EMPLOYMENT AGREEMENT
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This EMPLOYMENT AGREEMENT ("Agreement") is executed as of the 15th day of
November, 2004 ("Effective Date") between PETROSEARCH ENERGY CORPORATION, a
Nevada corporation ("Company") and XXXXXXX X. XXXX ("Xxxx").
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 as the successor by merger to Petrosearch Corporation, a Texas
corporation.
B. Company desires to engage the services of Xxxx as an executive
officer of the Company.
TERMS OF AGREEMENT:
NOW, THEREFORE, FOR VALUE RECEIVED, and in consideration of the mutual
covenants contained herein, Company and Xxxx agree as follows:
1. ENGAGEMENT/TERM. Company shall employ Xxxx as Chairman of the
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Board, President and Chief Executive Officer for a period of two (2) years from
the Effective Date, subject to the termination provisions herein (the "Term"),
and Xxxx hereby agrees to be engaged by Company for the Term in such capacity.
This Agreement shall be automatically renewed for additional one (1) year
periods unless either party elects to send written notice of termination of this
Agreement to the other party at least thirty (30) days prior to the expiration
of the then pending term.
2. NON-EXCLUSIVE/OTHER ENGAGEMENTS BY XXXX. Company and Xxxx
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hereby stipulate that this Agreement is non-exclusive as to Xxxx and Xxxx shall
not be prevented or in any way restricted from entering into contemporaneous
consulting/employment relationships with third parties so long as the third
party is not in competition with Company, but Xxxx shall dedicate a minimum of
forty (40) hours per week to the tasks associated with the executive positions
assumed under this Agreement.
3. COMPENSATION. Xxxx shall be compensated for his services as
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follows:
a. As compensation for all services rendered by Xxxx in
performance of his duties or obligations under this Agreement, Company shall pay
Xxxx a base salary (the "Base Salary") of FIFTEEN THOUSAND AND NO/100 DOLLARS
($15,000.00) monthly, in monthly installments, during the term of this
Agreement, which compensation may, at Xxxx'x election, be made payable to his
personal business entity and which compensation may be increased from time to
time in the discretion of the Board of Directors.
EMPLOYMENT AGREEMENT Page 1
b. In addition to receiving the Base Salary provided for in
Section 3.a., Xxxx shall be entitled to receive such other and additional
bonuses from time to time as are authorized by the Board of Directors of Company
in its sole discretion.
x. Xxxx shall be reimbursed, upon submission of receipts, for any
and all Company related travel away from Houston, Texas, including coach
airfare, hotel and meals (subject to the expenditure limitations imposed by
Company).
x. Xxxx 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, Xxxx shall be entitled
during the Term, upon satisfaction of all eligibility requirements, to
participate in all health, dental, disability, life insurance, profit or royalty
participation plans, stock option plans, retirement plans, and and other
benefit programs now or hereafter established by Company, including the
Petrosearch Energy Corporation Pool of Capital Royalty Participation Plan, and
shall receive such other benefits as may be approved from time to time by the
Board of Directors.
x. Xxxx shall as of the Effective Date above be granted warrants
to purchase THREE MILLION SIX HUNDRED THIRTY SEVEN THOUSAND SEVEN HUNDRED THIRTY
EIGHT (3,637,738) shares of Common Stock, par value $.001, of Company for a
purchase price of $1.95 per share, subject to cashless exercise at Xxxx'x
election so long as Xxxx 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 Xxxx, subject to the following
provisions, on or before the date that is four (4) years following the
warrants' issue date; provided, however, that such warrants shall: (i) be
exercisable immediately only as to one half (1/2) of the available Common
shares, (ii) be exercisable as to any remaining available shares one day after
the one (1) year anniversary of the warrant conditioned upon Xxxx occupying the
position described in paragraph 1 above on such date; and (iii) be 100%
exercisable immediately upon a change of control (as defined in the Securities
Exchange Act of 1934, as amended) or termination of this Agreement by the
Company without "cause" or by Xxxx for "good reason", each as defined below.
All amounts paid to Xxxx hereunder shall be subject to applicable employee
related taxes and withholdings.
4. LIMITED INDEMNITY FOR LEGISLATIVE CHANGES. Company and Xxxx
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acknowledge and agree that Xxxx has agreed to accept stock warrant-based
compensation to assist Company in its working capital position despite pending
proposed legislative enactments which create uncertainty regarding future
taxation of such warrant-based compensation. In order to induce Xxxx to accept
such warrant-based compensation and the risks associated with future market
conditions and legislative changes affecting future taxation, Company hereby
agrees to indemnify and hold Xxxx harmless for damages suffered in the form of
taxes and penalties directly incurred by Xxxx due to legislative or regulatory
enactment or Internal Revenue Service policy which results in the taxation of
the Xxxx warrants effective upon grant of the warrants and/or results in
EMPLOYMENT AGREEMENT Page 2
taxation of the Xxxx warrants effective upon cashless exercise of the Xxxx
warrants, if exercised.
5. DUTIES AND OBLIGATIONS. Xxxx shall perform such duties and
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tasks pertaining to Xxxx'x 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 described in paragraph 1 above. Xxxx
shall set his own work hours and shall be entitled to perform his services, in
his discretion, at locations other than Company's principal offices. Xxxx 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.
6. TERMINATION FOR CAUSE BY COMPANY. This Agreement may be terminated
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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 Xxxx;
x. Xxxxx malfeasance by Xxxx 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
Xxxx 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.
7. TERMINATION FOR GOOD REASON BY XXXX. This Agreement may be
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terminated for "good reason" by Xxxx. For purposes hereof, "good reason" shall
mean any of the following events:
a. The failure of Xxxx to be appointed or reappointed to, or his
removal without cause, from the offices of Chairman of the Board, President
and/or Chief Executive Officer of Company;
b. A material change by Company of Xxxx'x function, duties or
responsibilities that would cause his position with the Company to become of
less dignity, responsibility, importance or scope (in a material regard) from
the position and attributes thereof described herein, and provided that such
change has remained uncured for a period of at least thirty (30) days following
written notice from Xxxx describing in reasonable detail the nature of such
alleged change; or
c. Any other material breach of this Agreement by the Company that
remains uncured for a period of at least thirty (30) days following written
notice from Xxxx to Company of such alleged breach, which written notice
describes in reasonable detail the nature of such alleged breach.
d. Upon a change of control (as defined in the Securities Exchange
Act of
EMPLOYMENT AGREEMENT Page 3
1934, as amended) of the Company.
8. EFFECT OF TERMINATION WITHOUT CAUSE BY COMPANY OR WITH GOOD REASON
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BY XXXX. In the event that this Agreement is terminated by Company
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without "cause" or by Xxxx with "good reason" and other than by the mutual
agreement of the parties or the election not to renew the initial Term or any
renewal Term, Xxxx'x sole remedy shall be limited to recovery by Xxxx from
Company of the compensation and continuation of the benefits described above for
the portion of the Term then remaining on the date of termination, but no less
than 12 months. For purposes of determining whether "vesting" has occurred
under the warrant described in paragraph 3.f. above or any existing benefit plan
in which Xxxx 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.
9. TIME OF ESSENCE, ATTORNEYS FEES. Time is of the essence with
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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.
10. MODIFICATION OR AMENDMENT. The parties hereto may modify or amend
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this Agreement only by written agreement executed and delivered by the
respective parties.
11. BINDING ON HEIRS AND ASSIGNS. This Agreement shall inure to
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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.
12. COUNTERPARTS. For the convenience of the parties hereto, this
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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.
13. NO WAIVERS. No waiver of or failure to act upon any of the
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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).
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
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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.
15. NOTICES. Any notice, request, instruction or other document to
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be given hereunder by any party to the other shall be in writing (by FAX, mail,
telegram or courier) and
EMPLOYMENT AGREEMENT Page 4
delivered to the parties as follows:
If to Company: Xxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxxx, Xxxxx 000X
Xxxxxxx, Xxxxx 00000
FAX: 000-000-0000
If to Xxxx: Xx. Xxxxxxx Xxxx
FAX: ______________
16. ENTIRE CONTRACT/NO THIRD PARTY BENEFICIARIES. This Agreement
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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.
17. CAPTIONS FOR CONVENIENCE. All captions herein are for convenience
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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.
18. SEVERABILITY. In case any one or more of the provisions contained
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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.
19. BINDING ARBITRATION. ANY CONTROVERSY OR CLAIM ARISING OUT OF OR
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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
EMPLOYMENT AGREEMENT Page 5
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
EMPLOYMENT AGREEMENT Page 6
PETROSEARCH ENERGY CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx, Vice President and CFO
/s/ XXXXXXX X. XXXX
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XXXXXXX X. XXXX
EMPLOYMENT AGREEMENT Page 7
AMENDMENT TO EMPLOYMENT AGREEMENT
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This Amendment to Employment Agreement is made effective as of May 18,
2005, between PETROSEARCH ENERGY CORPORATION, A NEVADA CORPORATION ("Company"),
and XXXXXXX X. XXXX ("Employee").
RECITALS:
A. On November 15, 2004, Company and Employee entered into an
Employment Agreement covering the 2-year term of office of Employee as Chairman
of the Board, President and Chief Executive Officer.
B. Company and Employee desire to amend the Employment Agreement to
address severance pay upon a change of control or upon Employee's disability.
TERMS OF AMENDMENT:
NOW THEREFORE, for valuable consideration the parties agree as follows:
1. RATIFICATION OF AGREEMENT. Except as modified hereby, the
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Employment Agreement is ratified by the undersigned parties.
2. AMENDED TERMS. The Employment Agreement is amended as follows:
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a) At Section 3, add the following subparagraph:
"g. DEATH OR DISABILITY. Upon the death or disability of the Xxxx, this
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Agreement will automatically terminate, and the Xxxx, 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."
b) At Section 4, delete the following language at the end of the
Section and add a period: "and/or results in taxation of the Xxxx warrants
effective upon cashless exercise of the Xxxx warrants, if exercised."
c) The following is inserted as new subparagraph (d) to Section 7:
"d. A change of control (as defined below) if within forty five (45) days
following the change of control Xxxx is not offered the renewal of
employment for at least one (1) year beyond the then pending employment
term at the identical monthly salary, position and responsibilities in
effect at the time of the change of control; provided, however, that such
offer need not include a new change of control
provision covering subsequent changes of control. The identical monthly
salary, job title and responsibilities, without required geographical
relocation (unless consented to by Xxxx), shall be the only criteria for
determining if the offer complies with this section. 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 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)."
d) At Section 8, line 3, after the words "good reason", insert:
"under Sections 7a, 7b or 7c above,"
e) At Section 8, at the end of the first sentence after the words
"but not less than 12 months." insert the following:
"In the event that this Agreement is terminated by Xxxx for the
reasons described in paragraph 8d above (i.e. a "change in control" which
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is not accompanied by an appropriate employment offer as described in
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paragraph 8d above), then Xxxx shall be entitled to severance benefits
equal to Xxxx'x 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 Xxxx 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 of control
occurs during the period after the expiration of a written employment
agreement but before renewal, the severance payable shall be salary and
existing benefits equal to a 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 Xxxx 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 Xxxx may be entitled under any Company severance
or termination plan, program, practice or arrangement. Xxxx'x 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."
3. BINDING ON HEIRS, SUCCESSORS AND ASSIGNS. This Amendment shall
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inure to and be binding upon the undersigned and their heirs, representatives,
successors and assigns.
EXECUTED as of the Effective Date above.
PETROSEARCH ENERGY
CORPORATION, A NEVADA CORPORATION
By: /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx, V.P./C.F.O.
/s/ XXXXXXX X. XXXX
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XXXXXXX X. XXXX
