Company or its
Affiliates and (i) is proprietary to, about or created by the Company or its
Affiliates, (ii) gives the Company or its Affiliates some competitive business
advantage or the opportunity of obtaining such advantage or the disclosure of
which could be detrimental to the interests of the Company or its Affiliates,
(iii) is designated as Confidential Information by the Company or its
Affiliates, is known by the Employee to be considered confidential by the
Company or its Affiliates, or from all the relevant circumstances should
reasonably be assumed by the Employee to be confidential and proprietary to the
Company or its Affiliates, or (iv) is not generally known by non-Company
personnel. Such Confidential Information includes, without limitation, the
following types of information and other information of a similar nature
(whether or not reduced to writing or designated as confidential):
(a) Internal personnel and financial information of the
Company or its Affiliates, information regarding oil and gas
properties including reserve information, vendor information
(including vendor characteristics, services, prices, lists and
agreements), purchasing and internal cost information, internal
service and operational manuals, and the manner and methods of
conducting the business of the Company or its Affiliates;
(b) Marketing and development plans, price and cost data,
price and fee amounts, pricing and billing policies, bidding, quoting
procedures, marketing techniques, forecasts and forecast assumptions
and volumes, and future plans and potential strategies (including,
without limitation, all information relating to any oil and gas
prospect and the identity of any key contact within the organization
of any acquisition prospect) of the Company or its Affiliates which
have been or are being discussed;
(c) Names of customers and their representatives,
contracts (including their contents and parties), customer services,
and the type, quantity, specifications and content of products and
services purchased, leased, licensed or received by customers of the
Company or its Affiliates; and
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(d) Confidential and proprietary information provided to
the Company or its Affiliates by any actual or potential customer,
government agency or other third party (including businesses,
consultants and other entities and individuals).
8.3 As a consequence of the Employee's acquisition or anticipated
acquisition of Confidential Information, the Employee shall occupy a position
of trust and confidence with respect to the affairs and business of the Company
and its Affiliates. In view of the foregoing and of the consideration to be
provided to the Employee, the Employee agrees that it is reasonable and
necessary that the Employee make each of the following covenants:
(a) At any time during the Employment Period and
thereafter, the Employee shall not disclose Confidential Information
to any person or entity, either inside or outside of the Company,
other than as necessary in carrying out his duties and
responsibilities as set forth in Section 2 hereof, without first
obtaining the Company's prior written consent (unless such disclosure
is compelled pursuant to court orders or subpoena, and at which time
the Employee shall give notice of such proceedings to the Company).
(b) At any time during the Employment Period and
thereafter, the Employee shall not use, copy or transfer Confidential
Information other than as necessary in carrying out his duties and
responsibilities as set forth in Section 2 hereof, without first
obtaining the Company's prior written consent.
(c) On the Date of Termination, the Employee shall
promptly deliver to the Company (or its designee) all written
materials, records and documents made by the Employee or which came
into his possession prior to or during the Employment Period
concerning the business or affairs of the Company or its Affiliates,
including, without limitation, all materials containing Confidential
Information.
9. Disclosure of Information, Ideas, Concepts, Improvements, Discoveries
and Inventions.
As part of the Employee's fiduciary duties to the Company, the
Employee agrees that during his employment by the Company and for a period of
three years following the Date of Termination, the Employee shall promptly
disclose in writing to the Company all information, ideas, concepts,
improvements, discoveries and inventions, whether patentable or not, and
whether or not reduced to practice, which are conceived, developed, made or
acquired by the Employee, either individually or jointly with others, and which
relate to the business, products or services of the Company or its Affiliates,
irrespective of whether the Employee used the Company's time or facilities and
irrespective of whether such information, idea, concept, improvement, discovery
or invention was conceived, developed, discovered or acquired by the Employee
on the job, at home, or elsewhere. This obligation extends to all types of
information, ideas and concepts, including information, ideas and concepts
relating to new types of services, corporate opportunities, acquisition
prospects, the identity of key representatives within acquisition prospect
organizations, prospective names or service marks for the Company's business
activities, and the like.
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<PAGE> 10
10. Ownership of Information, Ideas, Concepts, Improvements, Discoveries
and Inventions, and all Original Works of Authorship.
10.1 All information, ideas, concepts, improvements, discoveries
and inventions, whether patentable or not, which are conceived, made, developed
or acquired by the Employee or which are disclosed or made known to the
Employee, individually or in conjunction with others, during the Employee's
employment by the Company and which relate to the business, products or
services of the Company or its Affiliates (including, without limitation, all
such information relating to corporate opportunities, research, financial and
sales data, pricing and trading terms, evaluations, opinions, interpretations,
acquisition prospects, the identity of customers or their requirements, the
identity of key contacts within the customers' organizations or within the
organization of acquisition prospects, marketing and merchandising techniques,
and prospective names and service marks) are and shall be the sole and
exclusive property of the Company. Furthermore, all drawings, memoranda,
notes, records, files, correspondence, manuals, models, specifications,
computer programs, maps and all other writings or materials of any type
embodying any of such information, ideas, concepts, improvements, discoveries
and inventions are and shall be the sole and exclusive property of the Company.
10.2 In particular, the Employee hereby specifically sells,
assigns, transfers and conveys to the Company all of his worldwide right, title
and interest in and to all such information, ideas, concepts, improvements,
discoveries or inventions, and any United States or foreign applications for
patents, inventor's certificates or other industrial rights which may be filed
in respect thereof, including divisions, continuations, continuations-in-part,
reissues and/or extensions thereof, and applications for registration of such
names and service marks. The Employee shall assist the Company and its nominee
at all times, during the Employment Period and thereafter, in the protection of
such information, ideas, concepts, improvements, discoveries or inventions,
both in the United States and all foreign countries, which assistance shall
include, but shall not be limited to, the execution of all lawful oaths and all
assignment documents requested by the Company or its nominee in connection with
the preparation, prosecution, issuance or enforcement of any applications for
United States or foreign letters patent, including divisions, continuations,
continuations-in-part, reissues and/or extensions thereof, and any application
for the registration of such names and service marks.
10.3 In the event the Employee creates, during the Employment
Period, any original work of authorship fixed in any tangible medium of
expression which is the subject matter of copyright (such as, videotapes,
written presentations on acquisitions, computer programs, drawings, maps,
architectural renditions, models, manuals, brochures or the like) relating to
the Company's business, products or services, whether such work is created
solely by the Employee or jointly with others, the Company shall be deemed the
author of such work if the work is prepared by the Employee in the scope of his
employment; or, if the work is not prepared by the Employee within the scope of
his employment but is specially ordered by the Company as a contribution to a
collective work, as a part of a motion picture or other audiovisual work, as a
translation, as a supplementary work, as a
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<PAGE> 11
compilation or as an instructional text, then the work shall be considered to
be work made for hire, and the Company shall be the author of such work. If
such work is neither prepared by the Employee within the scope of his
employment nor a work specially ordered and deemed to be a work made for hire,
then the Employee hereby agrees to sell, transfer, assign and convey, and by
these presents, does sell, transfer, assign and convey, to the Company all of
the Employee's worldwide right, title and interest in and to such work and all
rights of copyright therein. The Employee agrees to assist the Company and its
Affiliates, at all times, during the Employment Period and thereafter, in the
protection of the Company's worldwide right, title and interest in and to such
work and all rights of copyright therein, which assistance shall include, but
shall not be limited to, the execution of all documents requested by the
Company or its nominee and the execution of all lawful oaths and applications
for registration of copyright in the United States and foreign countries.
11. Employee's Non-Competition Obligation.
11.1 (a) Until the Date of Termination, the Employee shall
not, acting alone or in conjunction with others, directly or
indirectly, in any of the business territories in which the Company or
any of its Affiliates is presently or from time to time during the
Employment Period conducting business, invest or engage, directly or
indirectly, in any business which is competitive with that of the
Company or accept employment with or render services to such a
competitor as a director, officer, agent, employee or consultant, or
take any action inconsistent with the fiduciary relationship of an
employee to his employer; provided, however, that the beneficial
ownership by the Employee of up to three percent of the Voting Stock
of any corporation subject to the periodic reporting requirements of
the Exchange Act shall not violate this Section 11.1(a).
(b) In addition to the other obligations agreed to by the
Employee in this Agreement, the Employee agrees that until the Date of
Termination, he shall not at any time, directly or indirectly, (i)
induce, entice or solicit any employee of the Company to leave his
employment, (ii) contact, communicate or solicit any customer or
acquisition prospect of the Company derived from any customer list,
customer lead, mail, printed matter or other information secured from
the Company or its present or past employees or (iii) in any other
manner use any customer lists or customer leads, mail, telephone
numbers, printed material or other information of the Company relating
thereto.
11.2 (a) If this Agreement is terminated either by the Company
for Cause or by the Employee for any reason, then for a period of one
year following the Date of Termination, the Employee shall not, acting
alone or in conjunction with others, directly or indirectly, in any of
the business territories in which the Company or any of its Affiliates
is presently or at the Date of Termination conducting business, invest
or engage, directly or indirectly, in any business which is
competitive with that of the Company as of the Date of Termination or
accept employment with or render services to such a competitor as a
director, officer, agent, employee or consultant, or take any action
inconsistent with the fiduciary relationship of an employee to his
employer; provided, however, that the beneficial ownership by the
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<PAGE> 12
Employee of up to three percent of the Voting Stock of any corporation
subject to the periodic reporting requirements of the Exchange Act
shall not violate this Section 11.2(a).
(b) In addition to the other obligations agreed to by the
Employee in this Agreement, the Employee agrees that if this Agreement
is terminated either by the Company for Cause or by the Employee for
any reason, then for a period of one year following the Date of
Termination, he shall not at any time, directly or indirectly, (i)
induce, entice or solicit any employee of the Company to leave his
employment, (ii) contact, communicate or solicit any customer or
acquisition prospect of the Company derived from any customer list,
customer lead, mail, printed matter or other information secured from
the Company or its present or past employees or (iii) in any other
manner use any customer lists or customer leads, mail, telephone
numbers, printed material or other information of the Company relating
thereto.
11.3 If this Agreement is terminated either by the Company Without
Cause, then the Employee shall not be subject to any non-competition
obligation.
12. Miscellaneous.
12.1 Notices. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when delivered by hand or
mailed by registered or certified mail, return receipt requested, as follows
(provided that notice of change of address shall be deemed given only when
received):
If to the Company to:
625 E. Kaliste Saloom Road
Suite 400
Lafayette, Louisiana 70508
If to the Employee to:
625 E. Kaliste Saloom Road
Suite 400
Lafayette, Louisiana 70508
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section 12.1.
12.2 Waiver of Breach. The waiver by any party hereto of a breach
of any provision of this Agreement shall neither operate nor be construed as a
waiver of any subsequent breach by any party.
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12.3 Assignment. This Agreement shall be binding upon and inure to
the benefit of the Company, its successors, legal representatives and assigns,
and upon the Employee, his heirs, executors, administrators, representatives
and assigns; provided, however, the Employee agrees that his rights and
obligations hereunder are personal to him and may not be assigned without the
express written consent of the Company.
12.4 Entire Agreement; No Oral Amendments. This Agreement,
together with any exhibit attached hereto and any document, policy, rule or
regulation referred to herein, replaces and merges all previous agreements and
discussions relating to the same or similar subject matter between the Employee
and the Company and constitutes the entire agreement between the Employee and
the Company with respect to the subject matter of this Agreement. This
Agreement may not be modified in any respect by any verbal statement,
representation or agreement made by any employee, officer, or representative of
the Company or by any written agreement unless signed by an officer of the
Company who is expressly authorized by the Company to execute such document.
12.5 Enforceability. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be determined to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement which can be
given effect without the invalid or unenforceable provision or application.
12.6 Jurisdiction; Arbitration. The laws of the State of Louisiana
shall govern the interpretation, validity and effect of this Agreement without
regard to the place of execution or the place for performance thereof. Any
controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled by arbitration located in Houston, Texas
administered by the American Arbitration Association in accordance with its
applicable arbitration rules, and the judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof, which
judgment shall be binding upon the parties hereto.
12.7 Injunctive Relief. The Company and the Employee agree that a
breach of any term of this Agreement by the Employee would cause irreparable
damage to the Company and that, in the event of such breach, the Company shall
have, in addition to any and all remedies of law, the right to any injunction,
specific performance and other equitable relief to prevent or to redress the
violation of the Employee's duties or responsibilities hereunder.
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<PAGE> 14
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first written above.
PETROQUEST ENERGY, INC.
By: /s/ Charles T. Goodson
---------------------------------------
Name: Charles T. Goodson
-------------------------------------
Title President & Chief Executive Officer
-------------------------------------
EMPLOYEE:
By: /s/ Alfred J. Thomas, II
---------------------------------------
Alfred J. Thomas, II
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<PAGE> 1
EXHIBIT 10.4
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into this 1st day of September, 1998
between PetroQuest Energy, Inc., a Delaware corporation having its principal
executive office at 625 E. Kaliste Saloom Road, Suite 400, Lafayette, Louisiana
70508 (hereinafter referred to as the "Company"), and Ralph J. Daigle
(hereinafter referred to as the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Employee in an executive
capacity and the Employee desires to enter the Company's employ.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Employee hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
have the meanings prescribed below:
Affiliate is used in this Agreement to define a relationship to a
person or entity and means a person or entity who, directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, such person or entity.
Annual Bonus shall have the meaning assigned thereto in Section 4.2
hereof.
Base Salary shall have the meaning assigned thereto in Section 4.1
hereof.
Beneficial Owner shall have the meaning assigned thereto in Rule
13(d)-3 under the Exchange Act; provided, however, and without limitation, that
any individual, corporation, partnership, group, association or other person or
entity that has the right to acquire any Voting Stock at any time in the
future, whether such right is (a) contingent or absolute or (b) exercisable
presently or at any time in the future, pursuant to any agreement or
understanding or upon the exercise or conversion of rights, options or
warrants, or otherwise, shall be the Beneficial Owner of such Voting Stock.
Cause shall have the meaning assigned thereto in Section 5.3 hereof.
Common Stock means the Company's common stock, par value $.001 per
share.
Confidential Information shall have the meaning assigned thereto in
Section 8.2 hereof.
<PAGE> 2
Date of Termination means the earliest to occur of (i) the date of the
Employee's death, (ii) the date on which the Employee terminates this Agreement
for any reason or (iii) the date of receipt of the Notice of Termination, or
such later date as may be prescribed in the Notice of Termination in accordance
with Section 5.5 hereof.
Disability means an illness or other disability which prevents the
Employee from discharging his responsibilities under this Agreement for a
period of 180 consecutive calendar days, or an aggregate of 180 calendar days
in any calendar year, during the Employment Period, all as determined in good
faith by the Board of Directors of the Company (or a committee thereof).
Effective Date means the date of execution hereof.
Employee means Ralph J. Daigle, whose business address is 625 E.
Kaliste Saloom Road, Suite 400, Lafayette, Louisiana 70508.
Exchange Act means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the Securities and Exchange Commission
thereunder, all as in effect from time to time during the Employment Period.
Company means PetroQuest Energy, Inc., a Delaware corporation, the
principal executive office of which is located at 625 E. Kaliste Saloom Road,
Suite 400, Lafayette, Louisiana 70508.
Employment Period shall have the meaning assigned thereto in Section 3
hereof.
Initial Term shall have the meaning assigned thereto in Section 3
hereof.
Notice of Termination shall have the meaning assigned thereto in
Section 5.5 hereof.
Unexpired Term shall have the meaning assigned thereto in Section
6.3(c) hereof.
Voting Stock means all outstanding shares of capital stock of the
Company entitled to vote generally in an election of directors; provided,
however, that if the Company has shares of Voting Stock entitled to more or
less than one vote per share, each reference to a proportion of the issued and
outstanding shares of Voting Stock shall be deemed to refer to the proportion
of the aggregate votes entitled to be cast by the issued and outstanding shares
of Voting Stock.
Without Cause shall have the meaning assigned thereto in Section 5.4
hereof.
2. General Duties of Company and Employee.
2.1 The Company agrees to employ the Employee, and the Employee
agrees to accept employment by the Company and to serve the Company as Senior
Vice President - Exploration, and shall also serve as a director of the
Company. The authority, duties and responsibilities of the
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<PAGE> 3
Employee shall include those described in Exhibit A to this Agreement, and such
other or additional duties as may from time to time be assigned to the Employee
by the Board of Directors (or a committee thereof) and agreed to by the
Employee. While employed hereunder, the Employee shall devote full time and
attention during normal business hours to the affairs of the Company and use
his best efforts to perform faithfully and efficiently his duties and
responsibilities. The Employee may (i) serve on corporate, civic or charitable
boards or committees, (ii) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (iii) manage personal investments, so
long as such activities do not significantly interfere with the performance of
the Employee's duties and responsibilities.
2.2 The Employee agrees and acknowledges that he owes a fiduciary
duty of loyalty, fidelity and allegiance to act at all times in the best
interests of the Company and to do no act and to make no statement, oral or
written, which would injure Company's business, its interests or its
reputation.
2.3 The Employee agrees to comply at all times during the
Employment Period with all applicable policies, rules and regulations of the
Company, including, without limitation, the Company's Code of Ethics and the
Company's policy regarding trading in the Common Stock, as each is in effect
from time to time during the Employment Period.
3. Term. Unless sooner terminated pursuant to other provisions hereof,
the Employee's period of employment under this Agreement shall be a period of
three years beginning on the Effective Date (the "Initial Term"). After the
expiration of the Initial Term, the Employee's period of employment under this
Agreement shall be automatically renewed for successive one-year terms on each
anniversary of the Effective Date (the Initial Term and any and all renewals
thereof are referred to herein collectively as the "Employment Period").
4. Compensation and Benefits.
4.1 Base Salary. As compensation for services to the Company, the
Company shall pay to the Employee until the Date of Termination an annual base
salary of $180,000 (the "Base Salary"). The Board of Directors (or a committee
thereof), in its discretion, may increase the Base Salary based upon relevant
circumstances. The Base Salary shall be payable in equal semi-monthly
installments or in accordance with the Company's established policy, subject
only to such payroll and withholding deductions as may be required by law and
other deductions applied generally to employees of the Company for insurance
and other employee benefit plans.
4.2 Bonus. In addition to the Base Salary, the Employee may be
awarded, for each fiscal year until the Date of Termination, an annual bonus
(either pursuant to a bonus or incentive plan or program of the Company or
otherwise) in an amount to be determined by the Board of Directors (or a
committee thereof), in its sole discretion (the "Annual Bonus"). Each such
Annual Bonus shall be payable at a time to be determined by the Board of
Directors (or a committee thereof) in its sole discretion.
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<PAGE> 4
4.3 Incentive, Savings and Retirement Plans. Until the Date of
Termination, the Employee shall be eligible to participate in and shall receive
all benefits under all executive incentive, savings and retirement plans
(including 401(k) plans) and programs currently maintained or hereinafter
established by the Company for the benefit of its executive officers and/or
employees.
4.4 Welfare Benefit Plan. Until the Date of Termination, the
Employee and/or the Employee's family, as the case may be, shall be eligible to
participate in and shall receive all benefits under each welfare benefit plan
of the Company currently maintained or hereinafter established by the Company
for the benefit of its employees. Such welfare benefit plans may include,
without limitation, medical, dental, disability, group life, accidental death
and travel accident insurance plans and programs.
4.5 Reimbursement of Expenses. The Employee may from time to time
until the Date of Termination incur various business expenses customarily
incurred by persons holding positions of like responsibility, including,
without limitation, travel, entertainment and similar expenses incurred for the
benefit of the Company, and will receive a Company credit card for use for such
expenses. Subject to the Company's policy regarding the reimbursement of such
expenses as in effect from time to time during the Employment Period, which
does not necessarily allow reimbursement of all such expenses, the Company
shall reimburse the Employee for such expenses from time to time, at the
Employee's request, and the Employee shall account to the Company for all such
expenses.
4.6 Life Insurance. The Company shall provide to the Executive
life insurance on terms that are mutually agreeable to the Company and the
Executive.
4.7 Relocation. The Company and the Executive agree that if the
Executive is asked to relocate from Lafayette, Louisiana to Houston, Texas, the
Company will provide to Executive reimbursement for out of pocket moving
expenses incurred in connection with such move, and it will also reimburse the
Executive for any loss incurred by the Executive on the sale of his personal
residence in Lafayette, Louisiana, with such loss being calculated on the basis
of the difference between the Executive's actual costs less the net sales
price.
5. Termination.
5.1 Death. This Agreement shall terminate automatically upon the
death of the Employee.
5.2 Disability. The Company may terminate this Agreement, upon
written notice to the Employee delivered in accordance with Sections 5.5 and
12.1 hereof, upon the Disability of the Employee.
5.3 Cause. The Company may terminate this Agreement, upon written
notice to the Employee delivered in accordance with Sections 5.5 and 12.1
hereof, for Cause. For purposes of
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<PAGE> 5
this Agreement, "Cause" means (i) the conviction of the Employee of a felony
(which, through lapse of time or otherwise, is not subject to appeal), (ii) the
Employee's willful refusal, without proper legal cause, to perform his duties
and responsibilities as contemplated in this Agreement or (iii) the Employee's
willful engaging in activities which would (A) constitute a breach of any term
of this Agreement, the Company's Code of Ethics, the Company's policies
regarding trading in the Common Stock or reimbursement of business expenses or
any other applicable policies, rules or regulations of the Company, or (B)
result in a material injury to the business, condition (financial or
otherwise), results of operations or prospects of the Company or its Affiliates
(as determined in good faith by the Board of Directors of the Company or a
committee thereof).
5.4 Without Cause. The Company may terminate this Agreement
Without Cause, upon written notice to the Employee delivered in accordance with
Sections 5.5 and 12.1 hereof. For purposes of this Agreement, the Employee
will be deemed to have been terminated "Without Cause" if the Employee is
terminated by the Company for any reason other than Cause, Disability or death.
5.5 Notice of Termination. Any termination of this Agreement by
the Company for Cause, Without Cause or as a result of the Employee's
Disability shall be communicated by Notice of Termination to the Employee given
in accordance with this Agreement. For purposes of this Agreement, a "Notice
of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee's employment under the provision so indicated and
(iii) specifies the termination date, if such date is other than the date of
receipt of such notice (which termination date shall not be more than 15 days
after the giving of such notice).
6. Obligations of Company upon Termination.
6.1 Cause by Employee. If this Agreement shall be terminated
either by the Company for Cause or by the Employee for any reason, the Company
shall pay to the Employee, in a lump sum in cash within 30 days after the Date
of Termination, the aggregate of the Employee's Base Salary (as in effect on
the Date of Termination) through the Date of Termination, if not theretofore
paid, and, in the case of compensation previously deferred by the Employee, all
amounts of such compensation previously deferred and not yet paid by the
Company. All other obligations of the Company and rights of the Employee
hereunder shall terminate effective as of the Date of Termination.
6.2 Death or Disability.
(a) Subject to the provisions of this Section 6.2, if
this Agreement is terminated as a result of the Employee's death or
Disability, the Company shall pay to the Employee or his estate, in
equal semi-monthly installments, the Employee's Base Salary (as in
effect on the Date of Termination) for 12 months after such Date of
Termination. The Company may purchase insurance to cover all or any
part of the obligation contemplated in the foregoing
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<PAGE> 6
sentence, and the Employee agrees to submit to a physical examination
to facilitate the procurement of such insurance.
(b) Whenever compensation is payable to the Employee
hereunder during a period in which he is partially or totally
disabled, and such Disability would (except for the provisions hereof)
entitle the Employee to Disability income or salary continuation
payments from the Company according to the terms of any plan or
program presently maintained or hereafter established by the Company,
the Disability income or salary continuation paid to the Employee
pursuant to any such plan or program shall be considered a portion of
the payment to be made to the Employee pursuant to this Section 6.2
and shall not be in addition hereto. If Disability income is payable
directly to the Employee by an insurance company under the terms of an
insurance policy paid for by the Company, the amounts paid to the
Employee by such insurance company shall be considered a portion of
the payment to be made to the Employee pursuant to this Section 6.2
and shall not be in addition hereto.
6.3 Without Cause. If this Agreement shall be terminated by the
Company Without Cause:
(a) the Company shall pay to the Employee, in a lump sum
in cash within 30 days after the Date of Termination, the aggregate of
the following amounts:
(1) if not theretofore paid, the Employee's Base
Salary (as in effect on the Date of Termination) through the
Date of Termination; and
(2) in the case of compensation previously
deferred by the Employee, all amounts of such compensation
previously deferred and not yet paid by the Company;
(b) the Company shall, promptly upon submission by the
Employee of supporting documentation, pay or reimburse to the Employee
any costs and expenses (including moving and relocation expenses) paid
or incurred by the Employee which would have been payable under
Section 4.5 of this Agreement if the Employee's employment had not
terminated; and
(c) for the 12-month period commencing on the Date of
Termination, the Company shall continue benefits to the Employee
and/or the Employee's family at least equal to those which would have
been provided to them under Section 4.4 if the Employee's employment
had not been terminated; and
(d) the Company shall pay to the Employee, in equal
semi-monthly installments, the Employee's Base Salary (as in effect on
the Date of Termination) for 12 months after the Date of Termination.
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<PAGE> 7
7. Employee's Obligation to Avoid Conflicts of Interest.
7.1 In keeping with the Employee's fiduciary duties to the
Company, the Employee agrees that he shall not knowingly become involved in a
conflict of interest with the Company, or upon discovery thereof, allow such a
conflict to continue. The Employee further agrees to disclose to the Company,
promptly after discovery, any facts or circumstances which might involve a
conflict of interest with the Company.
7.2 The Company and the Employee recognize that it is impossible
to provide an exhaustive list of actions or interests which constitute a
"conflict of interest." Moreover, the Company and the Employee recognize that
there are many borderline situations. In some instances, full disclosure of
facts by the Employee to the Company is all that is necessary to enable the
Company to protect its interests. In others, if no improper motivation appears
to exist and the Company's interests have not suffered, prompt elimination of
the outside interest will suffice. In still others, it may be necessary for
the Company to terminate the employment relationship. The Company and the
Employee agree that the Company's determination as to whether or not a conflict
of interest exists shall be conclusive. The Company reserves the right to take
such action as, in its judgment, will end the conflict of interest.
7.3 In this connection, it is agreed that any direct or indirect
interest in, connection with or benefit from any outside activities,
particularly commercial activities, which interest might in any way adversely
affect the Company or its Affiliates, involves a possible conflict of interest.
Circumstances in which a conflict of interest on the part of the Employee would
or might arise, and which should be reported immediately to the Company,
include, but are not limited to, the following:
(a) Ownership of a material interest in any lender,
supplier, contractor, subcontractor, customer or other entity with
which the Company does business.
(b) Acting in any capacity, including director, officer,
partner, consultant, employee, distributor, agent or the like, for any
lender, supplier, contractor, subcontractor, customer or other entity
with which the Company does business.
(c) Acceptance, directly or indirectly, of payments,
services or loans from a lender, supplier, contractor, subcontractor,
customer or other entity with which the Company does business,
including, without limitation, gifts, trips, entertainment or other
favors of more than a nominal value, but excluding loans from publicly
held insurance companies and commercial or savings banks at market
rates of interest.
(d) Use of information or facilities to which the
Employee has access in a manner which will be detrimental to the
Company's interests, such as use for the Employee's own benefit of
know-how or information developed through the Company's business
activities.
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<PAGE> 8
(e) Disclosure or other misuse of information of any kind
obtained through the Employee's connection with the Company.
(f) Acquiring or trading in, directly or indirectly, oil
and gas properties or interests for his own account or the account of
his Affiliates without the prior written consent of the Board of
Directors.
8. Employee's Confidentiality Obligation.
8.1 The Employee hereby acknowledges, understands and agrees that
all Confidential Information is the exclusive and confidential property of the
Company and its Affiliates which shall at all times be regarded, treated and
protected as such in accordance with this Section 8. The Employee acknowledges
that all such Confidential Information is in the nature of a trade secret.
8.2 For purposes of this Agreement, "Confidential Information"
means information, which is used in the business of the Company or its
Affiliates and (i) is proprietary to, about or created by the Company or its
Affiliates, (ii) gives the Company or its Affiliates some competitive business
advantage or the opportunity of obtaining such advantage or the disclosure of
which could be detrimental to the interests of the Company or its Affiliates,
(iii) is designated as Confidential Information by the Company or its
Affiliates, is known by the Employee to be considered confidential by the
Company or its Affiliates, or from all the relevant circumstances should
reasonably be assumed by the Employee to be confidential and proprietary to the
Company or its Affiliates, or (iv) is not generally known by non- Company
personnel. Such Confidential Information includes, without limitation, the
following types of information and other information of a similar nature
(whether or not reduced to writing or designated as confidential):
(a) Internal personnel and financial information of the
Company or its Affiliates, information regarding oil and gas
properties including reserve information, vendor information
(including vendor characteristics, services, prices, lists and
agreements), purchasing and internal cost information, internal
service and operational manuals, and the manner and methods of
conducting the business of the Company or its Affiliates;
(b) Marketing and development plans, price and cost data,
price and fee amounts, pricing and billing policies, bidding, quoting
procedures, marketing techniques, forecasts and forecast assumptions
and volumes, and future plans and potential strategies (including,
without limitation, all information relating to any oil and gas
prospect and the identity of any key contact within the organization
of any acquisition prospect) of the Company or its Affiliates which
have been or are being discussed;
(c) Names of customers and their representatives,
contracts (including their contents and parties), customer services,
and the type, quantity, specifications and content of products and
services purchased, leased, licensed or received by customers of the
Company or its Affiliates; and
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(d) Confidential and proprietary information provided to
the Company or its Affiliates by any actual or potential customer,
government agency or other third party (including businesses,
consultants and other entities and individuals).
8.3 As a consequence of the Employee's acquisition or anticipated
acquisition of Confidential Information, the Employee shall occupy a position
of trust and confidence with respect to the affairs and business of the Company
and its Affiliates. In view of the foregoing and of the consideration to be
provided to the Employee, the Employee agrees that it is reasonable and
necessary that the Employee make each of the following covenants:
(a) At any time during the Employment Period and
thereafter, the Employee shall not disclose Confidential Information
to any person or entity, either inside or outside of the Company,
other than as necessary in carrying out his duties and
responsibilities as set forth in Section 2 hereof, without first
obtaining the Company's prior written consent (unless such disclosure
is compelled pursuant to court orders or subpoena, and at which time
the Employee shall give notice of such proceedings to the Company).
(b) At any time during the Employment Period and
thereafter, the Employee shall not use, copy or transfer Confidential
Information other than as necessary in carrying out his duties and
responsibilities as set forth in Section 2 hereof, without first
obtaining the Company's prior written consent.
(c) On the Date of Termination, the Employee shall
promptly deliver to the Company (or its designee) all written
materials, records and documents made by the Employee or which came
into his possession prior to or during the Employment Period
concerning the business or affairs of the Company or its Affiliates,
including, without limitation, all materials containing Confidential
Information.
9. Disclosure of Information, Ideas, Concepts, Improvements, Discoveries
and Inventions.
As part of the Employee's fiduciary duties to the Company, the
Employee agrees that during his employment by the Company and for a period of
three years following the Date of Termination, the Employee shall promptly
disclose in writing to the Company all information, ideas, concepts,
improvements, discoveries and inventions, whether patentable or not, and
whether or not reduced to practice, which are conceived, developed, made or
acquired by the Employee, either individually or jointly with others, and which
relate to the business, products or services of the Company or its Affiliates,
irrespective of whether the Employee used the Company's time or facilities and
irrespective of whether such information, idea, concept, improvement, discovery
or invention was conceived, developed, discovered or acquired by the Employee
on the job, at home, or elsewhere. This obligation extends to all types of
information, ideas and concepts, including information, ideas and concepts
relating to new types of services, corporate opportunities, acquisition
prospects, the identity of key representatives within acquisition prospect
organizations, prospective names or service marks for the Company's business
activities, and the like.
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<PAGE> 10
10. Ownership of Information, Ideas, Concepts, Improvements, Discoveries
and Inventions, and all Original Works of Authorship.
10.1 All information, ideas, concepts, improvements, discoveries
and inventions, whether patentable or not, which are conceived, made, developed
or acquired by the Employee or which are disclosed or made known to the
Employee, individually or in conjunction with others, during the Employee's
employment by the Company and which relate to the business, products or
services of the Company or its Affiliates (including, without limitation, all
such information relating to corporate opportunities, research, financial and
sales data, pricing and trading terms, evaluations, opinions, interpretations,
acquisition prospects, the identity of customers or their requirements, the
identity of key contacts within the customers' organizations or within the
organization of acquisition prospects, marketing and merchandising techniques,
and prospective names and service marks) are and shall be the sole and
exclusive property of the Company. Furthermore, all drawings, memoranda,
notes, records, files, correspondence, manuals, models, specifications,
computer programs, maps and all other writings or materials of any type
embodying any of such information, ideas, concepts, improvements, discoveries
and inventions are and shall be the sole and exclusive property of the Company.
10.2 In particular, the Employee hereby specifically sells,
assigns, transfers and conveys to the Company all of his worldwide right, title
and interest in and to all such information, ideas, concepts, improvements,
discoveries or inventions, and any United States or foreign applications for
patents, inventor's certificates or other industrial rights which may be filed
in respect thereof, including divisions, continuations, continuations-in-part,
reissues and/or extensions thereof, and applications for registration of such
names and service marks. The Employee shall assist the Company and its nominee
at all times, during the Employment Period and thereafter, in the protection of
such information, ideas, concepts, improvements, discoveries or inventions,
both in the United States and all foreign countries, which assistance shall
include, but shall not be limited to, the execution of all lawful oaths and all
assignment documents requested by the Company or its nominee in connection with
the preparation, prosecution, issuance or enforcement of any applications for
United States or foreign letters patent, including divisions, continuations,
continuations-in-part, reissues and/or extensions thereof, and any application
for the registration of such names and service marks.
10.3 In the event the Employee creates, during the Employment
Period, any original work of authorship fixed in any tangible medium of
expression which is the subject matter of copyright (such as, videotapes,
written presentations on acquisitions, computer programs, drawings, maps,
architectural renditions, models, manuals, brochures or the like) relating to
the Company's business, products or services, whether such work is created
solely by the Employee or jointly with others, the Company shall be deemed the
author of such work if the work is prepared by the Employee in the scope of his
employment; or, if the work is not prepared by the Employee within the scope of
his employment but is specially ordered by the Company as a contribution to a
collective work, as a part of a motion picture or other audiovisual work, as a
translation, as a supplementary work, as a
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compilation or as an instructional text, then the work shall be considered to
be work made for hire, and the Company shall be the author of such work. If
such work is neither prepared by the Employee within the scope of his
employment nor a work specially ordered and deemed to be a work made for hire,
then the Employee hereby agrees to sell, transfer, assign and convey, and by
these presents, does sell, transfer, assign and convey, to the Company all of
the Employee's worldwide right, title and interest in and to such work and all
rights of copyright therein. The Employee agrees to assist the Company and its
Affiliates, at all times, during the Employment Period and thereafter, in the
protection of the Company's worldwide right, title and interest in and to such
work and all rights of copyright therein, which assistance shall include, but
shall not be limited to, the execution of all documents requested by the
Company or its nominee and the execution of all lawful oaths and applications
for registration of copyright in the United States and foreign countries.
11. Employee's Non-Competition Obligation.
11.1 (a) Until the Date of Termination, the Employee shall
not, acting alone or in conjunction with others, directly or
indirectly, in any of the business territories in which the Company or
any of its Affiliates is presently or from time to time during the
Employment Period conducting business, invest or engage, directly or
indirectly, in any business which is competitive with that of the
Company or accept employment with or render services to such a
competitor as a director, officer, agent, employee or consultant, or
take any action inconsistent with the fiduciary relationship of an
employee to his employer; provided, however, that the beneficial
ownership by the Employee of up to three percent of the Voting Stock
of any corporation subject to the periodic reporting requirements of
the Exchange Act shall not violate this Section 11.1(a).
(b) In addition to the other obligations agreed to by the
Employee in this Agreement, the Employee agrees that until the Date of
Termination, he shall not at any time, directly or indirectly, (i)
induce, entice or solicit any employee of the Company to leave his
employment, (ii) contact, communicate or solicit any customer or
acquisition prospect of the Company derived from any customer list,
customer lead, mail, printed matter or other information secured from
the Company or its present or past employees or (iii) in any other
manner use any customer lists or customer leads, mail, telephone
numbers, printed material or other information of the Company relating
thereto.
11.2 (a) If this Agreement is terminated either by the Company
for Cause or by the Employee for any reason, then for a period of one
year following the Date of Termination, the Employee shall not, acting
alone or in conjunction with others, directly or indirectly, in any of
the business territories in which the Company or any of its Affiliates
is presently or at the Date of Termination conducting business, invest
or engage, directly or indirectly, in any business which is
competitive with that of the Company as of the Date of Termination or
accept employment with or render services to such a competitor as a
director, officer, agent, employee or consultant, or take any action
inconsistent with the fiduciary relationship of an employee to his
employer; provided, however, that the beneficial ownership by the
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Employee of up to three percent of the Voting Stock of any corporation
subject to the periodic reporting requirements of the Exchange Act
shall not violate this Section 11.2(a).
(b) In addition to the other obligations agreed to by the
Employee in this Agreement, the Employee agrees that if this Agreement
is terminated either by the Company for Cause or by the Employee for
any reason, then for a period of one year following the Date of
Termination, he shall not at any time, directly or indirectly, (i)
induce, entice or solicit any employee of the Company to leave his
employment, (ii) contact, communicate or solicit any customer or
acquisition prospect of the Company derived from any customer list,
customer lead, mail, printed matter or other information secured from
the Company or its present or past employees or (iii) in any other
manner use any customer lists or customer leads, mail, telephone
numbers, printed material or other information of the Company relating
thereto.
11.3 If this Agreement is terminated either by the Company Without
Cause, then the Employee shall not be subject to any non-competition
obligation.
12. Miscellaneous.
12.1 Notices. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when delivered by hand or
mailed by registered or certified mail, return receipt requested, as follows
(provided that notice of change of address shall be deemed given only when
received):
If to the Company to:
625 E. Kaliste Saloom Road
Suite 400
Lafayette, Louisiana 70508
If to the Employee to:
625 E. Kaliste Saloom Road
Suite 400
Lafayette, Louisiana 70508
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section 12.1.
12.2 Waiver of Breach. The waiver by any party hereto of a breach
of any provision of this Agreement shall neither operate nor be construed as a
waiver of any subsequent breach by any party.
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12.3 Assignment. This Agreement shall be binding upon and inure to
the benefit of the Company, its successors, legal representatives and assigns,
and upon the Employee, his heirs, executors, administrators, representatives
and assigns; provided, however, the Employee agrees that his rights and
obligations hereunder are personal to him and may not be assigned without the
express written consent of the Company.
12.4 Entire Agreement; No Oral Amendments. This Agreement,
together with any exhibit attached hereto and any document, policy, rule or
regulation referred to herein, replaces and merges all previous agreements and
discussions relating to the same or similar subject matter between the Employee
and the Company and constitutes the entire agreement between the Employee and
the Company with respect to the subject matter of this Agreement. This
Agreement may not be modified in any respect by any verbal statement,
representation or agreement made by any employee, officer, or representative of
the Company or by any written agreement unless signed by an officer of the
Company who is expressly authorized by the Company to execute such document.
12.5 Enforceability. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be determined to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement which can be
given effect without the invalid or unenforceable provision or application.
12.6 Jurisdiction; Arbitration. The laws of the State of Louisiana
shall govern the interpretation, validity and effect of this Agreement without
regard to the place of execution or the place for performance thereof. Any
controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled by arbitration located in Houston, Texas
administered by the American Arbitration Association in accordance with its
applicable arbitration rules, and the judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof, which
judgment shall be binding upon the parties hereto.
12.7 Injunctive Relief. The Company and the Employee agree that a
breach of any term of this Agreement by the Employee would cause irreparable
damage to the Company and that, in the event of such breach, the Company shall
have, in addition to any and all remedies of law, the right to any injunction,
specific performance and other equitable relief to prevent or to redress the
violation of the Employee's duties or responsibilities hereunder.
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IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first written above.
PETROQUEST ENERGY, INC.
By: /s/ Charles T. Goodson
----------------------------------------
Name: Charles T. Goodson
--------------------------------------
Title President & Chief Executive Officer
---------------------------------------
EMPLOYEE:
By: /s/ Ralph J. Daigle
----------------------------------------
Ralph J. Daigle
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EXHIBIT 10.5
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into this _1st_ day of _September_,
1998 between PetroQuest Energy, Inc., a Delaware corporation having its
principal executive office at 625 E. Kaliste Saloom Road, Suite 400, Lafayette,
Louisiana 70508 (hereinafter referred to as the "Company"), and Robert R.
Brooksher (hereinafter referred to as the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Employee in an executive
capacity and the Employee desires to enter the Company's employ.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Employee hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
have the meanings prescribed below:
Affiliate is used in this Agreement to define a relationship to a
person or entity and means a person or entity who, directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, such person or entity.
Annual Bonus shall have the meaning assigned thereto in Section 4.2
hereof.
Base Salary shall have the meaning assigned thereto in Section 4.1
hereof.
Beneficial Owner shall have the meaning assigned thereto in Rule
13(d)-3 under the Exchange Act; provided, however, and without limitation, that
any individual, corporation, partnership, group, association or other person or
entity that has the right to acquire any Voting Stock at any time in the future,
whether such right is (a) contingent or absolute or (b) exercisable presently or
at any time in the future, pursuant to any agreement or understanding or upon
the exercise or conversion of rights, options or warrants, or otherwise, shall
be the Beneficial Owner of such Voting Stock.
Cause shall have the meaning assigned thereto in Section 5.3 hereof.
Common Stock means the Company's common stock, par value $.001 per
share.
Confidential Information shall have the meaning assigned thereto in
Section 8.2 hereof.
<PAGE> 2
Date of Termination means the earliest to occur of (i) the date of the
Employee's death, (ii) the date on which the Employee terminates this Agreement
for any reason or (iii) the date of receipt of the Notice of Termination, or
such later date as may be prescribed in the Notice of Termination in accordance
with Section 5.5 hereof.
Disability means an illness or other disability which prevents the
Employee from discharging his responsibilities under this Agreement for a period
of 180 consecutive calendar days, or an aggregate of 180 calendar days in any
calendar year, during the Employment Period, all as determined in good faith by
the Board of Directors of the Company (or a committee thereof).
Effective Date means the date of execution hereof.
Employee means Robert R. Brooksher, whose business address is 625 E.
Kaliste Saloom Road, Suite 400, Lafayette, Louisiana 70508.
Exchange Act means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the Securities and Exchange Commission
thereunder, all as in effect from time to time during the Employment Period.
Company means PetroQuest Energy, Inc., a Delaware corporation, the
principal executive office of which is located at 625 E. Kaliste Saloom Road,
Suite 400, Lafayette, Louisiana 70508.
Employment Period shall have the meaning assigned thereto in Section 3
hereof.
Initial Term shall have the meaning assigned thereto in Section 3
hereof.
Notice of Termination shall have the meaning assigned thereto in
Section 5.5 hereof.
Unexpired Term shall have the meaning assigned thereto in Section
6.3(c) hereof.
Voting Stock means all outstanding shares of capital stock of the
Company entitled to vote generally in an election of directors; provided,
however, that if the Company has shares of Voting Stock entitled to more or less
than one vote per share, each reference to a proportion of the issued and
outstanding shares of Voting Stock shall be deemed to refer to the proportion of
the aggregate votes entitled to be cast by the issued and outstanding shares of
Voting Stock.
Without Cause shall have the meaning assigned thereto in Section 5.4
hereof.
2. General Duties of Company and Employee.
2.1 The Company agrees to employ the Employee, and the Employee agrees
to accept employment by the Company and to serve the Company as Chief Financial
Officer and Secretary, and shall also serve as a director of the Company. The
authority, duties and responsibilities of the
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<PAGE> 3
Employee shall include those described in Exhibit A to this Agreement, and such
other or additional duties as may from time to time be assigned to the Employee
by the Board of Directors (or a committee thereof) and agreed to by the
Employee. While employed hereunder, the Employee shall devote full time and
attention during normal business hours to the affairs of the Company and use his
best efforts to perform faithfully and efficiently his duties and
responsibilities. The Employee may (i) serve on corporate, civic or charitable
boards or committees, (ii) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (iii) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Employee's duties and responsibilities.
2.2 The Employee agrees and acknowledges that he owes a fiduciary duty
of loyalty, fidelity and allegiance to act at all times in the best interests of
the Company and to do no act and to make no statement, oral or written, which
would injure Company's business, its interests or its reputation.
2.3 The Employee agrees to comply at all times during the Employment
Period with all applicable policies, rules and regulations of the Company,
including, without limitation, the Company's Code of Ethics and the Company's
policy regarding trading in the Common Stock, as each is in effect from time to
time during the Employment Period.
3. Term. Unless sooner terminated pursuant to other provisions hereof, the
Employee's period of employment under this Agreement shall be a period of three
years beginning on the Effective Date (the "Initial Term"). After the expiration
of the Initial Term, the Employee's period of employment under this Agreement
shall be automatically renewed for successive one-year terms on each anniversary
of the Effective Date (the Initial Term and any and all renewals thereof are
referred to herein collectively as the "Employment Period").
4. Compensation and Benefits.
4.1 Base Salary. As compensation for services to the Company, the
Company shall pay to the Employee until the Date of Termination an annual base
salary of $180,000 (the "Base Salary"). The Board of Directors (or a committee
thereof), in its discretion, may increase the Base Salary based upon relevant
circumstances. The Base Salary shall be payable in equal semi-monthly
installments or in accordance with the Company's established policy, subject
only to such payroll and withholding deductions as may be required by law and
other deductions applied generally to employees of the Company for insurance and
other employee benefit plans.
4.2 Bonus. In addition to the Base Salary, the Employee may be awarded,
for each fiscal year until the Date of Termination, an annual bonus (either
pursuant to a bonus or incentive plan or program of the Company or otherwise) in
an amount to be determined by the Board of Directors (or a committee thereof),
in its sole discretion (the "Annual Bonus"). Each such Annual Bonus shall be
payable at a time to be determined by the Board of Directors (or a committee
thereof) in its sole discretion.
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4.3 Incentive, Savings and Retirement Plans. Until the Date of
Termination, the Employee shall be eligible to participate in and shall receive
all benefits under all executive incentive, savings and retirement plans
(including 401(k) plans) and programs currently maintained or hereinafter
established by the Company for the benefit of its executive officers and/or
employees.
4.4 Welfare Benefit Plan. Until the Date of Termination, the Employee
and/or the Employee's family, as the case may be, shall be eligible to
participate in and shall receive all benefits under each welfare benefit plan of
the Company currently maintained or hereinafter established by the Company for
the benefit of its employees. Such welfare benefit plans may include, without
limitation, medical, dental, disability, group life, accidental death and travel
accident insurance plans and programs.
4.5 Reimbursement of Expenses. The Employee may from time to time until
the Date of Termination incur various business expenses customarily incurred by
persons holding positions of like responsibility, including, without limitation,
travel, entertainment and similar expenses incurred for the benefit of the
Company, and will receive a Company credit card for use for such expenses.
Subject to the Company's policy regarding the reimbursement of such expenses as
in effect from time to time during the Employment Period, which does not
necessarily allow reimbursement of all such expenses, the Company shall
reimburse the Employee for such expenses from time to time, at the Employee's
request, and the Employee shall account to the Company for all such expenses.
4.6 Life Insurance. The Company shall provide to the Executive life
insurance on terms that are mutually agreeable to the Company and the Executive.
4.7 Relocation. The Company and the Executive agree that if the
Executive is asked to relocate from Lafayette, Louisiana to Houston, Texas, the
Company will provide to Executive reimbursement for out of pocket moving
expenses incurred in connection with such move, and it will also reimburse the
Executive for any loss incurred by the Executive on the sale of his personal
residence in Lafayette, Louisiana, with such loss being calculated on the basis
of the difference between the Executive's actual costs less the net sales price.
5. Termination.
5.1 Death. This Agreement shall terminate automatically upon the death
of the Employee.
5.2 Disability. The Company may terminate this Agreement, upon written
notice to the Employee delivered in accordance with Sections 5.5 and 12.1
hereof, upon the Disability of the Employee.
5.3 Cause. The Company may terminate this Agreement, upon written
notice to the Employee delivered in accordance with Sections 5.5 and 12.1
hereof, for Cause. For purposes of
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<PAGE> 5
this Agreement, "Cause" means (i) the conviction of the Employee of a felony
(which, through lapse of time or otherwise, is not subject to appeal), (ii) the
Employee's willful refusal, without proper legal cause, to perform his duties
and responsibilities as contemplated in this Agreement or (iii) the Employee's
willful engaging in activities which would (A) constitute a breach of any term
of this Agreement, the Company's Code of Ethics, the Company's policies
regarding trading in the Common Stock or reimbursement of business expenses or
any other applicable policies, rules or regulations of the Company, or (B)
result in a material injury to the business, condition (financial or otherwise),
results of operations or prospects of the Company or its Affiliates (as
determined in good faith by the Board of Directors of the Company or a committee
thereof).
5.4 Without Cause. The Company may terminate this Agreement Without
Cause, upon written notice to the Employee delivered in accordance with Sections
5.5 and 12.1 hereof. For purposes of this Agreement, the Employee will be deemed
to have been terminated "Without Cause" if the Employee is terminated by the
Company for any reason other than Cause, Disability or death.
5.5 Notice of Termination. Any termination of this Agreement by the
Company for Cause, Without Cause or as a result of the Employee's Disability
shall be communicated by Notice of Termination to the Employee given in
accordance with this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Employee's employment under the provision so indicated and (iii) specifies the
termination date, if such date is other than the date of receipt of such notice
(which termination date shall not be more than 15 days after the giving of such
notice).
6. Obligations of Company upon Termination.
6.1 Cause by Employee. If this Agreement shall be terminated either by
the Company for Cause or by the Employee for any reason, the Company shall pay
to the Employee, in a lump sum in cash within 30 days after the Date of
Termination, the aggregate of the Employee's Base Salary (as in effect on the
Date of Termination) through the Date of Termination, if not theretofore paid,
and, in the case of compensation previously deferred by the Employee, all
amounts of such compensation previously deferred and not yet paid by the
Company. All other obligations of the Company and rights of the Employee
hereunder shall terminate effective as of the Date of Termination.
6.2 Death or Disability.
(a) Subject to the provisions of this Section 6.2, if this
Agreement is terminated as a result of the Employee's death or
Disability, the Company shall pay to the Employee or his estate, in
equal semi-monthly installments, the Employee's Base Salary (as in
effect on the Date of Termination) for 12 months after such Date of
Termination. The Company may purchase insurance to cover all or any
part of the obligation contemplated in the foregoing
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sentence, and the Employee agrees to submit to a physical examination
to facilitate the procurement of such insurance.
(b) Whenever compensation is payable to the Employee hereunder
during a period in which he is partially or totally disabled, and such
Disability would (except for the provisions hereof) entitle the
Employee to Disability income or salary continuation payments from the
Company according to the terms of any plan or program presently
maintained or hereafter established by the Company, the Disability
income or salary continuation paid to the Employee pursuant to any such
plan or program shall be considered a portion of the payment to be made
to the Employee pursuant to this Section 6.2 and shall not be in
addition hereto. If Disability income is payable directly to the
Employee by an insurance company under the terms of an insurance policy
paid for by the Company, the amounts paid to the Employee by such
insurance company shall be considered a portion of the payment to be
made to the Employee pursuant to this Section 6.2 and shall not be in
addition hereto.
6.3 Without Cause. If this Agreement shall be terminated by the
Company Without Cause:
(a) the Company shall pay to the Employee, in a lump sum in
cash within 30 days after the Date of Termination, the aggregate of the
following amounts:
(1) if not theretofore paid, the Employee's
Base Salary (as in effect on the Date of Termination) through
the Date of Termination; and
(2) in the case of compensation previously deferred
by the Employee, all amounts of such compensation previously
deferred and not yet paid by the Company;
(b) the Company shall, promptly upon submission by the
Employee of supporting documentation, pay or reimburse to the Employee
any costs and expenses (including moving and relocation expenses) paid
or incurred by the Employee which would have been payable under Section
4.5 of this Agreement if the Employee's employment had not terminated;
and
(c) for the 12-month period commencing on the Date of
Termination, the Company shall continue benefits to the Employee and/or
the Employee's family at least equal to those which would have been
provided to them under Section 4.4 if the Employee's employment had not
been terminated; and
(d) the Company shall pay to the Employee, in equal
semi-monthly installments, the Employee's Base Salary (as in effect on
the Date of Termination) for 12 months after the Date of Termination.
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7. Employee's Obligation to Avoid Conflicts of Interest.
7.1 In keeping with the Employee's fiduciary duties to the Company, the
Employee agrees that he shall not knowingly become involved in a conflict of
interest with the Company, or upon discovery thereof, allow such a conflict to
continue. The Employee further agrees to disclose to the Company, promptly after
discovery, any facts or circumstances which might involve a conflict of interest
with the Company.
7.2 The Company and the Employee recognize that it is impossible to
provide an exhaustive list of actions or interests which constitute a "conflict
of interest." Moreover, the Company and the Employee recognize that there are
many borderline situations. In some instances, full disclosure of facts by the
Employee to the Company is all that is necessary to enable the Company to
protect its interests. In others, if no improper motivation appears to exist and
the Company's interests have not suffered, prompt elimination of the outside
interest will suffice. In still others, it may be necessary for the Company to
terminate the employment relationship. The Company and the Employee agree that
the Company's determination as to whether or not a conflict of interest exists
shall be conclusive. The Company reserves the right to take such action as, in
its judgment, will end the conflict of interest.
7.3 In this connection, it is agreed that any direct or indirect
interest in, connection with or benefit from any outside activities,
particularly commercial activities, which interest might in any way adversely
affect the Company or its Affiliates, involves a possible conflict of interest.
Circumstances in which a conflict of interest on the part of the Employee would
or might arise, and which should be reported immediately to the Company,
include, but are not limited to, the following:
(a) Ownership of a material interest in any lender, supplier,
contractor, subcontractor, customer or other entity with which the
Company does business.
(b) Acting in any capacity, including director, officer,
partner, consultant, employee, distributor, agent or the like, for any
lender, supplier, contractor, subcontractor, customer or other entity
with which the Company does business.
(c) Acceptance, directly or indirectly, of payments, services
or loans from a lender, supplier, contractor, subcontractor, customer
or other entity with which the Company does business, including,
without limitation, gifts, trips, entertainment or other favors of more
than a nominal value, but excluding loans from publicly held insurance
companies and commercial or savings banks at market rates of interest.
(d) Use of information or facilities to which the Employee has
access in a manner which will be detrimental to the Company's
interests, such as use for the Employee's own benefit of know-how or
information developed through the Company's business activities.
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<PAGE> 8
(e) Disclosure or other misuse of information of any kind
obtained through the Employee's connection with the Company.
(f) Acquiring or trading in, directly or indirectly, oil and
gas properties or interests for his own account or the account of his
Affiliates without the prior written consent of the Board of Directors.
8. Employee's Confidentiality Obligation.
8.1 The Employee hereby acknowledges, understands and agrees that all
Confidential Information is the exclusive and confidential property of the
Company and its Affiliates which shall at all times be regarded, treated and
protected as such in accordance with this Section 8. The Employee acknowledges
that all such Confidential Information is in the nature of a trade secret.
8.2 For purposes of this Agreement, "Confidential Information" means
information, which is used in the business of the Company or its Affiliates and
(i) is proprietary to, about or created by the Company or its Affiliates, (ii)
gives the Company or its Affiliates some competitive business advantage or the
opportunity of obtaining such advantage or the disclosure of which could be
detrimental to the interests of the Company or its Affiliates, (iii) is
designated as Confidential Information by the Company or its Affiliates, is
known by the Employee to be considered confidential by the Company or its
Affiliates, or from all the relevant circumstances should reasonably be assumed
by the Employee to be confidential and proprietary to the Company or its
Affiliates, or (iv) is not generally known by non-Company personnel. Such
Confidential Information includes, without limitation, the following types of
information and other information of a similar nature (whether or not reduced to
writing or designated as confidential):
(a) Internal personnel and financial information of the
Company or its Affiliates, information regarding oil and gas properties
including reserve information, vendor information (including vendor
characteristics, services, prices, lists and agreements), purchasing
and internal cost information, internal service and operational
manuals, and the manner and methods of conducting the business of the
Company or its Affiliates;
(b) Marketing and development plans, price and cost data,
price and fee amounts, pricing and billing policies, bidding, quoting
procedures, marketing techniques, forecasts and forecast assumptions
and volumes, and future plans and potential strategies (including,
without limitation, all information relating to any oil and gas
prospect and the identity of any key contact within the organization of
any acquisition prospect) of the Company or its Affiliates which have
been or are being discussed;
(c) Names of customers and their representatives, contracts
(including their contents and parties), customer services, and the
type, quantity, specifications and content of products and services
purchased, leased, licensed or received by customers of the Company or
its Affiliates; and
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<PAGE> 9
(d) Confidential and proprietary information provided to the
Company or its Affiliates by any actual or potential customer,
government agency or other third party (including businesses,
consultants and other entities and individuals).
8.3 As a consequence of the Employee's acquisition or anticipated
acquisition of Confidential Information, the Employee shall occupy a position of
trust and confidence with respect to the affairs and business of the Company and
its Affiliates. In view of the foregoing and of the consideration to be provided
to the Employee, the Employee agrees that it is reasonable and necessary that
the Employee make each of the following covenants:
(a) At any time during the Employment Period and thereafter,
the Employee shall not disclose Confidential Information to any person
or entity, either inside or outside of the Company, other than as
necessary in carrying out his duties and responsibilities as set forth
in Section 2 hereof, without first obtaining the Company's prior
written consent (unless such disclosure is compelled pursuant to court
orders or subpoena, and at which time the Employee shall give notice of
such proceedings to the Company).
(b) At any time during the Employment Period and thereafter,
the Employee shall not use, copy or transfer Confidential Information
other than as necessary in carrying out his duties and responsibilities
as set forth in Section 2 hereof, without first obtaining the Company's
prior written consent.
(c) On the Date of Termination, the Employee shall promptly
deliver to the Company (or its designee) all written materials, records
and documents made by the Employee or which came into his possession
prior to or during the Employment Period concerning the business or
affairs of the Company or its Affiliates, including, without
limitation, all materials containing Confidential Information.
9. Disclosure of Information, Ideas, Concepts, Improvements, Discoveries
and Inventions.
As part of the Employee's fiduciary duties to the Company, the Employee
agrees that during his employment by the Company and for a period of three years
following the Date of Termination, the Employee shall promptly disclose in
writing to the Company all information, ideas, concepts, improvements,
discoveries and inventions, whether patentable or not, and whether or not
reduced to practice, which are conceived, developed, made or acquired by the
Employee, either individually or jointly with others, and which relate to the
business, products or services of the Company or its Affiliates, irrespective of
whether the Employee used the Company's time or facilities and irrespective of
whether such information, idea, concept, improvement, discovery or invention was
conceived, developed, discovered or acquired by the Employee on the job, at
home, or elsewhere. This obligation extends to all types of information, ideas
and concepts, including information, ideas and concepts relating to new types of
services, corporate opportunities, acquisition prospects, the identity of key
representatives within acquisition prospect organizations, prospective names or
service marks for the Company's business activities, and the like.
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<PAGE> 10
10. Ownership of Information, Ideas, Concepts, Improvements, Discoveries and
Inventions, and all Original Works of Authorship.
10.1 All information, ideas, concepts, improvements, discoveries and
inventions, whether patentable or not, which are conceived, made, developed or
acquired by the Employee or which are disclosed or made known to the Employee,
individually or in conjunction with others, during the Employee's employment by
the Company and which relate to the business, products or services of the
Company or its Affiliates (including, without limitation, all such information
relating to corporate opportunities, research, financial and sales data, pricing
and trading terms, evaluations, opinions, interpretations, acquisition
prospects, the identity of customers or their requirements, the identity of key
contacts within the customers' organizations or within the organization of
acquisition prospects, marketing and merchandising techniques, and prospective
names and service marks) are and shall be the sole and exclusive property of the
Company. Furthermore, all drawings, memoranda, notes, records, files,
correspondence, manuals, models, specifications, computer programs, maps and all
other writings or materials of any type embodying any of such information,
ideas, concepts, improvements, discoveries and inventions are and shall be the
sole and exclusive property of the Company.
10.2 In particular, the Employee hereby specifically sells, assigns,
transfers and conveys to the Company all of his worldwide right, title and
interest in and to all such information, ideas, concepts, improvements,
discoveries or inventions, and any United States or foreign applications for
patents, inventor's certificates or other industrial rights which may be filed
in respect thereof, including divisions, continuations, continuations-in-part,
reissues and/or extensions thereof, and applications for registration of such
names and service marks. The Employee shall assist the Company and its nominee
at all times, during the Employment Period and thereafter, in the protection of
such information, ideas, concepts, improvements, discoveries or inventions, both
in the United States and all foreign countries, which assistance shall include,
but shall not be limited to, the execution of all lawful oaths and all
assignment documents requested by the Company or its nominee in connection with
the preparation, prosecution, issuance or enforcement of any applications for
United States or foreign letters patent, including divisions, continuations,
continuations-in-part, reissues and/or extensions thereof, and any application
for the registration of such names and service marks.
10.3 In the event the Employee creates, during the Employment Period,
any original work of authorship fixed in any tangible medium of expression which
is the subject matter of copyright (such as, videotapes, written presentations
on acquisitions, computer programs, drawings, maps, architectural renditions,
models, manuals, brochures or the like) relating to the Company's business,
products or services, whether such work is created solely by the Employee or
jointly with others, the Company shall be deemed the author of such work if the
work is prepared by the Employee in the scope of his employment; or, if the work
is not prepared by the Employee within the scope of his employment but is
specially ordered by the Company as a contribution to a collective work, as a
part of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a
10
<PAGE> 11
compilation or as an instructional text, then the work shall be considered to be
work made for hire, and the Company shall be the author of such work. If such
work is neither prepared by the Employee within the scope of his employment nor
a work specially ordered and deemed to be a work made for hire, then the
Employee hereby agrees to sell, transfer, assign and convey, and by these
presents, does sell, transfer, assign and convey, to the Company all of the
Employee's worldwide right, title and interest in and to such work and all
rights of copyright therein. The Employee agrees to assist the Company and its
Affiliates, at all times, during the Employment Period and thereafter, in the
protection of the Company's worldwide right, title and interest in and to such
work and all rights of copyright therein, which assistance shall include, but
shall not be limited to, the execution of all documents requested by the Company
or its nominee and the execution of all lawful oaths and applications for
registration of copyright in the United States and foreign countries.
11. Employee's Non-Competition Obligation.
11.1 (a) Until the Date of Termination, the Employee shall not, acting
alone or in conjunction with others, directly or indirectly, in any of
the business territories in which the Company or any of its Affiliates
is presently or from time to time during the Employment Period
conducting business, invest or engage, directly or indirectly, in any
business which is competitive with that of the Company or accept
employment with or render services to such a competitor as a director,
officer, agent, employee or consultant, or take any action inconsistent
with the fiduciary relationship of an employee to his employer;
provided, however, that the beneficial ownership by the Employee of up
to three percent of the Voting Stock of any corporation subject to the
periodic reporting requirements of the Exchange Act shall not violate
this Section 11.1(a).
(b) In addition to the other obligations agreed to by the
Employee in this Agreement, the Employee agrees that until the Date of
Termination, he shall not at any time, directly or indirectly, (i)
induce, entice or solicit any employee of the Company to leave his
employment, (ii) contact, communicate or solicit any customer or
acquisition prospect of the Company derived from any customer list,
customer lead, mail, printed matter or other information secured from
the Company or its present or past employees or (iii) in any other
manner use any customer lists or customer leads, mail, telephone
numbers, printed material or other information of the Company relating
thereto.
11.2 (a) If this Agreement is terminated either by the Company for
Cause or by the Employee for any reason, then for a period of one year
following the Date of Termination, the Employee shall not, acting alone
or in conjunction with others, directly or indirectly, in any of the
business territories in which the Company or any of its Affiliates is
presently or at the Date of Termination conducting business, invest or
engage, directly or indirectly, in any business which is competitive
with that of the Company as of the Date of Termination or accept
employment with or render services to such a competitor as a director,
officer, agent, employee or consultant, or take any action inconsistent
with the fiduciary relationship of an employee to his employer;
provided, however, that the beneficial ownership by the
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<PAGE> 12
Employee of up to three percent of the Voting Stock of any corporation
subject to the periodic reporting requirements of the Exchange Act
shall not violate this Section 11.2(a).
(b) In addition to the other obligations agreed to by the
Employee in this Agreement, the Employee agrees that if this Agreement
is terminated either by the Company for Cause or by the Employee for
any reason, then for a period of one year following the Date of
Termination, he shall not at any time, directly or indirectly, (i)
induce, entice or solicit any employee of the Company to leave his
employment, (ii) contact, communicate or solicit any customer or
acquisition prospect of the Company derived from any customer list,
customer lead, mail, printed matter or other information secured from
the Company or its present or past employees or (iii) in any other
manner use any customer lists or customer leads, mail, telephone
numbers, printed material or other information of the Company relating
thereto.
11.3 If this Agreement is terminated either by the Company Without
Cause, then the Employee shall not be subject to any non-competition obligation.
12. Miscellaneous.
12.1 Notices. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when delivered by hand or
mailed by registered or certified mail, return receipt requested, as follows
(provided that notice of change of address shall be deemed given only when
received):
If to the Company to:
625 E. Kaliste Saloom Road
Suite 400
Lafayette, Louisiana 70508
If to the Employee to:
625 E. Kaliste Saloom Road
Suite 400
Lafayette, Louisiana 70508
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section 12.1.
12.2 Waiver of Breach. The waiver by any party hereto of a breach of
any provision of this Agreement shall neither operate nor be construed as a
waiver of any subsequent breach by any party.
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12.3 Assignment. This Agreement shall be binding upon and inure to the
benefit of the Company, its successors, legal representatives and assigns, and
upon the Employee, his heirs, executors, administrators, representatives and
assigns; provided, however, the Employee agrees that his rights and obligations
hereunder are personal to him and may not be assigned without the express
written consent of the Company.
12.4 Entire Agreement; No Oral Amendments. This Agreement, together
with any exhibit attached hereto and any document, policy, rule or regulation
referred to herein, replaces and merges all previous agreements and discussions
relating to the same or similar subject matter between the Employee and the
Company and constitutes the entire agreement between the Employee and the
Company with respect to the subject matter of this Agreement. This Agreement may
not be modified in any respect by any verbal statement, representation or
agreement made by any employee, officer, or representative of the Company or by
any written agreement unless signed by an officer of the Company who is
expressly authorized by the Company to execute such document.
12.5 Enforceability. If any provision of this Agreement or application
thereof to anyone or under any circumstances shall be determined to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.
12.6 Jurisdiction; Arbitration. The laws of the State of Louisiana
shall govern the interpretation, validity and effect of this Agreement without
regard to the place of execution or the place for performance thereof. Any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, shall be settled by arbitration located in Houston, Texas administered
by the American Arbitration Association in accordance with its applicable
arbitration rules, and the judgment on the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof, which judgment shall be
binding upon the parties hereto.
12.7 Injunctive Relief. The Company and the Employee agree that a
breach of any term of this Agreement by the Employee would cause irreparable
damage to the Company and that, in the event of such breach, the Company shall
have, in addition to any and all remedies of law, the right to any injunction,
specific performance and other equitable relief to prevent or to redress the
violation of the Employee's duties or responsibilities hereunder.
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IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first written above.
PETROQUEST ENERGY, INC.
By: /s/Charles T. Goodson
-----------------------------------------
Name: Charles T. Goodson
---------------------------------------
Title President & Chief Executive Officer
---------------------------------------
EMPLOYEE:
By: /s/Robert R. Brooksher
-----------------------------------------
Robert R. Brooksher
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<PAGE> 1
EXHIBIT 99.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of September 1_, 1998, among Optima Petroleum Corporation, a
Delaware corporation whose name has been changed to PetroQuest Energy, Inc.
("Optima"), and each person listed on the signature pages of this Agreement
under the caption "Stockholders" (each a "Stockholder" and, collectively, the
"Stockholders").
WHEREAS, pursuant to a Plan and Agreement of Merger dated February 11,
1998 and entered into with Optima (collectively, the "Acquisition Agreements"),
each of the Stockholders has received on the date hereof shares of common stock,
par value $.001 per share, of Optima ("Common Stock") and contingent stock issue
rights to receive additional shares of Common Stock on the occurrence of certain
events ("Contingent Shares"), and among other things, Optima will change its
name to PetroQuest Energy, Inc.; and
WHEREAS, in order to induce the Stockholders to enter into their
respective Acquisition Agreements, Optima has agreed to provide registration
rights on the terms set forth in this Agreement for the benefit of the
Stockholders.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
1. Definitions. The following capitalized terms shall have the meanings
assigned to them in this Section 1 or in the parts of this Agreement referred to
below:
Commission: the Securities and Exchange Commission, and any successor
thereto.
Exchange Act: the Securities Exchange Act of 1934, as amended, and any
successor thereto, and the rules and regulations thereunder.
Exempt Offering: as defined in Section 2.
<PAGE> 2
Registrable Common: shares of Common Stock that were issued to the
Stockholders pursuant to the Acquisition Agreement, the Contingent Shares and
any additional shares of Common Stock issued or distributed in respect of any
other shares of Registrable Common by way of a stock dividend or distribution or
stock split or in connection with a combination of shares, recapitalization,
reorganization, merger, consolidation or otherwise. For purposes of this
Agreement, shares of Registrable Common will cease to be Registrable Common when
and to the extent that (i) a registration statement covering such shares has
been declared effective under the Securities Act and such shares have been
disposed of pursuant to such effective registration statement, (ii) such shares
are sold pursuant to Rule 144 or become saleable under Rule 144(k), or (iii)
such shares have been otherwise transferred to a person or entity that is not a
Stockholder, other than pursuant to Section 10.
Registration Notice: as defined in Section 2.
Rule 144: Securities Act Rule 144 (or any similar or successor
provision under the Securities Act).
Securities Act: the Securities Act of 1933, as amended, and any
successor thereto, and the rules and regulations thereunder.
Selling Stockholder: as defined in Section 11.
2. Piggyback Registration Rights. At any time when Optima proposes to
register any Common Stock under the Securities Act for its own account or for
the account of a stockholder of Optima other than a registration relating to the
offering or issuance of shares in connection with (i) employee compensation or
benefit plans or (ii) one or more acquisition transactions under a Registration
Statement on Form S-4 or Form S-1 under the Securities Act (or a successor to
Form S-4 or Form S-1) (any such offering or issuance being an "Exempt
Offering"), Optima will give each Stockholder written notice of its intent to do
so (a "Registration Notice") at least 20 days prior to the filing of the related
registration statement with the Commission. Such notice shall specify the
approximate date on which Optima proposes to file such registration statement
and shall contain a statement that the Stockholders are entitled to participate
in such offering and shall set forth the number of shares of Registrable Common
that represents the best estimate of the lead managing underwriter (or if not
known, Optima) that will be available for sale by the holders of Registrable
Common in the proposed offering. If Optima shall have delivered a Registration
Notice, each Stockholder shall be entitled to participate on the same terms and
conditions as Optima in the public offering to which the Registration Notice
relates and to offer and sell shares of Registrable Common therein only to the
extent provided in this Section 2. Each Stockholder desiring to participate in
such offering shall notify Optima no later than ten days following receipt of
the Registration Notice of the aggregate number of shares of Registrable Common
that such Stockholder then desires to sell in the public offering. Each
Stockholder desiring to participate in the public offering may include shares of
Registrable Common in the registration statement relating to such offering, to
the extent that the inclusion of such shares shall not reduce the number of
shares of Common Stock to be offered and sold by Optima to be included therein.
If the lead managing underwriter selected by
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<PAGE> 3
Optima for a public offering determines that marketing factors require a
limitation on the number of shares of Registrable Common to be offered and sold
in such offering, there shall be included in the offering only that number of
shares of Registrable Common, if any, requested to be included in the offering
that such lead managing underwriter reasonably and in good faith believes will
not jeopardize the success of the offering, provided, however, that if the lead
managing underwriter determines that marketing factors require a limitation on
the number of shares of Registrable Common to be offered and sold as aforesaid
and so notifies Optima and any requesting Stockholder in writing, the number of
shares of Registrable Common to be offered and sold by holders desiring to
participate in the offering, shall be allocated among such holders on a pro rata
basis based on their holdings of Registrable Common.
3. Registration Procedures. In connection with registrations under
Section 2, and subject to the terms and conditions contained therein, Optima
shall:
(a) use its best efforts to prepare and file with the
Commission as soon as reasonably practicable, a registration statement
with respect to the Registrable Common and use its best efforts to
cause such registration to promptly become effective;
(b) prepare and file with the Commission such amendments
(including post-effective amendments) to such registration statement
and supplements to the related prospectus to reflect appropriately the
plan of distribution of the securities registered thereunder until the
completion of the distribution contemplated by such registration
statement or for so long thereafter as a dealer is required by law to
deliver a prospectus in connection with the offer and sale of the
shares of Registrable Common covered by such registration statement
and/or as shall be necessary so that neither such registration
statement nor the related prospectus shall contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading and so that such registration statement and the related
prospectus will otherwise comply with applicable legal requirements;
(c) provide to any Stockholder requesting to include shares of
Registrable Common in such registration statement and a single counsel
for all holders of Registrable Common requesting to include shares of
Registrable Common in such registration statement, which counsel shall
be selected by the holders of a majority of shares of Registrable
Common requested to be included in such registration statement and
shall be reasonably satisfactory to Optima, an opportunity to review
and provide comments with respect to such registration statement (and
any post-effective amendment thereto) prior to such registration
statement (or post-effective amendment) becoming effective;
(d) use its best efforts to register and qualify the
Registrable Common covered by such registration statement under
applicable securities or "Blue Sky" laws of such jurisdictions as the
holders shall reasonably request for the distribution of the
Registrable Common;
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<PAGE> 4
(e) take such other actions as are reasonable and necessary to
comply with the requirements of the Securities Act;
(f) furnish such number of prospectuses (including preliminary
prospectuses) and documents incident thereto as a Stockholder from time
to time may reasonably request;
(g) provide to any Stockholder requesting to include
Registrable Common in such registration statement and any managing
underwriter participating in any distribution thereof, and to any
attorney, accountant or other agent retained by such Stockholder or
managing underwriter, reasonable access to appropriate officers and
directors of Optima to ask questions and to obtain information
reasonably requested by any such Stockholder, managing underwriter,
attorney, accountant or other agent in connection with such
registration statement or any amendment thereto; provided, however,
that (i) in connection with any such access or request, any such
requesting persons shall cooperate to the extent reasonably practicable
to minimize any disruption to the operation by Optima of its business
and (ii) any records, information or documents shall be kept
confidential by such requesting persons, unless (A) such records,
information or documents are in the public domain or otherwise publicly
available or (B) disclosure of such records, information or documents
is required by court or administrative order or by applicable law
(including, without limitation, the Securities Act);
(h) notify each Stockholder and the managing underwriters
participating in the distribution pursuant to such registration
statement promptly (i) when Optima is informed that such registration
statement or any post-effective amendment to such registration
statement becomes effective, (ii) of any request by the Commission for
an amendment or any supplement to such registration statement or any
related prospectus, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of such registration statement or of
any order preventing or suspending the use of any related prospectus or
the initiation or threat of any proceeding for that purpose, (iv) of
the suspension of the qualification of any shares of Registrable Common
included in such registration statement for sale in any jurisdiction or
the initiation or threat of a proceeding for that purpose, (v) of any
determination by Optima that any event has occurred which makes untrue
any statement of a material fact made in such registration statement or
any related prospectus or which requires the making of a change in such
registration statement or any, related prospectus in order that the
same will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (vi) of the completion
of the distribution contemplated by such registration statement if it
relates to an offering by Optima;
(i) in the event of the issuance of any stop order suspending
the effectiveness of such registration statement or of any order
suspending or preventing the use of any related prospectus or
suspending the qualification of any shares of Registrable Common
included in such registration statement for sale in any jurisdiction,
use its best efforts to obtain its withdrawal;
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<PAGE> 5
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, but not
later than fifteen months after the effective date of such registration
statement, an earnings statement covering the period of at least twelve
months beginning with the first full fiscal quarter after the effective
date of such registration statement, which earnings statement shall
satisfy the provisions of Section 11 (a) of the Securities Act;
(k) use reasonable diligence to cause all shares of
Registrable Common included in such registration statement to be listed
on any securities exchange (including, for this purpose, the Nasdaq
Small-Cap Market) on which the Common Stock is then listed at the
initiation of Optima;
(l) use reasonable diligence to obtain an opinion from legal
counsel (which may include the General Counsel of Optima) in customary
form and covering such matters of the type customarily covered by
opinions as the underwriters, if any, may reasonably request;
(m) provide a transfer agent and registrar for all such
Registrable Common not later than the effective date of such
registration statement;
(n) enter into such customary agreement (including an
underwriting agreement in customary form) as the underwriters, if any,
may reasonably request in order to expedite or facilitate the
disposition of such shares of Registrable Common; and
(o) use reasonable diligence to obtain a "comfort letter" from
Optima's independent public accountants in customary form and covering
such matters of the type customarily covered by comfort letters as the
underwriters, if any, may reasonably request. As used in this Section 3
and elsewhere herein, the term "underwriters" does not include any
Stockholder.
4. Underwriting Agreement. In connection with each registration
pursuant to Section 2 covering an underwritten registered public offering,
Optima and each participating Stockholder agree to enter into a written
agreement with the managing underwriter in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such underwriter and companies of Optima's size and investment stature,
including provisions for indemnification by Optima and each Selling Stockholder
as more fully described in Section 11.
5. Availability of Rule 144. Notwithstanding anything contained herein
to the contrary, (including Section 2), Optima shall not be obligated to
register shares of Registrable Common or maintain effectiveness of any
registration statement covering Registrable Common held by any Stockholder when
the resale provisions of Rule 144(k) are available to such Stockholder or such
Stockholder is otherwise entitled to sell the shares of Registrable Common held
by him or her in a brokerage transaction without registration under the
Securities Act and without limitation as to volume or manner of sale or both.
5
<PAGE> 6
6. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of the
shares of Registrable Common held by the Stockholders to the public without
registration, Optima agrees to:
(a) make and keep public information available (as those terms
are understood and defined in Rule 144) at all times from and after 90
days following the effective date of the registration statement;
(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of Optima under
the Securities Act and the Exchange Act at any time that it is subject
to such reporting requirements;
(c) so long as a Stockholder owns any shares of Registrable
Common, furnish to the Stockholder forthwith upon request a written
statement by Optima as to its compliance with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act (at
any time that it is subject to such reporting requirements), a copy of
the most recent annual or quarterly report of Optima, and such other
reports and documents filed in accordance with such reporting
requirements as a Stockholder may reasonably request in availing itself
of any rule or regulation of the Commission allowing a Stockholder to
sell any such securities without registration; and
(d) if required by the transfer agent and registrar for the
Common Stock, use reasonable diligence to obtain an opinion from legal
counsel (which may include the General Counsel of Optima) addressed to
such transfer agent and registrar, with respect to any sale of shares
of Registerable Common pursuant to Rule 144 (or, at the option of
Optima, pay the reasonable fees and expenses of legal counsel retained
by a Stockholder to provide such an opinion).
7. Market Standoff. In consideration of the granting to Stockholders of
the registration rights pursuant to this Agreement, each Stockholder agrees
that, for so long as such Stockholder holds shares of Registrable Common which
are not part of a registration as permitted by Section 2, such Stockholder will
not sell, transfer or otherwise dispose of, including without limitation through
put or short sale arrangements, such shares of Registrable Common in the 30 days
prior to the effectiveness of any registration (other than relating to an Exempt
Offering) of Common Stock for sale to the public and for up to 90 days following
the effectiveness of such registration.
8. Registration Expenses. All expenses incurred in connection with any
registration, qualification and compliance under this Agreement (including,
without limitation, all registration, filing, qualification, legal, printing and
accounting fees, and including all reasonable fees of one counsel acting on
behalf of all holders of the securities being registered in such registration)
shall be borne by Optima. All underwriting commissions and discounts applicable
to shares of Registrable Common included in the registrations under this
Agreement shall be borne by the holders of the securities so registered pro rata
on the basis of the number of shares so registered. Subject to the foregoing,
all expenses incident to Optima's performance of or compliance with this
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Agreement, including, without limitation, all filing fees, fees and expenses of
compliance with securities or Blue Sky laws (including, without limitation, fees
and disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Common), printing expenses, messenger and delivery expenses,
internal expenses (including, without limitation, all salaries and expenses of
Optima's officers and employees performing legal or accounting duties), the fees
and expenses applicable to shares of Registrable Common included in connection
with the listing of the securities to be registered on each securities exchange
(including, for this purpose, the Nasdaq Small-Cap Market) on which similar
securities issued by Optima are then listed at the initiation of Optima,
registrar and transfer agents' fees and fees and disbursements of counsel for
Optima and its independent certified public accountants, Securities Act
liability insurance of Optima and its officers and directors (if Optima elects
to obtain such insurance), the fees and expenses of any special experts retained
by Optima in connection with such registration and fees and expenses of other
persons retained by Optima and incurred in connection with each registration
hereunder (but not including, without limitation, any underwriting fees,
discounts or commissions attributable to the sale of Registrable Common, and
transfer taxes, if any), will be borne by Optima.
9. Participation in Underwritten Registrations. No holder of
Registrable Common may participate in any underwritten registration hereunder
unless such holder (a) agrees to sell such holder's securities on the basis
provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, custody agreement, indemnities, underwriting
agreement and other documents reasonably required under the terms of such
underwriting arrangements.
10. Transfer of Registration Rights; Additional Grants of Registration
Rights. The registration rights provided to the holders of Registrable Common
under Section 2 hereof may not be transferred to any other person or entity,
except to another Stockholder, Robert R. Brooksher or pursuant to the laws of
descent and distribution; provided, however, that such transferees are bound by
and subject to the terms and conditions contained herein. The Company may,
without the prior consent of the Stockholders, extend the registration rights
provided for in this Agreement to additional persons or entities who become
holders of Common Stock subsequent to the date of this Agreement by entering
into one or more addenda to this Agreement with any such stockholders, and, upon
execution of any such addenda, any stockholder that is a party thereto shall
thereafter be a "Stockholder" for purposes of this Agreement and any shares of
Common Stock referred to therein as such shall be shares of "Registrable Common"
for purposes of this Agreement. Nothing herein shall limit the ability of Optima
to grant to any person or entity any registration or similar rights in the
future with respect to Common Stock or other securities of Optima (whether
pursuant to the foregoing provision or otherwise).
11. Indemnification and Contribution.
(a) Indemnification by the Company. To the extent permitted by
law, Optima agrees to indemnify and hold harmless each Stockholder who
sells shares of Registrable Common in a registered offering pursuant to
Section 2 (a "Selling Stockholder"), from and against any and all
losses, claims, damages, liabilities and expenses (including reasonable
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<PAGE> 8
legal expenses) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Registrable Common
or in any amendment or supplement thereto or in any related preliminary
prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or expenses arise
out of, or are based upon, any such untrue statement or omission or
allegation thereof based upon information furnished in writing to
Optima by such Selling Stockholder or on such Selling Stockholder's
behalf expressly for use therein. Notwithstanding the foregoing,
Optima's indemnification obligations with respect to any preliminary
prospectus shall not inure to the benefit of any Selling Stockholder or
underwriter with respect to any loss, claim, damage, liability (or
actions in respect thereof) or expense arising out of or based on any
untrue statement or alleged untrue statement or omission or alleged
omission to state a material fact in such preliminary prospectus, in
any case where (i) a copy of the prospectus used to confirm sales of
shares of Registrable Common was not sent or given to the person
asserting such loss, claim, damage or liability at or prior to the
written confirmation of the sale to such person and (ii) such untrue
statement or alleged untrue statement or omission or alleged omission
was corrected in such prospectus.
(b) Conduct of Indemnification Proceedings. Promptly after
receipt by a Selling Stockholder of notice of any claim or the
commencement of any action or proceeding brought or asserted against
such Selling Stockholder in respect of which indemnity may be sought
from Optima, such Selling Stockholder shall notify Optima in writing of
the claim or the commencement of that action or proceeding; provided,
however, that the failure to so notify Optima shall not relieve Optima
from any liability that it may have to the Selling Stockholder
otherwise than pursuant to the indemnification provisions of this
Agreement. If any such claim or action or proceeding shall be brought
against a Selling Stockholder and such Selling Stockholder shall have
duly notified Optima thereof, Optima shall have the right to assume the
defense thereof, including the employment of counsel. Such Selling
Stockholder shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Selling
Stockholder unless (i) Optima has agreed to pay such fees and expenses
or (ii) the named parties to any such action or proceeding include both
such Selling Stockholder and Optima, and such Selling Stockholder shall
have been advised by counsel that there may be one or more legal
defenses available to such Selling Stockholder which are different from
or additional to those available to Optima, in which case, if such
Selling Stockholder notifies Optima in writing that it elects to employ
separate counsel at the expense of Optima, Optima shall not have the
right to assume the defense of such action or proceeding on behalf of
such Selling Stockholder; it being understood, however, that Optima
shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one
separate firm of attorneys (together with appropriate local counsel) at
any time for all Selling
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Stockholders. Optima shall not be liable for any settlement of any such
action or proceeding effected without Optima's written consent.
(c) Indemnification by Holders of Registrable Common. In
connection with any registration in which a Selling Stockholder is
participating, such Selling Stockholder will furnish to Optima in
writing such information and affidavits as Optima reasonably requests
for use in connection with any related registration statement or
prospectus. To the extent permitted by law, each Selling Stockholder
agrees to indemnify and hold harmless Optima, its directors and
officers who sign the registration statement relating to shares of
Registrable Common offered by such Selling Stockholder and each person,
if any, who controls Optima within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act to the same extent
as the foregoing indemnity from Optima to such Selling Stockholder, but
only with respect to information concerning such Selling Stockholder
furnished in writing by such Selling Stockholder or on such Selling
Stockholder's behalf expressly for use in any registration statement or
prospectus relating to shares of Registrable Common offered by such
Selling Stockholder, or any amendment or supplement thereto, or any
related preliminary prospectus. In case any action or proceeding shall
be brought against Optima or its directors or officers, or any such
controlling person, in respect of which indemnity may be sought against
such Selling Stockholder, such Selling Stockholder shall have the
rights and duties given to Optima, and Optima or its directors or
officers or such controlling persons shall have the rights and duties
given to such Selling Stockholder, by the preceding paragraph. Each
Selling Stockholder also agrees to indemnify and hold harmless any
underwriters of the Registrable Common, their partners, officers and
directors and each person who controls such underwriters (within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act) on substantially the same basis as that of the
indemnification of Optima provided in this Section 11(c).
Notwithstanding anything to the contrary herein, in no event shall the
amount paid or payable by any Selling Stockholder under this Section
11(c) exceed the amount of proceeds received by such Selling
Stockholder from the offering of the Registrable Common.
(d) Contribution. If the indemnification provided for in this
Section 11 is unavailable to any indemnified party in respect of any
losses, claims, damages, liabilities or expenses referred to herein,
then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities and expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and the
indemnified parties in connection with the actions that resulted in
such losses, claims, damages, liabilities or expenses, as well as any
other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by such indemnified party or indemnified parties
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. Optima and the Selling
Stockholders agree that it would not be just and equitable if
contribution
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pursuant to this Section 11(d) were determined by pro rata allocation
or by any other method of allocation that does not take account of the
equitable considerations referred to in this Section 11(d). No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. If
indemnification is available under this Section 11, the indemnifying
parties shall indemnify each indemnified party to the full extent
provided in Sections 11(a) and (c) without regard to the relative fault
of said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 11(d).
12. Miscellaneous
(a) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified
or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless Optima has obtained the
written consent of holders of at least 51% of the shares of Registrable
Common then outstanding.
(b) Notices. All notices and other communications provided for
or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by telex or telecopy,
or registered or certified mail (return receipt requested), postage
prepaid, or courier to the parties at the following addresses (or at
such other address for any party as shall be specified by like notice),
provided that notices of a change of address shall be effective only
upon receipt thereof. Notices sent by mail shall be effective when
answered back, notices sent by telecopier shall be effective when
receipt is acknowledged, and notices sent by courier guaranteeing next
day delivery shall be effective on the next business day after timely
delivery by the courier. Notices shall be sent to the following
addresses:
(i) if to a Stockholder, at the most current
address given by such Stockholder to Optima in a writing
making specific reference to this Agreement;
(ii) if to Optima, at the following address:
625 E. Kaliste Saloom Road
Suite 400
Lafayette, Louisiana 70508
(c) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the heirs, executors, administrators,
successors and assigns of each of the parties.
(d) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts,
each of which when so
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executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(f) Section References. Unless the context requires otherwise,
references in this Agreement to "Sections" are to Sections of this
Agreement.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THAT
STATE.
(h) Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason,
the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained herein
shall not be in any way impaired thereby, it being intended that all
the rights and privileges of the Stockholders shall be enforceable to
the fullest extent permitted by law.
(i) Entire Agreement; Termination. This Agreement is intended
by the parties as a final expression of their agreement and intended to
be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter
contained herein. This Agreement supersedes all prior agreement and
understandings between the parties with respect to such subject matter.
This Agreement, except the provisions of Section 11 (which shall
survive until the expiration of the applicable statutes of limitations)
and this Section 12, shall terminate and be of no further force or
effect on December 31, 2001.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Optima:
OPTIMA PETROLEUM CORPORATION
By: /s/ Ronald Bourgeois
--------------------------------------
Name: Ronald Bourgeois
------------------------------
Title: Chief Financial Officer
-----------------------------
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STOCKHOLDERS:
/s/ Charles T. Goodson
------------------------------------
Charles T. Goodson
/s/ Alfred J. Thomas, II
------------------------------------
Alfred J. Thomas, II
/s/ Ralph J. Daigle
------------------------------------
Ralph J. Daigle
/s/ Janell B. Thomas
------------------------------------
Janell B. Thomas
/s/ Alfred J. Thomas, III
------------------------------------
Alfred J. Thomas, III
/s/ Blaine A. Thomas
------------------------------------
Blaine A. Thomas
/s/Natalie A. Thomas
------------------------------------
Natalie A. Thomas
12
