FALCON NATURAL GAS CORP.
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made between
Falcon Natural Gas Corp., a Nevada corporation and its affiliated companies
(collectively referred to as the "Company"), and Xxxx X. Xxxxxxx ("Executive").
Unless otherwise indicated, all references to Sections are to Sections in this
Agreement. This Agreement is effective as of the "Effective Date" set forth in
Section 14 below.
W I T N E S S E T H:
WHEREAS, the Company desires to obtain the services of Executive, and
Executive desires to be employed by the Company upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, the agreements herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as of the date hereof as follows:
1. Employment. The Company hereby agrees to employ Executive, and Executive
hereby agrees to serve the Company, as its President and Chief Executive Officer
("Employment") and as a Director for a period of twelve (12) months beginning on
the Effective Date. This Agreement is renewable upon the mutual written consent
of the parties within thirty (30) days of the ending date of this Agreement.
Any such renewal shall also be for a period of twelve (12) months.
2. Scope of Employment.
(a) During the Employment, Executive will serve as President and Chief
Executive Officer of the Company. In that connection, Executive will (i) devote
his full-time attention and energies to the business of the Company and will
diligently and to the best of his ability perform all duties incident to his
employment hereunder; (ii) use his best efforts to promote the interests and
goodwill of the Company; and (iii) perform such other duties commensurate with
his office as the Board of Directors of the Company may from time-to-time assign
to him.
(b) Section 2(a) shall not be construed as preventing Executive from
(i) serving on corporate, civic or charitable boards or committees, or (ii)
making investments in other businesses or enterprises; provided that in no event
shall any such service, business activity or investment require the provision of
substantial services by Executive to the operations or the affairs of such
businesses or enterprises such that the provision thereof would interfere in any
respect with the performance of Executive's duties hereunder; and subject to
Section 6.
3. Compensation and Benefits During Employment. During the Employment, the
Company shall provide compensation to Executive as follows.
(a) The Company shall pay Executive $11,000 per month in equal monthly
installments. Executive shall be responsible for the payment of all taxes to
the Internal Revenue Service as well as any and other taxes payable in the
United States including taxes payable to any state and local jurisdiction.
Executive indemnifies the Company with respect to the payment of any and all
taxes owing and due from Executive's compensation.
(b) As additional consideration for signing this Agreement and for
agreeing to abide and be bound by its terms, provisions and restriction, and in
addition to all other benefits described in this Agreement, Executive, his
nominees and/or assigns, shall receive up to an aggregate of 5,000,000
restricted shares of Company common stock (the "Shares") payable as follows: 1)
1,000,000 Shares payable at the end of the twelve-month period immediately
following the Effective Date; and 2) assuming that this Agreement is
subsequently renewed pursuant to Section 1, 1,000,000 Shares payable at the end
of each of the four twelve-month renewals, if any, immediately following the
Effective Date. In the event that Executive's employment terminates prior to the
end of any twelve-month period contemplated by this Section 3(b), his rights in
the number of Shares that would otherwise be payable at the end of such
twelve-month period multiplied by the ratio which the number of months in such
twelve-month period that Executive was employed by the Company bears to twelve
(12) shall immediately and fully vest and shall be transferable by Executive as
of the date Executive's Employment terminates. In the event that Executive's
Employment terminates pursuant to Section 11(b) during the twelve-month period
immediately following the Effective Date, his right to 1,000,000 Shares shall
immediately and fully vest and shall be payable to Xxxxxxx X. Xxxxxxx,
Executive's wife as of the Effective Date. In the event of a consolidation or
merger or sale of all or substantially all of the assets of the Company in which
outstanding shares of the Company's common stock are exchanged for securities,
cash or other property of any other corporation, firm, partnership, joint
venture, association, or business entity, the Company is otherwise acquired or
there is a change of control of the Company (receipt of more than 50% of the
outstanding shares of the Company, the Company otherwise being acquired, or a
change in control of the Company are collectively referred to as an
"Acquisition"), or in the event of liquidation of the Company, so much of the
5,000,000 Shares that have not been issued to Executive shall immediately and
fully vest and shall also be transferable by Executive immediately prior to such
Acquisition or liquidation. The numbers of Shares are subject to adjustment from
time to time as set forth in this Section 3(b). In the event that the Company
shall at any time after the Effective Date (i) declare a dividend on the Common
Stock in shares of its capital stock, (ii) subdivide the outstanding Common
Stock, (iii) combine the outstanding Common Stock into a smaller number of
Common Stock, or (iv) issue any shares of its capital stock by reclassification
of the Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation),
then in each case, with respect to so much of the 5,000,000 Shares that have not
been issued to Executive, Executive shall be entitled to new, additional, or
different shares of Common Stock in proportion to such dividend, subdivision,
combination or issuance. This Section 3(b) shall otherwise apply to such new,
additional, or different shares of Common Stock to the extent applicable to the
Shares with respect to which they were distributed. For example, if the Company
declares a 2:1 stock dividend within thirty-six (36) months after the Effective
Date when Executive has received 2,000,000 Shares, Executive would thereafter be
entitled to receive 2,000,000 Shares at the end of the thirty-six (36),
forty-eight (48), and sixty (60) month periods (or an aggregate of 6,000,000
Shares) immediately after the Effective Date provided that Executive is employed
by the Company at the end of each of such periods. Such adjustment shall be made
successively whenever any event listed above shall occur. Any successor of the
Company shall be bound by this Section 3(b) as provided by Section 8(b) hereof.
(c) The Company shall reimburse Executive for business expenses
incurred by Executive in connection with the Employment in accordance with the
Company's then-current policies.
(d) Executive will be entitled to participate in any health insurance
or other employee benefit plan which the Company may adopt in the future.
(e) Executive will be entitled to five (5) weeks of paid vacation per
year.
(f) Executive will be entitled to participate in any incentive program
or discretionary bonus program of the Company which may be implemented in the
future by the Board of Directors.
(g) Executive will be entitled to participate in any stock option plan
of the Company which may be approved in the future by the Board of Directors.
Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by
Executive in good faith and in the best interests of the Company and thus shall
not be deemed grounds for Termination for Cause.
4. Confidential Information.
(a) Executive acknowledges that the law provides the Company with
protection for its trade secrets and confidential information. Executive will
not disclose, directly or indirectly, any of the Company's confidential business
information or confidential technical information to anyone without
authorization from the Company's management. Executive will not use any of the
Company's confidential business information or confidential technical
information in any way, either during or after the Employment with the Company,
except as required in the course of the Employment.
(b) Executive will strictly adhere to any obligations that may be owed
to former employers insofar as Executive's use or disclosure of their
confidential information is concerned.
(c) Information will not be deemed part of the confidential
information restricted by this Section 4 if Executive can show that: (i) the
information was in Executive's possession or within Executive's knowledge before
the Company disclosed it to Executive; (ii) the information was or became
generally known to those who could take economic advantage of it; (iii)
Executive obtained the information from a party having the right to disclose it
to Executive without violation of any obligation to the Company, or (iv)
Executive is required to disclose the information pursuant to legal process
(e.g., a subpoena), provided that Executive notifies the Company immediately
upon receiving or becoming aware of the legal process in question. No
combination of information will be deemed to be within any of the four
exceptions in the previous sentence, however, whether or not the component parts
of the combination are within one or more exceptions, unless the combination
itself and its economic value and principles of operation are themselves within
such an exception or exceptions.
(d) All originals and all copies of any drawings, blueprints, manuals,
reports, computer programs or data, notebooks, notes, photographs, and all other
recorded, written, or printed matter relating to research, manufacturing
operations, or business of the Company made or received by Executive during the
Employment are the property of the Company. Upon Termination of the Employment,
whether or not for Cause, Executive will immediately deliver to the Company all
property of the Company which may still be in Executive's possession. Executive
will not remove or assist in removing such property from the Company's premises
under any circumstances, either during the Employment or after Termination
thereof, except as authorized by the Company's management.
(e) For a period of one (1) year after the date of Termination of the
Employment, Executive will not, either directly or indirectly, hire or employ or
offer or participate in offering employment to any person who at the time of
such Termination or at any time during such one-year period following the time
of such Termination was an employee of the Company without the prior written
consent of the Company.
5. Ownership of Intellectual Property.
(a) The Company will be the sole owner of any and all of Executive's
Inventions that are related to the Company's business, as defined in more detail
below.
(b) For purposes of this Agreement, "Inventions" means all inventions,
discoveries, and improvements (including, without limitation, any information
relating to manufacturing techniques, processes, formulas, developments or
experimental work, work in progress, or business trade secrets), along with any
and all other work product relating thereto.
(c) An Invention is "related to the Company's business"
("Company-Related Invention") if it is made, conceived, or reduced to practice
by Executive (in whole or in part, either alone or jointly with others, whether
or not during regular working hours), whether or not potentially patentable or
copyrightable in the U.S. or elsewhere, and it either: (i) involves equipment,
supplies, facilities, or trade secret information of the Company; (ii) involves
the time for which Executive was or is to be compensated by the Company; (iii)
relates to the business of the Company or to its actual or demonstrably
anticipated research and development; or (iv) results, in whole or in part, from
work performed by Executive for the Company.
(d) Executive will promptly disclose to the Company, or its
nominee(s), without additional compensation, all Company-Related Inventions.
(e) Executive will assist the Company, at the Company's expense, in
protecting any intellectual property rights that may be available anywhere in
the world for such Company-Related Inventions, including signing U.S. or foreign
patent applications, oaths or declarations relating to such patent applications,
and similar documents.
(f) To the extent that any Company-Related Invention is eligible under
applicable law to be deemed a "work made for hire," or otherwise to be owned
automatically by the Company, it will be deemed as such, without additional
compensation to Executive. In some jurisdictions, Executive may have a right,
title, or interest ("Right," including without limitation all right, title, and
interest arising under patent law, copyright law, trade-secret law,
semiconductor chip protection law, or otherwise, anywhere in the world,
including the right to xxx for present or past infringement) in certain
Company-Related Inventions that cannot be automatically owned by the Company.
In that case, if applicable law permits Executive to assign Executive's Right(s)
in future Company-Related Inventions at this time, then Executive hereby assigns
any and all such Right(s) to the Company, without additional compensation to
Executive; if not, then Executive agrees to assign any and all such Right(s) in
any such future Company-Related Inventions to the Company or its nominee(s) upon
request, without additional compensation to Executive.
6. Non-competition. As a condition to, and in consideration of, the
Company's entering into this Agreement, and giving Executive access to certain
confidential and proprietary information, which Executive recognizes is valuable
to the Company and, therefore, its protection and maintenance constitutes a
legitimate interest to be protected by the provisions of this Section 6 as
applied to Executive and other employees similarly situated to Executive, and
for ten dollars ($10) and other good and valuable consideration, the receipt and
sufficiency of which Executive hereby acknowledges, Executive acknowledges and
hereby agrees as follows:
(a) that Executive is and will be engaged in the business of the
Company;
(b) that Executive has occupied a position of trust and confidence
with the Company prior to the Effective Date, and that during such period and
the period of Executive's Employment under this Agreement, Executive has, and
will, become familiar with the Company's trade secrets and with other
proprietary and confidential information concerning the Company;
(c) that the obligations of this Agreement are directly related to the
Employment and are necessary to protect the Company's legitimate business
interests; and that the Company's need for the covenants set forth in this
Agreement is based on the following: (i) the substantial time, money and effort
expended and to be expended by the Company in developing technical designs,
computer program source codes, marketing plans and similar confidential
information; (ii) the fact that Executive will be personally entrusted with the
Company's confidential and proprietary information; (iii) the fact that, after
having access to the Company's technology and other confidential information,
Executive could become a competitor of the Company; and (iv) the highly
competitive nature of the Company's industry, including the premium that
competitors of the Company place on acquiring proprietary and competitive
information; and
(d) that for a period commencing on the Effective Date and ending
twelve (12) months following Termination as provided in Section 11, Executive
will not, directly or indirectly, serve as employee, agent, consultant,
stockholder, director, co-partner or in any other individual or representative
capacity, own, operate, manage, control, engage in, invest in or participate in
any manner in, act as consultant or advisor to, render services for (alone or in
association with any person, firm, corporation or entity), or otherwise assist
any person or entity that directly or indirectly engages or proposes to engage
in (i) the same, or a substantially similar, type of business as that in which
the Company engages; or (ii) the business of the manufacturing, distribution or
sale of (A) products manufactured, distributed, sold or license by the Company
at the time of Termination; or (B) products proposed at the time of Termination
to be manufactured, distributed, sold or licensed by the Company, anywhere in
Texas and Louisiana (the "Territory"); provided, however
(e) that nothing contained herein shall be construed to prevent
Executive from investing in the stock or securities of any competing corporation
listed on any recognized national securities exchange or traded in the over the
counter market in the United States, but only if (i) such investment is of a
totally passive nature and does not involve Executive devoting time to the
management or operations of such corporation and Executive is not otherwise
involved in the business of such corporation; and if (ii) Executive and his
associates (as such term is defined in Regulation 14(A) promulgated under the
Securities Exchange Act of 1934, as in effect on the Effective Date),
collectively, do not own, directly or indirectly, more than an aggregate of two
(2) percent of the outstanding stock or securities of such corporation.
7. Legal Fees and Expenses. In the event of a lawsuit, arbitration, or
other dispute-resolution proceeding between the Company and Executive arising
out of or relating to this Agreement, the prevailing party, in the proceeding as
a whole and/or in any interim or ancillary proceedings (e.g., opposed motions,
including without limitation motions for preliminary or temporary injunctive
relief) will be entitled to recover its reasonable attorneys' fees and expenses
unless the court or other forum determines that such a recovery would not serve
the interests of justice.
8. Successors.
(a) This Agreement shall inure to the benefit of and be binding upon
(i) the Company and its successors and assigns and (ii) Executive and
Executive's heirs and legal representatives, except that Executive's duties and
responsibilities under this Agreement are of a personal nature and will not be
assignable or delegable in whole or in part.
(b) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "the Company" shall mean the Company
as hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
9. Arbitration.
(a) Except as set forth in paragraph (b) of this Section 9 or to the
extent prohibited by applicable law, any dispute, controversy or claim arising
out of or relating to this Agreement will be submitted to binding arbitration
before a single arbitrator in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association in
effect on the date of the demand for arbitration. The arbitration shall take
place before a single arbitrator, who will preferably but not necessarily be a
lawyer but who shall have at least five years' experience in working in or with
companies engaged in the industry in which the Company is engaged. Unless
otherwise agreed by the parties, the arbitration shall take place in the city in
which Executive's principal office space is located at the time of the dispute
or was located at the time of Termination of the Employment (if applicable).
The arbitrator is hereby directed to take all reasonable measures not
inconsistent with the interests of justice to expedite, and minimize the cost
of, the arbitration proceedings.
(b) To protect inventions, trade secrets, or other confidential
information of Section 4, and/or to enforce the non-competition provisions of
Section 6, the Company may seek temporary, preliminary, and/or permanent
injunctive relief in a court of competent jurisdiction, in each case, without
waiving its right to arbitration.
(c) At the request of either party, the arbitrator may take any
interim measures s/he deems necessary with respect to the subject matter of the
dispute, including measures for the preservation of confidentiality set forth in
this Agreement.
(d) Judgment upon the award rendered by the arbitrator may be entered
in any court having jurisdiction.
10. Indemnification. Company shall to the fullest extent permitted by law
or as set forth in the Articles of Incorporation, and any future amendments,
and the Bylaws of the Company, indemnify, defend and hold harmless Executive
from and against any and all claims, demands, proceedings, liabilities, damages,
losses and expenses (including attorney's fees, court costs and disbursements)
arising out of the fact that he is or was a director or officer of the Company,
or the performance of his duties hereunder except in the case of Executive's
gross negligence, willful misconduct, criminal conduct or violations of law.
11. Termination.
This Agreement and the employment relationship created hereby will
terminate (i) upon the death or disability of Executive under Section 11 (a) or
11(b); (ii) with cause under Section 11 (c); (iii) for good reason under Section
11 (d); or (iv) without cause under Section 11(e).
(a) Disability. Company shall have the right to terminate the
employment of Executive under this Agreement for disability in
the event Executive suffers an injury, illness, or incapacity of
such character as to substantially disable him from performing
his duties without reasonable accommodation by Executive
hereunder for a period of more than thirty (30) consecutive days
upon Company giving at least thirty (30) days written notice of
termination.
(b) Death. This agreement will terminate on the Death of the
Executive.
(c) With Cause. Company may terminate this Agreement at any time
because of (i) Executive's material breach of any term of the
Agreement, (ii) the determination by the Board of Directors in
the exercise of its reasonable judgment that Executive has
committed an act or acts constituting a felony or other crime
involving moral turpitude, dishonesty or theft or fraud; or (iii)
Executive's negligence in the performance of his duties
hereunder.
(d) Good Reason. The Executive may terminate his employment for "Good
Reason" by giving Company ten (10) days written notice if:
(i) he is assigned, without his express written consent, any
duties materially inconsistent with his positions, duties,
responsibilities, or status with Company as of the date
hereof, or a change in his reporting responsibilities or
titles as in effect as of the date hereof;
(ii) his compensation is reduced; or
(iii) Company does not pay any material amount of compensation
due hereunder and then fails either to pay such amount
within the ten (10) day notice period required for
Termination hereunder or to contest in good faith such
notice. Further, if such contest is not resolved within
thirty (30) days, Company shall submit such dispute to
arbitration under Section 9.
(e) Without Cause. Company may terminate this Agreement without
cause.
12. Obligations of Company upon Termination.
(a) In the event of the termination of Executive's employment
pursuant to Section 11(a), (b) or (c), Executive will be entitled only to the
compensation earned by him hereunder as of the date of such termination (plus
life insurance or disability benefits), provided that if Executive's employment
terminates pursuant to Section 11(b) during the twelve-month period immediately
following the Effective Date, Executive's right to 1,000,000 Shares shall
immediately and fully vest and shall be payable to Xxxxxxx X. Xxxxxxx,
Executive's wife as of the Effective Date.
(b) In the event of the termination of Executive's employment
pursuant to Section 11 (d) or (e), Executive will be entitled to receive as
severance pay, an amount equal to the monthly compensation provided for in
Section 3(a) multiplied by a factor of three (3) in addition to all payments of
salary earned through the date of termination in one lump sum.
13. Other Provisions.
(a) All notices and statements with respect to this Agreement must be
in writing. Notices to the Company shall be delivered to the Chairman of the
Board or any vice president of the Company. Notices to Executive may be
delivered to Executive in person or sent to Executive's then-current home
address as indicated in the Company's records.
(b) This Agreement sets forth the entire agreement of the parties
concerning the subjects covered herein; there are no promises, understandings,
representations, or warranties of any kind concerning those subjects except as
expressly set forth in this Agreement.
(c) Any modification of this Agreement must be in writing and signed
by all parties; any attempt to modify this Agreement, orally or in writing, not
executed by all parties will be void.
(d) If any provision of this Agreement, or its application to anyone
or under any circumstances, is adjudicated to be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability will not affect any other
provision or application of this Agreement which can be given effect without the
invalid or unenforceable provision or application and will not invalidate or
render unenforceable such provision or application in any other jurisdiction.
(e) This Agreement will be governed and interpreted under the laws of
the United States of America and the laws of the State of Texas as applied to
contracts made and carried out in Texas by residents of Texas.
(f) No failure on the part of any party to enforce any provisions of
this Agreement will act as a waiver of the right to enforce that provision.
(g) Section headings are for convenience only and shall not define or
limit the provisions of this Agreement.
(h) This Agreement may be executed in several counterparts, each of
which is an original. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any of the other
counterparts. A copy of this Agreement signed by one party and faxed to another
party shall be deemed to have been executed and delivered by the signing party
as though an original. A photocopy of this Agreement shall be effective as an
original for all purposes.
14. Summary of Terms of Employment
Effective Date October 27, 2004
Term One year, renewable
Office / Position President and Chief Executive Officer
Salary $11,000 per month
This Agreement contains provisions requiring binding arbitration of
disputes. By signing this Agreement, Executive acknowledges that he or she (i)
has read and understood the entire Agreement; (ii) has received a copy of it
(iii) has had the opportunity to ask questions and consult counsel or other
advisors about its terms; and (iv) agrees to be bound by it.
Executed to be effective as of the Effective Date.
FALCON NATURAL GAS CORP. EXECUTIVE
by:/s/ Massimiliano Pozzoni /s/ Xxxx X. Xxxxxxx
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Massimiliano Pozzoni Xxxx X. Xxxxxxx
Director
