EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT ("Agreement") is executed as of the 1st day of
May, 2005 ("Effective Date") between PETROSEARCH ENERGY CORPORATION, a Nevada
corporation ("Company") and XXXX X. XXXXX ("EMPLOYEE").
RECITALS:
A. Company has been capitalized under the laws of the State of Nevada
in order to acquire and develop key oil and gas development prospects across the
United States.
B. Company desires to engage the services of Employee on an exclusive
basis as AN EXECUTIVE OFFICER for the Company.
TERMS OF AGREEMENT:
NOW, THEREFORE, FOR VALUE RECEIVED, and in consideration of the mutual
covenants contained herein, Company and Employee agree as follows:
1. ENGAGEMENT/TERM. Company shall employ Employee as Vice
---------------
President of Finance for a period of two (2) years from the Effective Date,
subject to the termination provisions herein (the "Term"), and Employee hereby
agrees to be engaged by Company for the Term in such capacity. This Agreement
shall automatically expire at the end of the indicated term unless extended in
writing by Company. In the absence of such an extension or notice of
non-renewal by the Company, this Agreement shall be treated as an agreement from
month-to-month.
2. EXCLUSIVE EMPLOYMENT/OTHER ENGAGEMENTS. Company and Employee
----------------------------------------
hereby stipulate that this Agreement is exclusive as to Employee, and Employee
shall not accept or enter into contemporaneous consulting/employment
relationships with third parties. Employee shall dedicate a minimum of forty
(40) hours per week to the tasks associated with the executive position assumed
under this Agreement.
3. COMPENSATION. Employee shall be compensated for his services
------------
as follows:
As compensation for all services rendered by Employee in performance of his
duties or obligations under this Agreement, Company shall pay Employee a base
salary (the "Base Salary") of FIFTEEN THOUSAND AND NO/100 DOLLARS ($15,000.00)
monthly, in semi-monthly installments, during the term of this Agreement. This
compensation may be increased from time to time at the discretion of the CEO.
b. In addition to receiving the Base Salary provided for in
Section 3.a., Employee shall be entitled to receive such other and additional
bonuses from time to time as are authorized by the CEO of the Company at his
sole discretion.
1
c. Employee shall be reimbursed, upon submission of receipts, for
any and all Company related travel away from the his designated office
(Medfield, Massachusetts) including coach airfare, hotel and meals (subject to
the expenditure limitations imposed by Company).
d. Employee shall be promptly reimbursed for all other reasonable
out-of-pocket expenses incurred on behalf of Company which are properly
documented to Company; including, long distance telephone charges on telephones
other than Company's office phones.
e. Beginning with the Effective Date, Employee shall be entitled
during the Term, upon satisfaction of all eligibility requirements, to
participate in all health, dental, disability, life insurance, retirement and
other benefit programs now or hereafter established by Company and shall receive
such other benefits as may be approved from time to time by the CEO.
f. Employee has been issued, as of March 25, 2005 the "Warrant
Effective Date", warrants to purchase FIVE HUNDRED THOUSAND (500,000) shares of
Common Stock, par value $.001, of Company for a purchase price of $1.95 per
share, subject to cashless exercise at Employee's election so long as Employee
resorts to cashless exercise through Company's designated broker in its Warrant
Exercise Policy on file at the Company's offices. The warrants shall be
exercisable by Employee, subject to the following provisions, on or before the
date that is four (4) years from November 15, 2004; provided, however, that such
warrants shall: (i) be exercisable immediately as to 50% of the available
Common shares on the Warrant Effective Date, and 50% on November 15, 2005; and
(ii) be 100% exercisable immediately upon a change of control (as defined in the
Section 8 below) or termination of this Agreement by the Company without "cause"
or by Employee for "good reason", each as defined below. If the Employee is
terminated for Cause prior to the vesting of the warrants, the unvested warrants
are automatically cancelled as of the date of the termination. All amounts paid
to Employee hereunder shall be subject to applicable employee related taxes and
withholdings. The Warrant Agreement shall be the operative document for terms
contained herein in the event of a conflict.
4. DEATH OR DISABILITY. Upon the death or disability of the Employee,
--------------------
this Agreement will automatically terminate, and the Employee or his heirs will
be entitled to six (6) months of compensation as listed above. All of the
Employee's outstanding warrants shall vest immediately upon death or disability,
and will become exercisable upon the date of death or disability, and shall
remain outstanding and exercisable per the terms of the warrant agreement.
5. ACKNOWLEDGMENT OF PENDING LEGISLATIVE CHANGES. Company and Employee
---------------------------------------------
acknowledge and agree that Employee has agreed to accept stock warrant-based
compensation despite pending proposed legislative enactments which create
uncertainty regarding future taxation of such warrant-based compensation
6. DUTIES AND OBLIGATIONS. Employee shall perform such duties and
----------------------
tasks pertaining to Employee's expertise as Company shall from time to time
reasonably determine and specify as well as those duties and tasks customarily
attributable to the assignment assumed as
2
described in paragraph 1 above. Employee, with the CEO's permission, shall be
entitled to perform his services, at his discretion, at locations other than
Company's principal offices. Employee hereby covenants and agrees to perform the
services for which he is hereby retained in good faith and with reasonable
diligence in light of attendant circumstances. The Employee shall be under the
supervision of the CEO and shall comply with such person's directives as to all
duties and tasks to be performed.
7. TERMINATION FOR CAUSE BY COMPANY. This Agreement may be terminated
----------------------------------
for "cause" by Company. For purposes hereof, "cause" shall mean any of the
following events:
a. Any embezzlement or wrongful diversion of funds of Company or
any affiliate of Company by Employee;
b. Malfeasance or insubordination by Employee in the conduct of
his duties;
c. Material breach of this Agreement that remains uncured for a
period of at least thirty (30) days following written notice from Company to
Employee of such alleged breach, which written notice describes in reasonable
detail the nature of such alleged breach; or
d. Conviction or the entry of a plea of nolo contendere or
equivalent plea of a felony in a court of competent jurisdiction, or any other
crime or offense involving moral turpitude.
8. TERMINATION FOR GOOD REASON BY EMPLOYEE. This Agreement may be
---------------------------------------------
terminated for "good reason" by Employee giving rise to the severance pay
provisions set forth in paragraph 9 below. For purposes hereof, "good reason"
shall mean only the following events:
a. A material breach of this Agreement by the Company that remains
uncured for a period of at least thirty (30) days following written notice from
Employee to Company of such alleged breach, which written notice describes in
reasonable detail the nature of such alleged breach.
b. A change of control (as defined below) if within forty five
(45) days following the change of control Employee is not offered the renewal of
employment for at least one (1) year beyond the then pending employment term at
the identical monthly salary in effect at the time of the change of control
without a required geographical location from Employee's designated location or
office (unless consented to by Employee); provided, however, that such offer
need not include the same job title or job description as held by Employee at
the time of the change of control, but must be a position commensurate with
Employee's skills and capabilities, and need not contain a new change of control
provision covering subsequent changes of control. A "Change in Control" shall
mean the occurrence during the Term of any of the following events WHICH IS
COUPLED WITH A CHANGE IN THE MAJORITY OF BOARD POSITIONS ON THE BOARD OF
DIRECTORS: (i) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any "Person" (as
the term person is used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934 (the "1934 Act")) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the
0000 Xxx) of 40% or more of the combined voting power of the
3
Company's then outstanding Voting Securities; provided however, that in
determining whether a Change in Control has occurred, Voting Securities which
are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (a) an employee benefit plan (or a
trust forming a part thereof) maintained by (x) the Company or (y) any
corporation or other Person of which a majority of its voting power or its
equity securities or equity interest is owned directly or indirectly by the
Company (a "Subsidiary"), (2) the Company or any Subsidiary, or (3) any Person
in connection with a "Non-Control" Acquisition, (ii) the sale or other
disposition of all or substantially all of the business or assets of the Company
to any person (other than a transfer to a Subsidiary); or (iii) a merger,
consolidation or reorganization involving the Company (other than with a
Subsidiary).
9. SEVERANCE PAY/EFFECT OF TERMINATION WITHOUT CAUSE BY COMPANY OR WITH
--------------------------------------------------------------------
GOOD REASON BY EMPLOYEE. In the event that Company does not renew the contract
------------------------
of employment at the end of any written contract term other than due to
Employee's decline of employment or Employee's acceptance of other employment,
then Employee shall be paid three (3) months severance pay at then current
salary rates. In the event that this Agreement is terminated by Company without
"cause", or in the event that Employee terminates his employment for the "good
reason set forth in paragraph 8a above, then Employee's sole remedy shall be
limited to recovery by Employee from Company of the compensation and
continuation of the benefits described above for the period which is equal to
the portion of the contract Term then remaining on the date of termination, plus
three (3) months. In the event that this Agreement is terminated by Employee
for the reasons described in paragraph 8b above (i.e. a "change in control"
---
which is not accompanied by an appropriate employment offer as described in
---
paragraph 8b above), then Employee shall be entitled to severance benefits equal
to the Employee's salary and existing benefits for a period equal to the full
term of the then existing employment agreement irrespective of the time
remaining under that written agreement (e.g. if the Employee is then under a
---
written 2-year agreement, the severance pay shall be 2 years, irrespective of
the time remaining under the 2-year agreement). If the change in control occurs
during a month-to-month period after the expiration of a written employment
agreement but before renewal, the severance payable shall be salary and existing
benefits equal to a twelve (12) month period. For purposes of determining
whether "vesting" has occurred under the warrant described in paragraph 3.f.
above or any existing benefit plan in which Employee is a participant in
calculating such compensation, a termination without cause or for good reason
shall result in an acceleration of the vesting conditions such that the benefits
shall be deemed fully vested as of the date of termination. The severance pay
provided for in this Agreement shall be in lieu of any other severance or
termination pay to which the Employee may be entitled under any Company
severance or termination plan, program, practice or arrangement. The Employee's
entitlement to any other compensation or benefits shall be determined in
accordance with the Company's employee benefit plans and other applicable
programs, policies and practices then in effect.
10. TIME OF ESSENCE, ATTORNEYS FEES. Time is of the essence with
-----------------------------------
respect to this Agreement and same shall be capable of specific performance
without prejudice to any other rights or remedies under law. If either party
seeks to enforce, in law or in equity (including any arbitration proceeding),
any provision contained herein, then the prevailing party in such proceeding
shall be entitled to attorneys fees, interest and all such other disbursements
and relief provided under law, but shall not be entitled to punitive or
exemplary damages of any kind.
4
11. MODIFICATION OR AMENDMENT. The parties hereto may modify or amend
--------------------------
this Agreement only by written agreement executed and delivered by the
respective parties.
12. BINDING ON HEIRS AND ASSIGNS. This Agreement shall inure to
------------------------------
and be binding upon the undersigned and their respective heirs, representatives,
successors and permitted assigns. This Agreement may not be assigned by either
party without the prior written consent of the other party.
13. COUNTERPARTS. For the convenience of the parties hereto, this
------------
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
14. NO WAIVERS. No waiver of or failure to act upon any of the
-----------
provisions of this Agreement or any right or remedy arising under this Agreement
shall be deemed or shall constitute a waiver of any other provisions, rights or
remedies (whether similar or dissimilar).
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
--------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND SHALL BE PERFORMABLE IN
XXXXXX COUNTY, TEXAS EXCEPT TO THE EXTENT THAT NEVADA CORPORATE LAW CONTROLS THE
MATTERS PERTAINING TO SECURITIES ISSUANCE AND CORPORATE GOVERNANCE BY OFFICERS
AND DIRECTORS.
16. NOTICES. Any notice, request, instruction or other document to
-------
be given hereunder by any party to the other shall be in writing (by FAX, mail,
telegram or courier) and delivered to the parties as follows:
If to Company: Xxxxxxx Xxxx
0000 Xxxxxxx Xxxxx, Xxxxx 000X
Xxxxxxx, Xxxxx 00000
FAX: 000-000-0000
If to Employee: Xxxx Xxxxx
FAX: 000-000-0000
17. ENTIRE CONTRACT/NO THIRD PARTY BENEFICIARIES. This Agreement
------------------------------------------------
constitutes the entire agreement, and supersedes all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof, and is not intended to create any obligations to, or
rights in respect of, any persons other than the parties hereto. There are no
third party beneficiaries of this Agreement.
18. CAPTIONS FOR CONVENIENCE. All captions herein are for convenience
-------------------------
or reference only and do not constitute part of this Agreement and shall not be
deemed to limit or otherwise affect any of the provisions hereof.
5
19. SEVERABILITY. In case any one or more of the provisions contained
------------
in this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or enforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal or enforceable provision had never been
contained herein.
20. BINDING ARBITRATION. ANY CONTROVERSY OR CLAIM ARISING OUT OF OR
--------------------
RELATING TO THIS AGREEMENT, OR THE BREACH THEREOF, SHALL BE SETTLED BY FINAL AND
BINDING ARBITRATION CONDUCTED IN HOUSTON, TEXAS, IN ACCORDANCE WITH THE
COMMERCIAL ARBITRATION RULES ("RULES") OF THE AMERICAN ARBITRATION ASSOCIATION
IN EFFECT AT THE TIME THE CONTROVERSY OR CLAIM ARISES, BUT SAID ARBITRATION NEED
NOT BE ADMINISTERED BY THE AMERICAN ARBITRATION ASSOCIATION. THE ARBITRATOR,
WHICH SHALL BE AGREED UPON BY THE PARTIES, SHALL HAVE JURISDICTION TO DETERMINE
ANY SUCH CLAIM AND MAY GRANT ANY RELIEF AUTHORIZED BY LAW FOR SUCH CLAIM
EXCLUDING CONSEQUENTIAL AND PUNITIVE DAMAGES. ANY SUCH ARBITRATION SHALL BE
CONCLUDED WITHIN 120 DAYS OF INITIATION OF THE ARBITRATION. IN ANY ARBITRATION
UNDER THIS PARAGRAPH, ANY AND ALL RULES OF DISCOVERY SET FORTH IN THE TEXAS
RULES OF CIVIL PROCEDURE SHALL BE APPLICABLE. EACH PARTY TO THE ARBITRATION
SHALL BEAR THE INITIAL FILING FEES AND CHARGES EQUALLY, PROVIDED, HOWEVER, THAT
THE ARBITRATOR SHALL AWARD REIMBURSEMENT OF ALL SUCH COSTS AND FEES TO THE
PREVAILING PARTY AS A PART OF ITS AWARD. THIS PARAGRAPH SHALL LIKEWISE BE
SPECIFICALLY ENFORCEABLE IN A COURT OF COMPETENT JURISDICTION SHOULD THE PARTY
NOT DEMANDING ARBITRATION REFUSE TO PARTICIPATE IN OR COOPERATE WITH THE
ARBITRATION PROCESS.
EXECUTED by the undersigned as of the Effective Date set forth above.
SIGNATURES APPEAR ON FOLLOWING PAGE
6
PETROSEARCH ENERGY CORPORATION
By: /s/ Xxxxxxx Xxxx
----------------------------------------------------
Xxxxxxx Xxxx
/s/ Xxxx X. Xxxxx
-------------------------------------------------------
XXXX X. XXXXX
7
