Exhibit 10.5
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT, made and
entered into as of this 18th day of May, 1999, to be effective as
of June 1, 1999 (“Effective Date”), by and between
GULFPORT ENERGY CORPORATION, a Delaware corporation, with address
of 6307 Waterford Blvd., Suite 100, Oklahoma City, OK 73118,
and MIKE LIDDELL, an individual, residing at 18824 Otter Creek
Drive, Edmond, OK 73003 (“Employee”).
WITNESSETH:
WHEREAS, Employer is engaged in the
exploration and development of crude oil and natural gas fields and
in the gathering, processing, transportation and marketing of
hydrocarbons and in secondary recovery activities.
WHEREAS, Employee is and has been
for some time a principal officer of Employer, and is highly
experienced in the management and conducting of the business of
Employer. Employer is desirous of entering into an agreement with
Employee, whereby said Employee will continue to be employed by
Employer in order to serve on an ongoing basis as the Chief
Executive Officer of Employer, upon the terms and conditions
hereinafter provided; and
WHEREAS, Employee is willing to
enter into this Employment Agreement with Employer to serve as the
Chief Executive Officer of Employer, in consideration of the
payments to be made to him by Employer, and certain other
additional and valuable benefits and inducements to be granted to
him by Employer as hereinafter set forth and in accordance with the
conditions hereinafter provided.
NOW, THEREFORE, for and in
consideration of the conditions hereinbelow to be performed on the
part of the respective parties hereto, and in consideration of the
mutual covenants and agreements hereinafter set forth, it is hereby
jointly and severally agreed by and between Employer and Employee
as follows, to-wit:
1. EMPLOYMENT .
Employer hereby employs Employee to render the services and perform
the duties described below for Employer and Employee hereby accepts
employment with Employer, upon the terms and conditions hereinafter
set forth.
2. TERM OF EMPLOYMENT
. Subject to the provisions on termination of employment contained
in Paragraph 9 herein, the term of the employment provided for
herein of Employee by Employer shall be for a period of
five (5) years, beginning on the Effective Date of this
Agreement and ending on the date which is the last day prior to the
fifth (5th) anniversary of the Effective Date. Subject to the
provisions on termination of employment as provided for in
paragraph 9 below, this Agreement shall be automatically
renewed for successive terms of one (1) year each, on the date
which is the fifth (5th) anniversary date of the Effective
Date of this Agreement, and on the anniversary date of the
Effective Date of this Agreement in each ensuing year thereafter,
unless within sixty (60) days prior to such renewal date,
either party to this Agreement shall notify the other party hereto
in writing, that said Agreement shall terminate and end at the
close of the then current employment term.
3. DUTIES . Employee
shall render services to the Employer as its Chief Executive
officer to the best of his ability for and on behalf of the
Employer. The Employee shall comply with all
laws, statutes, ordinances, rules and
regulations relating to the performances of services for the
Employer under this Agreement. During the term of this Agreement,
Employee shall serve as the Chief Executive Officer of Employer,
and in that capacity shall, subject to the control of the Board of
Directors of Employer, generally supervise, plan and direct the
business and affairs of Employer and shall preside at all meetings
of the shareholders of Employer and of the Board of Directors of
Employer. As Chief Executive Officer of Employer, Employee shall
exercise and perform such other powers and duties as are usually
vested in a president and chief executive or operating officer, or
as may be from time to time prescribed or assigned to him by the
Employer’s Board of Directors, or as may be otherwise
prescribed by the Bylaws of the Employer. The designation by
Employer’s Board of Directors of any other duties or any
other titles for Employee during the term of this Agreement shall
not affect Employee’s compensation as provided for
herein.
4. COMPENSATION
.
a. During the term of this
Agreement, the Employee shall be paid an annual base salary by
Employer for the services rendered to Employer by Employee, as
described above, in the amount of TWO HUNDRED THOUSAND AND NO/100
DOLLARS ($200,000.00) per year. This salary shall be payable to
Employee in twelve (12) monthly installments of SIXTEEN
THOUSAND SIX HUNDRED AND SIXTY SIX AND 66/100 DOLLARS ($16,666.66)
per month for each month during which services are rendered by
Employee to Employer during the term of this Agreement. The base
salary of TWO HUNDRED THOUSAND AND NO/100 ($200,000.00) to be paid
by Employer to Employee each year during the term of this Agreement
shall be increased annually in an amount equal to any increase in
the cost of living as determined in accordance with the formula set
forth below in this subparagraph a.
(i) As promptly as practicable at
the end of each year during the original or extended term of this
Agreement, Employer shall compute the increase, if any, in the cost
of living, using as the basis of such computation the
“Consumer Price Index—Urban Wage Earners (1967 =
100)” (hereinafter called the Index), as published by the
Bureau of Labor Statistics of the United States Department of
Labor.
(ii) The Index number in the column
for Oklahoma City, Oklahoma entitled “all items” for
the month which includes the Effective Date of this Agreement,
shall be the Base Index Number (“BIN”) and the
corresponding Index number for the month preceding the anniversary
month of the Effective Date of this Agreement for each year during
the initial term hereof or any renewal thereof, shall be the
Current Index Number (“CIN”).
(iii) The increase in the cost of
living on each anniversary of this Agreement shall be determined by
dividing the current Index number (“CIN”) by the Base
Index Number (“BIN”) and subtracting the integer 1 from
the quotient, in accordance with the following formula:
Increase to cost of living =
(CIN/BIN)—1
(iv) The percentage of increase in
the cost of living, determined in the foregoing manner, shall then
be multiplied by $200,000.00, the product of which shall be the
amount of annual increase, if any, in the Employee’s base
salary to be determined by this
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subparagraph. The amount so determined shall be
added to the amount of base salary payable to Employee for the
ensuing year to be paid in twelve equal, monthly installments. This
calculation of adjustment to base salary shall be made for each
year during the term of this Agreement or any renewal term
thereof.
(v) Appropriate adjustments shall be
promptly made in case there is a published amendment of the Index
figures upon which the foregoing computation is based. Any portion
of the increase retroactively due as a result of such an adjustment
shall be payable within five days after the computation of the
adjustment has been made hereunder.
(vi) If publication of the Consumer
Price Index is discontinued for any reason, the Employer and
Employee shall accept comparable statistics on the cost of living
for the City of Oklahoma City, Oklahoma, as computed and published
by an agency of the United States of America, or by a responsible
financial periodical of recognized authority to be mutually
selected, at such time, by the Employer and the
Employee.
b. Employer shall pay Employee the
amount determined in subparagraph a above, as adjusted each year
for increases in the Index as set forth above, on a monthly basis
on the first day of each month, subject to normal salary deductions
for the amount so owing, including, but not limited to, those
Social Security, Medicare, Federal and state income withholding
taxes. Employee’s base salary may be increased in the future,
other than the annual adjustment for increases in the Index as set
forth in subparagraph a above, from time to time, by the action of
Employer’s Board of Directors, based upon Employee’s
performance and other relevant factors and Employer’s Board
of Directors will review Employee’s salary for the purposes
of determining any appropriate increase in the base salary of
employee at least annually. In addition, Employer may, from time to
time, enter into supplemental agreements or memoranda in writing
with Employee for the award and payment to him of additional
compensation or bonuses upon such terms and conditions as Employer
shall deem to be in its best interest and in the event of the
execution by Employer of any such agreement or memorandum, the
right of Employee to additional compensation or bonuses shall be
determined in accordance with the applicable provisions thereof. In
the absence of any such supplemental agreements or memoranda,
Employer shall not be obligated to pay to Employee any additional
compensation or bonus whatsoever, irrespective of the payments of
additional compensation or bonus to Employee in any past or
succeeding year, or the payment of additional compensation or bonus
to other employees of Empoyer at the end of the year, but may do so
in the sole discretion of the Employer’s Board of Directors,
and the termination of Employer’s Board of Directors, in the
exercise of such discretion, with respect to the payment and amount
of any additional compensation or bonus to Employee for any fiscal
year of Employer if made, shall be final and conclusive.
5. GRANTING OF STOCK
OPTIONS . As an additional inducement to Employee to enter
into this Agreement with Employer and to render his services to
Employer under a long-term basis and as additional compensation to
him for services to be rendered under the provisions of this
Agreement, Employer has agreed to grant to Employee certain stock
options to acquire Employer’s Common Stock on or before
June 1, 1999. The stock options have been granted by Employer
to Employee pursuant to that certain Gulfport Energy Corporation
Stock Option Plan (“Plan”) to be enacted by Employer.
In order to evidence these stock options, the Employer has also
prepared and will execute and enter into with Employee,
contemporaneously with this
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Agreement, that certain Gulfport Energy
Corporation Stock Option Agreement (“Stock Option
Agreement”), which will set forth the terms and conditions of
the successive stock options to be granted to Employee by Employer
in accordance herewith and the manner and method of exercising such
options and acquiring such stock by Employee. Attached as
Exhibit “A” to this Agreement, and by this
reference made a part hereof, is an executed copy of the Stock
Option Agreement entered into by and between Employer and Employee
this same date in fulfillment of the contractual obligations of
Employer.
6. ADDITIONAL EMPLOYEE
BENEFITS . In addition to the annual base salary, as
adjusted, provided above, Employer agrees to provide to employee,
or reimburse Employee for, the following additional benefits and
expenses:
a. During the term of this
Agreement, Employer shall furnish and provide to Employee, at its
sole cost and expense, the following described employee benefits,
upon the same basis that Employer accords these same benefits to
its other executive employees. In the event Employer does not
provide any of the following benefits to its executive level
employees, it shall not be required to initiate a program solely to
provide such benefits to Employee. However, if Employer should at
any time in the future provide such benefits to its employees, any
such benefits shall also be provided to Employee upon the same
basis that it is provided to such other employees of Employer,
whether or not such benefit is listed below:
(i) Hospitalization, Dental,
Accident and Major Medical Insurance Benefits to Employee and all
members of Employee’s immediate family. The opportunity to
participate in any group life insurance program on a basis
comparable to the participation provided under any plans of such
kind to other executive officers of Employer. In any case, Employer
will be expected to make contributions toward the cost of such
plans for Employee at the same rate and in the same manner as it
makes for its other employees of like status who participate
therein.
(ii) The right and opportunity to
participate in and become vested under and pursuant to the 401(k)
pension and profit sharing plan maintained by Employer or any other
qualified pension and profit sharing plans hereafter maintained by
Employer upon the same basis accorded to other full-time employees
of Employer. The right to participate in the incentive bonus plan
maintained by Employer on the same basis provided to any other
full-time employee of Employer. In addition, Employer shall provide
to Employee such other fringe benefits as may be provided by
Employer to its executives, or its other employees, in accordance
with the policies heretofore or hereafter adopted by
Employer.
b. In addition to the compensation
above set forth, Employee
