Exhibit 10.31
AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
This Amended and Restated Employment Agreement
(this “Agreement”), effective as of December 31, 2008
(the “Amendment Date”), is between Rosetta Resources
Inc., a Delaware corporation (“Employer”), and Randy L.
Limbacher (“Executive”), and supersedes and replaces
that certain Employment Agreement between Employer and Executive
dated November 1, 2007.
WHEREAS, Executive has been employed as
President and Chief Executive Officer of Employer ; and
WHEREAS, the parties desire to amend and restate
the Employment Agreement dated as of November 1, 2007, all as
herein provided;
NOW, THEREFORE, the parties hereto agree as
follows:
1.
Definitions . As
used in this Agreement, the following terms have the following
meanings:
(a)
“Affiliate” means, with respect to
any entity, any other corporation, organization, association,
partnership, sole proprietorship or other type of entity, whether
incorporated or unincorporated, directly or indirectly controlling
or controlled by or under direct or indirect common control with
such entity.
(b)
“Annual Period” means the time
period of each year beginning on the first day of the Employment
Term and ending on the day before the anniversary of that
date.
(c)
“Board” means the Board
of Directors of Employer.
(d)
“Cause” means a finding by the
Board of acts or omissions constituting, in the Board’s
reasonable judgment, any of the following occurring during the
Employment Term :
(i) a material
breach of duty by Executive in the course of his employment with
Employer or its Affiliates involving fraud, acts of dishonesty
(other than inadvertent acts or omissions), disloyalty to Employer
or its Affiliates or moral turpitude constituting criminal felony;
(ii) conduct by Executive that is materially detrimental to
Employer, monetarily or otherwise, or that reflects unfavorably on
Employer or Executive to such an extent that Employer’s best
interests reasonably require the termination of Executive’s
employment; (iii) acts or omissions of Executive materially in
violation of his obligations under this Agreement or at law; (iv)
Executive’s material failure to comply with or enforce the
personnel policies of Employer or its Affiliates ,
specifically including those concerning equal employment
opportunity and those related to harassing conduct; (v)
Executive’s material insubordination to the Board; (vi)
subject to the details of Paragraph 4(b), Executive’s failure
to devote his full working time and best efforts to the performance
of his responsibilities to Employer or its Affiliates; (vii)
Executive’s conviction of, or entry of a plea agreement or
consent decree or similar arrangement with respect to a felony or
any material violation of federal or state securities laws, in
either case, having a material adverse effect on Employer or its
Affiliates; or (viii) Executive’s material failure to
cooperate with any investigation or inquiry authorized by the Board
or conducted by a governmental authority related to
Employer’s or an Affiliate’s business or
Executive’s conduct related to Employer or an
Affiliate.
(e)
“Competitor” means any
person or entity that is engaged in the acquisition, exploration,
development and production of oil and gas properties in competition
with the activities of Employer or an Affiliate.
(f)
“Confidential Information”
means, without limitation, all documents or information, in
whatever form or medium, concerning or evidencing sales; costs;
pricing; strategies; forecasts and long range plans; financial and
tax information; personnel information; business, marketing and
operational projections, plans and opportunities; customer, vendor,
and supplier information; geological and geophysical maps, data,
interpretations, and analyses; project and prospect locations and
leads; well logs, interpretations, and analyses; and production
information; but excluding any such information that is or becomes
generally available to the public other than as a result of any
breach of this Agreement or other unauthorized disclosure by
Executive.
(g)
“Corporate Change” means (i)
the dissolution or liquidation of Employer; (ii) a reorganization,
merger or consolidation of Employer with one or more corporations
(other than a merger or consolidation effecting a reincorporation
of Employer in another state or any other merger or consolidation
in which the shareholders of the surviving corporation and their
proportionate interests therein immediately after the merger or
consolidation are substantially identical to the shareholders of
Employer and their proportionate interests therein immediately
prior to the merger or consolidation) (collectively, a
“Corporate Change Merger”); (iii) the sale of all or
substantially all of the assets of Employer or an Affiliate as
defined in the Rosetta Resources, Inc. 2005 Long-Term Incentive
Plan; or (iv) the occurrence of a Change in Control. A
“Change in Control” shall be deemed to have occurred if
(x) individuals who were directors of Employer immediately prior to
a Control Transaction shall cease, within two years of such Control
Transaction to constitute a majority of the Board of Directors of
Employer (or of the Board of Directors of any successor to Employer
or to a company which has acquired all or substantially all its
assets) other than by reason of an increase in the size of the
membership of the applicable Board that is approved by at least a
majority of the individuals who were directors of Employer
immediately prior to such Control Transaction or (y) any entity,
person or Group acquires shares of Employer in a transaction or
series of transactions that result in such entity, person or Group
directly or indirectly owning beneficially 50% or more of the
outstanding shares of Common Stock. As used herein, “Control
Transaction” means (A) any tender offer for or acquisition of
capital stock of Employer pursuant to which any person, entity, or
Group directly or indirectly acquires beneficial ownership of 20%
or more of the outstanding shares of Common Stock; (B) any
Corporate Change Merger of Employer; (C) any contested election of
directors of Employer; or (D) any combination of the foregoing, any
one of which results in a change in voting power sufficient to
elect a majority of the Board of Directors of Employer. As used
herein, “Group” means persons who act “in
concert” as described in Sections 13(d)(3) and/or 14(d)(2) of
the Securities Exchange Act of 1934, as
amended. Notwithstanding the foregoing, “Corporate
Change” shall not include the Acquisition, the Offering or
any public offering of equity of Employer pursuant to a
registration that is effective under the Securities Act of 1933, as
amended. As used herein, “Acquisition” and
“Offering” shall have the same meaning given to those
terms in the Rosetta Resources Inc. 2005 Long-Term Incentive
Plan.
(h)
“Employment Termination Date”
means the effective date of termination of Executive’s
employment as established under Paragraph 6(g).
(i)
“Good Reason” means any of the
following actions if taken without Executive’s prior written
consent: (i) any material diminution in Executive’s
authority, responsibilities or duties; (ii) any material diminution
in Executive’s base compensation; (iii) any permanent
relocation of Executive’s regular place of business to a
location 50 miles or more from the then-current location of
Employer’s executive offices; or (iv) any other action or
inaction by Employer that constitutes a material breach by Employer
of its obligations under this Agreement. Neither a transfer of
employment among Employer and any of its Affiliates nor a change in
the co-employment relationship, standing alone, constitutes
“Good Reason.”
(j)
“Inability to Perform”
means and shall be deemed to have occurred if Executive has been
determined under Employer’s long-term disability plan to be
eligible for long-term disability benefits. In the absence of
Executive’s participation in, application for benefits under,
or existence of such a plan, “Inability to Perform”
means Executive’s inability to perform the essential
functions of his position because of an illness or injury for (i) a
period of six consecutive months or (ii) an aggregate of six months
within any period of 12 consecutive months.
(k)
“Work Product” means all
ideas, works of authorship, inventions, and other creations,
whether or not patentable, copyrightable, or subject to other
intellectual-property protection, that are made, conceived,
developed or worked on in whole or in part by Executive while
employed by Employer and/or any of its Affiliates, that relate in
any manner whatsoever to the business, existing or then-proposed,
of Employer and/or any of its Affiliates, or any other business or
research or development effort in which Employer and/or any of its
Affiliates engages during Executive’s employment.
2.
Employment . Employer agrees to
employ Executive (directly or through an Affiliate), and Executive
agrees to be employed, for the period set forth in Paragraph 3.
Executive will be employed in the position and with the duties and
responsibilities set forth in Paragraph 4(a) and upon the other
terms and conditions set out in this Agreement. Employer and
Executive agree that such employment may be through a co-employment
relationship with a professional employer organization, subject to
the requirements of Paragraph 4(a).
3.
Term . Executive’s employment
under this Agreement shall commence on November 1, 2007, and shall
be for an initial term of one Annual Period (the “Employment
Term”), unless sooner terminated as provided in this
Agreement. Subject to earlier termination as provided in this
Agreement, the Employment Term shall be automatically extended for
an additional Annual Period (not to exceed nine additional Annual
Periods) unless either Executive or Employer gives written notice
to the other six months or more prior to the end of the initial
term or, if the Agreement has been automatically extended beyond
the initial term, six months or more prior to the end of the
additional Annual Period. In the event of such an automatic
extension, each additional Annual Period shall be part of the
“Employment Term.” Upon such timely written
notice or at the end of the nine additional periods contemplated
above, Executive’s employment will end upon the expiration of
the Employment Term.
(a)
During the Employment Term, Executive shall be employed
as President and Chief Executive Officer of Employer, under the
direction and subject to the control of the Board (which direction
shall be such as is customarily exercised over a chief executive
officer), and Executive shall be responsible for the business,
affairs, properties and operations of Employer and shall have
general executive charge, management and control of Employer, with
all such powers and authority with respect to such business,
affairs, properties and operations as may be reasonably incident to
such duties and responsibilities. In addition, Executive
shall have such other duties, functions, responsibilities, and
authority as are from time to time delegated to Executive by the
Board; provided, however, that such duties, functions,
responsibilities, and authority are reasonable and customary for a
person serving in the same or similar capacity of an enterprise
comparable to Employer.
(b)
During the Employment Term, Executive shall
devote his full business time, skill, and attention and his best
efforts to the business and affairs of Employer to the extent
necessary to discharge fully, faithfully, and efficiently the
duties and responsibilities delegated and assigned to Executive in
or pursuant to this Agreement, except for usual, ordinary, and
customary periods of vacation and absence due to illness or other
disability and as otherwise specified in this
paragraph. Employer agrees that it shall not be a
violation of this paragraph for Executive to (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 in
the case of (i), (ii) and (iii) above such activities do not
significantly interfere or conflict with the performance of
Executive’s responsibilities under this Agreement or the
interests of Employer. Specifically, Employer
acknowledges that Executive currently serves on the Board of
Directors of CARBO Ceramics, Inc. and currently serves as the
Chairman of Junior Achievement for Southeast Texas and represents
that such service shall not be considered a violation of this
paragraph unless such activities significantly interfere with
Executive’s performance of his responsibilities under this
Agreement. Executive shall not become a member of the
board of directors or committees of any other business organization
without the prior written
consent of the Board.
(c)
In connection with Executive’s employment
under this Agreement, Executive shall be based in Houston, Texas,
or at any other place where the principal executive offices of
Employer may be located during the Employment Term, subject to the
provisions of Paragraph 1(i)(iii). Executive also will engage in
such travel as the performance of Executive’s duties in the
business of Employer may require.
(d)
All services that Executive may render to
Employer or any of its Affiliates in any capacity during the
Employment Term shall be deemed to be services required by this
Agreement and the consideration for such services is that provided
for in this Agreement.
(e)
Executive hereby acknowledges that he has
read and is familiar with Employer’s policies regarding
business ethics and conduct, and will comply with all such
provisions, and any amendments thereto, during the Employment
Term.
5.
Compensation and Related
Matters .
(a)
Base Salary. During each
Annual Period of the Employment Term, Employer shall pay to
Executive for his services under this Agreement an annual base
salary (“Base Salary”). The Base Salary as of the
Amendment Date shall be $625,000. The Base Salary is subject to
annual adjustments beginning in January 2009, at the discretion of
the Board, but in no event shall Employer pay Executive a Base
Salary less than that set forth above, or any increased Base Salary
later in effect, without the consent of Executive. The Base Salary
shall be payable in installments in accordance with the general
payroll practices of Employer, or as otherwise mutually agreed
upon.
(b)
Annual Incentives
. Beginning in calendar year 2008 and during the
Employment Term, Executive will participate in any incentive
compensation plan (ICP) applicable to Executive’s position,
as may be adopted by Employer from time to time and in accordance
with the terms of such plan(s). Executive’s target
award opportunity under the ICP will be 100% of Executive’s
Base Salary, and shall be subject to such other terms, conditions
and restrictions as may be established by the Board or the ICP
committee.
(c)
Long-Term Incentives . During
the Employment Term, Executive will participate in Employer’s
2005 Long-Term Incentive Plan (“LTI Plan”) applicable
to Executive’s position, or any successor plan as may be
adopted by Employer from time to time, in accordance with the terms
of such plan(s). Except as provided in Paragraph 5(d), Executive
will participate in such long term incentive opportunities
(“LTI opportunities”) as may be determined by the Board
or the LTI Plan committee, as applicable; provided that, in no
event shall the LTI opportunities provided to Executive ever be
less than the LTI opportunities then provided to other senior
executives of Employer without the consent of Executive.
(d)
Equity Grants Related to Initial
Employment . Executive shall be granted the
following awards pursuant to the terms of the LTI Plan:
(i)
On November 1, 2007, a nonqualified stock option
to purchase 102,100 shares of Employer’s common stock at an
exercise price equal to the Fair Market Value (as defined in the
LTI Plan) of Employer’s common stock on the November 1, 2007,
which option will have a ten year term and be 100% vested on the
date of grant.
(ii)
On November 1, 2007, 102,100 shares
of restricted common stock in Employer, which will vest as follows:
(A) 25% of such shares (if a fractional number, then the next lower
whole number) will vest on November 1, 2008, provided Executive is
in the continuous service of Employer or an Affiliate until and on
such vesting date; (B) an additional 25% of such shares (if a
fractional number, then the next lower whole number) will vest on
November 1, 2009, provided Executive is in the continuous service
of Employer or an Affiliate until and on such vesting date; and (C)
the remaining shares will vest on November 1, 2010, provided
Executive is in the continuous service of Employer or an Affiliate
until and on such vesting date.
(iii) On
January 1, 2008 (if Executive is employed by Employer on such
date), $3,500,000 in value of sign-on restricted common stock in
Employer, which will vest in full on the fifth anniversary of
November 1, 2007, provided that Executive is in the continuous
service of Employer or an Affiliate until and on such vesting date.
The number of shares of restricted common stock to be granted to
Executive in respect of the $3,500,000 in value shall be determined
by dividing $3,500,000 by the Fair Market Value (as defined in the
LTI Plan) of Employer’s common stock on November 1, 2007;
provided, however, that no more than 200,000 shares of restricted
common stock shall be granted to Executive pursuant to this
Paragraph 5(d)(iii).
Notwithstanding
the foregoing, the percentage indicated below of the total number
of shares of restricted common stock granted Executive under this
Paragraph 5(d)(iii) will vest on the date on which the Fair Market
Value per share of Employer’s common stock has reached a
level indicated below (each a “Target Level”) and
remained at or above such Target Level for 30 consecutive trading
days, provided that Executive is in the continuous service of
Employer or an Affiliate until and on the applicable vesting
date:
$22 per share 15%
$25 per share 20%
$30 per share 30%
$35 per share 20%
$40 per share 15%
To the extent
that a specified percentage of shares vests based on a particular
Target Level, and the shares associated with any lower Target Level
have not previously vested, the shares associated with that lower
Target Level shall vest on the same date.
The equity
award grants provided for in this Paragraph 5(d) shall be subject
to the terms and conditions of the LTI Plan and the award
agreements covering such awards, which shall be substantially in
the forms collectively attached hereto as Exhibit A, but only to
the extent that such forms are not inconsistent with the terms and
conditions of this Agreement. In the event of an
inconsistency between this Agreement and any such award, the terms
of this Agreement shall govern (including, for example, the
definitions of “Cause” and “Good
Reason”).
(e)
Employee Benefits . During the
Employment Term, Executive shall be entitled to participate in all
employee benefit plans, programs, and arrangements that are
generally made available by Employer to its similarly situated
employees, including without limitation Employer’s life
insurance, long-term disability, and health plans. Executive
acknowledges and agrees that cooperation and participation in
medical or physical examinations may be required by one or more
insurance companies in connection with the applications for such
life and/or disability insurance policies.
(f)
Expenses . Executive shall be entitled to receive
reimbursement for all reasonable expenses incurred by Executive
during the Employment Term in performing his duties and
responsibilities under this Agreement, consistent with
Employer’s policies or practices for reimbursement of
expenses incurred by other senior executives of Employer
(“Business Expenses”). Notwithstanding the foregoing,
(i) the amount of expenses eligible for reimbursement during a
calendar year may not affect the expenses eligible for
reimbursement in any other calendar year, (ii) the reimbursement
must be made on or before the last day of the calendar year
following the calendar year in which the expense was incurred and
(iii) the right to reimbursement shall not be subject to
liquidation or exchange for any other benefit.
(g)
Vacations . During each Annual Period of the
Employment Term, Executive shall be eligible for four weeks’
paid vacation, as well as sick pay and other paid and unpaid time
off in accordance with the policies and practices of Employer.
Executive agrees to use his vacation and other paid time off at
such times that are (i) consistent with the proper performance of
his duties and responsibilities and (ii) mutually convenient for
Employer and Executive.
(h)
Fringe Benefits . During the Employment
Term, Executive shall be entitled to the perquisites and other
fringe benefits that are made available by Employer to its senior
executives generally and to such perquisites and fringe benefits
that are made available by Employer to Executive in particular,
subject to any applicable terms and conditions of any specific
perquisite or other fringe benefit.
6.
Termination of Employment .
(a)
Death
. Executive’s employment shall terminate
automatically upon his death.
(b)
Inability to Perform
. Employer may terminate Executive’s employment
for Inability to Perform.
(c)
Termination by Employer for
Cause . Employer may terminate Executive’s
employment for Cause by providing Executive with a Notice of
Termination as set out in Paragraph 6(f). Before terminating
Executive’s employment for Cause, Employer must provide
Executive with written notice of its intent to do so, which notice
must specify the particular circumstances or events that Employer
contends gives rise to the existence of Cause; provided, however,
that if Employer intends to exercise its right to terminate
Executive’s employment in whole or part under provisions
(iii), (iv), (v), (vi) or (viii) of the definition of Cause,
Employer must first provide Executive with a reasonable period of
time to correct those circumstances or events Employer contends
give rise to the existence of Cause under such provision(s) (the
“Correction Period”), but not to the
extent the Board makes a reasonable, good faith determination that
those circumstances or events cannot reasonably be corrected. A
30-day Correction Period shall be presumptively reasonable.
Executive will be given the opportunity within 30 calendar days of
his receipt of Employer’s written notice of its intent to
terminate Executive’s employment for Cause to defend himself
with respect to the circumstances or events specified in such
notice and in a manner and under such procedures as the Board may
establish. Nothing in this Paragraph 6(c) precludes informal
discussions between Executive and any member of the Board regarding
such circumstances or events.
(d)
Termination by Executive for Good
Reason . Executive may terminate his employment for
Good Reason. To exercise his right to terminate for Good Reason,
Executive must provide written notice to Employer of his belief
that Good Reason exists within 60 days of the date he first becomes
aware of the condition(s) giving rise to the Good Reason, and that
notice shall describe the condition(s) believed to constitute Good
Reason. Employer shall have 30 days to remedy the Good Reason
condition(s). If not remedied within that 30-day period, Executive
may submit a Notice of Termination; provided, however, that the
Notice of Termination invoking Executive’s right to terminate
his employment for Good Reason must be given no later than 100 days
after the date Executive first became aware of the condition(s)
giving rise to the Good Reason; otherwise, Executive is deemed to
have accepted the condition(s), or Employer’s correction of
such condition(s), that may have given rise to the existence of
Good Reason.
(e)
Termination by Either Party Without Cause or
Without Good Reason . Either Employer or Executive
may terminate Executive’s employment without Cause or without
Good Reason upon at least 60 days’ prior written notice to
the other party.
(f)
Notice of Termination . Any
termination of Executive’s employment by Employer or by
Executive (other than a termination pursuant to Paragraph 6(a))
shall be communicated by a Notice of Termination. A “Notice
of Termination” is a written notice that must (i) indicate
the specific termination provision in this Agreement relied upon;
(ii) in the case of a termination for Inability to Perform, Cause,
or Good Reason, set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of
Executive’s employment under the provision invoked; and (iii)
if the termination is by Executive under Paragraph 6(e), or by
Employer for any reason, specify the Employment Termination
Date. The failure by Employer or Executive to set forth
in the Notice of Termination any fact or circumstance that
contributes to a showing of Cause or Good Reason shall not waive
any right of Employer or Executive or preclude either of them from
asserting such fact or circumstance in enforcing or defending their
rights.
(g)
Employment Termination Date
. The Employment Termination Date, whether occurring
before or after a Corporate Change, shall be as follows: (i) if
Executive’s employment is terminated by his death, the date
of his death; (ii) if Executive’s employment is terminated by
Employer because of his Inability to Perform or for Cause, the date
specified in the Notice of Termination, which date shall be no
earlier than the date such notice is given; (iii) if
Executive’s employment is terminated by Executive for Good
Reason, the date on which the Notice of Termination is given; (iv)
if the termination is under Paragraph 6(e), the date specified in
the Notice of Termination, which date shall be no earlier than 60
days after the date such notice is given, or (v) if
Executive’s employment is terminated by expiration of the
Employment Term, or Executive or Employer gives timely notice
pursuant to Paragraph 3, the date the Employment Term
expires.
(h)
Deemed Resignation . In
the event of termination of Executive’s employment, Executive
agrees that if at such time he is a member of the Board or is an
officer of Employer or a director or officer of any of its
Affiliates, he shall be deemed to have resigned from such
positi
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