Document:

Exhibit 10.2

 

SEPARATION AND CONSULTING AGREEMENT

 

This Separation and Consulting Agreement (the “Agreement”) is made and entered into by and between Ian H. Fay (“Consultant”) and ZaZa Energy Corporation (the “Company”).

 

WHEREAS, Consultant and the Company are parties to an Employment Agreement dated September 11, 2012 (the “Employment Agreement”);

 

WHEREAS, Consultant and the Company have agreed to terminate Consultant’s employment with the Company under the terms described herein; and

 

WHEREAS, due to his experience with the Company and in the industry, the Company wishes to engage Consultant as a consultant to the Company reporting to the Company’s Chief Executive Officer (“CEO”):

 

NOW, THEREFORE, in consideration of the promises and agreements set forth below, Consultant and the Company agree as follows:

 

1.                                      Termination of Consultant’s Employment and Creation of Consulting Arrangement.  Consultant’s employment with the Company shall terminate on the date on which Consultant executes this Agreement (the “Termination Date”).  For purposes of the Employment Agreement, the termination is under Section 8(d) without Cause.  Upon the Termination Date, the Company retains Consultant, and Consultant agrees to serve, as a consultant reporting to the CEO.  The Company shall pay Consultant a monthly consulting fee of $37,500 (the “Consulting Fee”) commencing June 19, 2014 and ending with May 19, 2015, or earlier upon mutual agreement (the “Consulting Period”).  During the Consulting Period, Consultant, upon written request (the “Request”) of the CEO, shall:

 

a.                                      consult with the Company concerning strategy; and

 

b.                                      make himself available from time to time for such other reasonable assignments as he may be called upon by the Company to undertake.

 

The Company shall allow Consultant to retain his Company laptop (after Consultant provides the laptop to the Company for the cleansing of files on May 20, 2014). The Company will allow Consultant reasonable access on May 20, 2014 to his office to remove personal belongings.  The Company will reimburse Consultant’s reasonable travel and other business expenses incurred in performing the Requested services in accordance with the expense reimbursement policies applicable to officers and directors of the Company generally.  The Company acknowledges that this Agreement is non-exclusive and that Consultant may undertake and perform work and services for other clients or employers; provided, however, that Consultant complies with his obligations under Section 9 of the Employment Agreement (it being agreed that Section 9(b) shall not apply to Consultant’s activities).  Consultant shall be solely responsible for paying any income and other taxes associated with the Consulting Fee, and he agrees to indemnify and hold harmless the Company relating to any penalties, fines, judgment, attorneys’ fees, costs, or other financial obligations relating to his non-payment of income and other taxes relating to the Consulting Fee.  During the Consulting Period, any consulting services shall be subject to the indemnities set forth in Annex A of the 2012 Engagement Letter between Odin Advisors and ZaZa Energy Development, LLC, and such Annex A shall be incorporated into this Agreement for this purpose mutatis

 

 

mutandis.   If Company requests that Consultant perform work that requires more than 20 hours per month of Consultant’s time, Consultant shall be entitled to such additional compensation as may be mutually agreed by the Company and Consultant.

 

2.                                      Stock Grant, Vesting of Existing Shares, and Continuation of Health Coverage.

 

a.                                      The Company shall grant to Consultant the sum of 169,596 shares of common stock, which such stock shall vest upon the expiration of the Consulting Period (the “Stock Grant”).  Consultant shall be solely responsible for any income and other tax consequences associated with the Stock Grant, and he agrees to indemnify and hold harmless the Company relating to any penalties, fines, judgment, attorneys’ fees, costs, or other financial obligations relating to Consultant’s non-payment of income and other taxes relating to the Stock Grant.

 

b.                                      All currently unvested outstanding grants of restricted shares of common stock made to Consultant by the Company other than the Stock Grant shall vest immediately (subject to the standard timing and process at AST for release of shares).  During the Consulting Period, Consultant shall be subject to the Company’s Securities Trading Policy’s restrictions as an “Access Person” and shall not acquire or divest any shares until the August trading window under the Company’s Securities Trading Policy.

 

3.                                      Impact of the Agreement on the Employment Agreement. The parties agree and acknowledge that the Stock Grant is being paid to Consultant in lieu and satisfaction of any LTI Award-related payments and benefits to which Consultant may have been entitled under the Employment Agreement.  The parties agree and acknowledge that the Consulting Fee is being paid to Consultant in lieu and satisfaction of Base Salary to which Consultant may be entitled under the Employment Agreement during the first twelve months following the Termination Date.  Except for Consultant’s entitlement under the Employment Agreement to (i) two STI-related payments during the Severance Term (it being agreed that Consultant only shall be paid the Target $450,000 STI Award for each of the fiscal years 2014 and 2015, payable after completion of such fiscal years at the time such awards are paid to other senior executives of the Company, but in no event later than one day prior to the date that is 2 1⁄2 months following the fiscal year end) and (ii) Base Salary paid monthly during months 13 to 24 of the Severance Term, with the first payment on June 19, 2015 and the last payment on May 19, 2016, and (iii) health benefits as provided in Section 8(d)(vii), Consultant hereby waives any claim, entitlement or right to any notice of termination, notice payments, severance payments, unused vacation days, benefits, and other rights that would otherwise be due or payable by the Company under the Employment Agreement.  Consultant shall be solely responsible for paying any income and other taxes associated with the preceding (i), (ii) and (iii), and he agrees to indemnify and hold harmless the Company relating to any penalties, fines, judgment, attorneys’ fees, costs, or other financial obligations relating to his non-payment of income and other taxes relating to such amounts.

 

4.                                      Independent Contractor.  The parties agree and acknowledge that, during the Consulting Period, Consultant will remain an independent contractor and not an employee, agent, partner, joint venturer, or representative of the Company, provided, however, that Consultant shall comply with all published policies of the Company applicable to directors, officers and employees of the Company.  Consultant shall not represent to any third party that he is an employee, agent, or representative of the Company, and shall not have the authority to bind the Company on any matter.

 

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Consultant shall not be entitled to receive any employee benefits offered to employees of the Company.

 

5.                                      Released Parties.  The term “Released Parties,” as used in this Agreement, shall mean the Company, ZaZa Petroleum Management LLC, ZaZa Energy LLC, and any of their respective past or present employees, representatives, administrators, agents, officials, officers, directors, shareholders, members, divisions, parents, subsidiaries, successors, affiliates, general partners, managers, limited partners, consultants, employee benefit plans (and their sponsors, fiduciaries, or administrators), insurers, or attorneys.

 

6.                                      General Release.  In consideration of Consultant’s entitlement to the Consulting Fee, Stock Grant, Share Vesting and COBRA Payments, Consultant, on behalf of himself and his agents, representatives, attorneys, assigns, heirs, executors, and administrators, fully, finally, unconditionally and forever releases and discharges each of the Released Parties from any and all liability, claims, demands, actions, causes of action, suits, grievances, debts, sums of money, agreements, promises, damages, back and front pay, costs, expenses, attorneys’ fees, and remedies of any type, regarding any act or failure to act that occurred up to and including the date on which Consultant signs this Agreement, including, without limitation, any claims arising or that arose or may have arisen out of, are incidental to, or are in any way connected with Consultant’s employment, or his separation of employment from the Company, and including but not limited to:

 

all claims, actions or liability under:  (1) Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Civil Rights Act of 1866 (42 U.S.C. §1981), the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act, the Fair Labor Standards Act, the National Labor Relations Act, the Employee Retirement Income Security Act, the Family and Medical Leave Act, the Texas Employment Discrimination Law, Texas wage laws, and any other provision of the Texas code; (2) any other federal, state, or local statute, ordinance, or regulation regarding employment, compensation, unpaid wages, employee benefits, termination of employment, or discrimination in employment; and (3) the common law of any state relating to employment contracts, wrongful discharge, defamation, or any other matter.

 

In consideration of Consultant’s execution of this Agreement, Company, on behalf of itself and its officers, directors, shareholders, agents, representatives, attorneys, assigns, and successors, fully, finally, unconditionally and forever releases and discharges Consultant from any and all liability, claims, demands, actions, causes of action, suits, grievances, debts, sums of money, agreements, promises, damages, costs, expenses, attorneys’ fees, and remedies of any type, regarding any act or failure to act that occurred up to and including the date on which Consultant signs this Agreement, including, without limitation, any claims arising or that arose or may have arisen out of, are incidental to, or are in any way connected with Consultant’s employment, or his separation of employment from the Company.

 

Consultant and Company each agree and acknowledge that in exchange for this release, he and it have received separate consideration beyond that to which he or it is otherwise entitled under Company policy, applicable law or any other agreement between the parties.  Except as otherwise expressly provided herein, Consultant and Company each intend and agree that this release shall be effective as a bar to all actions, causes of action, obligations, costs, expenses, attorneys’ fees,

 

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damages, debts, duties, losses, claims, liabilities and demands of whatsoever character, nature and kind, whether or not Consultant or the Company knows that the claim exists at this time.

 

7.                                      Covenant Not To Sue.  Except for an action arising out of a breach of the terms of this Agreement, Consultant agrees never to bring (or cause to be brought) any claim, action or proceeding against any of the Released Parties and Company agrees never to bring (or cause to be brought) any claim, action or proceeding against Consultant regarding any act or failure to act that occurred up to and including the date on which the parties sign this Agreement, including but not limited to any claim, action or proceeding relating to Consultant’s employment or his separation of employment from the Company.

 

8.                                      No Encouragement of Claims.  Neither Party will directly or indirectly encourage or assist any person or entity who files a lawsuit, charge, claim or complaint against any of the Released Parties (in the case of the Consultant) or against the Consultant (in the case of the Company) unless he is required to render such assistance pursuant to a lawful subpoena or other legal obligation.

 

9.                                      Return of Company Property.  Consultant agrees to immediately return to the Company all Company property, including but not limited to, files, records, computer hardware and software, printers, phones, electronic devices, keys and all other property or information provided by the Company to Consultant.  Consultant agrees and acknowledges that the term “Company property” shall include any property and information belonging or relating to any Released Party.

 

10.                               Non-Disparagement. Consultant, on the one hand, and Company and its CEO, on the other hand, each agree not to directly or indirectly make any oral or written statement to any third party that disparages, defames, or reflects adversely upon any of the Released Parties or their respective products, executives, directors, employees and family members (in the case of the Consultant) or the Consultant and his family members (in the case of the Company and its CEO).  Consultant and CEO specifically agree that the non-disparagement obligations in this Section 10 shall apply to their immediate family members (including spouses), and that Consultant shall indemnify the Company, and the Company shall indemnify Consultant, for any damages, claims and monies (including the liquidated damages described immediately below) for any disparagement of any of the Released Parties or their respective products, executives, directors, employees and family members (in the case of the Consultant’s immediate family members) or the Consultant and his family members (in the case of the CEO’s immediate family members).  Consultant and Company each agrees and acknowledges that any breach by him or his immediate family members (including his spouse) (in the case of Consultant) or by it, the CEO or any of his immediate family members (including his spouse) (in the case of the Company), of the provisions stated in this Section 10 will constitute a material breach of the Agreement and will entitle the other Party to liquidated damages in the amount of $250,000 (two hundred fifty thousand dollars) for each such breach and the recovery of the liquidated damages described in this Section 10.  The remedies provided for in this Section 10 shall be in addition to any other remedy available to the Company or Consultant, as the case may be, in law or equity or pursuant to the terms of this Agreement.

 

11.                               Non-Admission.  This Agreement does not constitute an admission by any of the Parties that any action that any of them took with respect to the other was wrongful, unlawful or in violation of any local, state, or federal act, statute, or constitution, or susceptible of inflicting any

 

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damages or injury on the other party, and each specifically denies any such wrongdoing or violation.

 

12.                               Agreement Inadmissible as Evidence.  This Agreement, its execution, and its implementation may not be used as evidence, and shall not be admissible, in a subsequent proceeding of any kind, except one which either party institutes alleging a breach of this Agreement.

 

13.                               Not Used.

 

14.                               Duty of Cooperation & Representations.  Consultant agrees to make himself reasonably available by telephone, email and/or in person, to transition his responsibilities to his successor (if any) and to otherwise provide information to or answer inquiries from the Company regarding subject matters of which Consultant has knowledge by virtue of his former responsibilities with the Company.  Consultant also agrees to cooperate relating to any filing (including any SEC filing), notice, publication and/or announcement of his departure from the Company and the circumstances of such departure.  Consultant and the Company further agree that the Company will file a Current Report on SEC Form 8-K with the disclosure required and within the time period required under the Securities Exchange Act of 1934.  Consultant hereby confirms that he agrees with the statements made by the Company in the Form 8-K concerning the reasons for his departure as an executive of the Company.  Consultant represents and warrants to the Company that, to his knowledge, the financial statements of the Company (the “Covered Financial Statements”) filed with the Securities and Exchange Commission (the “Commission”) during his employment as Chief Financial Officer of the Company and any financial information contained in any filings (the “Covered Filings”) made by the Company with the Commission during Consultant’s employment as Chief Financial Officer of the Company:  (a) do not contain any untrue statements of material fact or omit to state any material facts necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to any period covered by the Covered Financial Statements or the Covered Filings and (b) fairly present in all material respects the financial condition, results of operation and cash flows of the Company as of, and for, the periods presented in the Covered Financial Statements or the Covered Filings.

 

15.                               Entire Agreement.  This Agreement contains the entire agreement and understanding between Consultant and the Company concerning the matters described herein.  It supersedes all prior agreements, discussions, negotiations, understandings and proposals of the parties.  The terms of this Agreement cannot be changed except in a subsequent document signed by both parties.  The parties agree, however, that unless otherwise stated herein, the Employment Agreement shall remain in full force and effect.  Any terms that are not defined in this Agreement shall take on the meaning assigned to them in the Employment Agreement.

 

16.                               Severability.  The provisions of this Agreement shall be severable and the invalidity of any provision shall not affect the validity of the other provisions; provided, however, that upon any finding by a court of competent jurisdiction that a release or waiver of claims or rights, or a covenant provided for by Sections 6 and 7 herein, is illegal, void or unenforceable, the Parties agree that each will execute promptly a release, waiver and/or covenant that is legal and enforceable.

 

17.                               ADEA Waiver.  Consultant acknowledges that he has been advised in writing to consult with an attorney prior to executing this Agreement, which contains releases and waivers.

 

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Consultant understands that he may take a period of twenty-one (21) days within which to consider this Agreement.  Consultant understands that he may revoke this Agreement during the seven (7) days following his execution of this Agreement and that this Agreement will not become effective until that seven-day revocation period has expired (the “Effective Date”).  In order to revoke this Agreement, Consultant must sign and send a written notice to the Company addressed to ZaZa Energy Corporation, 1301 McKinney Street, Suite 2850, Houston, Texas 77010, Attention: Chief Executive Officer, which shall only be effective if the Company receives it no later than seven days after Consultant signs this Agreement.  If Consultant revokes this Agreement, he will not be entitled to any of the benefits or other consideration described in this Agreement, including the Consulting Fee, Stock Grant, Share Vesting and COBRA Payments.

 

18.                               Knowing and Voluntary Waiver.  Consultant acknowledges that: (a) he has carefully read this Agreement and fully understands its meaning and effect; (b) he had a full and adequate opportunity and reasonable time period to review this Agreement with an attorney of his choosing before he signed it; (c) he was not coerced into signing this Agreement; (d) he agrees to all the terms of this Agreement and is entering into this Agreement knowingly, voluntarily, and with full knowledge of its significance; and (e) the only consideration for his signing this Agreement are the terms stated herein, and no other promises or representations of any kind have been made by any person or entity to cause him to sign this Agreement.

 

19.                               Choice of Law and Venue.  This Agreement shall be governed by and interpreted in accordance with the laws of the State of Texas, without regard to the law of conflicts of that State.  In the event of any dispute under this Agreement or relating or arising under the consulting relationship between Consultant and the Company (a “Dispute”), the parties agree first to engage in good faith negotiations to try to resolve the Dispute.  If the Dispute is not resolved through such negotiations, the parties agree to engage in mediation using the services of an agreed upon mediator.  If the parties fail to agree on a mediator, they shall proceed under the rules and administration of JAMS in Houston, Texas.  If the Dispute is not resolved through such mediation, the parties agree to submit the Dispute to binding arbitration to take place in Houston, Texas by a panel of three arbitrators (one appointed by each party, and the third appointed by the two party-appointed arbitrators), in accordance with the Commercial Arbitration Rules of the American Arbitration Association.  If there is any inconsistency between this Section 19 and any statute or rules, this Section 19 shall control.  Arbitration shall be initiated by one party (“Claimant”) giving written notice to the other party (“Respondent”) and to the American Arbitration Association, that the Claimant elects to refer the arbitrable dispute to arbitration.  If the parties fail to appoint an arbitrator within ten (10) days from Claimant’s notice initiating the arbitration, the appointing authority shall make such an appointment.  Claimant and Respondent shall each pay the expenses of their appointed arbitrator and one-half of the compensation and expenses of the third arbitrator.  Each arbitrator must be a neutral party who has never been an officer, director or employee of the parties or any of their affiliates. The parties may engage in limited discovery of relevant and material information that is reasonably calculated to lead to admissible evidence through depositions of expert and fact witnesses.  The arbitrators may grant a request for additional discovery or may, in their discretion, order additional discovery.  Any information disclosed to the other party shall be confidential and not disclosed to third parties, except as required by law, regulation, or bona fide business purpose.  The Federal Rules of Evidence shall guide the arbitrators in determining what information they shall consider in reaching the decision.  Irrespective of the result, each party shall be solely responsible for its own legal fees, expenses, and costs.

 

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20.                               Breach of Agreement.  The parties agree and acknowledge that in the event that the Company believes, in good faith, that Consultant is or has been in breach of any material term of this Agreement or the Employment Agreement on or after May 19, 2014, the Company will be entitled to, in addition to any other remedies called for in this Agreement or the Employment Agreement, suspend the Consulting Fee, Share Vesting, vesting of the Stock Grant, COBRA Payments and any other applicable severance payment or benefits pending resolution of the dispute between the parties.

 

21.                               Counterparts.  This Agreement may be executed in counterparts and will be as fully binding as if signed in one entire document.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE]

 

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I ACKNOWLEDGE THAT I HAVE CAREFULLY READ THE FOREGOING AGREEMENT, THAT I UNDERSTAND ALL OF ITS TERMS, THAT I UNDERSTAND THAT IT CONTAINS A COMPLETE RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS, AND THAT I AM ENTERING INTO IT VOLUNTARILY.

 

	
 
    	
ZaZa Energy Corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Ian H. Fay
    	
 
    	
By:
    	
/s/ Scott Gaille
    
	
Ian H. Fay
    	
 
    	
 
    	
Scott Gaille
    
	
 
    	
 
    	
 
    
	
Dated: May 19, 2014
    	
Dated:   May 19, 2014
    
	
 
    	
 
    
	
NGEDOCS: 2174064.2
    	
 
    

 

8Exhibit 10.3

 

SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

 

THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (this “Second Amendment”) is made and entered into as of the 12th day of August 2014, by and between ZaZa Energy Corporation, a Delaware corporation (the “Company”), and Scott Gaille (“Employee”).

 

1.                                      Restatement of Employment Agreement and First Amendment to Employment Agreement.  Except as stated herein, the Company and Employee agree to restate and fully incorporate by reference herein the terms and conditions of the Employment Agreement dated October 3, 2012 (the “Employment Agreement”) and the First Amendment to Employment Agreement dated November 8, 2013 (the “First Amendment”), between the parties.

 

2.                                      Revision to Section 4(a) of Employment Agreement.  Section 4(a) of the Employment Agreement is amended such that the following shall completely replace the prior Section 4(a) appearing in the original Employment Agreement:

 

“(a)                           Base Salary. Employee shall be paid an annualized Base Salary, payable in accordance with the regular payroll practices of the Company, of not less than $350,000, with minimum increases of 3% per annum effective each January 1 (commencing on January 1, 2014), and additional increases, if any, as may be approved in writing by the Compensation Committee.  The Base Salary may not be decreased unless such decrease is approved by Employee.  No more often than once during any consecutive twelve (12) month period, the Company’s President and Chief Executive Officer (the “CEO”) may, in his discretion and on behalf of the Company if the CEO determines that the applicable conditions set forth in Treasury Regulation Section 1.409A-1(b)(4)(ii) (the “Regulation”) exist, elect to defer the payment and Employee’s receipt of one (1) or more installments of Base Salary (the “Deferral Election”).  The Company shall make the Deferral Election by providing written notice to Employee no later than thirty (30) days in advance of the commencement of the deferral, which shall identify the number of installments of Base Salary to be deferred and the circumstances requiring such deferral.  In the event that a timely Deferral Election is made, all unpaid installments of Base Salary shall earn 8% annual interest, compounded daily. Each deferred installment of Base Salary, as credited with interest, shall be paid to Employee at such time when the CEO determines that the applicable conditions in the Regulation no longer exist, but in no event later than twelve (12) months after the date in which the installment of Base Salary would have otherwise been paid.”

 

3.                                      Revision to Section 4(b) of Employment Agreement.  Section 4(b) of the Employment Agreement is amended such that the following shall completely replace the prior Section 4(b) appearing in the original Employment Agreement:

 

“(b)                           Short-Term Incentive Awards.

 

(i)                                     Employee shall be eligible for an annual short-term incentive award determined in respect of each fiscal year or partial fiscal year, as the case may be, during the Term of Employment in accordance with this Section 4(b) (the “STI Award”). The target STI Award for each fiscal year shall be 75% of Base Salary, with a minimum STI Award of 0% of Base Salary and a maximum STI Award of 150% of Base Salary.

 

 

(ii)                                  No later than February 15th of the fiscal year following the fiscal year to which the STI Award is attributable, the CEO shall deliver to the Employee and the Compensation Committee an annual performance evaluation of Employee using one of the following ratings of A, B, C, D or F (the “CEO Performance Rating”).  A rating of A will result in a maximum STI Award, B will result in an STI Award halfway between the target and the maximum, C will result in the target STI Award, D will result in an STI Award halfway between 0 and the target, and a rating of F will result in the minimum STI Award.  An STI Award for any partial fiscal year occurring during the Term of Employment shall be prorated as and to the extent provided in Section 8.  The date on which the CEO Performance Rating is delivered shall be the “STI Date.”

 

(iii)                               Within five (5) business days after the STI Date, the CEO shall elect the percentage of the STI Award that will be payable in cash and the percentage of the STI Award that will be payable in Common Shares.  The number of Common Shares to be distributed shall equal the dollar value of the STI Award that the Company has elected to be payable in Common Shares divided by the most recent January Representative Value.

 

(iv)                              On the first payroll date following the Company’s election under Section 3(b)(iii), the Company shall distribute to Employee (x) a cash payment equal to the portion of the STI Award that the Company had elected to be payable in cash (as reduced for required tax withholding), and (y) the number of Common Shares payable under the STI Award (as reduced for required tax withholding and 401k contributions, based on the closing price of the Company’s common stock on the principal U.S. stock exchange on which the Company’s common stock is listed or traded on the day prior to distribution); provided, however, that any fractional Common Shares shall be payable in cash.

 

(v)                                 Any Common Shares to be delivered to Employee shall be subject to such transfer policies as the Company may adopt that are applicable to officers, directors and other management personnel generally.”

 

4.                                      Revision to Section 4(c) of Employment Agreement.  Section 4(c) of the Employment Agreement is amended such that the following shall completely replace the prior Section 4(c) appearing in the original Employment Agreement:

 

“(c)                            Long-Term Incentive Awards.

 

(i)                                     Employee shall be eligible for a long-term incentive award in respect of each fiscal year or partial fiscal year, as the case may be, during the Term of Employment in accordance with this Section 4(c) (the “LTI Award”).  The target LTI Award for each fiscal year shall be 120% of Base Salary, with a minimum LTI Award of 0% of Base Salary and a maximum LTI Award of 350% of Base Salary.

 

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(ii)                                  The LTI Award shall be based upon the sum of (x) the CEO’s Performance Rating, and (y) the Compensation Committee’s performance evaluation of the Employee using one of the following ratings: A, B, C, D, or F (the “Committee Score”). The Committee’s Score shall be provided to the Employee at the time he receives the LTI Award. Two A ratings will result in a maximum LTI Award, two C ratings will result in the target LTI Award, and two F ratings will result in no LTI Award.  Ratings in between any of the preceding shall result in an LTI Award that is pro-rated accordingly.  The Compensation Committee shall determine the Committee Score no later than March 15 of each year, with such determination date being the “Determination Date.”

 

(iii)                               The LTI Award will be payable in Common Shares (subject to the vesting requirements below).  The number of Common Shares to be distributed (subject to the vesting requirements below) shall equal the dollar value of the LTI Award divided by the most recent January Representative Value.

 

(iv)                              Each LTI Award shall vest in three equal installments on the first, second and third anniversaries of the applicable Determination Date.

 

(v)                                 On the first payroll date following the vesting date of any portion of an LTI Award, the Company shall distribute to Employee the number of Common Shares payable under the LTI Award (as reduced for required tax withholding, based on the closing price of the Company’s common stock on the principal U.S. stock exchange on which the Company’s common stock is listed or traded on the day prior to distribution); provided, however, that any fractional Common Shares shall be payable in cash.

 

(vi)                          Any Common Shares to be delivered to Employee shall be subject to such transfer policies as the Company may adopt that are applicable to officers, directors and other management personnel generally.”

 

5.                                      Addition to Section 5 of Employment Agreement.  The following shall constitute new Section 5(d) of the Employment Agreement.

 

“(d)                           Benefits to Other Executives of the Company.  To the extent that the Company grants any material employment-related benefit or perquisite to another executive of the Company, and Employee has not been granted that benefit, Employee shall be entitled to the benefit consistent with the terms and conditions under which the other executive was granted the benefit.”

 

6.                                      Revision to Section 8 of Employment Agreement and Section 2 of First Amendment.  Section 8 of the Employment Agreement and Section 2 of the First Amendment are amended such that the following shall completely replace the prior Section 8 appearing in the original Employment Agreement and the prior Section 2 appearing in the First Amendment:

 

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“Section 8.                                     Termination of Employment.

 

(a)                                 General.  The Term of Employment shall terminate upon the earliest to occur of (i) an Expiration, (ii) Employee’s death, (iii) a termination by reason of a Disability, (iv) a termination by the Company with or without Cause, and (v) a termination by Employee with or without Good Reason.  Notwithstanding anything herein to the contrary, the payment (or commencement of a series of payments) hereunder of any nonqualified deferred compensation (within the meaning of Section 409A of the Code) upon a termination of employment shall be delayed until such time as Employee has also undergone a “separation from service” as defined in Treas. Reg. 1.409A-1(h), at which time such nonqualified deferred compensation (calculated as of the date of Employee’s termination of employment hereunder) shall be paid (or commence to be paid) to Employee on the schedule set forth in this Section 8 as if Employee had undergone such termination of employment (under the same circumstances) on the date of his ultimate “separation from service.”

 

(b)                                 Termination Due to Death or Disability.  Employee’s employment shall terminate automatically upon his death.  The Company may terminate Employee’s employment immediately upon the occurrence of a Disability, such termination to be effective upon Employee’s receipt of written notice of such termination.  In the event Employee’s employment is terminated due to his death or Disability, Employee or his estate or his beneficiaries, as the case may be, shall be entitled to:

 

(i)                                     The Accrued Obligations; and

 

(ii)                                  A cash payment representing the value of any unpaid target STI Award in respect of any completed fiscal year that has ended prior to the date of such termination, which amount shall be paid within sixty (60) days from the date of such; and

 

(iii)                               A cash payment (in lieu of Common Shares) representing the value of any target STI Award that would have been payable with respect to the year of termination in the absence of the Employee’s death or Disability, pro-rated for the period Employee worked prior to his death or Disability, which amount shall be paid at such time STI Awards are paid to other senior executives of the Company, but in no event later than one day prior to the date that is 21⁄2 months following the last day of the fiscal year in which such termination occurs; and

 

(iv)                              Immediate vesting of any unvested LTI Award; and

 

(v)                                 LTI Award at the target level for any year(s) for which an LTI Award has not yet been determined, including a pro-rated LTI Award for such partial year at the target level.  Such pro-rated LTI Award will be immediately vested upon issuance; and

 

(vi)                              Continuation and/or payment of Employee’s and/or Employee’s dependents’ medical insurance premiums for a period of eighteen (18) months; and

 

(vii)                           The rights to the same compensation and benefits as provided in Section 8(d) below, in lieu of clauses (i) through (vi) hereof, if the termination of Employee’s employment is by reason of death or Disability while Employee is traveling or engaged on official Company business.

 

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Following such termination of Employee’s employment by reason of death or Disability, except as set forth in this Section 8(b), Employee shall have no further rights to any compensation or any other benefits under this Agreement.

 

(c)                                  Termination by the Company for Cause.

 

(i)                                     The Company may terminate Employee’s employment at any time for Cause, effective upon Employee’s receipt of written notice of such termination; provided, however, that with respect to any Cause of termination relying on clause (i), (ii), (vi) or (vii) of the definition of Cause set forth in Section 1(d) hereof, to the extent such act or acts are curable, Employee shall be given not less than twenty (20) days’ written notice by the Board of the Company’s intention to terminate him for Cause, such notice to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based, and such termination shall be effective at the expiration of such twenty (20) day notice period unless Employee has substantially cured such act or acts or failure or failures to act that give rise to Cause during such period.

 

(ii)                                  In the event the Company terminates Employee’s employment for Cause, he shall be entitled only to the Accrued Obligations, and any previously awarded nonqualified stock options and Common Shares which are not vested as of the date of termination shall be cancelled.  Following such termination of Employee’s employment for Cause, except as set forth in this Section 8(c)(ii), Employee shall have no further rights to any compensation or any other benefits under this Agreement.

 

(d)                                 Termination Upon an Expiration or by the Company without Cause.  The Company may terminate Employee’s employment at any time without Cause, effective upon Employee’s receipt of at least sixty (60) days written notice of such termination.  Upon an Expiration or in the event Employee’s employment is terminated by the Company without Cause (other than due to death or Disability), Employee shall be entitled to:

 

(i)                                     The Accrued Obligations; and

 

(ii)                                  A payment (in cash or Common Shares at the Company’s election) representing the value of any unpaid target STI Award in respect of any completed fiscal year that has ended prior to the date of such termination, which amount shall be paid at such time STI Awards are paid to other senior executives of the Company, but in no event later than one day prior to the date that is 21⁄2 months following the last day of the fiscal year in which such termination occurs; and

 

(iii)                               A payment (in cash or Common Shares at the Company’s election) representing the value of any target STI Award for the year in which termination occurs, pro-rated for the period the Employee worked prior to such termination, which amount shall be paid at such time STI Awards are paid to other senior executives of the Company, but in no event later than one day prior to the date that is 21⁄2 months following the last day of the fiscal year in which such termination occurs; and

 

(iv)                              Immediate vesting of any unvested LTI Award; and

 

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(v)                                 LTI Award at the target level for any year(s) for which an LTI Award has not yet been determined and awarded, including a pro-rated LTI Award for such partial year at the target level.  Such pro-rated LTI Award will be immediately vested upon issuance; and

 

(vi)                              Base Salary and target STI Award payable in equal installments during the Severance Term in accordance with the Company’s regular payroll practices (in cash or Common Shares at the Company’s election); and

 

(vii)                           Continuation, during the Severance Term, of the health benefits provided to Employee and his covered dependants under the Company’s health plans, it being understood and agreed that the Company’s obligation to provide such continuation of benefits shall terminate prior to the expiration of the Severance Term in the event that Employee becomes eligible to receive any health benefits while employed by or providing service to, in any capacity, any other business or entity during the Severance Term; provided, however, that as a condition of the Company’s providing the continuation of health benefits described herein, the Company may require Employee to elect continuation coverage under COBRA.  Notwithstanding the forgoing, if such health benefits are provided to employees of the Company generally through a self-insured arrangement, and Employee qualifies as a “highly compensated individual” (within the meaning of Section 105(h) of the Code), (i) such continuation of benefits shall be provided on a fully taxable basis, based on 100% of the monthly premium cost of participation in the self-insured plan less any portion required to be paid by Employee as described above (the “Taxable Cost”), and, as such, Employee’s W-2 shall include the after-tax value of the Taxable Cost for each month during the applicable benefit continuation period, and (ii) on the last payroll date of each calendar month during which any health benefits are provided pursuant to this Section 8(d)(vii), Employee shall receive an additional payment, such that, after payment by the Employee of all federal, state, local and employment taxes imposed on Employee as a result of the inclusion of the portion of the Taxable Cost in income during such calendar month, Employee retains (or has had paid to the Internal Revenue Service on his behalf) an amount equal to such taxes as Employee is required to pay as a result of the inclusion of the Taxable Cost in income during such calendar month; and

 

(viii)                        Reimbursement of Employee’s reasonable, documented outplacement expenses for up to 12 months, not to exceed $20,000 in the aggregate.

 

Following such termination of Employee’s employment upon an Expiration or by the Company without Cause, except as set forth in this Section 8(d), Employee shall have no further rights to any compensation or any other benefits under this Agreement.

 

(e)                                  Termination by Employee with Good Reason.  Employee may terminate his employment with Good Reason by providing the Company twenty (20) days’ written notice setting forth in reasonable specificity the event that constitutes Good Reason.  During such twenty (20) day notice period, the Company shall have a cure right (if curable), and if not cured within such period, Employee’s termination will be effective upon the expiration of such cure period, and Employee shall be entitled to the same payments and benefits as provided in Section 8(d) above for a termination upon an Expiration and by the Company without Cause, subject to

 

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the same conditions on payment and benefits as described in Section 8(d) above.  Following such termination of Employee’s employment by Employee with Good Reason, except as set forth in this Section 8(e), Employee shall have no further rights to any compensation or any other benefits under this Agreement.

 

(f)                                   Termination by Employee without Good Reason.  Employee may terminate his employment without Good Reason by providing the Company sixty (60) days’ written notice of such termination.  In the event of a termination of employment by Employee under this Section 8(f), except as provided in Section 8(g), Employee shall be entitled only to the Accrued Obligations, and any previously awarded nonqualified stock options and Common Shares which are not vested as of the date of termination shall be cancelled.  In the event of termination of Employee’s employment under this Section 8(f), the Company may, in its sole and absolute discretion, by written notice accelerate such date of termination without changing the characterization of such termination as a termination by Employee without Good Reason.  Following such termination of Employee’s employment by Employee without Good Reason, except as set forth in this Section 8(f) or Section 8(g), Employee shall have no further rights to any compensation or any other benefits under this Agreement.

 

(g)                                  Change of Control and Termination Following Change of Control.  Upon a Change of Control, the Company shall (i) pay to Employee, on the thirtieth (30th) day following the effective date of the Change of Control and payable in a lump sum an amount equal to three (3) times target STI Award under Section 4, and (ii) immediately vest any unvested LTI Award.  If, during the one (1) year period following such Change of Control, Employee is terminated because of an Expiration or by the Company without Cause, or Employee terminates his employment with or without Good Reason, in lieu of the benefits payable pursuant to Sections 8(d) or 8(e) or 8(f) hereof, as applicable, and in addition to the benefits payable pursuant to the preceding sentence, Employee shall be entitled to:

 

(i)                                     The Accrued Obligations; and

 

(ii)                                  A lump-sum cash payment equal to two (2) times Base Salary which amount shall be paid within thirty (30) days after the effective date of termination; and

 

(iii)                               LTI Award at the target level for any year(s) for which an LTI Award has not yet been determined and awarded, including a pro-rated LTI Award for such partial year at the target level.  Such pro-rated LTI Award will be immediately vested upon issuance; and

 

(iv)                              Continuation, during the Change of Control Severance Term, of the health benefits provided to Employee and his covered dependants under the Company’s health plans, subject to the terms and conditions set forth in Section 8(d)(vii) above.

 

Following such termination of Employee’s employment following a Change of Control, except as set forth in this Section 8(g), Employee shall have no further rights to any compensation or any other benefits under this Agreement.

 

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(h)                                 Release.  Notwithstanding any provision herein to the contrary, the Company may require that, prior to payment of any amount or provision of any benefit pursuant to subsection (d), (e), or pursuant to clauses (ii) and (iii) of subsection (g) of this Section 8, Employee shall have executed, on or prior to the Release Expiration Date, a customary general release in favor of the Company in such form as is reasonably required by the Company, and any waiting periods contained in such release shall have expired.  To the extent that the Company requires execution of such release, the Company shall deliver such release to Employee within ten (10) business days following the termination of Employee’s employment hereunder, and the Company’s failure to deliver such release prior to the expiration of such ten (10) business day period shall constitute a waiver of any requirement to execute such release.  Such release, if any, shall contain mutual releases whereby the Company also issues a release in favor of Employee.  Assuming a timely delivery of the release by the Company, if Employee fails to execute such release on or prior to the Release Expiration Date or timely revokes his acceptance of such release thereafter, Employee shall not be entitled to any payments or benefits pursuant to subsection (d), (e), or pursuant to clauses (ii) and (iii) of subsection (g) of this Section 8.  Notwithstanding anything herein to the contrary, in any case where the date of termination and the Release Expiration Date fall in two separate taxable years, any payments required to be made to Employee that are treated as deferred compensation for purposes of Section 409A of the Code shall be made in the later taxable year.”

 

IN WITNESS WHEREOF, the undersigned have executed this Second Amendment as of the date first above written.

 

	
 
    	
ZAZA ENERGY CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Todd Brooks
    
	
 
    	
By: TODD BROOKS
    
	
 
    	
PRESIDENT & CEO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EMPLOYEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Scott Gaille
    
	
 
    	
SCOTT GAILLE
    

 

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