EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of April 4, 2005 (this
"Agreement")
between Dune Energy, Inc., a Delaware
corporation having its principal place of
business at 3050 Post Oak Blvd., Suite 695,
Houston, Texas 77056 (the "Employer"
or the "Company"), and Hugh Idstein, an
individual residing in the State of
Texas (the "Executive").
WHEREAS, the Company and Executive desire that Executive's
relationship with the Company be governed
by this Agreement and by the exhibits
annexed hereto;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other
good and valuable consideration, the
parties agree as follows:
1.
Employment: The Employer hereby employs the Executive and the
Executive
hereby accepts employment upon the terms
and conditions hereinafter set forth.
2. Title;
Responsibilities; Reporting: During the Term of this Agreement,
the Executive shall diligently and
faithfully: (a) serve the Company in the
capacity of Chief Financial Officer, and/or
in whatever similar executive
capacities as shall from time to time be
assigned to the Executive by the
Company's Board of Directors or by such
other person(s) as directed by the Board
of Directors; (b) report directly to the
Company's Board of Directors; (c)
discharge and carry out all duties and
responsibilities as may from time to time
be assigned, and such directions as may
from time to time be given, to the
Executive by the Company's Board of
Directors and (d) abide by and carry out the
policies and programs of the Company in
existence or as the same may be changed
from time to time.
3.
Exclusivity: All services to be provided by the Executive under
this
Agreement shall be performed by the
Executive personally. During the term of
this Agreement, the Executive shall devote
substantially all of the Executive's
business time, attention and energies and
all of his skills, learnings and best
efforts to the business of Company. At all
times during the term of this
Agreement, the services required of
Executive and the location at which he
performs such services shall not require
that he reside outside of Houston,
Texas, except for travel in the ordinary
course of business.
4. Term: The
initial term of this Agreement shall commence as of April 4,
2005 (the "Commencement Date") and shall
end on April 4, 2006, unless sooner
extended by agreement of the parties or
terminated in accordance with the
provisions of this Agreement. The date on
which this Agreement is scheduled to
expire (i.e. April 4, 2006 or such later
date to which this Agreement may be
extended by agreement of the parties) is
referred to as the "End Date". No more
than one hundred twenty (120) nor less than
and sixty (60) days prior to the an
End Date (each such sixty (60) day period
is referred to as a "Renegotiation
Period"), the Company and the Executive may
agree in writing to extend this
Agreement for an additional term. If during
any Renegotiation Period the Company
and Executive fail to agree upon an
extension of this Agreement, this Agreement
shall terminate as of the End Date of the
then current term notwithstanding the
provision of services by Executive after
the end of the then current term. The
term of this Agreement, whether as
originally scheduled, extended by agreement
or shortened pursuant to a termination in
accordance herewith is referred to as
the "Term."
<PAGE>
5. Base
Compensation: The Employer shall pay to the Executive a base
salary at the rate of $135,000 per year,
subject to increase at the discretion
of the Board of Directors of the Company.
The salary shall be paid in monthly
installments on the first day of each month
and shall be subject to such
deductions by the Employer as are required
to be made pursuant to law,
government regulations or order. The
Executive understands and agrees that the
Executive is an exempt Executive as that
term is applied for purposes of Federal
or State wage and hour laws, and further
understands that the Executive shall
not be entitled to any compensatory time
off or other compensation for overtime.
6.
Performance Bonus: Upon the completion of his initial term
hereunder,
the Executive shall be entitled to a
performance bonus equal to 15% of his base
compensation. In addition, Executive may be
entitled to an additional
performance bonus up to an additional 15%
of his base compensation, solely at
the discretion of the Company's Board of
Directors. Performance bonuses earned
hereunder shall be payable in cash thirty
(30) days after delivery by the
Company's auditors of audited financial
statements for such fiscal year, but in
no event later than sixty (60) days after
the end of the applicable fiscal year.
Where the Executive's employment hereunder
is terminated prior to the end of a
fiscal year by reason of death,
"Disability" (as defined in Section 12 below),
expiration of the term hereof, "Termination
Without Cause" (as defined in
Section 17 below), or "Resignation for Good
Reason" (as defined in Section 16
below), then the Executive shall still be
eligible for payment of a performance
bonus for such fiscal year, provided that
the amount of such performance bonus
shall equal the product of (i) the amount
of the performance bonus that would
have been payable for the entire fiscal
year had the Executive remained employed
for the entire fiscal year and (ii) a
fraction, the numerator of which shall
equal the number of days the Executive was
employed hereunder during such fiscal
year and the denominator of which shall
equal 365.
7. Fringe
Benefits: During the Term of this Agreement, the Executive
shall
be entitled to major medical and full
hospital insurance for the Executive, his
spouse and immediate dependents, provided
that the Executive and his family are
insurable at "standard rates". The
Executive shall also be entitled to such
disability, life insurance, and other
similar benefits as may be made available
to other senior officers of the Company
under such group benefit plans and/or
programs as may be maintained by the
Company from time to time, subject to any
eligibility, copayment and waiting period
requirements under or applicable to
any such benefit plans and/or programs. The
Executive acknowledges and agrees
that the Company has the right, in its sole
discretion, to amend, modify or
terminate any such benefit plan or program
at any time and for any reason or for
no reason. The Executive's entitlement to
such benefits shall end upon the
termination of his employment with the
Company, however caused, except as
provided (a) by applicable law or (b) by
the express terms of any such group
benefit plan or program maintained by the
Company. As soon as practicable
following the execution hereof, the Company
shall add Executive to the Company's
D&O insurance policy and to such other
plans that the Company may acquire for
its senior management. Executive shall be
eligible to participate in such plans.
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8.
Vacation, Etc.: During the Term of this Agreement, the Executive
shall
be entitled to four (4) weeks paid vacation
to be taken at such time or times as
shall be consistent with the proper
performance by the Executive of his duties,
and which shall accrue ratably during the
fiscal year. No unused vacation,
holidays, sick leave or personal days may
be carried forward from year to year.
In the event that the Executive's
employment terminates by virtue of
"Termination Without Cause", "Resignation
for Good Reason", death or disability,
then the Executive shall be entitled to
payment for any accrued but unused
vacation days during the year such
termination occurs.
9. Expense
Reimbursement; Travel Policy: The Company shall provide the
Executive with such reasonable business
lodging and travel expense
reimbursements as are consistent with the
Company's policies in effect from time
to time as they pertain to senior officers
of the Company. All reimbursements by
the Company provided for in this Agreement
are conditioned upon the Executive's
submission to the Company of reasonably
satisfactory documentation and an
itemized account for such expenses within a
reasonable period after they are
incurred. Expense reports and requests for
reimbursement which are submitted
later than two months after the expense is
incurred will not be reimbursed
without the approval of the Company's Chief
Executive Officer.
10. Grant
of Stock Option: Effective as of the date hereof, the Company
shall grant to the Executive, a stock
option to acquire up to 75,000 shares of
the Company's common stock, at an exercise
price of $2.56 per share (the
"Option"). Such Option shall be immediately
exercisable with respect to 25,000
shares. The Option may be exercised for an
additional 25,000 shares on each of
the first and second anniversary dates of
this Agreement, provided that
Executive remains employed by the
Company.
11. Death
of Executive: In the event of the Executive's death during the
Term of this Agreement, the Employer's
obligations and agreements under this
Agreement shall automatically terminate as
of the date of such death, and in
full satisfaction thereof, the Company
shall pay to the Executive's estate any
base salary and pro rata performance bonus
earned and unpaid through the date of
such death and any business expenses or
other fringe benefits or otherwise due
to Executive. The Executive's estate shall
also be entitled to payment for (i)
any bonus earned in the year preceding such
termination but not yet paid and
(ii) accrued but unused vacation days
during the year such termination occurs.
Such event shall not be deemed a
"Termination Without Cause" as defined below.
12.
Disability of Executive: If the Executive shall, during the term
of
this Agreement, suffer a "Disability," (as
defined, from time to time, in a
disability plan that the Company may
maintain for the benefit of its senior
officers (a "Disability Plan") or, whenever
no such Disability Plan exists, as
defined in accordance with the meanings on
Exhibit A hereto), then the Employer
shall have the right to terminate this
Agreement by written notice of such
Disability to the Executive, whereupon the
Employer's obligations and agreements
under this Agreement shall automatically
terminate as of the date of such
notice, and in full satisfaction thereof,
the Company shall pay to the Executive
any base salary and pro rata performance
bonus earned and unpaid through the
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date of such notice (less any payments
received by the Executive under a
Disability Plan) and any business expenses
or other fringe benefits otherwise
due to Executive. Executive shall also be
entitled to payment for (i) any bonus
earned in the year preceding such
termination but not yet paid and (ii) accrued
but unused vacation days during the year
such termination occurs. No such
termination shall be deemed a "Termination
Without Cause" as defined below. All
other obligations of the Employer under
this Agreement shall automatically
cease, and the Executive shall not be
entitled to any other salary, payments or
benefits otherwise payable under this
Agreement, except as otherwise required by
law.
13.
Resignation Notice; Termination: The Executive agrees to give
sixty
(60) days' prior written notice to the
Company of any decision by the Executive
to resign during the term of this Agreement
(such notice hereinafter referred to
as a "Resignation Notice"), provided,
however, that in the case of the
Executive's resignation for "Good Reason"
as defined in Section 16 below, only
fourteen (14) days' prior written notice
shall be required. The Executive
acknowledges and understands that these
notice periods are for the exclusive
benefit of the Company, and do not confer
any employment obligation on the
Company. If the Company receives any such
Resignation Notice, the Company may
elect, in its sole discretion and for any
reason or for no reason, to terminate
the Executive's employment, either
immediately or at any point during the period
indicated in such notice.
14.
Post-Resignation Actions: If the Executive decides to resign from
the
Executive's employment with the Company,
the Executive agrees to make no public
announcement and no statement to persons or
entities doing business with the
Company, without the written consent of the
Company, and to continue faithfully
performing and discharging the Executive's
duties and responsibilities for the
Company from the date of such Resignation
Notice until such termination date.
15.
Post-Resignation Obligations: Except as provided below with respect
to
resignations for "Good Reason," no such
resignation (or termination by the
Company following a Resignation Notice)
shall be deemed to be or treated as if
it was a "Termination Without Cause" as
defined below. The Executive agrees and
understands that, in the event of any such
resignation (or termination by the
Company following a Resignation Notice),
the Executive shall be entitled to
receive the Executive's base salary from
the Employer at the rate provided in
this Agreement through the date of
termination of the Executive's employment and
any business expenses otherwise due to
Executive. The Executive shall also be
entitled to payment for any (i) bonus
earned in the year preceding such
resignation but not yet paid and, in the
event of a "Resignation for Good
Reason", accrued but unused vacation days
during the year such resignation
occurs. All other obligations of the
Employer under this Agreement shall
automatically cease, and the Executive
shall not be entitled to any other
salary, payments or benefits otherwise
payable under this Agreement, except as
otherwise required by law. The parties
further agree and understand that, in the
event of any such resignation (or
termination by the Company following a
Resignation Notice), the Executive's
obligations and agreements under Sections
20 through 23 hereof shall continue in full
force and effect in the manner and
on the terms set forth herein.
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16.
Resignation for Good Reason: If the Executive resigns for "Good
Reason" (as defined below), then such a
resignation (a "Resignation for Good
Reason") shall be treated hereunder as if
it were a "Termination Without Cause"
as defined in Section 17 below. "Good
Reason" means any of the following
failures or conditions which shall remain
uncured twenty (20) days after written
notice of such failure or condition is
received by the Company from the
Executive: (i) the failure of the Company
to continue the Executive in the
position of the Chief Financial Officer of
the Company (or such other senior
executive position as may be offered by the
Company and which the Executive in
his sole discretion may accept); (ii)
material diminution by the Company of the
Executive's responsibilities, duties, or
authority in comparison with the
responsibilities, duties and authority held
during the six month period
following the Commencement Date, or
assignment to the Executive of any duties
inconsistent with the Executive's position
as a senior executive officer of the
Company (or such other senior executive
position as may be offered by the
Company and which the Executive in his sole
discretion may accept); (iii)
failure by the Company to pay and provide
to the Executive the compensation and
benefits provided for in this Agreement; or
(iv) the requirement that the
Executive relocate his residence outside of
Houston, Texas.
17.
Termination Without Cause: The Executive's employment under
this
Agreement may be terminated at any time by
the Company, without cause, upon
fourteen (14) days' written notice to the
Executive (such termination referred
to throughout this Agreement as a
"Termination Without Cause"). In the event of
any such Termination Without Cause, the
Company agrees to pay to the Executive
as severance pay, an amount equal to six
(6) months' base salary (at the then
current rate), pro rata performance bonus
earned and unpaid through the date of
such ter
