EMPLOYMENT AGREEMENT
This
Employment Agreement ("Agreement") is entered into this 28th day of February,
2005 (the "Effective Date"), between Ness Energy International, Inc., a
Washington corporation ("Ness") (Ness Energy and, to the extent applicable, one
or more of its subsidiaries, being collectively referred to herein
as "Employer"), and Xxxxxxx X Xxxxxxxx, who resides in Weatherford, Texas
("Employee").
RECITALS
WHEREAS,
Employee and Ness entered into that certain Employment Agreement
(the "Original Oral Agreement"); and
WHEREAS,
Employee and Ness Energy desire to amend and restate and place in writing the
Original Agreement; and
WHEREAS,
Employer desires to employ Employee as Chief Executive Officer of Ness Energy
and as an officer and/or director of one or more of
Ness Energy’s subsidiaries, and or affiliates upon the terms and conditions
provided herein; and
WHEREAS,
Employee desires to be so employed.
STATEMENT
OF AGREEMENT
NOW,
THEREFORE, in consideration of the above recitals, and for and in consideration
of the mutual promises set forth below, the parties agree as follows:
1.
Employment. Employer hereby employs Employee as President, and Chief
Executive Officer of Ness Energy, and Employee hereby accepts employment with
Employer
upon
the terms
and conditions herein stated.
2.
Term. Subject to the provisions for termination set forth herein,
this
Agreement shall be for the period commencing on the Effective Date and
ending on
December 31, 2005
(referred
to herein as the "Expiration Date). In the event
Employee shall continue to be employed on the Expiration Date and no
previous
Notice of Termination (as defined in Section 10.4) is effective on that
date,
this Agreement and Employee's employment hereunder shall be automatically
continued
from year to year thereafter until terminated by either party upon not
less than
thirty (30) days written notice to the other party prior to any anniversary
of the Expiration Date.
3. Position and
Duties. Employee shall serve Employer in an executive capacity
as Chief Executive Officer of Ness Energy and as an officer
and/or director of one or more of Ness Energy's
subsidiaries. Employee's
duties shall include, in addition to those enumerated
in the Bylaws of Employer, those duties as may be directed by the Board of
Directors of Ness Energy (the "Board"), including service as an officer
and/or director of one or more of Ness Energy subsidiaries and
affiliates.
4. Extent
of Services. Employee shall devote his best efforts and full business
time (with allowances for vacations and sick leave) and attention to
furthering
the business of Employer,
and shall not during the term of this Agreement
be engaged in other activities which require such substantial services
on the
part of Employee that Employee is unable to perform the duties assigned
to him by
Employer. The foregoing shall not be construed as preventing Employee
from
maintaining or making investments, or engaging in other business, enterprises
or civic, charitable or public service functions, provided such investments,
business or enterprises do not require services on the part of Employee
that would materially impair the performance of his duties under this
Agreement.
5.
Compensation. As his regular compensation for all services rendered
by
Employee under this Agreement to Ness Energy and its subsidiaries and
affiliates,
Employer shall pay Employee
a salary (the "Regular Salary") of not less than
$175,000 per annum, payable in substantially equal semimonthly installments
during the term hereof. It is understood that Employer will review annually
and may, in the discretion of the Board (or any committee thereof), increase
Employee's Regular Salary, in which case the amount of such increased
salary
shall thereafter be deemed to be the amount of Regular Salary contracted
for in
this Agreement for all purposes and, if so increased, the Regular Salary
shall not
thereafter during the term of this Agreement be decreased to less than
$175,000
per annum. All salary and any other current compensation (if any) paid
to
Employee shall be subject to such payroll and withholding deductions as are
required
by the laws of any jurisdiction, federal, state or local, with taxing
authority
with respect to such salary and other compensation, if any. Regular Salary
payments (including any increased Regular Salary payments) hereunder
shall not
in any way limit or reduce any other obligation of Employer hereunder,
and no
other compensation, benefit or payment hereunder shall in any way limit
or reduce
the obligation of Employer to pay Employee's Regular Salary hereunder.
It is
acknowledged by the parties that Employee's Regular Salary, as well as any
cash
incentive compensation and other employee benefits payable pursuant hereto,
may be
paid or provided by one or more of Ness Energy' subsidiaries, but shall
be the
ultimate responsibility of Ness Energy International, Inc.
6.
Incentive Compensation and Other Benefits.
6.1 Employer shall pay to Employee cash incentive compensation as shall be
determined
by the Board (or any committee thereof) from time to time. Employee shall be
entitled to participate in any such plan established at a level to provide
Employee compensation commensurate with Employee's position and responsibilities.
Upon the establishment of such plans, this Agreement shall be deemed to
be automatically amended to include all applicable terms of such plans.
6.2 Employee
shall be qualified to participate in grants of options to purchase
units in a royalty trust pursuant to any current, or future Royalty Trust
Option
Plans or any other
similar subsequently adopted royalty trust option plans. Employee shall also be
qualified to participate in grants of Stock Options,
Incentive
Stock Options or Performance Shares to purchase or receive common stock of Ness
Energy Stock Incentive Plans or any other similar subsequently adopted stock
plans. Employee shall receive $2,000 worth of one year restricted stock and each
calendar month. The number of shares to be paid is determined by Dividing $2,000
by the average closing price of the month. Such share to be issued within 15
calendar days following the close of a calendar month.
6.3 Employer
shall also provide the following employee benefits to Employee
during the term of this Agreement:
(a) Life
Insurance. Employer will provide Employee with life insurance having a
death benefit equal to $50,000. Employee shall have the right to designate
on such policies the primary
and
contingent beneficiaries thereunder.
(b)
Medical Insurance. Employer shall maintain in full force and effect,
and
Employee shall be entitled to participate in, any medical or health benefit
plan
provided by Ness Energy or
any of
its subsidiaries.
(c)
Disability. Employer shall maintain in full force and effect, and
Employee
shall be entitled to receive, such disability insurance protection as
is
provided to other full-time executives
of Ness
Energy or any of its subsidiaries.
(d)
Vacations. Employee shall be entitled to two weeks paid vacation in
each
calendar year and to compensation in respect of earned but unused vacation
days,
determined
in accordance
with Employer's vacation plan if such plan so provides.
Employee shall also be entitled to all paid holidays given by Employer
to the
executives of Ness or any of its subsidiaries.
(e)
Automobile and Related Expenses. Employee shall have noautomobile
allowance.
(f) Other
Benefits. Employee shall be entitled to all other benefits and to
participate in and be covered by all such other employee benefit plans, including
deferred
compensation programs,
if any, as are provided to other full - time
executive employees of Ness Energy or any of its subsidiaries from time
to
time.
6.4 Nothing
paid to Employee under any plan or arrangement presently in effect or
made available in the future shall be deemed to be in lieu of the Regular
Salary payable to Employee pursuant to Section 5. Employer shall not
make any
changes in any plans or arrangements provided pursuant to this Section
6 that
would adversely affect Employee's rights or benefits thereunder unless
such
change occurs pursuant to a program applicable to all executives of Ness Energy
or any of its subsidiaries and does not result in a proportionately greater
reduction in the rights or benefits to Employee as compared with any
other
executive of Ness Energy or any of its subsidiaries.
7.
Representation of Employee. As a material inducement to Employer to
enter
into this Agreement, Employee represents and warrants to Employer that, to
the
best of
Employee's
knowledge,
he is not now, nor has he been in the past, the
subject of any regulatory agency's investigation for violation of state or
federal
securities law, nor has he had any judgment against him for violation of
these
laws in any civil action in any court.
8. Working
Facilities and Staff. Employer shall furnish Employee with such
facilities, staff and services as are suitable to his position and
adequate
for the
performance of his duties.
9.
Expenses. Employer shall pay or reimburse Employee for all reasonable
expenses
for entertainment, travel, meals, hotel accommodations and fees and the
like
incurred
by him in the
interest of the business of Employer, such payment or
reimbursement to be made upon submission of an itemized accounting statement
by
Employee documenting such expenses as may be required by the Internal Revenue
Code of
1986, as amended (the "Code"); provided, however, that Employee shall be
reimbursed
for such expenses, whether or not such expenses are deductible by Employer
under the Code.
10.
Termination of Agreement.
10.1
Notwithstanding any other provision hereof, Employee's employment hereunder
shall terminate:
(a) upon the
death of Employee;
(b) upon
the disability of Employee, which for the purpose of this Agreement
shall be the physical or mental inability of Employee to carry out
the normal and usual duties of his employment on a full-time basis for
the entire period of six (6) continuous months with the reasonable
likelihood as determined by the Board that Employee, upon the
advice of a qualified physician, will be unable to carry out the normal
and usual duties of his employment on a full-time basis for the following
continuous period of six (6) months, and within 30 days after
Notice of Termination (as defined in Section 10.4) is given Employee
shall not have returned to the performance of his duties on a full-time
basis (subject to the terms of Sections 6.3(c) and 11);
(c) "for
cause" (as defined in Section 10.2 below), upon written notice of termination
for cause given by Employer to Employee; or
(d) on the
Expiration Date (subject to the terms of Section 2).
10.2 Employer
shall have "cause" to terminate Employee if Employee (a) willfully
and continually fails to substantially perform his duties with Employer
(other than a failure resulting from Employee's incapacity due to physical
or mental illness) which failure continues for a period of at least thirty
(30) days after a written notice of demand for substantial performance
has been
delivered to Employee specifying the manner in which Employee has failed to
substantially perform, or (b) willfully engages in conduct which is demonstrably
and
materially injurious to Employer, monetarily or otherwise; provided,
however,
that no termination of Employee's employment shall be for cause until
(x) there
shall have been delivered to
Employee
a written notice authorized by two-thirds
(2/3) of the full Board of Directors, specifying in detail the particulars
of Employee's conduct which violates either (a) or (b) above, (y) Employee
shall have been provided an opportunity to be heard by the Board (with
the
assistance of Employee's counsel if Employee so desires), and (z) a resolution
is adopted in good faith by two-thirds (2/3) of the full Board of Directors
confirming such violation. No act, nor failure to act, on Employee's
part,
shall be considered "willful" unless he has acted or failed to act with an
absence
of good faith and without a reasonable belief that his action or failure
to act
was in the best interest of Employer. Notwithstanding anything contained
in this
Agreement to the contrary, no failure to perform by Employee after Notice of
Termination is given by or to Employee shall constitute cause.
10.3 Employee
may terminate his employment hereunder for "Good Reason" upon the
occurrence of any of the following events or conditions:
(a) a
change in Employee's status, title, position or responsibilities (including
reporting responsibilities) which, in Employee's reasonable judgment,
represents a substantial reduction of the status, title, position
or responsibilities as in effect immediately prior thereto; the
assignment to Employee of any duties or responsibilities which, in Employee's
reasonable judgment, are inconsistent with such status, title,
position or responsibilities; or any removal of Employee from, or
failure to reappoint or reelect him to, any of such positions, except in
connection with the termination of his employment for cause, disability,
or as a result of his death, or by Employee other than for Good
Reason;
(b) a
reduction in Employee's Regular Salary as the same may be increased from time
to time thereafter;
(c)
Employer's requiring Employee (without the consent of Employee) to be
based at
any place outside a twenty-five (25) mile radius of his place of
employment immediately prior to such proposed relocation, except for
reasonably required travel on Employer's business which is not materially
greater than such travel requirements prior thereto, or, in the event
Employee consents to any relocation beyond such 25-mile radius,
the failure by Employer to pay (or reimburse Employee) for all reasonable
moving expenses incurred by him relating to a change of his principal
residence in connection with such relocation and to indemnify
Employee against any loss (defined as the difference between the
actual sale price of such residence and the higher of (a) his aggregate
investment in such residence or (b) the fair market value of such
residence as determined by a real estate appraiser designated by Employee
and reasonably satisfactory to Employer) realized on the sale of
Employee's principal residence in connection with any such change of
residence;
(d) the
failure by Employer to provide Employee with compensation and benefits
at least equal (in terms of benefit levels and/or reward opportunities)
to those provided to Employee under each employee benefit
plan, program and practice as in effect immediately prior to the
Effective Date (or as in effect following the Effective Date, if greater),
including,
but not limited to, Ness Energy Incentive Plan, Key Management Incentive Bonus
Plan, the Ness Energy Employees' 401(k) Plan, and any other stock or royalty
trust
unit option plan, pension plan, life insurance plan, health and accident
plan or disability plan;
(e) any
material breach by Employer of any provision of this Agreement; or
(f) any
purported termination of Employee's employment for cause by Employer
which does not otherwise comply with the terms of this Agreement.
10.4 Any
termination of Employee's employment by Employer or by Employee (other
than termination as a result of Employee's death) shall be communicated
by
written Notice of Termination
to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a written notice which
shall
indicate the specific termination provision in this Agreement relied upon
and shall
set forth in reasonable detail the facts and circumstances claimed to
provide a
basis for termination of Employee's employment under the provision so
indicated.
10.5 "Date of
Termination" shall mean (i) if Employee's employment is terminated
by his death, the date of his death, (ii) if Employee's employment is
terminated
upon the disability of Employee, thirty (30) days after Notice of Termination
is given (provided that Employee shall not have returned to the performance
of his duties on a full-time basis during such thirty (30) day period),
(iii) if Employee's employment is terminated for cause, the date specified
in the Notice of Termination, and (iv) if Employee's employment is terminated
for any other reason, the date on which a Notice of Termination is given;
provided that if within thirty (30) days after any Notice of Termination
is given
the party receiving such Notice of Termination notifies the other party
that a
dispute exists concerning the termination, the Date of Termination shall
be the
date on which the dispute is finally determined, either by mutual written
agreement
of the parties or by a final judgment, order or decree of a court of
competent
jurisdiction (the time for appeal there from having expired and no
appeal
having been perfected).
10.6 In the
event of a Change in Control or a termination of Employee's employment
under this Agreement for any reason, Employee shall have no right to
receive
any compensation, remuneration, bonus or benefit for any period subsequent
to the Date of Termination or the Change in Control, as the case may
be,
except as may be provided in Sections 11, 12 and 13 or pursuant to Ness Energy’s
Management Group Agreement for Grant. In the event that Employee
is entitled to receive Severance Benefits pursuant to Section 11 upon a
Change in
Control, Employee shall not be entitled to receive Severance Benefits upon the
occurrence of any other event that would otherwise have entitled Employee to
receive Severance Benefits, including without limitation a subsequent Change in
Control or a Termination of Employee's employment as contemplated by Section
10.1.
11.
Compensation Upon Termination or Change in Control.
11.1 If (i)
Employee's employment is terminated for any reason other than termination
by Employer for Cause or termination by Employee for other than Good
Reason,
or (ii) there shall occur a Change in Control (as defined in Section
11.4),
Employee shall be entitled to the following severance benefits (collectively,
"Severance Benefits"):
(a) Employer
shall pay to Employee an amount in cash equal to three (3) times the
sum of (i) Employee's Regular Salary and (ii) an amount equal to the
greater
of Employee's two most recent bonuses awarded under the Key Management
Incentive
Bonus Plan adopted by Ness Energy (or any other bonus plan or program
then in effect) multiplied by two, to be paid on
or before ten (10) days after the
Date of Termination or forty-five (45) days after the Change in Control,
as the case may be.
(b) For a
period of eighteen (18) months after Employee's termination of employment
or a Change in Control, Employer shall at its expense continue on behalf of
Employee and his dependents and beneficiaries, all medical, dental, vision,
and health benefits and insurance coverage which were being provided to
Employee
at the time of termination of employment. The benefits provided in this
Section 11.1(b) shall be no less favorable to Employee, in terms of amounts
and
deductibles and costs to him, than the coverage provided Employee under the
plans
providing such benefits at the time of termination. Employer's obligation
hereunder
to provide a benefit shall terminate if Employee obtains comparable coverage
under a subsequent employer's benefit plan. For purposes of the preceding
sentence, benefits will not be comparable during any waiting period for
eligibility for such benefits or during any period during which there is a
preexisting
condition limitation on such benefits. Employer also shall pay a lump sum
equal to the amount of any additional income tax payable by Employee
and
attributable to the benefits provided under this Section 11.1(b) at the time
such tax
is imposed upon Employee. In the event that Employee's participation in
any such
coverage is barred under the general terms and provisions of the plans
and
programs under which such coverage is provided, or any such coverage is
discontinued
or the benefits there under are materially reduced, Employer shall provide
or arrange to provide Employee with benefits substantially similar to
those
which Employee was entitled to receive under such coverage immediately
prior to
the Termination Notice. At the end of the period of coverage set forth
above,
Employee shall have the option to have assigned to him at no cost to
Employee
and with no apportionment of prepaid premiums, any assignable insurance
owned by
Employer and relating specifically to Employee, and Employee shall be
entitled
to all health and similar benefits that are or would have been made available
to Employee under law.
(c) Employer
shall transfer to Employee all right, title or other ownership
interest it may have in any automobile then being provided by Employer for use
by Employee.
(d) Employer
shall transfer to Employee any right, title or ownership in any club
memberships provided by Employer for use by Employee.
(e) Employer
shall transfer to Employee any right, title or ownership in any life
insurance owned by Employer on Employee's life.
(f) (i) Notwithstanding
any provision
to the contrary in any option agreement,
restricted stock agreement,
or
other
agreement relating
to equity-type compensation
that may
be
outstanding between Employee and Employer,
all units, stock options, incentive stock options, performance shares,
stock
appreciation rights and royalty trust options or any other plan or arrangement)
held by Employee immediately prior to the Date of Termination or the
Change in Control, as the case may be, and any such units, options, shares or
rights received by Employee after the Date of Termination or the Change in
Control, as the case may be (whether or not received in exchange for or in
substitution for existing units, options, shares or rights) shall immediately
become 100% vested and exercisable, and Employee shall become 100%
vested in all shares of restricted stock held by
or for the benefit
of Employee; provided, however, that to the extent Employer
is unable
to
provide
for such acceleration of vesting, Employer shall provide in lieu thereof a
lump-sum cash payment equal to the difference between the total value of
such units, stock options, incentive stock options, performance shares,
stock appreciation rights, royalty trust options and shares of restricted
stock (the "stock rights") as of the date of Employee's termination
of employment or a Change in Control and the total value of the stock
rights in which Employee is vested as of the date of his termination
of
employment. The value of such accelerated vesting in Employee's stock
rights
shall be determined by the Board in good faith based on a valuation performed
by an independent consultant selected by the Board; any such stock
rights which are not in existence at the time of Employee's termination
of employment or a Change in Control shall be valued as of the date of
the Date of Termination or the Change in Control, as the case may be.
(ii) Notwithstanding any
provision to the contrary in any option agreement
that may be outstanding between Employee and Employer, Employee's right to
exercise any previously unexercised options under any such option agreement
shall not terminate until the latest date on which the option granted
under such agreement would expire under the terms of such agreement but for
Employee's termination of employment; provided, however, that to the
extent Employer is unable to provide for the extension of the expiration
date of such options, Employer shall provide in lieu thereof a lump-sum
cash payment equal to the value of such extension Employer is unable to
provide. Such values of such accelerated vesting and exercisability
shall be determined by the Board in good faith based on a valuation
performed by an independent consultant selected by the Board.
11.2 If
Employee's employment shall be terminated (i) by Employer for cause, or
(ii) by Employee without Good Reason, Employer shall pay Employee (i)
his
Regular Salary through the Date of Termination at the rate in effect at the
time
Notice of Termination is given and (ii) the vested portion of any incentive
compensation
plan to which Employee is entitled in accordance with the terms of such
plan.
11.3 During
any period that Employee fails to perform his duties hereunder as a
result of incapacity due to physical or mental illness ("Disability Period"),
Employee shall continue to receive his Regular Salary at the rate then
in effect
for such period until his employment is terminated pursuant to Section
10.1(b)
hereof, provided that payments so made to Employee during the Disability
Period
shall be reduced by the sum of the amounts, if any, payable to Employee
prior to
the time of any such payment under disability benefit plans of Employer
and which
were not previously applied to reduce any Regular Salary payment.
11.4
Change in Control.
(a) For
purposes of this Agreement, a "Change in Control" shall mean any one of
the following:
(i) "Continuing
Directors" no longer constitute a majority of the Board;
the term "Continuing Director" means any individual who is a member of the
Board on the date hereof or was nominated for election as a
director by, or
whose nomination as a director was approved by, the Board with the affirmative
vote of a majority of the Continuing Directors;
(ii) any person or group
of persons (as defined in Rule 13d-5 under the
Securities Exchange Act of 1934, as amended ("Exchange Act")) together
with his
or its affiliates, becomes the beneficial owner, directly or indirectly,
of 25% or more of the voting power of Ness Energy then outstanding
securities entitled generally to vote for the election of Ness Energy'
directors;
(iii) the merger or
consolidation to which Ness Energy is a party if the
shareholders of Ness Energy immediately prior to the effective date of
such merger or consolidation have beneficial ownership (as defined in Rule
13d-3 under the Exchange Act) of less than 50% of the combined voting
power to vote for the election of directors of the surviving corporation
or other entity following the effective date of such merger or consolidation;
or
(iv) the sale of all or
substantially all of the assets of Ness Energy or the liquidation or dissolution
of Ness Enegy.
(b)
Notwithstanding anything herein to the contrary, under no circumstances
will a change in the constitution of the board of directors of any subsidiary,
a change in the beneficial ownership of any subsidiary, the merger or
consolidation of a subsidiary with any other entity, the sale of all or
substantially all of the assets of any subsidiary
or the liquidation or dissolution of any subsidiary constitute a "Change
in Control" under this Agreement.
11.5 Employee
shall not be required to mitigate the amount of any payment provided
in this Section 11 by seeking or accepting other employment or otherwise.
12. Ness
Energys' Guarantee of Severance Benefits.
12.1 In the
event Employee becomes entitled to receive from Employer Severance
Benefits under Section 11.1 above and such Employer fails to pay or
provide
such
Severance Benefits,
Ness Energy shall assume the obligation of such
Employer to pay or provide such Severance Benefits. In consideration of
Ness
Energys' assumption of the obligation to pay or provide such Severance
Benefits
provided under this Agreement, Ness Energy shall be subrogated to any
recovery
(irrespective of whether there is recovery from the third party of the
full
amount of all claims against the third party) or right to recovery of
either
Employee or his legal representative against Employer or any person or
entity.
Employee or his legal representative shall cooperate in doing what is
reasonably
necessary to assist Ness Energy in exercising such rights, including
but not limited to notifying Ness Energy of the institution of any claim
against a third party and notifying the third party and the third party's
insurer,
if any, of Ness Energys' subrogation rights. Neither Employee nor his
legal
representative shall do anything after a loss to prejudice such
rights.
12.2 In its
sole discretion, Ness Energy reserves the right to prosecute an action
in the name of Employee or his legal representative against any third
parties
potentially liable to Employee. Ness Energy shall have the absolute discretion
to settle subrogation claims on any basis it deems appropriate under
the
circumstances. If Employee or his legal representative initiates a lawsuit
against
any third parties potentially liable to Employee, Ness Energy shall not be
responsible for any attorneys' fees or court costs that may be incurred
in
such liability claim.
12.3 Ness
Energy shall be entitled, to the extent of any payments made to or on
behalf of Employee or a dependent of Employee, to be paid first from the
proceeds
of any settlement or judgment that may result from the exercise of any
rights of
recovery asserted by or on behalf of Employee or his legal representative
against any person or entity legally responsible for the injury for which
such payment was made. Ness Energy shall be reimbursed by Employee or his
legal representative an amount of money equal to all sums paid by Ness Energy
under this Agreement to or on behalf of Employee and all expenses, costs
and
attorneys' fees incurred by Ness Energy in connection with the prosecution
and
collection of Ness Energys' subrogation interest. The right is also hereby
given
Ness Energy to receive directly from Employer or any third party(ies),
attorney(s)
or insurance company(ies) an amount equal to the amount paid to or on behalf
of Employee.
13. Excise
Taxes.
13.1 In the
event it shall be determined that any payment or distribution of any
type by Employer to or for the benefit of Employee, whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement
or
otherwise (the "Total Payments"), would be subject to the excise tax imposed
by
Section 4999 of the Code or any interest or penalties with respect to such
excise
tax (such excise tax, together with any such interest and penalties, are
collectively
referred to as the "Excise Tax"), then Employee shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after
payment by Employee of all taxes (including additional excise taxes under
said
Section 4999 and any interest and penalties imposed with respect to any
taxes)
imposed upon the Gross-Up Payment, Employee retains an amount of the
Gross-Up
Payment equal to the Excise Tax imposed upon the Total Payments. Employer
shall pay the Gross-Up Payment to Employee within twenty (20) business
days
after the Payment Date.
13.2 All
determinations required to be made under this Section 13(c)(ii) including
whether a Gross-Up Payment is required and the amount of such Gross-Up
Payment,
shall be made by the independent accounting firm retained by Employer
on the
date of determination (the "Accounting Firm"), which shall provide detailed
supporting calculations both to Employer and Employee within fifteen
(15)
business days of the Payment Date, if applicable, or such earlier time as
is
requested by Employer. If the Accounting Firm determines that no Excise Tax
is
payable by Employee, it shall furnish Employee with an opinion that he has
substantial
authority not to report any Excise Tax on his federal income tax return.
Any determination by the Accounting Firm shall be binding upon Employer
and
Employee. As a result of the uncertainty in the application of Section 4999
of the
Code at the time of the initial determination by the Accounting Firm
hereunder,
it is possible that Gross-Up Payments which will not have been made by
Employer should have been made ("Underpayment"), consistent with the
calculations
required to be made hereunder. In the event that Employer exhausts its
remedies pursuant to Section 13.3 and Employee thereafter is required to
make a
payment of any Excise Tax, the Accounting Firm shall determine the amount
of the
Underpayment that has occurred, and any such Underpayment shall be promptly
paid by Employer to or for the benefit of Employee.
13.3 Employee
shall notify Employer in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by Employer of
the
Gross-Up Payment. Such notification shall be given as soon as practicable
but no
later than ten (10) business days after Employee is notified in writing
of such
claim and shall apprise Employer of the nature of such claim and the
date on
which such claim is requested to be paid. Employee shall not pay such
claim
prior to the expiration of the thirty (30)-day period following the date
on which
he gives such notice to Employer (or such shorter period ending on the
date that
any payment of taxes with respect to such claim is due). If Employer
notifies
Employee in writing prior to the expiration of such period that it desires
to contest such claim, Employee shall (w) give Employer any information
reasonably
requested by Employer relating to such claim, (x) take such action in
connection
with contesting such claim as Employer shall reasonably request in writing
from time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by Employer, (y)
cooperate with Employer in good faith in order to effectively
contest such claim, and (z) permit Employer to participate in any proceedings
relating to such claim, provided, however, that Employer shall bear and pay
directly all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
Employee
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing
provisions of this Section 13.3, Employer shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at its sole
option, either direct Employee to pay the tax claimed and xxx for a refund,
or
contest the claim in any permissible manner, and Employee agrees to prosecute
such
contest to a determination before any administrative tribunal, in a court
of
initial jurisdiction and in one or more appellate courts, as Employer shall
determine;
provided, however, that if Employer directs Employee to pay such claim and
xxx for a refund, Employer shall advance the amount of such payment to
Employee,
on an interest-free basis and shall indemnify and hold Employee harmless,
on an after-tax basis, from any Excise Tax or income tax, including interest
or penalties with respect thereto, imposed with respect to such advance
or with
respect to any imputed income with respect to such advance; and further
provided
that any extension of the statute of limitations relating to payment of
taxes for
the taxable year of Employee with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore,
Employer's control of the contest shall be limited to issues with respect
to which a Gross-Up Payment would be payable hereunder and Employee
shall be
entitled to settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority.
13.4 If,
after the receipt by Employee of an amount advanced by Employer pursuant
to Section 13.3, Employee becomes entitled to receive any refund with
respect
to such claim, Employee shall (subject to Employer's complying with the
requirements
of Section 13.3) promptly pay to Employer the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto).
If, after the receipt by Employee of an amount advanced by Employer pursuant
to Section 13.3, a determination is made that Employee shall not be entitled
to any refund with respect to such claim and Employer does not notify
Employee
in writing of its intent to contest such denial of refund prior to the
expiration
of thirty days after such determination, then such advance shall be forgiven
and shall not be required to be repaid and the amount of such advance
shall
offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid.
14.
Counsel Fees and Indemnification.
14.1 In the
event Employer or Employee is required to employ legal counsel to
enforce the performance of this Agreement or recover damages because of any
breach of
this Agreement, the prevailing party shall be entitled to recover from
the other
party reasonable attorneys' fees and the reimbursement of all necessary
expenses and court costs.
14.2 Employer
shall indemnify and hold Employee harmless to the maximum extent
permitted by law against judgments, fines, amounts paid in settlement and
reasonable
expenses, including attorneys' fees and costs incurred by Employee, in
connection with the defense of, or as a result of any action or proceeding or
any
appeal from any action or proceeding, in which Employee is made or is
threatened
to be made a party by reason that Employee is or was an officer or director
of Ness Energy or any of its subsidiaries or affiliates, regardless of
whether such action or proceeding is one brought by or in the right of Ness
Energy or any of its subsidiaries or affiliates, to procure a judgment in their
favor (or
other than by or in the right of Ness Energy or any of its subsidiaries
or affiliates).
14.3 The
undertakings of Section 14.1 above are independent of, and shall not be
limited or prejudiced by, the undertakings of Section 14.2 above.
14.4 The
provisions of this Section 14 shall survive the termination of this
Agreement.
15.
Notices. All notices, requests, demands and other communications
required
or permitted to be given under this Agreement shall be in writing and
shall be
deemed to
have been duly
given on the date of service if served personally
on the party to whom notice is to be given and acknowledged by written
receipt, or on the seventh day after mailing if mailed (return receipt
requested),
postage prepaid and properly addressed as follows:
|
Employer:
|
Ness
Energy International, Inc.
0000
X-00 Xxxxxxx Xxxx,
Xxxxxx
Xxxx, Xxxxx 00000
Attention:
Board of Directors
|
|
Employee:
|
Xxxxxxx
X Xxxxxxxx 000
Xxxxxx Xx
Xxxxxxxxxxx,
Xxxxx 00000
|
Any party
may change its address for purposes of this Section 15 by giving the
other
party written notice of the new address in the manner set forth
above.
16.
Assignment; Binding Effect. Neither this Agreement nor any of the
rights or
obligations hereunder may be assigned by any party without the prior
written
consent
of the other
party. This Agreement is binding upon and inures to the
benefit of Employee and Employer and their respective heirs, personal
representatives and permitted successors and assigns.
As used in this Agreement,"Employer" shall mean the Employer as hereinabove
defined and any
successors
to its
business or assets as aforesaid which execute and deliver the agreement
provided
for in this Section 16 or which otherwise become bound by the terms and
provisions
of this Agreement by operation of law.
17.
Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Texas.
18.
Waiver. Any waiver by any party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
thereof
or of any other provision of this Agreement.
19. Entire
Agreement. This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes
any and all
prior and contemporaneous
promises, agreements and representations
not set forth in this Agreement including, but not limited to, as of the
Effective Date, the Original Agreement. This greement may not be
amended
except by a mutual written agreement signed by all parties; provided,
however,
that the terms of any cash incentive compensation plan or stock
option
plan
established by Employer subsequent to the date hereof in accordance with
terms
previously outlined by Employer shall automatically become part of this
Agreement
when established.
20.
Severability. Should any one or more of the provisions hereof be determined
to be illegal or unenforceable, all other provisions hereof shall be given
effect separately
there from and
shall not be affected thereby.
IN WITNESS
WHEREOF, Employer and Employee have executed and delivered this Agreement
as of the date written above.
|
Ness Energy
International, Inc.
| |
| By: | |
|
/S/ Xxxxx X Xxxxxxxx
Xxxxx X
Xxxxxxxx
Secretary of Ness
Energy International,
as directed by the
Board of Directors
| |
|
EMPLOYEE:
|
|
|
/S/ Xxxxxxx X
Xxxxxxxx
Xxxxxxx X
Xxxxxxxx
| |
