SEVERANCE AGREEMENT
This Severance Agreement dated December
30, 2009, by and between Pinnacle Resources, Inc., a Wyoming company (the
"Company") and Xxxx X. Xxxxxx (the "Executive").
WHEREAS, the Board of Directors (the
"Board") of the Company (as hereinafter defined) has approved a transaction that
has created the potential for a termination without Cause (as hereinafter
defined) of the Executive and the possibility of a Change in Control (as
hereinafter defined);
WHEREAS, the Board has determined that
the Executive was instrumental in creating value for the shareholders of the
Company during his tenure with the Company and that because of cash flow
constraints the Executive has not received appropriate compensation for his
efforts during his term in office; and
WHEREAS,
the Board has determined that it is essential and in the best interest of the
Company and its stockholders to retain the services of the Executive until such
time as the Company or its newly acquired Iron Eagle Group subsidiary completes
an acquisition, at which time it is likely that a Change in Control
will occur; and
WHEREAS,
in order to induce the Executive to remain in the employ of the Company, in
general, and particularly in the event of a threat or the occurrence of a Change
in Control, the Company desires to enter into this Agreement with the Executive
to provide the Executive with certain benefits in the event his employment is
terminated without Cause or as a result of, or in connection with, a Change in
Control and to provide the Executive with certain benefits that the Board is of
the opinion that the Executive earned but did not receive prior to the date of
this Agreement.
NOW THEREFORE, in consideration of the
mutual covenants herein contained, the parties agree as follows:
1. Position and
Responsibilities.
1.1 The
Executive shall serve as the President of the Company until such time as there
is a Change in Control. The Executive shall devote the necessary attention to
the business and affairs of the Company and shall render such services to the
best of his ability and use his best efforts to promote the interests of the
Company.
2. Employment
Term.
2.1 The
term of employment shall be for a period of one year, commencing with the date
hereof, unless sooner terminated with Cause or as a result of a Change in
Control as provided in this Agreement.
1
2.2 Notwithstanding
the provisions of paragraph 2.1 above, the Company shall have the right to
terminate the Executive's employment for Cause (as defined in paragraph 2.3
below); provided, however, that the Executive shall not be deemed to have been
terminated for Cause unless and until the Board of Directors at a meeting duly
called and held for that purpose shall have determined that the Executive
committed an act falling within the definition of Cause and specifying the basis
for such determination. If the Executive's employment shall be terminated by the
Company for Cause, then the Company shall not be obligated to pay the Executive
compensation as provided hereunder.
2.3 For
purposes of this Agreement the term, "Cause" shall mean the Executive's: (a)
engagement in gross misconduct materially injurious to the Company: (b) knowing
and willful neglect or refusal to attend to the material duties assigned to him
by the Board of Directors of the Company, which is not cured within 30 days
after written notice; (c) intentional misappropriation of property of the
Company to the Executives own use; (d) commission of an act of fraud or
embezzlement; or (e) conviction for a crime (excluding misdemeanors and minor
traffic offenses).
2.4 For
purposes of this Agreement, a "Change in Control" shall mean any of the
following events:
|
|
(a)
|
The
release from escrow of the shares of the Company’s common stock issued to
the shareholders of Iron Eagle Group in connection with the acquisition
of Iron Eagle Group by the Company;
or
|
|
|
(b)
|
The
individuals who, as of the date this Agreement are approved by the Board,
cease for any reason to constitute at least two-thirds of the
Board;
|
2.5 Any
purported termination of the Executive's employment by the Company hereunder
shall be communicated by a Notice of Termination to the Executive in accordance
with paragraph 13. For purposes of this Agreement, a "Notice of Termination"
shall mean a written notice which shall indicate those specific termination
provisions in this Agreement relied upon and which sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provisions so indicated.
3. Severance Compensation Upon
Termination of Employment.
3.1 In
the event that the Executive is terminated without Cause or as a result of a
Change in Control, the Company shall pay to the Executive or his nominee for the
services to be rendered by the Executive hereunder, compensation as
set forth in Section 3.2 below if, as and when the Company sells certain
securities it owns of The Saint Xxxxx Company (such securities in the form of
shares of common stock, together with shares of common stock issuable upon the
conversion of a convertible promissory note from The Saint Xxxxx Company shall
be referred to herein as the “STJC Shares”).
2
3.2 If
the Executive qualifies for compensation as provided in Section 3.1 above, such
compensation shall be paid subject to the following (see Appendix A as a
reference):
|
|
(a)
|
Executive
or his nominee will receive no compensation from the sale of the STJC
Shares at eighty cents ($0.80) per share or
less;
|
|
|
(b)
|
Executive
or his nominee will receive compensation equal to Twenty-Five percent
(25%) of the amount from sales of STJC Shares at prices in excess of $0.80
up to $1.50 per share;
|
|
|
(c)
|
Executive
or his nominee will receive compensation equal to Thirty percent (30%) of
the amount from sales of STJC Shares at prices in excess of $1.50 up to
$3.00 per share: and
|
|
|
(d)
|
Executive
or his nominee will receive compensation equal to Thirty-Five percent
(35%) of the amount from sales of STJC Shares exceeding $3.00 per
share.
|
3.3 Any
compensation paid hereunder shall be payable upon receipt by the Company of the
proceeds from the sale of the STJC Shares, subject to applicable withholding and
other taxes.
3.4 The
Executive agrees that no compensation or remuneration, other than that set forth
on Section 3 hereof, shall be due or payable to the Executive or his nominee,
either for past, present or future services.
3.5 The
Executive shall not be entitled to any compensation if the Board determines that
the Executive is terminated “for Cause”.
4. Death.
4.1 In
the event of the death of the Executive during the Employment Term, the
Employment Term hereunder shall terminate on the date of death of the Executive;
provided, however, that the Company shall (i) pay to the estate of the deceased
Executive Severance Compensation in the event that a Change in Control as
defined in Section 2.4 (a) occurs during the Term of this
Agreement.
5. Arbitration. Any
dispute, controversy or claim arising under or in connection with this
Agreement, or the breach hereof, shall be settled exclusively by arbitration in
accordance with the rules then in effect of the American Arbitration Association
under its Employment Mediation Rules. Judgment upon the award rendered by the
Arbitrator(s) may be entered in any court having jurisdiction thereof. Any
arbitration held pursuant to this Section 8 shall take place in New York. Should
either party hereto, or any heirs, personal representatives, successors or
assigns of either xxxxx hereto, resort to litigation or arbitration to enforce
this Agreement, the party or parties prevailing in such litigation shall be
entitled, in addition to such other relief as may be granted, to recover its or
their reasonable attorney's fees and costs in such litigation or arbitration
from the party or parties against whom enforcement was sought.
3
6. No Third Party
Beneficiaries. This Assignment does not create, and shall not be
construed as creating, any rights enforceable by any person not a party to this
Agreement except as provided in paragraph 9 hereof.
7. Headings. The
headings of the paragraphs hereof are inserted for convenience only and shall
not be deemed to constitute a part hereof nor to affect the meaning
thereof.
8. Interpretation. 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
invalidly, illegality or unenforceability shall not affect any other provisions
of this Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein. If,
moreover, any one or more of the provisions contained in the Agreement shall for
any reason be held to be excessively broad as to duration, geographical scope,
activity or subject, it shall be construed by limiting and reducing it, so as to
be enforceable to the extent compatible with the applicable law as it shall then
appear.
9. Notices. All notices
under this Agreement shall be in writing and shall be deemed to have been given
at the time when delivered personally or by facsimile transmission, sent by
recognized overnight courier service, or mailed by registered or certified mail,
addressed to the address set forth at the end of this Agreement, or to such
changed address as such party may have fixed by notice; provided, however, that
any notice of change of address shall be effective only upon
receipt.
10.
Waivers. If
either party should waive any breach of any provision of this Agreement, he or
it shall not thereby be deemed to have waived any preceding or succeeding breach
of the same or any other provision of this Agreement. No waiver shall be
effective unless it is in writing and signed by an authorized representative of
the waiving party.
11. Complete Agreement;
Amendments. The foregoing is the entire agreement of the
parties with respect to the subject matter hereof and supersedes in its entirety
any letter agreement or other writings by and among the Executive and the
Company. This Agreement may not be amended, supplemented, canceled or discharged
except by written instrument executed by both parties hereto.
12. Governing Law. This
Agreement is to be governed by and construed in accordance with the laws of
Nevada without giving effect to principles of conflicts of law.
[Signatures
on Page Following]
4
IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the date first above written and the parties
acknowledge that this Agreement memorializes their agreement since the effective
date set forth below.
|
PINNCALE
RESOURCES, INC.
|
EXECUTIVE
|
|||
|
By:
|
By:
|
|||
|
Name:
Xxxxx Xxxxxxx
|
Name:
Xxxx X. Xxxxxx
|
|||
|
Title:
Chief Financial Officer
|
Title:
President
|
|||
5
Appendix
A – Severance Schedule
Severance
Payment to Executive or his nominee
|
$0.80
- $1.50
|
$1.50
- $3.00
|
Over
$3.00
|
|||||||||||||||||||||||
|
25%
|
30%
|
35%
|
|||||||||||||||||||||||
|
St. Xxxxx
|
Xxxxxxxxx
|
Total Severance to
|
|||||||||||||||||||||||
|
Sale Price
|
Per Tranche
|
Total Per Share
|
Shares
|
Executive or his nominee
|
|||||||||||||||||||||
|
$
|
6.00
|
$ | 0.18 | $ | 0.45 | $ | 1.05 | $ | 1.68 | 1,880,000 | $ | 3,149,000 | |||||||||||||
|
$
|
5.00
|
$ | 0.18 | $ | 0.45 | $ | 0.70 | $ | 1.33 | 1,880,000 | $ | 2,491,000 | |||||||||||||
|
$
|
4.00
|
$ | 0.18 | $ | 0.45 | $ | 0.35 | $ | 0.98 | 1,880,000 | $ | 1,833,000 | |||||||||||||
|
$
|
3.00
|
$ | 0.18 | $ | 0.45 | $ | 0.00 | $ | 0.63 | 1,880,000 | $ | 1,175,000 | |||||||||||||
|
$
|
2.00
|
$ | 0.18 | $ | 0.15 | $ | 0.00 | $ | 0.33 | 1,880,000 | $ | 611,000 | |||||||||||||
6
