Employment Agreement - Atlas America Inc. and Edward E. Cohen
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") executed on May 14, 2004
and effective as of the Effective Date (as later defined herein) is by and
between ATLAS AMERICA, INC., a Delaware corporation having its principal place
of business at 311 Rouser Road, Moon Township, PA 15108 (the "Company") and
EDWARD E. COHEN ("Executive").
WHEREAS, the Company and Executive wish to set forth in this Agreement
the terms and conditions under which the Employee will be employed by the
Company;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Employment. The Company agrees to employ Executive, and Executive
hereby accepts such employment and agrees to perform Executive's duties and
responsibilities, in accordance with the terms, conditions and provisions
hereinafter set forth.
1.1. Employment Term. This Agreement shall be effective as of
the date on which Executive shall retire from his position as Chief Executive
Officer of Resource America, Inc. (the "Effective Date"), and shall continue for
three years, thereafter, unless the Agreement is terminated sooner in accordance
with Section 2 or 3 below. The term of the Agreement shall automatically renew
daily so that, at all times, it shall be for a three-year term. The period
commencing on the Effective Date and ending on the date on which the term of
Executive's employment under this Agreement shall terminate is hereinafter
referred to as the "Employment Term."
1.2. Duties and Responsibilities. Commencing on the Effective
Date, Executive shall serve as the Chairman of the Board of Directors of the
Company (the "Board") and Chief Executive Officer of the Company. Until such
time as the Board shall fill the office of President, Executive shall also serve
as President of the Company. Executive shall perform all duties and accept all
responsibilities incident to such position as may be reasonably assigned to him
by the Board.
1.3. Extent of Service. Executive agrees to use Executive's
best efforts to carry out Executive's duties and responsibilities under Section
1.2 hereof and, consistent with the other provisions of this Agreement, to
devote such business time, attention and energy thereto as is reasonably
necessary to carry out those duties and responsibilities. It is recognized that
Executive in the past has invested and participated, and it is agreed that
Executive in the future may invest and participate, in business endeavors
separate and apart from the Company, in his discretion.
1.4. Base Salary. For all the services rendered by Executive
hereunder, the Company shall pay Executive an annual base salary ("Base
Salary"), commencing on the Effective Date, at the annual rate of $350,000,
payable in accordance with the Company's customary payroll practices.
Executive's Base Salary shall be reviewed annually for appropriate increases by
the compensation committee of the Board pursuant to the its normal performance
review policies for senior level executives, but shall not be decreased at any
time.
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1.5. Bonus. Executive shall be eligible to receive bonuses in
such amounts as the Board may approve in its sole discretion or under the terms
of any incentive plan of the Company maintained for other senior level
executives.
1.6. Welfare Plans and Perquisites. Executive shall be
entitled to participate in all employee welfare benefit plans and programs or
executive perquisites made available to the Company's senior level executives as
a group or to its employees generally, as such welfare plans or perquisites may
be in effect from time to time and subject to the eligibility requirements of
the plans. Nothing in this Agreement shall prevent the Company from amending or
terminating any welfare or other employee benefit plans or programs from time to
time as the Company deems appropriate.
1.7. Reimbursement of Expenses; Vacation. Executive shall be
provided with reimbursement of reasonable expenses related to Executive's
employment by the Company on a basis no less favorable than that which may be
authorized from time to time for senior level executives as a group, and shall
be entitled to vacation and sick leave in accordance with the Company's
vacation, holiday and other pay for time not worked policies.
1.8. Incentive Compensation. Executive shall be entitled to
participate in any short-term and long-term incentive programs (including
without limitation any stock option plans) established by the Company for its
senior level executives generally, at levels commensurate with the benefits
provided to other senior executives and with adjustments appropriate for his
position as Chairman of the Board, Chief Executive Officer and/or President.
1.9. Supplemental Executive Retirement Plan.
(a) The Company shall provide and maintain on Executive's
behalf a supplemental executive retirement plan (the "SERP"). The SERP
will provide Executive with an annual benefit ("SERP Retirement
Benefit") equal to the product of (A) six and one-half percent (6
1/2%), multiplied by (B) Executive's Base Salary at the time of his
retirement, death or other termination of employment with the Company
("Final Base Salary"), multiplied by (C) the amount of years (or
portions thereof) that Executive shall have been employed by Company
commencing on the Effective Date. Notwithstanding anything herein to
the contrary, the maximum number used in subclause (C) of the
immediately preceding sentence shall be ten (10) and the minimum number
used in subclause (c) of the immediately preceding sentence shall be
four (4), so that the maximum SERP Retirement Benefit shall be 65% of
Final Base Salary and the minimum SERP Retirement Benefit shall be 26%.
(b) Notwithstanding anything herein to the contrary, upon the
occurrence of a Change of Control (as later defined) or in the event
the Executive is terminated without Cause (as later defined) or resigns
for Good Reason (as later defined), Executive shall be vested in a SERP
Retirement Benefit equal to the greater of (x) the SERP Retirement
Benefit as accrued under the formula set forth above, or (y) 40% of the
Final Base Salary.
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(c) Retirement Benefit will be paid to Executive commencing
upon the later of (i) his retirement, or (ii) his reaching the age of
seventy (70) years old (the "Retirement Age"). The SERP Retirement
Benefit will be payable as long as the Executive shall live, with ten
(10) years guaranteed, so that if Executive shall die prior to his
retirement or within ten (10) years of his retirement, his estate shall
receive the payment of the SERP Retirement Benefit until a total of ten
(10) years of such SERP Retirement Benefit shall have been paid.
Executive shall be fully vested in the SERP Retirement Benefit as such
benefits accrue, except that Executive shall be fully vested in the
minimum SERP Retirement Benefit of 26% as of the Effective Date.
(d) The Company shall establish a "rabbi" trust to serve as
the funding vehicle for the SERP Retirement Benefit, and shall not less
than annually make contributions to the trust in amounts sufficient to
provide the present value, discounted at the ten (10) year U.S.
Treasury rate then in effect (which discount rate may differ from the
discount rate used by the Company in accruing the SERP Retirement
Benefit on its books), of the SERP Retirement Benefit accrued as of the
most recent reporting date for the Company prior to such contribution.
Upon the occurrence of a Change of Control (whether during or after the
Employment Term), the Company shall immediately contribute to the trust
an amount sufficient to permit the full payment of the benefit due to
Executive. Notwithstanding the establishment of a rabbi trust, the
Company's obligation to pay the SERP Retirement Benefit shall
constitute a general, unsecured obligation, payable out of its general
assets, and the Executive shall not have any rights to any specific
asset of the Company. The Executive or his beneficiary shall have only
the rights of a general, unsecured creditor against the Company for any
distributions due under this paragraph, and the assets of the rabbi
trust shall be available to pay the claims of the Company's creditors.
2. Termination. Executive's employment shall terminate upon the
occurrence of any of the following events:
2.1. Termination Without Cause; Resignation for Good Reason
(a) The Company may remove Executive at any time without Cause
(as defined in Section 4) from the position in which Executive is employed
hereunder upon not less than thirty days' prior written notice to Executive;
provided, however, that, in the event that such notice is given, Executive shall
be under no obligation to render any additional services to the Company. In
addition, Executive may initiate a termination of employment by resigning under
this Section 2.1 for Good Reason (as defined in Section 4); provided, however,
that the Company shall be given the opportunity to cure any condition
susceptible to cure. Executive shall give the Company not less than thirty days'
prior written notice of such resignation.
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(b) Subject to the provisions of Section 2.1(c) hereof, upon
any removal or resignation described in Section 2.1(a) above, Executive shall be
entitled to receive only the amount due to Executive under the Company's then
current severance pay plan for employees, if any. No other payments or benefits
shall be due under this Agreement to Executive, but Executive shall be entitled
to any benefits accrued and earned in accordance with the terms of any
applicable benefit plans and programs of the Company.
(c) Notwithstanding the provisions of Section 2.1(b), in the
event that Executive executes a written mutual release (which the Company shall
be obligated to execute and if it refuses to execute for purposes of this
section 2.1(c) will be deemed to have been executed by the Company as long as
Executive executes the release) upon such removal, resignation or Non-Renewal,
substantially in the form attached hereto as Exhibit A (the "Release"), of
claims against the Company and related parties with respect to all matters
arising out of Executive's employment by the Company, or the termination thereof
(other than claims for any entitlements under the terms of this Agreement or
under any plans or programs of the Company under which Executive has accrued and
is due a benefit), and any claims against Executive for actions within the scope
of his employment by the Company, Executive shall be entitled to receive, in
lieu of the payment described in Section 2.1(b), the following:
(i) Executive shall receive a lump sum cash severance
payment, without discount, in an amount equal to the sum of the total amount
payable to Executive under this Agreement until expiration of the term then in
effect (i.e. three (3) years), assuming that Executive's total compensation for
each year would be equal to the Average Compensation. Payment shall be made
within fifteen days after the effective date of the termination.
(ii) For a period of thirty-six (36) months following
the date of termination, Executive shall continue to receive the group term life
and health insurance in effect at the date of his termination (or generally
comparable coverage) for himself and, where applicable, his spouse and
dependents (without giving effect to any reduction in such benefits subsequent
to a Change in Control), as the same may be changed from time to time for
employees generally, as if Executive had continued in employment during such
period; or, as an alternative, the Company may elect to pay Executive cash in
lieu of such coverage in an amount equal to Executive's after-tax cost of
continuing such coverage, where such coverage may not be continued (or where
such continuation would adversely affect the tax status of the plan pursuant to
which the coverage is provided). The COBRA health care continuation coverage
period under section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), shall run concurrently with the foregoing thirty-six month benefit
period.
(iii) Executive shall also receive any other amounts
earned, accrued and owing but not yet paid under Section 1 above.
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2.2. Voluntary Termination.
(a) Executive may voluntarily terminate his employment for any
reason upon sixty days' prior written notice. If Executive terminates his
employment on or after January 1, 2006 for any reason not specified in Section
2.1(a) or 2.2(b), Executive shall be entitled to the benefits set forth in
Section 2.1(b) hereof, but if he executes the Releases he shall receive a
benefit equal to one-half (1/2) of Final Base Salary, which benefit shall be
paid in a lump sum within sixty (60) days after Executive's termination date. In
addition, after Executive reaches the Retirement Age, Executive shall also
receive the vested SERP Retirement Benefit pursuant to the SERP.
(b) If Executive terminates his employment under this Section
2.2, he shall be entitled to any benefits accrued and earned in accordance with
the terms of any applicable benefit plans and programs of the Company.
2.3. Disability. The Company may terminate Executive's
employment if Executive has been unable to perform the material duties of his
employment for a period of one hundred eighty days in any twelve month period
because of physical or mental injury or illness ("Disability"); provided,
however, that the Company shall continue to pay Executive's Base Salary until
the Company acts to terminate Executive's employment. Executive agrees, in the
event of a dispute under this Section 2.3 relating to Executive's Disability, to
submit to a physical examination by a licensed physician jointly selected by the
Board and Executive. If the Company terminates Executive's employment for
Disability, the Company shall continue to pay to Executive his Base Salary, as
in effect on the date of his Disability, for three (3) years and such three (3)
year period shall be included as a portion of the Employment Term for the
purpose of determining vesting of SERP benefits. In addition, upon such a
termination, Executive shall received the benefits described in Section 2.1(ii)
hereof. Thereafter, Executive shall receive any amounts payable to him under the
Company's long-term disability plan. Payments paid under this Section shall not
be reduced by any payments made directly to Executive by an insurance company.
Executive shall also be entitled to any other amounts earned, accrued and owing
but not yet paid under Section 1 above and any benefits accrued and earned in
accordance with the terms of any applicable benefit plans and programs of the
Company.
2.4. Death. If Executive dies while employed by the Company,
the Company shall pay to Executive's executor, legal representative,
administrator or designated beneficiary, as applicable, any amounts earned,
accrued and owing but not yet paid under Section 1 above and any benefits
accrued and earned under the Company's benefit plans and programs. The Company
shall also pay to Executive's executor, legal representative, administrator or
designated beneficiary, as applicable, a death benefit equal to the Final Base
Salary for a period equal to the lesser of (i) three years or (ii) the period of
time from the Effective Date until the date of Executive's death (but not less
than one (1) year). The death benefit described in the preceding sentence shall
be paid in a lump sum within sixty days following the day on which Executive
shall have died. Otherwise, the Company shall have no further liability or
obligation under this Agreement to Executive's executors, legal representatives,
administrators, heirs or assigns or any other person claiming under or through
Executive. In addition to the forgoing, the SERP provides that Executive or his
beneficiary shall receive at least ten (10) years of the vested SERP Retirement
Benefit, as set forth in more particularity in Paragraph 1.9 hereof.
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2.5. Cause. The Company may terminate Executive's employment
at any time for Cause upon written notice to Executive, in which event all
payments under this Agreement shall cease, except for Base Salary to the extent
already accrued. Executive shall be entitled to any benefits accrued and earned
before his termination in accordance with the terms of any applicable benefit
plans and programs of the Company.
2.6. Vesting of Options. Upon any termination of this
Agreement for any reason other than Cause, the vesting of all options to
purchase securities of the Company granted to Executive during his employment
with the Company shall be accelerated to the later of the effective date of
termination of this Agreement or six months after the date such option was
granted, and any provision contained in the agreements under which such options
were granted that is inconsistent with such acceleration is hereby modified to
the extent necessary to provide for such acceleration; such acceleration shall
not apply to any option that by its terms would vest prior to the date provided
for in this paragraph.
2.7. Gross-Up Payment.
(a) Notwithstanding any provision in the Agreement to the
contrary, in the event that it shall be determined that any payment or
distribution by the Company to or for the benefit of Executive, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise (a "Payment"), would constitute an "excess parachute payment"
within the meaning of section 280G of the Code, the Company shall pay Executive
an additional amount (the "Gross-Up Payment") such that the net amount retained
by Executive after deduction of any excise tax imposed under section 4999 of the
Code, and any federal, state and local income tax, FICA and Medicare withholding
taxes and excise tax imposed upon the Gross-Up Payment, shall be equal to the
Payment. For purposes of determining the amount of the Gross-Up Payment, unless
Executive specifies that other rates apply, Executive shall be deemed to pay
federal income tax and employment taxes at the highest marginal rate of federal
income and employment taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of Executive's residence on
Executive's termination date, net of the reduction in federal income taxes that
may be obtained from the deduction of such state and local taxes (calculated by
assuming that any reduction under section 68 of the Code in the amount of
itemized deductions allocable to Executive applies first to reduce that amount
of such state and local income taxes that would otherwise be deductible by
Executive).
(b) In the event that the excise tax imposed by section 4999
of the Code is subsequently determined to be less than the amount taken into
account hereunder at the time of Executive's termination of employment,
Executive shall repay to the Company, at the time that the amount of such
reduction in excise tax is finally determined, the portion of the Gross-Up
Payment attributable to such reduction (plus that portion of the Gross-Up
Payment attributable to the excise tax, federal, state and local income taxes
and FICA and Medicare withholding taxes imposed on the Gross-Up Payment being
repaid by Executive to the extent that such repayment results in a reduction in
excise tax, FICA and Medicare withholding taxes and/or a federal, state or local
income tax deduction) plus interest on the amount of such repayment at the rate
provided in section 1274(b)(2)(B) of the Code. In the event that the excise tax
is determined to exceed the amount taken into account hereunder at the time of
Executive's termination of employment (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall make an additional Gross-Up Payment to Executive in
respect to such excess (plus any interest, penalties or additions payable by
Executive with respect to such excess) at the time that the amount of such
excess is finally determined.
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(c) Except as otherwise provided herein, all determinations to
be made under this Section 2.7 shall be made by the tax counsel selected by
Executive, at the Company's expense and reasonably acceptable to the Company.
(d) Notwithstanding anything in this Section 2.7 to the
contrary, no Gross Up payment shall be due at any time for any Payment to
Executive resulting from termination of this Agreement due to Executive's death
or disability.
2.8. Notice of Termination. Any termination of Executive's
employment shall be communicated by a written notice of termination to the other
party hereto given in accordance with Section 10. The notice of termination
shall (i) indicate the specific termination provision in this Agreement relied
upon, (ii) briefly summarize the facts and circumstances deemed to provide a
basis for a termination of employment and the applicable provision hereof, and
(iii) specify the termination date in accordance with the requirements of this
Agreement.
3. Change of Control.
3.1. Effect of Change of Control. If a Change of Control
occurs and Executive's employment terminates under the circumstances described
below, the provisions of Section 2.1 shall apply.
3.2. Termination Without Cause Upon or After a Change of
Control. Upon or after a Change of Control, the Company (by action of the Board)
may remove Executive at any time upon thirty (30) days' notice from the position
in which Executive is employed hereunder or Executive may initiate termination
of employment by resigning under this Section 3 for Good Reason (as defined in
Section 4) (in either case, the Employment Term shall be deemed to have ended)
upon not less than thirty days' prior written notice to Executive (or in the
case of resignation for Good Reason, Executive shall give the Company not less
than thirty days' prior written notice of such resignation); provided, however,
that, in the event that such notice is given, Executive shall be under no
obligation to render any additional services to the Company. In any such event,
the provisions of Section 2.1(b) or (c), as applicable, shall then apply.
4. Definitions.
(a) "Average Compensation" shall mean the average of the three
highest amounts of annual total compensation received by Executive hereunder
during the Employment Term, or if the Employment Term shall be less than three
years, the Average Compensation shall be the highest total compensation reserved
by executive in any year (or an annualized amount for a portion of a year if
this Employment Term is not one (1) year old).
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(b) "Cause" shall mean any of the following grounds for
termination of Executive's employment:
(i) Executive shall have been convicted of a felony,
or any crime involving fraud, embezzlement or moral turpitude;
(ii) Executive intentionally and continually fails,
in the absence of good reason, to substantially perform his reasonably assigned
material duties to the Company (other than a failure resulting from Executive's
incapacity due to physical or mental illness), which failure has been materially
and demonstrably detrimental to the Company and has continued for a period of at
least thirty (30) days after a written notice of demand for substantial
performance, signed by a majority of the members of the Board, has been
delivered to Executive specifying the manner in which Executive has failed
substantially to perform;
(iii) Executive breaches Section 5 of this Agreement.
(c) "Good Reason" shall mean the occurrence of any of the
following events or conditions, unless Executive has expressly consented in
writing thereto or unless the event is remedied by the Company within thirty
days after receipt of notice thereof given by Executive:
(i) a reduction in Executive's Base Salary (which
shall be in violation of this Agreement);
(ii) a demotion of Executive from the position of
chief executive officer;
(iii) a material reduction of Executive's duties
hereunder;
(iv) the Company's requiring Executive to be based at
a location other than the Company's current chief executive offices;
(v) the failure of the Executive to be elected to the
Board; or
(vi) any material breach of this Agreement by the
Company.
(d) Change of Control. As used herein, "Change of Control"
shall mean the occurrence of any of the following:
(i) The acquisition of the beneficial ownership, as
defined under the Securities Exchange Act of 1934, of
twenty-five percent (25%) or more of the Company's
voting securities or all or substantially all of the
assets of the Company by a single person or entity or
group of affiliated persons or entities other than by
a Related Entity (as defined below); or
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(ii) The Company consummates, a merger, consolidation,
combination, share exchange, division or other
reorganization or transaction of the Company (a
"Corporate Transaction") with an unaffiliated entity,
other than a Related Entity (as defined below), in
which either (A) the directors of the Company as
applicable immediately prior to the Corporate
Transaction constitute less than a majority of the
board of directors of the surviving, new or combined
entity unless one-half of the board of directors of
the surviving, new or combined entity, were directors
of the Company immediately prior to such Corporate
Transaction and the Company's chief executive officer
immediately prior to such Corporate Transaction
continues as the chief executive officer of the
surviving, new or combined entity, or (B) the voting
securities of the Company immediately before the
Corporate Transaction represent less than sixty
percent of the combined voting power immediately
after the Corporate Transaction of the outstanding
securities of (I) the Company, (II) the surviving
entity or (III) in the case of a division, each
entity resulting from the division; or
(iii) During any period of twenty-four consecutive calendar
months, individuals who at the beginning of such
period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the
election or nomination for the election by the
Company's stockholders of each new director was
approved by a vote of at least two-thirds of the
directors then still in office who were directors at
the beginning of the period; or
(iv) The shareholders of the Company approve a plan of
complete liquidation, or winding-up of the Company or
an agreement of sale or disposition (in one
transaction or a series of transactions) of all or
substantially all of the Company's assets or all or
substantially all of the assets of its primary
subsidiaries to an unaffiliated entity, other than to
a Related Entity (as defined below).
For purposes of the definition of "Change of Control" as set forth
herein, the term "Related Entity" shall mean an entity that is an
"affiliate" of the Executive or any member of the Executive's immediate
family including his spouse or children, as determined in accordance
with Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended. Neither the Company's
initial public offering nor the Company's possible spin-off from
Resource America, Inc. shall be deemed a "Change of Control" in the
Agreement.
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5. Intellectual Property and Confidentiality. Executive hereby
acknowledges that, during and solely as a result of his employment by the
Company, Executive will receive special training and education with respect to
the operation of the Company's business and other related matters, and access to
confidential information and business and professional contacts. In
consideration of Executive's employment and in consideration of the special and
unique opportunities afforded by the Company to Executive as a result of
Executive's employment, Executive hereby agrees to abide by the terms of the
intellectual property and confidentiality provisions below. Executive agrees and
acknowledges that his employment is full, adequate and sufficient consideration
for the restrictions and obligations set forth in those provisions.
5.1. Developments. Executive shall disclose fully, promptly
and in writing to the Company any and all inventions, discoveries, improvements,
modifications and other intellectual property rights, whether patentable or not,
which Executive has conceived, made or developed, solely or jointly with others,
while employed by the Company and which (i) relate to the business, work or
activities of the Company or (ii) result from or are suggested by the carrying
out of Executive's duties hereunder or from or by any information that Executive
may receive as an employee of the Company. Executive hereby assigns, transfers
and conveys to the Company all of Executive's right, title and interest in and
to any and all such inventions, discoveries, improvements, modifications and
other intellectual property rights and agrees to take all such actions as may be
requested by the Company at any time and with respect to any such invention,
discovery, improvement, modification or other intellectual property rights to
confirm or evidence such assignment, transfer and conveyance. Furthermore, at
any time and from time to time, upon the request of the Company, Executive shall
execute and deliver to the Company, any and all instruments, documents and
papers, give evidence and do any and all other acts that, in the opinion of
counsel for the Company, are or may be necessary or desirable to document such
assignment, transfer and conveyance or to enable the Company to file and
prosecute applications for and to acquire, maintain and enforce any and all
patents, trademark registrations or copyrights under United States or foreign
law with respect to any such inventions, discoveries, improvements,
modifications or other intellectual property rights or to obtain any extension,
validation, reissue, continuance or renewal of any such patent, trademark or
copyright. The Company shall be responsible for the preparation of any such
instruments, documents and papers and for the prosecution of any such
proceedings and shall reimburse Executive for all reasonable expenses incurred
by Executive in compliance with the provisions of this Section 5.1.
5.2. Confidentiality.
(a) Executive acknowledges that, by reason of Executive's
employment by the Company, Executive will have access to confidential
information of the Company, including, without limitation, information and
knowledge pertaining to products, inventions, discoveries, improvements,
innovations, designs, ideas, trade secrets, proprietary information,
manufacturing, packaging, advertising, distribution and sales methods, sales and
profit figures, customer and client lists and relationships between the Company
and dealers, distributors, sales representatives, wholesalers, customers,
clients, suppliers and others who have business dealings with them
("Confidential Information"). Executive acknowledges that such Confidential
Information is a valuable and unique asset of the Company and covenants that,
both during and after the Employment Term, Executive will not disclose any
Confidential Information to any person (except as Executive's duties as an
officer of the Company may require or as required by law or in a judicial or
administrative proceeding) without the prior written authorization of the Board.
The obligation of confidentiality imposed by this Section 5.3 shall not apply to
information that becomes generally known to the public through no act of
Executive in breach of this Agreement.
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(b) Executive acknowledges that all documents, files and other
materials received from the Company during the Employment Term (with the
exception of documents relating to Executive's compensation or benefits to which
Executive is entitled following the Employment Term) are for use of Executive
solely in discharging Executive's duties and responsibilities hereunder and that
Executive has no claim or right to the continued use or possession of such
documents, files or other materials following termination of Executive's
employment by the Company. Executive agrees that, upon termination of
employment, Executive will not retain any such documents, files or other
materials and will promptly return to the Company any documents, files or other
materials in Executive's possession or custody.
5.3. Equitable Relief. Executive acknowledges that the
restrictions contained in Sections 5.1 and 5.2 hereof are, in view of the nature
of the business of the Company, reasonable and necessary to protect the
legitimate interests of the Company, and that any violation of any provision of
those Sections will result in irreparable injury to the Company. Executive also
acknowledges that in the event of any such violation, the Company shall be
entitled to preliminary and permanent injunctive relief, without the necessity
of proving actual damages or posting a bond, and to an equitable accounting of
all earnings, profits and other benefits arising from any such violation, which
rights shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled. Executive agrees that in the event of any
such violation, an action may be commenced for any such preliminary and
permanent injunctive relief and other equitable relief in any federal or state
court of competent jurisdiction sitting in Pennsylvania or in any other court of
competent jurisdiction. Executive hereby waives, to the fullest extent permitted
by law, any objection that Executive may now or hereafter have to such
jurisdiction or to the laying of the venue of any such suit, action or
proceeding brought in such a court and any claim that such suit, action or
proceeding has been brought in an inconvenient forum. Executive agrees that
effective service of process may be made upon Executive by mail under the notice
provisions contained in Section 10 hereof.
6. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent
or limit Executive's continuing or future participation in or rights under any
benefit, bonus, incentive or other plan or program provided by the Company and
for which Executive may qualify; provided, however, that if Executive becomes
entitled to and receives the payments provided for in Section 2.1(b) or (c) of
this Agreement, Executive hereby waives Executive's right to receive payments
under any severance plan or similar program applicable to all employees of the
Company.
7. Survivorship. The respective rights and obligations of the parties
under this Agreement shall survive any termination of Executive's employment to
the extent necessary to the intended preservation of such rights and
obligations.
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8. Mitigation. Executive shall not be required to mitigate the amount
of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise and there shall be no offset against amounts due
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that Executive may obtain.
9. Arbitration; Expenses; Damages. In the event of any dispute under
the provisions of this Agreement, other than a dispute in which the primary
relief sought is an equitable remedy such as an injunction, the parties shall be
required to have the dispute, controversy or claim settled by arbitration in
Philadelphia, Pennsylvania in accordance with the National Rules for the
Resolution of Employment Disputes then in effect of the American Arbitration
Association, before a panel of three arbitrators, two of whom shall be selected
by the Company and Executive, respectively, and the third of whom shall be
selected by the other two arbitrators. Any award entered by the arbitrators
shall be final, binding and nonappealable and judgment may be entered thereon by
either party in accordance with applicable law in any court of competent
jurisdiction. This arbitration provision shall be specifically enforceable. The
parties hereby agree that upon any termination of Executive's employment
hereunder (i) by Company without cause; (ii) by Executive with good Reason; or
(iii) by either Company or Executive after a Change in Control, as long as
Executive has executed the Release, if required, then the Company shall pay all
amounts due to Executive hereunder on or prior to the deadline for such payments
(it being agree that TIME IS OF THE ESSENCE) without offset or reduction, and
failure to do so shall result in two hundred percent (200%) of the withheld
amount (in addition to the actual amount owed to Executive) being due to
Executive as liquidated damages, regardless of any determination that the
Company had a basis for offset or reduction. The Company hereby agrees that it
shall be estopped from asserting that such damages are excessive of constitute a
penalty, and that Executive has reasonably relied upon such estoppel. If Company
determines it has such an offset or basis for reduction, it shall notify
Executive of such determination, in writing, as soon as reasonably possible and
in any event on or prior to the deadline for making such payment. Company shall
make the full payment, but Executive shall be obligated to return any portion of
such payment that is determined, pursuant to the arbitration set forth in this
section 9, to have been subject to legitimate offset or deduction.
10. Notices. All notices and other communications required or permitted
under this Agreement or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when hand delivered or mailed
by registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received):
If to the Company, to:
Atlas America, Inc.
311 Rouser Road
Moon Township, PA 15108
If to Executive, to:
Edward E. Cohen
1240 North Casey Key Road
Osprey, FL 34229
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or to such other names or addresses as the Company or Executive, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.
11. Contents of Agreement; Amendment and Assignment.
(a) This Agreement sets forth the entire understanding between
the parties hereto with respect to the subject matter hereof and cannot be
changed, modified, extended or terminated except upon written amendment approved
by the Board and executed on its behalf by a duly authorized officer and by
Executive.
(b) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and assigns
of the parties hereto, except that the duties and responsibilities of Executive
under this Agreement are of a personal nature and shall not be assignable or
delegatable in whole or in part by Executive. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business or
assets of the Company, within fifteen days of such succession, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent as the Company would be required to perform if no such succession had
taken place.
12. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or render unenforceable such provision or application in any
other jurisdiction. If any provision is held void, invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.
13. Remedies Cumulative; No Waiver. No remedy conferred upon a party by
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given under this Agreement or now or hereafter existing at law or in
equity. No delay or omission by a party in exercising any right, remedy or power
under this Agreement or existing at law or in equity shall be construed as a
waiver thereof, and any such right, remedy or power may be exercised by such
party from time to time and as often as may be deemed expedient or necessary by
such party in its sole discretion.
14. Beneficiaries/References. Executive shall be entitled, to the
extent permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable under this
Agreement following Executive's death by giving the Company written notice
thereof. In the event of Executive's death or a judicial determination of
Executive's incompetence, reference in this Agreement to Executive shall be
deemed, where appropriate, to refer to Executive's beneficiary, estate or other
legal representative.
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15. Miscellaneous. All section headings used in this Agreement are for
convenience only. This Agreement may be executed in counterparts, each of which
is an original. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for any of the other counterparts.
16. Withholding. All payments under this Agreement shall be made
subject to applicable tax withholding, and the Company shall withhold from any
payments under this Agreement all federal, state and local taxes as the Company
is required to withhold pursuant to any law or governmental rule or regulation.
Except as specifically provided otherwise in this Agreement, Executive shall
bear all expense of, and be solely responsible for, all federal, state and local
taxes due with respect to any payment received under this Agreement.
17. Indemnification.
(a) If Executive is made a party or is threatened to be made a party to
or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "proceeding"), by reason of the fact that he
is or was an employee (which term includes officer, director, agent and any
other capacity) of the Company or is or was serving at the request of the
Company as an employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as an employee or agent or in any other capacity while
serving as an employee or agent, Executive shall be indemnified and held
harmless by the Company to the fullest extent authorized by applicable law,
against all expense, liability and loss (including, but not limited to,
attorneys' fees, judgments, fines, ERISA excise taxes and penalties and amount
paid or to be paid in settlement) incurred or suffered by Executive in
connection therewith and such indemnification shall continue as to the Executive
after he has ceased to be a director, officer, employee or agent and shall inure
to the benefit of Executive's heir, executors and administrators; provided,
however, that the Company shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
Executive (other than a proceeding to enforce this Section 17) only if such
proceeding (or part thereof) was authorized directly or indirectly by the Board.
The right to indemnification conferred in this Section shall be a contract right
and shall include the right to be, promptly upon request, paid by the Company
the expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that if the Business Corporation Law of the
Commonwealth of Pennsylvania requires the payment of such expenses incurred by
an employee in his capacity as an employee (and not in any other capacity in
which service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, payment shall be made only upon
delivery to the Company of an undertaking, by or on behalf of Executive, to
repay all amounts so advanced if it shall ultimately be determined that such
employee is not entitled to be indemnified under this Section or otherwise.
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(b) The indemnification provided by this Section shall not be limited
or exclude any rights, indemnities or limitations of liability to which
Executive may be entitled, whether as a matter of law, under the Certificate of
Incorporation, By-laws of the Company, by agreement, vote of the stockholders or
disinterested directors of the Company or otherwise.
(c) Executive, in seeking indemnification under this Agreement (an
"Indemnitee"), shall give the other party or parties (the "Indemnitor") prompt
written notice of any claim, suit or demand that the Indemnitee believes will
give rise to indemnification under this Agreement; provided, however, that the
failure to give such notice shall not affect the liability of the Indemnitor
under this Agreement unless the failure to give such notice materially and
adversely affects the ability of the Indemnitor to defend itself against or to
cure or mitigate the damages. Except as hereinafter provided, the Indemnitor
shall have the right (without prejudice to the right of the Indemnitee to
participate at its expense through counsel of its own choosing) to defend and to
direct the defense against any such claim, suit or demand, at the Indemnitor's
expense and with counsel chosen jointly by Indemnitor and Indemnitee, and the
right to settle or compromise any such claim, suit or demand; provided, however,
that the Indemnitor shall not, with the Indemnitee's written consent, which
shall not be unreasonably withheld, settle or compromise any claim or consent to
any entry of judgment. The Indemnitee shall, at the Indemnitor's expense,
cooperate in the defense of any such claim, suit or demand. If the Indemnitor,
within a reasonable time after notice of a claim fails to defend the Indemnitee,
the Indemnitee shall be entitled to undertake the defense, compromise or
settlement or such claim at the expense of and for the account and risk of the
Indemnitor.
(d) Executive shall be covered during the entire term of this Agreement
and thereafter by Officer and Director liability insurance in amounts and on
terms similar to that afforded to other executive and/or directors of the
Company or its affiliates, which such insurance shall be paid by the Company.
18. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of Delaware without giving effect to any conflict of
laws provisions.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.
ATLAS AMERICA, INC.
By: ________________________________
Name: ______________________________
Title: _____________________________
_____________________________________
Executive
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EXHIBIT A
Separation of Employment Agreement and General Release
THIS SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE (the
"Agreement") is made as of this ___ day of __________, ____, by and between
ATLAS AMERICA, INC. (the "Company") and _______________ ("Executive").
WHEREAS, Executive formerly was employed by the Company as ____________
pursuant to the terms of the Employment Agreement, dated _______ __, 2004, (the
"Employment Agreement");
WHEREAS, the Employment Agreement provides for certain benefits in the
event that Executive's employment is terminated on account of a reason set forth
in the Employment Agreement;
WHEREAS, Executive and the Company mutually desire to terminate
Executive's employment on an amicable basis, such termination to be effective
_________ ____, ____ ("Date of Resignation"); and
WHEREAS, in connection with the termination of Executive's employment,
the parties have agreed to a separation package and the resolution of any and
all disputes between them.
NOW, THEREFORE, IT IS HEREBY AGREED by and between Executive and the
Company as follows:
1. (a) Executive, for and in consideration of the commitments of the
Company as set forth in the Employment Agreement, and intending to be legally
bound, does hereby REMISE, RELEASE AND FOREVER DISCHARGE the Company, its
affiliates, subsidiaries and parents, and its officers, directors, employees,
and agents, and its and their respective successors and assigns, heirs,
executors, and administrators (collectively, "Releasees") from all causes of
action, suits, debts, claims and demands whatsoever in law or in equity
("Claims"), which Claims related to Executive's employment with the Company and
which Claims Executive ever had, now has, or hereafter may have, whether known
or unknown, or which his heirs, executors, or administrators may have, by reason
of any matter, cause or thing whatsoever, from the beginning of his employment
to the date of this Agreement. Company, for itself and its successors and
assigns, and any party claiming by, through or under the Company, its successors
and assigns, does hereby REMISE, RELEASE AND FOREVER DISCHARGE Executive for any
and all Claims that Company ever had, now has, or hereafter may have against
Executive, whether known or unknown, by reason of any matter, cause or thing
whatsoever, from the beginning of Executive's employment to the date of this
Agreement. This Agreement is effective without regard to the legal nature of the
claims raised and without regard to whether any such claims are based upon tort,
equity, implied or express contract or discrimination of any sort. The forgoing
releases do not apply to Executive's and Company's obligations under this
Agreement and any continuing obligations under the Employment Agreements.
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(b) To the fullest extent permitted by law, Executive
represents and affirms that (i) [other than _______,] he has not filed or caused
to be filed on his behalf any claim for relief against the Company or any
Releasee and, to the best of his knowledge and belief, no outstanding claims for
relief have been filed or asserted against the Company or any Releasee on his
behalf; and (ii) [other than _______,] he has not reported any improper,
unethical or illegal conduct or activities to any supervisor, manager,
department head, human resources representative, agent or other representative
of the Company, to any member of the Company's legal or compliance departments,
or to the ethics hotline, and has no knowledge of any such improper, unethical
or illegal conduct or activities; and (iii) he will not file, commence,
prosecute or participate in any judicial or arbitral action or proceeding
against the Company or any Releasee based upon or arising out of any act,
omission, transaction, occurrence, contract, claim or event existing or
occurring on or before the date of this Agreement.
2. Executive agrees that he will not file, charge, claim, sue or cause
or permit to be filed, charged or claimed, any civil action, suit or legal
proceeding seeking equitable or monetary relief (including damages, injunctive,
declaratory, monetary or other relief) for himself involving any matter released
in paragraph 1. In the event that suit is filed in breach of this covenant not
to sue, it is expressly understood and agreed that this covenant shall
constitute a complete defense to any such suit. In the event any Releasee is
required to institute litigation to enforce the terms of this paragraph,
Releasees shall be entitled to recover reasonable costs and attorneys' fees
incurred in such enforcement. Executive further agrees and covenants that should
any person organization, or other entity file, charge, claim, sue, or cause or
permit to be filed any civil action, suit or legal proceeding involving any
matter occurring at any time in the past, Executive will not seek or accept
personal equitable or monetary relief in such civil action, suit or legal
proceeding.
3. Executive further agrees and recognizes that he has permanently and
irrevocably severed his employment relationship with the Company and that the
Company has no obligation to employ him in the future.
4. Executive further agrees that he will not disparage or subvert the
Company, or make any statement reflecting negatively on the Company, its
affiliated corporations or entities, or any of their officers, directors,
employees, agents or representatives, including, but not limited to, any matters
relating to the operation or management of the Company, Executive's employment
and the termination of his employment, irrespective of the truthfulness or
falsity of such statement.
5. Executive understands and agrees that the payments, benefits and
agreements provided in this Agreement and in the Employment Agreement are being
provided to him in consideration for his acceptance and execution of, and in
reliance upon his representations in, this Agreement. Executive acknowledges
that if he had not executed this Agreement containing a release of all claims
against the Company, he would only have been entitled to the payments provided
in the Company's standard severance pay plan for employees.
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6. Executive represents that, to the best of his knowledge, he does not
presently have in his possession any records and business documents, whether on
computer or hard copy, and other materials (including but not limited to
computer disks and tapes, computer programs and software, office keys,
correspondence, files, customer lists, technical information, customer
information, pricing information, business strategies and plans, sales records
and all copies thereof) (collectively, the "Corporate Records") provided by the
Company and/or its predecessors, subsidiaries or affiliates or obtained as a
result of his prior employment with the Company and/or its predecessors,
subsidiaries or affiliates, or created by Executive while employed by or
rendering services to the Company and/or its predecessors, subsidiaries or
affiliates. Executive acknowledges that all such Corporate Records are the
property of the Company.
7. Nothing in this Agreement shall prohibit or restrict Executive from:
(i) making any disclosure of information required by law; (ii) providing
information to, or testifying or otherwise assisting in any investigation or
proceeding brought by, any federal regulatory or law enforcement agency or
legislative body, any self-regulatory organization, or the Company's; or (iii)
filing, testifying, participating in or otherwise assisting in a proceeding
relating to an alleged violation of any federal, state or municipal law relating
to fraud, or any rule or regulation of the Securities and Exchange Commission or
any self-regulatory organization.
8. The parties agree and acknowledge that the agreement by the Company
described herein, and the settlement and termination of any asserted or
unasserted claims against the Releasees, are not and shall not be construed to
be an admission of any violation of any federal, state or local statute or
regulation, or of any duty owed by any of the Releasees to Executive.
9. This Agreement and the obligations of the parties hereunder shall be
construed, interpreted and enforced in accordance with the laws of the State of
Delaware.
10. Executive certifies and acknowledges as follows:
(a) That he has read the terms of this Agreement, and that he
understands its terms and effects, including the fact that he has agreed to
RELEASE AND FOREVER DISCHARGE the Company and each and everyone of its
affiliated entities from any legal action arising out of his employment
relationship with the Company and the termination of that employment
relationship;
(b) That he has signed this Agreement voluntarily and
knowingly in exchange for the consideration described herein, which he
acknowledges is adequate and satisfactory to him and which he acknowledges is in
addition to any other benefits to which he is otherwise entitled;
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(c) That he has been and is hereby advised in writing to
consult with an attorney prior to signing this Agreement;
(d) That he does not waive rights or claims that may arise
after the date this Agreement is executed;
(e) That the Company has provided him with a period of fifteen
days within which to consider this Agreement, and that Executive has signed on
the date indicated below after concluding that this Agreement is satisfactory to
him; and
(f) Executive acknowledges that this Agreement may be revoked
by him within seven days after execution, and it shall not become effective
until the expiration of such seven day revocation period. In the event of a
timely revocation by Executive, this Agreement will be deemed null and void and
the Company will have no obligations hereunder.
Intending to be legally bound hereby, Executive and the Company
executed the foregoing Confidential Separation Agreement and General Release
this ______ day of _______, ____.
_____________________________ Witness:________________________
[Executive]
ATLAS AMERICA, INC.
By:___________________________ Witness:________________________
Name:________________________
Title:_________________________
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