EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the
“Agreement”) is dated as of January 15, 2010 (the “Effective Date”) and entered
into between Cross Canyon Energy Corp., a Nevada corporation having its
principal place of business at 0000 Xxxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, XX
00000 (the "Company"), and Xxxx X. Xxxxx, an individual residing in the State of
Texas ("Executive"). The Company and Executive are referred to
individually herein as a “Party” and collectively as the “Parties.”
WHEREAS, Executive presently
serves as the Company’s Chief Financial Officer pursuant to an Employment
Agreement dated as of May 22, 2008 (the “Prior Agreement”);
and
WHEREAS, the Parties wish to
terminate the Prior Agreement in its entirety and continue Executive’s
employment with the Company pursuant to the terms and conditions of this
Agreement, which shall completely supersede the Prior Agreement;
and
WHEREAS, the Company desires
to continue to employ Executive and Executive desires to continue to be employed
by the Company subject to the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in
consideration of the mutual covenants and agreements set forth herein, and for
other good and valuable consideration, the Parties agree as
follows:
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(a) As
consideration for Executive entering into this Agreement and agreeing to abide
by the terms hereof, the Company has agreed to pay to Executive a one-time
retention bonus in the amount of $95,000, minus all applicable withholdings and
deductions (the “Retention Bonus”). Such Retention Bonus shall be deemed earned
as of the Effective Date and shall be payable to Executive in full, on or before
the later of (x) February 1, 2010 and (y) the date that a recapitalization of
the Company is consummated.
(b) If
during the Term of this Agreement or within three (3) months after the
termination of Executive’s employment under this Agreement, the Company is sold
or its existing assets are sold in whole or in part (whether in one or more
transactions), then upon the closing of such sale transaction, Executive shall
be entitled to receive a bonus (“Sales Bonus”) as follows:
Gross Proceeds of
Sale
|
Sales Bonus Payable to
Executive
|
$15
million - $23.99 million
|
$142,500
|
$24
million - $29.99 million
|
$190,000
|
$30
million - $35.99 million
|
$285,000
|
$36
million or greater
|
$380,000
|
Similarly, if during the Term of this Agreement and continuing for a period of three months thereafter, the Company enters into a definitive agreement to sell the Company or its assets, then upon such sale (regardless of when such sale occurs), a Sales Bonus shall be due and payable to Executive pursuant to the schedule set forth above. Any Sales Bonus earned hereunder shall be payable to Executive on the date of closing of any sales transaction directly from the proceeds of any such sales transaction and shall be subject to such withholdings and deductions by the Company as are required to be made pursuant to law, government regulations or order. In the event that the Company acquires a material amount of additional assets after the date hereof, then the Company and the Executive shall cooperate to determine a mutually acceptable bonus program with respect to the sale of such assets.
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13. Resignation
for Good Reason: If Executive
resigns for “Good Reason” (as defined below), then such a resignation shall be
treated hereunder as if it were a “Termination Without Cause,” as defined in
Section 14 below. “Good Reason” means the occurrence of any of the
following events: (i) a material diminution by the Company of Executive’s
responsibilities, duties, or authority in comparison with the responsibilities,
duties and authority held during the six month period immediately preceding such
diminution, which such diminution shall include but not be limited to, his no
longer serving as Executive Vice President of Finance and Chief Financial
Officer of the Company (ii) a material diminution in Executive’s base
compensation; or (iii) the involuntary, material relocation of the geographic
location of Executive’s principal place of employment, which shall exist if
Executive is required to relocate such principal place of employment to a
location more than 50 miles from downtown Houston,
Texas. Notwithstanding the foregoing, or any other provision in this
Agreement to the contrary, any assertion by Executive of a termination for “Good
Reason” shall not be effective unless all of the following conditions are
satisfied: (1) the condition arising in Sections 13(i), (ii) or (iii) above must
have arisen without Executive’s consent; (2) Executive must provide written
notice to the Company of such condition within twenty (20) days of the initial
existence of the condition; (3) the condition specified in such notice must
remain uncorrected for thirty (30) days after receipt of such notice by the
Company; and (4) the date of Executive’s termination of employment must occur
within sixty (60) days after the initial existence of the condition specified in
such notice.
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(a) the
breach by Executive, in any material respect, of this Agreement (including,
without limitation, the refusal or other failure by Executive to perform any of
Executive’s duties hereunder other than a failure to perform resulting from
death or Disability) and failure by Executive to cure such breach within ten
(10) days of written notice thereof from the Company;
(b) the
commission by Executive of any act of dishonesty, fraud, material
misrepresentation or moral turpitude in connection with his employment,
including, but not limited to, misappropriation or embezzlement of any funds of
the Company or any of its affiliates;
(c) the
commission by Executive of any (1) willful misconduct or gross negligence, or
(2) intentional act having the effect of, or that may have the effect of,
injuring the reputation, business or business relationships of the Company or
any of its affiliates, and which intentional act the Board deems to not be in
the best interests of the Company;
(d) the
entering by Executive of a plea of guilty or nolo contendere to, or the
conviction of Executive for, a crime (other than a routine traffic
offense);
(e) Executive’s
abuse of alcohol, prescription drugs or controlled substances to a degree which
interferes with his performance on behalf of the Company;
(f) Executive’s
deliberate disregard of any lawful material rule or policy of the Company or
order of the Company’s Board of Directors and failure to cure the same within
ten (10) days of written notice thereof from the Company; or
(g) Executive’s
excessive absenteeism other than for reasons of illness, which such absenteeism
is not cured after written notice from the Company with respect
thereto.
If
Executive is terminated for any of the causes referred to in the above
sub-paragraphs (a) through (g), all obligations of the Company under this
Agreement shall automatically cease and Executive shall only be entitled to
receive Executive’s then applicable Base Salary through the date of termination,
any business expenses or fringe benefits otherwise due to Executive, and any
Retention Bonus and/or Sales Bonus earned by Executive and not yet
paid. Executive shall not be entitled to any other salary, payments
or benefits otherwise payable under this Agreement, except as otherwise required
by law.
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(a) The
Parties agree to the non-solicitation and non-competiton provisions of this
Section 18 in consideration for the Confidential Information provided to
Executive pursuant to Section 19 below, to protect the trade secrets and other
Confidential Information of the Company and as an express inducement for the
Company to enter into this Agreement. During the Term, and for one
(1) year thereafter, Executive expressly agrees that Executive will not,
directly or indirectly:
(i) for
his own account or on behalf of any other person or as an employee, consultant,
manager, agent, representative, broker, stockholder, director or officer of a
corporation, company, individual, investor, owner, lender, partner, joint
venturer, or otherwise engage in any business which is then engaged in the
exploration, drilling or production of natural gas or oil, within any 5-mile
radius of any property in which the Company has or had an ownership, leasehold
or participation interest during the Term of this Agreement;
(ii) solicit,
entice or induce any Customer (as defined below) of the Company to cease or
limit its business with the Company (except if and to the extent directed to do
so by the Board of Directors of the Company), or to become a customer, supplier,
vendor or client of any other person (including, without limitation, Executive,
individually) or entity engaged in any activity or business competitive with the
Company; and
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(iii) engage
in any act or practice the purpose of which is to evade the provisions of this
covenant not to solicit or not to compete or to commit any act which adversely
affects the business of the Company.
For
purposes of this Agreement, a “Customer” of the Company shall mean any person or
entity, who or which is, or was at any time within the prior one year period, a
purchaser of goods or services from the Company, a landlord, sublandlord,
licensor, licensee or supplier of (or prospective purchaser, landlord,
sublandlord, licensor, licensee or supplier, provided the Company was in active
discussions with such party prior to the termination of Executive’s employment),
to or from the Company, as the case may be.
(b) Executive
expressly acknowledges and agrees that the covenants contained in this Section
18 are essential elements of this Agreement and that, but for the agreement of
Executive to comply with such covenants, the Company would not have agreed to
enter into this Agreement and would not have agreed to the provisions of Section
19. Executive acknowledges that the provisions of this Section 18 are
reasonable and necessary for the protection of the Company and that enforcement
of the provisions of this Section 18 shall not result in an unreasonable
deprivation of the right of Executive to earn a living. The existence
of any claim or cause of action of Executive against the Company, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of such covenants. The Parties expressly
agree that the restrictions set forth in this Agreement are reasonable and no
greater than necessary to protect the Company’s legitimate business
interests. Nonetheless, in the event a court of competent
jurisdiction determines that the provisions of this Section 18 are excessively
broad as to duration, geographical scope or activity, it is expressly agreed
that Section 18 shall be construed so that the remaining provisions shall not be
affected, but shall remain in full force and effect, and any such overbroad
provisions shall be deemed, without further action on the part of any person, to
be modified, amended and/or limited, to the extent necessary to render the same
valid and enforceable in such jurisdiction.
(a) The
Company will disclose to Executive, and place Executive in a position to have
access to or develop, Confidential Information (as defined below) of the
Company. Executive acknowledges and agrees that Executive’s services
for the Company shall bring Executive into contact with sensitive, secret and
non-public information relating to the Company, its successors, subsidiaries,
assigns, officers, employees, executives, associated entities and/or agents
including, but not limited to (i) information concerning the objectives, plans,
strategies, commitments, contracts, leases, operations, employees, executives,
methods, market investigations, surveys, research, records, costs and prices of
the Company and/or the Company’s subsidiaries or associated entities, (ii)
information concerning the identities, objectives, plans, preferences, needs,
requests, specifications, commitments, contracts, operations, methods and
records of the Company’s and/or its subsidiaries’ or associated entities’
lenders, prospective lenders, investors, owners and/or prospective owners, and
(iii) any and all information, trade secrets or non-public ideas that give the
Company or its subsidiaries or associated entities the opportunity to obtain an
advantage over such competitors of the Company or of such subsidiaries or
associated entities that do not know or use such information, trade secrets or
ideas (the “Confidential Information”).
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(b) Executive
further understands and acknowledges that Confidential Information includes not
only recorded or written information, but also information that Executive can
recall or reconstruct from Executive’s memory.
(c) Executive
agrees that he will, at all times, faithfully hold all such Confidential
Information in the strictest of confidence and will, at all times, use his best
efforts and highest diligence to keep such Confidential Information secret, to
guard against its disclosure, and never, directly or indirectly, to use or
disclose or divulge any such Confidential Information to any person, company,
firm or other entity, or to use the same, except that (i) Executive may use
Confidential Information as necessary to perform his duties of employment with
the Company, (ii) Executive may disclose Confidential Information to those
within the Company who have a need to know it in the performance of their duties
for the Company, (iii) Executive may disclose Confidential Information to
parties outside the Company when, as and if he is expressly directed to do so by
Executive’s supervisors within the Company, and (iv) Executive may disclose
Confidential Information as expressly directed by judicial process, provided
that Executive has promptly, and prior to making such disclosure, provided a
copy of such judicial process to the Company and provided the Company with
sufficient opportunity to intervene in order to oppose such
disclosure.
(d) Notwithstanding
the foregoing, after any termination or resignation of Executive from his
employment with the Company, Confidential Information shall not include, and
Executive shall not be restricted from divulging or using, any information which
Executive can demonstrate (i) is or becomes generally available to the public
other than as a result of a disclosure by Executive, (ii) was available to
Executive on a non-confidential basis prior to its disclosure to Executive by
the Company or any of its subsidiaries or associated entities, or (iii) becomes
available to Executive on a non-confidential basis from a source other than the
Company or any of its subsidiaries or associated entities, provided, however, that such
source was not bound by a confidentiality agreement with the Company or any of
its subsidiaries or associated entities, or was not otherwise prohibited from
transmitting such information to Executive.
(e) Executive
agrees that upon any termination, resignation or expiration of his employment
with the Company, however caused, Executive shall deliver to the Company all
writings, documents, recordings, computer discs and other media of recordation
or storage in his possession, custody or control containing any Confidential
Information (including, without limitation, all duplicates and copies), shall
relinquish access to any computer maintained by or for the benefit of the
Company or any of its subsidiaries or associated entities, and shall return all
such Confidential Information (in whatever form, including electronic data) to
the Company and not retain any copies of such Confidential
Informaiton. To ensure compliance with this Agreement, at the time of
such termination, resignation or expiration, Executive shall provide the Company
with a sworn statement, duly notarized, that Executive has performed each and
every agreement and obligation contained or referred to in this
Section.
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28. Governing
Law; Construction: Any and all differences and disputes of
whatever nature arising out of or relating to this Agreement (including, without
limitation, the negotiation, execution, performance or termination of this
Agreement) shall be governed by the laws of the State of Texas applicable to
contracts made, negotiated and to be performed entirely in such State without
giving effect to its principles of conflicts of laws. With respect to
all such differences and disputes, the parties agree and consent to be subject
to the exclusive jurisdiction of the state and federal courts located in Xxxxxx
County in the State of Texas and consent to the exclusive venue of such
courts.
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|
(a)
|
if to the Company, to: |
0000 Xxxxxxxxxxx Xxxxx, Xxxxx
000
Xxxxxx, Xxxxx 00000
|
(b)
|
if
to Executive, to his home address on file with the
Company,
|
The
Parties may change their designated address and information for purposes of
notices upon written notice to the other Party.
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[Remainder
of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the
parties have signed this Agreement as of the date first above
written.
Company: | CROSS CANYON ENERGY CORP. | ||
By:
|
|||
Name: | Xxxxxx X. Xxxx | ||
Title: | President and Chief Executive Officer | ||
Executive: | XXXX X. XXXXX | ||
|
|||
Xxxx X. Xxxxx | |||
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Exhibit
A
For the
purposes of this Agreement, whenever the term “Disability” is not defined in a
Disability Plan that the Company may maintain for the benefit of its senior
officers, that term shall mean that, for a period of “120 continuous days”,
Executive is “limited” from performing the “material and substantial duties” of
his “regular occupation” due to his “sickness” or “injury.”
For
purposes of this definition:
“120
continuous days” shall mean 120 days of sickness or injury which meets all of
the other criteria for a Disability as defined herein, with no lapse of greater
than 30 days (consecutively or in the aggregate);
“limited”
from performing a duty or function means that Executive is unable to perform
such duty or function;
“material
and substantial duties” means duties that are normally required for the
performance of Executive’s “regular occupation” and cannot be reasonably omitted
or modified;
“regular
occupation” means all of the functions that Executive was routinely performing
while he was actively employed by the Company pursuant to this Agreement and
prior to the onset of the condition or conditions that resulted in the Company’s
decision to terminate Executive’s employment for reasons related to
Disability;
“sickness”
means any illness or disease that renders Executive incapable of performing
material and substantial duties of his employment under the Employment
Agreement; and
“injury”
means a bodily injury that is the direct result of an accident and not related
to any other cause.
Exhibit
B
For the
purposes of this Employment Agreement, the term “Change of Control” shall mean:
(i) a sale, transfer, or other disposition through a single transaction or a
series of transactions of all or substantially all of the assets of the Company
to another entity other than an affiliate of the Company; or (ii) any
consolidation or merger of the Company with or into another entity, unless
immediately after the consolidation or merger the holders of the common stock of
the Company immediately prior to the consolidation or merger are the beneficial
owners (within the meaning of Rule 13d-3 promulgated under the Securities and
Exchange Act of 1934, as amended) of securities of the surviving corporation
representing at least fifty (50%) percent of the combined voting power of the
surviving corporation’s then outstanding securities. Notwithstanding
the previous sentence, a Change of Control will be deemed to have occurred if
50% or more of the fully diluted voting shares transfer to a single entity other
than an affiliate fo the Company or a group of shareholders other than
affiliates of the Company that act as a single entity for voting purposes,
within a twelve month period, in any manner other than a primary or secondary
public stock offering.
Exhibit
C
RELEASE
AGREEMENT
This
Release Agreement (this “Agreement”)
constitutes the release referred to in that certain Employment Agreement (the
“Employment
Agreement”) dated as of January __, 2010, by and among Xxxx X. Xxxxx
(“Employee”)
and Cross Canyon Energy Corp. (the “Company”).
(a) For
good and valuable consideration, including the Company’s provision of certain
payments and benefits to Employee in accordance with Section 14 or 16 of the
Employment Agreement, Employee hereby releases, discharges and forever acquits
the Company, its affiliates and subsidiaries and the past, present and future
stockholders, members, partners, directors, officers, managers, employees,
agents, attorneys, heirs, legal representatives, successors and assigns of the
foregoing, in their personal and representative capacities (collectively, the
“Company
Parties”), from liability for, and hereby waives, any and all claims,
damages, or causes of action of any kind related to Employee’s employment with
any Company Party, the termination of such employment, and any other acts or
omissions related to any matter on or prior to the date of this Agreement
including without limitation any alleged violation through the date of this
Agreement of: (i) the Age Discrimination in Employment Act of 1967,
as amended; (ii) Title VII of the Civil Rights Act of 1964, as amended; (iii)
the Civil Rights Act of 1991; (iv) Section 1981 through 1988 of Title 42 of the
United States Code, as amended; (v) Employee Retirement Income Security Act of
1974, as amended (“ERISA”); (vi) the Immigration Reform Control Act, as amended;
(vii) the Americans with Disabilities Act of 1990, as amended; (viii) the
National Labor Relations Act, as amended; (ix) the Occupational Safety and
Health Act, as amended; (x) the Family and Medical Leave Act of 1993; (xi) any
state anti-discrimination law; (xii) any state wage and hour law; (xiii) any
other local, state or federal law, regulation or ordinance; (xiv) any public
policy, contract, tort, or common law claim; (xv) any allegation for costs,
fees, or other expenses including attorneys’ fees incurred in these matters;
(xvi) any and all rights, benefits or claims Employee may have under any
employment contract, incentive compensation plan or stock option plan with any
Company Party or to any ownership interest in any Company Party except as
expressly provided in the Employment Agreement and any stock option or other
equity compensation agreement between Employee and the Company and (xvii) any
claim for compensation or benefits of any kind not expressly set forth in the
Employment Agreement or any such stock option or other equity compensation
agreement (collectively, the “Released
Claims”). In no event shall the Released Claims include (a)
any claim which arises after the date of this Agreement, (b) any claim to vested
benefits under an employee benefit plan (withint the meaning of Section 3(3) of
ERISA) , or (c) any claims for contractual payments under the Employment
Agreement. This Agreement is not intended to indicate that any such
claims exist or that, if they do exist, they are meritorious. Rather,
Employee is simply agreeing that, in exchange for the consideration recited in
the first sentence of this paragraph, any and all potential claims of this
nature that Employee may have against the Company Parties, regardless of whether
they actually exist, are expressly settled, compromised and
waived. By signing this Agreement, Employee is bound by
it. Anyone who succeeds to Employee’s rights and responsibilities,
such as heirs or the executor of Employee’s estate, is also bound by this
Agreement. This release also applies to any claims brought by any
person or agency or class action under which Employee may have a right or
benefit. Notwithstanding this release of liability, nothing in this
Agreement prevents Employee from filing any non-legally waivable claim
(including a challenge to the validity of this Agreement) with the Equal
Employment Opportunity Commission (“EEOC”) or comparable state or local agency
or participating in any investigation or proceeding conducted by the EEOC or
comparable state or local agency; however, Employee understands and agrees that
Employee is waiving any and all rights to recover any monetary or personal
relief or recovery as a result of such EEOC or comparable state or local agency
proceeding or subsequent legal actions. THIS RELEASE INCLUDES MATTERS
ATTRIBUTABLE TO THE SOLE OR PARTIAL NEGLIGENCE (WHETHER GROSS OR SIMPLE) OR
OTHER FAULT, INCLUDING STRICT LIABILITY, OF ANY OF THE COMPANY
PARTIES.
(b) Employee
agrees not to bring or join any lawsuit against any of the Company Parties in
any court relating to any of the Released Claims. Employee represents
that Employee has not brought or joined any lawsuit or filed any charge or claim
against any of the Company Parties in any court or before any government agency
and has made no assignment of any rights Employee has asserted or may have
against any of the Company Parties to any person or entity, in each case, with
respect to any Released Claims.
(c) By
executing and delivering this Agreement, Employee acknowledges
that:
|
(i)
|
Employee has carefully read this Agreement; |
|
(ii)
|
Employee
has had at least [twenty-one (21)] [forty-five (45)] days to consider this
Agreement before the execution and delivery hereof to the Company [Add if
45 days applies: , and Employee acknowledges that attached to this
Agreement are (1) a list of the positions and ages of those employees
selected for termination (or participation in the exit incentive or other
employment termination program); (2) a list of the ages of those employees
not selected for termination (or participation in such program); and (3)
information about the unit affected by the employment termination program
of which Employee’s termination was a part, including any eligibility
factors for such program and any time limits applicable to such
program];
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|
(iii)
|
Employee
has been and hereby is advised in writing that Employee may, at Employee’s
option, discuss this Agreement with an attorney of Employee’s choice and
that Employee has had adequate opportunity to do so;
and
|
|
(iv)
|
Employee
fully understands the final and binding effect of this Agreement; the only
promises made to Employee to sign this Agreement are those stated in the
Employment Agreement and herein; and Employee is signing this Agreement
voluntarily and of Employee’s own free will, and that Employee understands
and agrees to each of the terms of this
Agreement.
|
Notwithstanding
the initial effectiveness of this Agreement, Employee may revoke the delivery
(and therefore the effectiveness) of this Agreement within the seven day period
beginning on the date Employee delivers this Agreement to the Company (such
seven day period being referred to herein as the “Release
Revocation Period”). To be effective, such revocation must be
in writing signed by Employee and must be delivered to the Chairman of the Board
of Directors of the Company before 11:59 p.m., Houston, Texas time, on the last
day of the Release Revocation Period. If an effective revocation is
delivered in the foregoing manner and timeframe, this Agreement shall be of no
force or effect and shall be null and void ab
initio. No consideration shall be paid if this Agreement is
revoked by Employee in the foregoing manner.
Executed
on this ___________ day of _____________, _______.
_________________________________
Xxxx X.
Xxxxx