EXHIBIT 10.10
Execution Copy
SERVICES AGREEMENT
by
and between
Crusader Energy Group Inc.
and
Robert J. Raymond
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (this “
Agreement ”) is made and entered into effective as of
the closing of the transaction contemplated by the Contribution
Agreement (as defined below) (the “ Effective Date
”), by and between Crusader Energy Group Inc. (f/k/a Westside
Energy Corporation), a Nevada corporation (the “
Company ”), and Robert J. Raymond (“
Raymond ”).
RECITALS:
A. Raymond possesses valuable
skills and knowledge in the field of business of the Company and
desires to be retained by the Company as non-executive Chairman of
the Board on the terms and conditions set forth in this
Agreement.
B. The Company desires to retain
Raymond on the terms and conditions set forth in this
Agreement.
AGREEMENTS:
In consideration of the premises and
of the mutual covenants and agreements contained herein, and other
good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Certain
Definitions . As used in this Agreement, the following
terms have the meanings set forth below:
(a)
“ Affiliate ” means, with respect to any Person,
any other Person that directly or indirectly controls, is
controlled by, or is under common control with the Person in
question. As used in this definition of “Affiliate,”
the term “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of
Voting Securities, by contract, or otherwise.
(b)
“ Beneficial Owner ” or “ Beneficial
Ownership ” or “ Beneficially Owns ”
shall have the meaning ascribed to such terms in, or be interpreted
in a manner consistent with, Rule 13d-3 under the Exchange Act
and any successor to such rule.
(c)
“ Board ” means the Board of Directors of the
Company and any committee thereof.
(d)
“ Cause ” means Raymond’s:
(i) commission
of an act of fraud, embezzlement, mis-appropriation, willful
misconduct, bad faith or dishonesty against the Company;
(ii) material
breach of this Agreement which is not remedied within 30 days
after receipt of written notice from the Company specifically
identifying the manner in which the Company believes that Raymond
has materially breached this Agreement;
(iii) conviction,
plea of no contest or nolo contendere, deferred adjudication or
unadjudicated probation for any felony or any crime involving moral
turpitude; or
(iv) violation
of the Company’s substance abuse policy.
(e)
“ Change in Control ” means the occurrence of
any of the following events:
(i) Subject
to the last paragraph of this definition, the acquisition by any
Person or Group of Beneficial Ownership of forty percent (40%) or
more of either (x) the then outstanding shares of Common Stock
(the “Outstanding Company Stock”) or (y) the
combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors
or similar governing body (the “Outstanding Company Voting
Securities” and, together with the Outstanding Company Stock,
the “Company Securities”); or
(ii) Members
of the Incumbent Board cease to constitute at least a majority of
the members of the Board; or
(iii) Consummation
of a reorganization, merger, consolidation, sale or other
disposition of all or substantially all of the assets of the
Company or an acquisition of assets of another company (a
“Business Combination”), in each case, unless,
following such Business Combination, (A) all or substantially all
of the Persons who were the Beneficial Owners of Company Securities
immediately prior to such Business Combination Beneficially Own,
directly or indirectly, more than fifty percent (50%) of,
respectively, the then outstanding shares of common stock or common
equity interests and the combined voting power of the then
outstanding Voting Securities, as the case may be, of the entity
resulting from such Business Combination (including without
limitation an entity which as a result of such transaction owns the
Company or all or substantially all of the Company’s assets
either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately
prior to such Business Combination, of the Company Securities, (B)
no Person or Group (excluding any employee benefit plan (or related
trust) of the Company or the entity resulting from such Business
Combination) Beneficially Owns, directly or indirectly, forty
percent (40%) or more of, respectively, the then outstanding shares
of common stock or common equity interests of the entity resulting
from such Business Combination or the combined voting power of the
then outstanding Voting Securities of such entity except to the
extent that such ownership results solely from ownership of the
Company that existed prior to the Business Combination, and
(C) at least a majority of the members of the board of
directors or similar governing body of the entity resulting from
such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination;
or
(iv) Approval
by the stockholders of the Company of a complete liquidation or
dissolution of the Company.
Notwithstanding the foregoing clause (i) of this definition:
(x) the following acquisitions (whether the acquiring Person
or Group acquires Beneficial Ownership of forty percent (40%)
or
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more of
the Outstanding Company Stock or Outstanding Company Voting
Securities or any such acquisition results in any other Person or
Group (other than the acquiring Person or Group) Beneficially
Owning forty percent (40%) or more of the Outstanding Company Stock
or Outstanding Company Voting Securities) shall not constitute a
Change in Control unless, following such acquisition, any Person or
Group (other than the acquiring Person or Group effecting the
acquisition pursuant to the following clauses (A) through (D))
who becomes the Beneficial Owner of forty percent (40%) or more of
the Outstanding Company Stock or Outstanding Company Voting
Securities as a result of one or more of such acquisitions shall
thereafter acquire any additional shares of Company Securities and,
following such acquisition, Beneficially Owns forty percent (40%)
or more of either the Outstanding Company Stock or Outstanding
Company Voting Securities, in which case such acquisition shall
constitute a Change in Control: (A) any acquisition directly
from the Company, (B) any acquisition by the Company,
(C) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any entity
controlled by the Company or (D) any acquisition by any entity
pursuant to a transaction which complies with clauses (A), (B) and
(C) of the foregoing clause (iii) of this definition; and
(y) the acquisition of Beneficial Ownership of shares of
Common Stock by the Crusader Parent Entities pursuant to the
Contribution Agreement, the corresponding acquisition of Beneficial
Ownership of shares of Common Stock by any other Person or Group
deemed to Beneficially Own the Common Stock so acquired by the
Crusader Parent Entities (any such Person and/or Group,
collectively with the Crusader Parent Entities and the Crusader
Distributees, the “Crusader Group”) and the acquisition
of Beneficial Ownership of shares of Common Stock as a result of
the distribution by a Crusader Parent Entity to Crusader
Distributees of shares of Common Stock acquired pursuant to the
Contribution Agreement or directly from the Company prior to the
date of the Contribution Agreement shall not constitute a Change of
Control, provided that if, (1) for so long as the shares of
Common Stock Beneficially Owned by any member of the Crusader Group
equals or exceeds forty percent (40%) of the Outstanding Company
Stock or the Outstanding Company Voting Securities, such member of
the Crusader Group shall obtain Beneficial Ownership of shares of
Common Stock (other than as a result of any acquisition described
in the foregoing clauses (A) through (D) of this
paragraph or pursuant to an award issued under any equity based
compensation plan of the Company, including without limitation the
LTIP) representing one percent (1%) or more of the Outstanding
Company Stock or Outstanding Company Voting Securities or
(2) at any time after such member of the Crusader Group shall
cease to Beneficially Own forty percent (40%) or more of the
Outstanding Company Stock and Outstanding Company Voting
Securities, such member of the Crusader Group shall obtain
Beneficial Ownership of shares of Common Stock (other than as a
result of any acquisition described in the foregoing clauses
(A) through (D) of this paragraph or pursuant to an award
issued under any equity based compensation plan of the Company,
including without limitation the LTIP) representing forty percent
(40%) or more of either the Outstanding Company Stock or
Outstanding Company Voting Securities, then in the case of either
(1) or (2) a Change of Control shall be deemed to
occur.
(f)
“ Common Stock ” means the Company’s
common stock, par value $.01 per share, and such other securities
as may be substituted (or resubstituted) for such Common
Stock.
(g)
“ Compensation Committee ” means the
Compensation Committee of the Board.
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(h)
“ Contribution Agreement ” means the
Contribution Agreement among the Company and Crusader Management
Corporation, David D. Le Norman, Knight Energy Management Holding
Company, LLC, Knight Energy Group II Holding Company, LLC, Knight
Energy Group I Holding Co., LLC, Crusader Energy Group Holding Co.,
LLC, Hawk Energy Fund I Holding Company, LLC, RCH Energy
Opportunity Fund I, L.P., Knight Energy Group, LLC, Knight Energy
Group II, LLC, Knight Energy Management, LLC, Hawk Energy Fund I,
LLC, RCH Upland Acquisition, LLC and Crusader Energy Group, LLC
dated as of December 31, 2007.
(i)
“ Crusader Distributees ” means holders of
equity interests in any Crusader Parent Entity who receives a
distribution from such Crusader Parent Entity of shares of Common
Stock acquired pursuant to the Contribution Agreement or directly
from the Company prior to the date of the Contribution
Agreement.
(j)
“ Crusader Parent Entities ” has the meaning set
forth in the Contribution Agreement.
(k)
“ Disability ” means Raymond’s inability
to perform, with or without reasonable accommodations, the
essential functions of Raymond’s position hereunder for a
period of 180 consecutive days due to mental or physical
incapacity, as determined by mutual agreement of a physician
selected by the Company or its insurers and a physician selected by
Raymond; provided, however, that if the opinion of the
Company’s physician and Raymond’s physician conflict,
the Company’s physician and Raymond’s physician shall
together agree upon a third physician, whose opinion shall be
binding. The foregoing definition of “Disability” is
not intended to and shall not affect the definition of
“disability” or any similar term in any insurance
policy the Company or any of its Subsidiaries may provide.
Notwithstanding the foregoing definition of Disability, Raymond
will not be considered to have a Disability under any provision of
this Agreement that would trigger the payment of deferred
compensation within the meaning of Section 409A of the Code
unless Raymond’s Disability also meets the Section 409A
definition of Disability.
(l)
“ Exchange Act ” means the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
(m)
“ Good Reason ” means, subject to the terms and
provisions of this Agreement, the occurrence of one or more of the
following events:
(i) any
removal of Raymond from the office of Chairman of the Board of the
Company except, in any such case, in connection with the
termination of Raymond’s retention hereunder by the Company
for Disability or for Cause or by Raymond other than for Good
Reason;
(ii)
any termination or material reduction of a material benefit under
any Investment Plan or Welfare Plan in which Raymond participates
unless (A) there is substituted a comparable benefit that is
economically substantially equivalent to the terminated or reduced
benefit prior to such termination or reduction or (B) benefits
under such Investment Plan
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or
Welfare Plan are terminated or reduced with respect to all
Raymond’s previously granted benefits thereunder;
(iii) any
reduction in Raymond’s Annual Base Salary;
(iv) any
failure by the Company to comply with any of the provisions of
Section 3(b) ;
(v) without
limiting the generality of the foregoing, any material breach by
the Company of this Agreement other than an isolated,
insubstantial, and inadvertent failure not occurring in bad faith
and which is remedied by the Company promptly after receipt of
notice thereof given by Raymond; or
(vi) a
Change in Control,
(n)
“ Group ” shall have the meaning ascribed to
such term in section 13(d)(3) or 14(d)(2) of the Exchange
Act.
(o)
“ Incumbent Board ” shall mean individuals who,
as of the Effective Date, constitute the Board and any other
individual who becomes a director of the Company after that date
and whose election or appointment by the Board or nomination for
election by the Company’s stockholders was approved by a vote
of at least a majority of the directors then comprising the
Incumbent Board.
(p)
“ LTIP ” means the 2008 Long-Term Incentive Plan
of the Company.
(q)
“ Person ” means any individual, partnership,
limited liability partnership, joint venture, corporation, limited
liability company, trust, association, or other entity or
organization.
(r)
“ Pro Rata Bonus ” means the amount equal to the
product of (i) the amount of the Annual Bonus (as defined in
Section 3(b)(ii)) , if any, to which Raymond would have
been entitled for the calendar year in which Raymond’s Date
of Termination occurs if Raymond was not terminated during such
calendar year, multiplied by (ii) a fraction, the
numerator of which is the number of days that have elapsed since
the beginning of such calendar year through (but not including)
Raymond’s Date of Termination, and the denominator of which
is the total number of days in such calendar year. The amount, if
any, of the Annual Bonus to which Raymond would have been entitled
for the calendar year in which the Date of Termination occurs shall
be determined by the Compensation Committee in its sole reasonable
discretion; provided, however, that for purposes of determining the
amount of the Pro Rata Bonus in connection with a termination of
Raymond’s retention upon a Change of Control, Raymond shall
be deemed to have been entitled to an Annual Bonus of not less than
the amount of the last Annual Bonus awarded to Raymond prior to
such Change in Control, and provided further however that any
determination by the Compensation Committee as to satisfaction of a
performance standard shall be made in the same manner as such
determination is made for the other similarly-situation executives
of the Company.
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(s)
“ Subsidiary ” means, with respect to any
Person, any corporation or other entity of which a majority of the
voting power of the voting equity securities or equity interest is
owned, directly or indirectly, by that Person.
(t)
“ Voting Securities ” means any securities that
vote generally in the election of directors, in the admission of
general partners, or in the selection of any other similar
governing body.
(u)
“ Without Cause ” means a termination by the
Company of Raymond’s retention hereunder during the Term at
the Company’s sole discretion for any reason other than a
termination based upon Cause, death or Disability; provided that,
“without Cause” does not include termination of this
Agreement and Raymond’ s retention pursuant to
Section 2 .
2. Term;
Non-Renewal of Term . Subject to the terms and provisions
of this Agreement, the Company hereby agrees to retain Raymond, and
Raymond hereby agrees to be retained by the Company, for the period
(the “ Term ”) commencing on the Effective Date
and, unless Raymond is sooner terminated in accordance with the
terms hereof, expiring at 5:00 p.m., Oklahoma City, Oklahoma time,
on December 31, 2011; provided, however, that on
January 1, 2009, and on each January 1 occurring thereafter,
the Term shall automatically (without any action by either party)
be extended for one additional calendar year unless, at least
30 days prior to each such January 1, the Company or
Raymond shall have given written notice (a “ Non-Renewal
Notice ”) that it or Raymond, as applicable, does not
wish to extend this Agreement (a “ Non-Renewal
”). Either party may elect not to renew this Agreement. The
term “Term,” as utilized in this Agreement, shall refer
to the Term as so automatically extended. The Term shall expire as
a result of any Non-Renewal at 5:00 p.m., Oklahoma City, Oklahoma
time, on the last day of the Term during which a Non-Renewal Notice
is given, and the retention of Raymond shall terminate at that
time.
3. Terms
.
(a)
Position and Duties .
(i) During
the Term, Raymond shall serve as Chairman of the Board of the
Company. In so doing, Raymond shall have such powers and duties as
may be assigned from time to time by the Board, so long as such
powers and duties are reasonable and customary for a non-executive
chairman of the board of an enterprise comparable to the
Company.
(ii) During
the Term, and excluding any periods of vacation and sick leave to
which Raymond is entitled, Raymond agrees to (a) use
Raymond’s reasonable efforts to perform diligently,
faithfully, effectively and efficiently his responsibilities, and
(b) use Raymond’s reasonable efforts to promote the
interests of the Company.
(iii) Raymond
shall not be an employee of the Company, and may engage in any
other business endeavors during the Term, including those which
compete with the Company; provided, however, that the foregoing
shall not be deemed to modify or limit Raymond’s covenants,
agreements and obligations under Section 3(a)(ii) ,
Section 8 or Section 9 . Raymond is an
independent contractor with respect to the services he provides to
the Company.
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(b)
Compensation .
(i)
Annual Base Salary . During the Term, Raymond shall receive
an annual base salary (“ Annual Base Salary ”),
which shall be paid bi-weekly in accordance with the customary
payroll practices for executives of the Company, in the initial
amount of $100,000 per year. At least annually (by no later than
January 31 of each year) during the Term, the Compensation
Committee shall review the Annual Base Salary of Raymond and may
increase (but not decrease) the Annual Base Salary by such amount
as the Compensation Committee shall deem appropriate. The term
“Annual Base Salary” as used in this Agreement shall
refer to the Annual Base Salary as it may be so increased.
(ii)
Annual Bonus . During the Term, Raymond shall be eligible to
receive an annual bonus, in addition to the Annual Base Salary,
(each, an “ Annual Bonus ”), in such amounts and
subject to such requirements as shall be determined by the
Compensation Committee.
(iii)
Option . Raymond shall be entitled to exercise the option to
purchase shares of common stock, par value $0.01 per share of the
Company issued to Raymond pursuant to Section 6(i) of the
Company’s 2008 Long Term Incentive Plan (the
“Option”). The Option may be exercised only in the time
and manner described in the Option.
(iv)
Incentive, Savings, Stock Option and Retirement Plans .
During the Term, Raymond shall be entitled to participate in all
incentive, savings, stock option, equity-based, profit sharing and
retirement plans, practices, policies and programs applicable
generally to directors of the Company (“ Investment
Plans ”), subject to all of the terms and conditions of
such Investment Plans.
(v)
Welfare Benefit Plans . During the Term, Raymond and
Raymond’s family shall be eligible for participation in and
shall receive all benefits under the welfare benefit plans,
practices, policies and programs (“ Welfare Plans
”) provided by the Company (including, without limitation,
medical, prescription, dental, short-term and long-term disability,
salary continuance, executive life, group life, accidental death
and travel accident insurance plans and programs) to the extent
applicable generally to other directors of the Company, subject to
all of the terms and conditions of such Welfare Plans.
(vi)
Expenses . During the Term, Raymond shall be entitled to
receive prompt reimbursement for all reasonable business-related
expenses incurred by Raymond in the performance of Raymond’s
duties in accordance with the Company’s policies, practices
and procedures.
(vii)
Pro-ration . Any payments or benefits payable to Raymond
hereunder in respect of any calendar year during which Raymond is
retained by the Company for less than the entire year, unless
otherwise provided in the applicable plan or arrangement, shall be
pro-rated in accordance with the number of days in such calendar
year during which Raymond is so retained.
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4.
Termination .
(a)
Death . Raymond’s retention hereunder shall terminate
automatically upon Raymond’s death during the Term.
(b)
Disability . If the Disability of Raymond has occurred
during the Term, the Company may give to Raymond a written Notice
of Termination (as defined in Section 6(a) ) in
accordance with Section 6(a) of its intention to
terminate Raymond’s retention hereunder. In such event,
Raymond’ s retention by the Company shall terminate effective
on the 30th day after receipt of such notice by Raymond (the
“ Disability Effective Date ”) provided that,
within 30 days after receipt of the Notice of Termination,
Raymond shall not have returned to perform, with or without
reasonable accommodations, the essential functions of
Raymond’s position. During any period of Raymond’s
Disability, the Company may assign Raymond’s duties to any
other director on an interim basis and any such action shall not be
deemed “Good Reason” for Raymond to terminate this
Agreement pursuant to Section 4(d)(i) so long as
Raymond continues to receive the compensation and benefits under
Section 3 during such period.
(c)
Termination by Company . Subject to Section 6(d)
, the Company may terminate Raymond’s retention at any time
during the Term for Cause or without Cause.
(d)
Resignation by Raymond . At Raymond’s option, Raymond
may terminate Raymond’s retention hereunder (i) subject
to Section 6(c) , for Good Reason or (ii) without
Good Reason.
5. Compensation
Upon Termination. Raymond shall be entitled to the
following compensation from the Company upon the termination of
Raymond’s retention by the Company during the Term. The
compensation provided for in this Section 5 shall be in
lieu of any other severance pay to which Raymond might otherwise be
entitled (whether contractual or under a severance plan, the WARN
Act, any other applicable law, or otherwise) and shall be
conditioned on the execution and delivery of a Release (as defined
in Section 6(f) ) signed by Raymond or Raymond’s
legal representative pursuant to Section 6(f) . The
timing of payments pursuant to this Section 5 shall
also be subject to the requirements of Section 6(g) and
Section 409A of the Code:
(a)
Death or Disability . If Raymond’s retention by the
Company is terminated by reason of Raymond’s death or
Disability, the Company shall pay to Raymond or Raymond’s
legal representatives:
(i) within
30 days after Raymond’s Date of Termination as defined
in Section 6(b) , a lump sum in cash equal to the sum
of Raymond’s Annual Base Salary through the Date of
Termination to the extent not previously paid and any compensation
previously deferred by Raymond (together with any accrued interest
or earnings thereon) (the “ Accrued Obligations
”);
(ii)
the amount of any Annual Bonus to which Raymond was entitled for
the calendar year ending prior to the Date of Termination to the
extent not previously paid and the amount of any Pro Rata Bonus,
each of which amounts shall be paid no later than the later of
30 days after the Date of Termination or 10 business days
after the date on which the
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Company
has available to it the information reasonably required to
determine the amount to be paid;
(iii) any
amounts arising from Raymond’s participation in, or benefits
under, any Investment Plan (the “ Accrued Investments
”), which amounts shall be paid in accordance with the terms
and conditions of such Investment Plan; and
(iv) any
amounts to which Raymond or Raymond’s spouse, beneficiaries
or estate are entitled from Raymond’s participation in, or
benefits under, any Welfare Plan (“ Accrued Welfare
Benefits ”), which amounts shall be paid in accordance
with the terms and conditions of such Welfare Plan.
Except as described in this
Section 5(a) , in the event of Raymond’s
termination by reason of Raymond’s death or Disability,
Raymond and Raymond’s legal representatives, as applicable,
shall forfeit all rights to any other compensation.
(b)
For Cause; Resignation by Raymond Without Good Reason;
Non-Renewal Election by Raymond . If the Company shall
terminate the retention of Raymond hereunder for Cause, or if
Raymond resigns without Good Reason, or if Raymond’s
retention by the Company is terminated due to a Non-Renewal
election by Raymond, the Company shall have no further obligations
to Raymond other than the obligation for payment of:
(i) the
Accrued Obligations, which shall be payable within 30 days
after Raymond’s Date of Termination;
(ii) the
amount of any Annual Bonus to which Raymond was entitled for the
calendar year ending prior to the Date of Termination to the extent
not previously paid, which amount shall be paid no later than the
later of 30 days after the Date of Termination;
(iii) the
Accrued Investments, which amounts shall be paid in accordance with
the terms and conditions of the Investment Plans; and
(iv) the
Accrued Welfare Benefits, which amounts shall be paid in accordance
with the terms and conditions of the Welfare Plans.
Except as described in this
Section 5(b) , in the event of Raymond’s
termination by the Company for Cause or by Raymond without Good
Reason or due to a Non-Renewal election by Raymond, Raymond shall
forfeit all rights to any other compensation.
(c)
Without Cause; Resignation by Raymond for Good Reason:
Non-Renewal Election by the Company . If the Company terminates
the retention of Raymond hereunder without Cause (other than by
reason of Raymond’s death or Disability or a Non-Renewal by
Raymond) or Raymond resigns for Good Reason or the retention of
Raymond hereunder is terminated due to a Non- Renewal election by
the
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