Exhibit 10.1
Execution Copy
EMPLOYMENT
AGREEMENT
This Employment Agreement
(“Agreement”) is entered into effective as of the 15
th day of August 2005 by and between Venoco, Inc., a
Delaware corporation (“Company”), and Mark DePuy
(“Employee”).
WHEREAS, the Company desires to
employ Employee as a Vice President, and Employee desires to accept
such employment;
NOW, THEREFORE, in consideration of
the mutual covenants, representations, warranties, and agreements
contained herein, and for other valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties agree as
follows:
1.
Employment
. The Company hereby employs
Employee, and Employee hereby accepts employment by the Company, as
Vice President on the terms and conditions set forth in this
Agreement.
2.
Term of Employment
. Subject to the provisions
for earlier termination provided in the Agreement, the term of this
Agreement (the “Term”) shall commence on the effective
date of this Agreement as stated above and shall terminate on
December 31, 2006; Bprovided, however, commencing on January
1, 2006 and on each January 1 thereafter, the term of this
Agreement shall automatically be extended one additional year
unless, not later than September 30 of the preceding year, the
Board of Directors of the Company (the “Board”) shall
give written notice to Employee that the Term of the Agreement
shall cease to be so extended; provided, further, that if a
Change in Control, as defined in Section 8, shall have occurred
during the original or extended Term of this Agreement, the Term
shall continue in effect for a period of not less than 36 months
beyond the date of such Change in Control. In no event,
however, shall the Term of this Agreement extend beyond the end of
the calendar month in which Employee’s 65th birthday
occurs. Notwithstanding any provision of this Agreement to
the contrary, termination of this Agreement shall not alter or
impair any rights or benefits of Employee (or Employee’s
estate or beneficiaries) that have arisen under this Agreement on
or prior to such termination, including, without limitation, the
provisions of Sections 9(c), 15 and 18.
3.
Employee’s
Duties . During the
Term of this Agreement, Employee shall serve as the Vice President
of the Company, based in Carpinteria California, and with such
customary duties and responsibilities as may from time to time be
assigned to him by the Chief Executive Officer and the Board,
provided that such duties are at all times consistent
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with the duties of such position.
Employee agrees to devote reasonable
attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge
the duties and responsibilities assigned to Employee hereunder, to
use reasonable best efforts to perform faithfully and efficiently
such duties and responsibilities.
4.
Base Compensation
. For services rendered by
Employee under this Agreement, the Company shall pay to Employee a
base salary (“Base Compensation”) of $165,000.00 per
annum, payable in accordance with the Company’s customary
payroll practice for its executive officers. The amount of
Base Compensation shall be reviewed periodically and may be
increased to reflect inflation or such other adjustments as the
Board may deem appropriate but Base Compensation, as increased, may
not be decreased thereafter.
5.
Signing and Annual
Bonuses . Upon
Employee’s execution of this Agreement, the Company shall pay
to Employee a signing bonus of $50,000.00 (which bonus shall be
returned to the Company in full if Employee terminates his
employment within six (6) months of the execution of this
Agreement). Employee shall be eligible to participate
in the Company’s incentive compensation plan; under which
cash bonuses are paid to employees based upon the performance of
both the Company and the employee. The target annual bonus
for the position of Vice President shall be $50,000. The annual
bonus award will be determined by the Compensation Committee each
year for performance during the prior year and paid on May 31 of
the year in which it is determined. The amount of the bonus shall
be based on performance of the Employee and the Company as measured
against goals established by the Compensation Committee.
6.
Stock Options
. Employee shall be granted
options to purchase shares of Company stock as set forth
herein. Stock options will at a minimum include provisions
similar to those in Attachment I, Stock Option Description.
The number of option shares and the strike price of the shares
shall be: 12.5 shares at $90,000 per share which the parties
hereto agree represents the approximate current fair market value
of the Company stock and 12.5 shares at $100,000 per share. The
strike price will be adjusted for any stock splits, stock
dividends, recapitalization, or similar events subsequent to
signing of this agreement. Pro rata for the various strike prices,
twenty percent (20%) of such options shall vest immediately upon
being granted, and the remainder shall vest in equal lots on the
first, second, third, and fourth anniversaries of the date that
Employee commences employment. In the event of a Change in Control
as defined in Section 8 hereof or discharge other than for
Misconduct (as defined herein) all options shall become immediately
vested. Vested options shall remain exercisable for a period of two
(2) years following termination of employment. Unvested options
shall expire upon termination of employment. Should the Company not
adopt a Stock Incentive Plan that affords Employee such options,
then the Company shall provide Employee with alternate compensation
that is at least as valuable to
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Employee as the options contemplated
herein.
7.
Additional Benefits
. In addition to the other
compensation and benefits provided for in this Agreement, Employee
shall be entitled to receive all fringe benefits and perquisites
offered by the Company to its executive officers. Such
benefits shall include, without limitation, reimbursement of
relocation expenses, including temporary housing for Employee and
his family for up to 60 days, 4 weeks paid vacation per year;
participation in the Company’s 401(k) Plan; participation in
other incentive and benefit plans offered generally to key
employees; participation in various employee benefit plans or
programs provided to the employees of the Company in general,
subject to the regular eligibility requirements with respect to
each of such benefit plans or programs; and such other benefits or
prerequisites as may be approved by the Board during the Term of
this Agreement. In addition, Employee shall be entitled
to receive mortgage assistance in the amount of $2500.00 per month
during the Term of this Agreement. Nothing in this paragraph
shall be deemed to prohibit the Company from making any changes in
any plans, programs or benefits described in this Section 7,
provided the change similarly affects all executives of the Company
similarly situated.
8.
Change in Control
.
For purposes of this Agreement, a
“Change in Control” shall mean the occurrence of one of
the following events:
(i)
Timothy M. Marquez, Bernadette B.
Marquez, their respective legal representatives, devisees, donees
and heirs and any Trust for the benefit of either or both of
Timothy M. Marquez and Bernadette B. Marquez and/or the issue of
either of them (the “Marquez Family”) individually or
collectively no longer are the “beneficial owners” (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934),
directly or indirectly, of securities of the Company representing
more than 50% of the combined voting power of the Company’s
then outstanding securities;
(ii)
the stockholders of the Company
approve, and the Company consummates, a merger or
consolidation of the Company with any other corporation, other than
(a) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
more than 65% of the combined voting power of the voting securities
of the Company (or such surviving entity) outstanding immediately
after such merger or consolidation or (b) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no “person” (as such term is used
in Section 13(d) and 14(d) of the Exchange Act other than the
Marquez Family) acquires more than 50% of the combined voting power
of the Company’s then outstanding securities; or
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(iii)
the stockholders of the Company
approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets. For purposes
of this clause (iii), the term “the sale or disposition by
the Company of all or substantially all of the Company’s
assets” shall mean a sale or other disposition transaction or
series of related transactions (other than transactions related to
the creation of a master limited partnership or royalty trust in
which the Company continues its corporate existence), involving
assets of the Company or of any direct or indirect subsidiary of
the Company (including the stock of any direct or indirect
subsidiary of the Company) in which the value of the assets or
stock being sold or otherwise disposed of (as measured by the
purchase price being paid therefor or by such other method as the
Board determines is appropriate in a case where there is no readily
ascertainable purchase price) constitutes more than two-thirds of
the “fair market value of the Company” (as hereinafter
defined). For purposes of the preceding sentence, the
“fair market value of the Company” shall be the
aggregate market value of the Company’s outstanding common
stock (on a fully diluted basis) plus the aggregate market value of
the Company’s other outstanding equity securities. The
aggregate market value of the Company’s equity securities
shall be determined by multiplying the number of shares of the
Company’s common stock (on a fully diluted basis) outstanding
on the date of the execution and delivery of a definitive agreement
with respect to the transaction or series of related transactions
(the “Transaction Date”) by the average closing price
of such security for the ten trading days immediately preceding the
Transaction Date, or if not publicly traded, by such other method
as the Board shall determine is appropriate.
9.
Termination
. This Agreement may be
terminated prior to the end of its Term as set forth
below.
(a)
Resignation
. Employee may resign,
including by reason of retirement, his position at any time.
In the event of such resignation, except in the case of resignation
on or following a Change in Control either (i) for Good Reason (as
defined below) or (ii) by Employee, with or without Good Reason,
during the 30-day period following the six-month anniversary of the
date of the Change in Control (the “Window Period”),
Employee shall not be entitled to further compensation pursuant to
this Agreement. A resignation by Employee during the Window
Period shall be treated for all purposes the same as a resignation
by Employee for Good Reason.
(b)
Death . If Employee’s employment is
terminated due to his death, the Company shall pay Employee’s
beneficiaries or legal representatives (i) within 15 days, any Base
Compensation and vacation pay which had accrued hereunder at the
date of Employee’s death; and (ii) within 30 days, the same
benefits that
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Employee would receive in the event
of Discharge following a Change in Control as described in Section
9(c)(i), below.
(c)
Discharge .
(i)
The Company may terminate this
Agreement and Employee’s employment for any reason deemed
sufficient by the Company upon notice as provided in Section
12. However, in the event that Employee’s employment is
terminated during the Term by the Company on or following a Change
in Control and for any reason other than his Misconduct (as defined
in Section 9(c)(ii) below) then: (A) the Company shall pay in a
lump sum, in cash, to Employee, within 15 days of the Date of
Termination, an amount equal to three times the sum of (1)
Employee’s Base Compensation, (2) an amount equal to the
highest incentive award paid or payable, as the case may be, to
Employee under the Company’s Incentive Compensation Plan
during the current year and the three years prior to termination,
(3) an amount equal to the amount of contributions that the Company
would have made on behalf of Employee under the Company’s
401(k) Plan during the prior year disregarding any limitations on
benefits or covered compensation imposed by I.R.C. Sections
401(a)(17), 401(k), 401(m) or 415; (B) for the 36-month period
after such Date of Termination, the Company shall provide or
arrange to provide Employee (and Employee’s dependents) with
life, disability, accident and group health insurance benefits
substantially similar to those which Employee (and Employee’s
dependents) were receiving immediately prior to the Notice of
Termination, with the Employee charged a monthly premium(s) for
such coverage(s) that does not exceed the premium(s) charged to an
active employee for comparable coverage(s); benefits otherwise
receivable by Employee pursuant to this clause (B) shall be reduced
to the extent comparable benefits are actually received by Employee
(and Employee’s dependents) during the 36-month period
following Employee’s termination, and any such benefits
actually received by Employee shall be reported to the Company (to
the extent coverage and/or benefits received under a self-insured
health plan of the Company (any successor or affiliate) are taxable
to Employee, the Company shall make Employee “whole” on
a net after tax basis); (C) within 30 days of the Date of
Termination or, if later, the first date on which such payment
would not subject Employee to suit under Section 16(b) of the
Securities Exchange Act of 1934, if applicable, the Company shall
offer to pay to Employee for cancellation of all outstanding
stock-based awards then held by Employee on the Date of Termination
(collectively, “Awards”), a lump sum amount in cash
equal to the sum of the value (with respect to an option or stock
appreciation right, the “spread”; and with respect to
restricted stock or phantom stock, the value of an
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unrestricted share) of all such
Awards, calculated, where applicable, as if all corporate
performance goals had been achieved (thus warranting full value of
the Award) and in the case where the Company’s stock is not
publicly traded, using a fair market value on the Date of
Termination as determined by an independent third party agreeable
to the Company and Employee. The fair market value shall be
determined based on the trading values of a comparable group of
public companies as determined by the independent third party and
the aggregate value discount applied for various factors including
illiquidity, being private and minority ownership shall not exceed
15%.
(ii)
Notwithstanding the foregoing
provisions of this Section 9, in the event Employee is terminated
because of Misconduct, the Company shall have no compensation
obligations pursuant to this Agreement after the Date of
Termination. As used herein, “Misconduct” means
(a) the willful and continued failure by Employee to substantially
perform his duties with the Company (other than any such failure
resulting from Employee’s incapacity due to physical or
mental illness or any such actual or anticipated failure after the
issuance of a Notice of Termination by Employee for Good Reason),
after a written demand for substantial performance is delivered to
Employee by the Board, which demand specifically identifies the
manner in which the Board believes that Employee has not
substantially performed his duties, or (b) the willful engaging by
Employee in conduct which is demonstrably and materially injurious
to the Company, monetarily or otherwise. For purposes hereof,
no act, or failure to act, on Employee’s part shall be deemed
“willful” unless done, or omitted to be done, by
Employee not in good faith and without reasonable belief that
Employee’s action or omission was in the best interest of the
Company. Notwithstanding the foregoing, Employee shall not be
deemed to have been terminated for Misconduct unless and until
there shall have been delivered to Employee a copy of a resolution
duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting
of the Board called and held for such purpose (after reasonable
notice to Employee and an opportunity for Employee, together with
Employee’s counsel, to be heard before the Board), finding
that in the good faith opinion of the Board Employee was guilty of
conduct set forth above and specifying the particulars thereof in
detail.
(iii) If the Company
terminates this Agreement and Employee’s employment before
the expiration of the Term, other than following a Change in
Control and other than for Misconduct, the Company shall pay in a
lump sum, in cash, to Employee within 15 days of the Date of
Termination, an amount equal to two times the sum of (1)
Employee’s Base Compensation and (2) an amount equal the
greater of $50,000 or the highest
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incentive award paid or payable, as
the case may be, during the three years prior to
termination.
(d)
Disability
.
(i)
If Employee shall have been absent
from the full-time performance of Employee’s duties with the
Company for six conse
