EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made on this 1st day of May,
2004, by and between Far East Energy Corporation, a Nevada corporation
("Company"), and Xxxxx X. Xxxx, a resident of Texas ("Executive").
PREMISES
WHEREAS, Company desires to employ Executive as its Chief Financial
Officer, pursuant to the terms and conditions hereof; and
WHEREAS, Executive possesses experience as a member of executive
management of companies in the oil and gas industry, and desires to serve as
Company's Chief Financial Officer; and
WHEREAS, in consideration for Executive's future services as Chief
Financial Officer of the Company, Company desires to grant to Executive
non-qualified options to purchase shares of its common stock (the "Common
Stock"), and Executive desires to receive partial payment for his services in
options to purchase shares of Common Stock.
AGREEMENT
NOW THEREFORE, with the above provisions incorporated herein by this
reference, in consideration of the mutual promises contained herein, the
benefits to be derived by each party hereunder and other good and valuable
consideration, the sufficiency of which is hereby expressly acknowledged, the
parties hereto mutually agree as follows:
3. Employment. Company hereby agrees to employ Executive and Executive
hereby agrees to accept full time employment as Chief Financial Officer
of Company, upon the terms and conditions set forth in this Agreement.
4. Term. The employment of Executive by Company pursuant to this Agreement
shall commence on May 1, 2004, and end Five (5) years hereafter, unless
sooner terminated pursuant to Section 4 below (hereinafter referred to
as the "Service Period").
5. Compensation. In consideration for the services to be rendered by
Executive, the Company shall compensate Executive as follows (such
compensation and benefits being hereinafter referred to as
"Compensation Benefits"):
6. Base Salary. Company shall pay to Executive a base annual salary of
$160,000 during the Service Period (such amount, as it may be increased
from time to time, may sometimes hereinafter be referred to as "Base
Salary"). Company shall conduct a
review of Executive twelve (12) months from the date of this Agreement
at which time Executive's Base Salary may be increased.
B. Signing Bonus. As a material inducement to
Executive to accept the position of Chief Executive Officer,
Company shall pay to Executive a signing bonus in the amount
of $25,000.00 immediately upon the effective date of this
Agreement.
C. Bonus. Executive shall be eligible to receive
annual bonuses of approximately fifteen to twenty-five percent
of his then current base salary, subject to management review.
D. Insurance. Company shall pay the full cost of
health care insurance for Executive and Executive's immediate
family. During the Service Period, Company shall provide
Executive with any other benefits that Company makes available
to other similarly situated Executives.
E. Common Stock. As additional compensation, Company
shall grant to Executive, pursuant to the Stock Option
Agreement attached hereto as Exhibit A and incorporated herein
by reference, a non-qualified option to purchase 500,000
shares ("Shares") of Common Stock. The Stock Option Agreement
will include certain registration rights for the benefit of
the Executive.
F. Vacation. Executive shall be entitled to vacation
befitting that of a senior executive, which in no event shall
be less than four weeks per year.
7. Termination. Executive's employment hereunder shall terminate as a
result of any of the following events:
8. Executive's death;
9. Executive shall be unable to perform his duties hereunder for a
continuous period of at least six months or an aggregate of nine months
during any continuous twelve month period by reason of illness,
accident or other physical or mental disability, as verified by a
licensed physician mutually selected by the Company and Executive
("Disability");
10. Termination by Executive upon 30 days advance notice in writing to
Company; or termination by Company by giving 30 days advance notice in
writing to Executive;
11. Termination by Company for Cause, where "Cause" shall mean: (i) the
final non-appealable conviction of Executive of a felony; (ii) gross
misappropriation or theft of company funds; or (iii) complete and total
abandonment of duties for thirty (30) consecutive days (other than for
reason of disability).
5. Severance Pay. As a material inducement to Executive to secure his
services as Chief Financial Officer, Company agrees that in the event that
Executive is terminated by Company for any reason (other than for "Cause" as
defined herein below),
or is terminated after a Change in Control, Company shall immediately pay to
Executive a single lump-sum severance or separation payment of Fifty Thousand
Dollars ($50,000). "Cause" shall mean gross misappropriation or theft of company
funds, conviction of a felony, or complete and total abandonment of duties for
thirty consecutive days (other than for reason of disability). Executive shall
retain all of his rights in, and ownership of, all stock options vested as of
the date of termination, or that would vest within thirty (30) days following
the date of termination or separation, or contractual default.
6. Representations and Warranties. Executive hereby represents and
warrants to the Company that (i) the execution, delivery and performance of this
Agreement by Executive does not and shall not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which Executive is bound, and (ii)
Executive is not a party to or bound by any employment agreement, noncompetition
agreement or confidentiality agreement with any other person or entity which in
any way may restrict, impair or limit the performance of his duties hereunder.
7. Duties. During the term of this Agreement, Executive shall initially
serve as the Senior Vice President of Exploration and Production of Company.
Executive shall perform the tasks and have the rights, powers and obligations
normally associated with the office of Senior Vice President of Exploration and
Production, including such other offices or positions that Company's board of
directors ("Board of Directors") shall reasonably request.
8. Covenant Not to Compete. In exchange for the various consideration
provided herein, during the term of this Agreement and for a period of one (1)
year following the date of termination, in the event Executive leaves or
abandons his position with Company otherwise than for Good Reason, then
Executive will not compete with Company through involvement on any project that
Company is then pursuing, or did pursue within the one hundred twenty (120) days
prior to Executive's departure from Company (a "Competing Project"). In the
event that Executive is hired as an Executive or consultant of an entity that is
involved in a Competing Project, Executive shall recuse himself from and not
participate in, directly or indirectly, any activities of such entity with
respect to the evaluation, development or operation of the Competing Project.
9. Non-Disclosure of Information. In exchange for the various
consideration provided herein, Executive will not, directly or indirectly,
during the term of this Agreement and for a period of one (1) year after the
termination of this Agreement, disclose to any person not authorized by Company
to receive or use such information, except for the sole benefit of Company, any
of Company's confidential or proprietary data, information, or techniques, or
give to any person not authorized by Company to receive any information that is
not generally known to anyone other than Company or that is designated by
Company as "Limited," "Private," or "Confidential," or similarly designated.
10. Expenses. In accordance with Company's published Expense
Reimbursement Policy, Executive may incur reasonable expenses for promoting or
developing Company's business, including reasonable expenses for entertainment,
travel, and similar items. In accordance with Company's published Expense
Reimbursement Policy, Company will reimburse Executive for all such expenses
upon Executive's periodic presentation of an itemized account of such
expenditures.
11. Entire Agreement. This Agreement constitutes the entire
understanding between the parties, and there are no covenants, conditions,
representations, or agreements, oral or written, of any nature whatsoever, other
than those herein contained.
12. Severability. If any term, condition, clause, or provision of
this Agreement shall be deemed to be void or invalid, then
that term, condition, clause, or provision shall be stricken
from this Agreement to the extent it is held to be void or
invalid, and in all other respects this Agreement shall be
valid and in full force and operation.
13. Notices. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be
in writing and shall be deemed to have been duly given when
received at the addresses written below on (i) the third
business day after the date when sent by certified or
registered mail; (ii) the next business day after the date
sent by guaranteed overnight courier; or (iii) the date sent
by telecopier or delivered by hand, in each case, to the
addresses set forth below:
If to Company: Far East Energy Corporation
000 Xxxxx Xxx Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. XxXxxxxxx
(000) 000-0000
With a Copy to: Xxxxxxx Law Firm
Attn: Xxxxx X. Xxxxxxx
0000 X. Xxxxxxx Xxxxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
(000) 000-0000
If to Executive: Xxxxx X. Xxxx
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxx, Xxxxx 00000
or to such other addresses as the parties may specify in writing.
14. Arbitration. Any controversy or claim arising out of or
relating to this Agreement or the breach of it, shall be
settled by arbitration in accordance with the rules of the
American Arbitration Association, and judgment on the award
rendered may be entered in any court having jurisdiction.
15. Governing Law and Venue. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of
Texas without reference
to the conflict of laws principles thereof. In the event any
dispute regarding this Agreement arises between the Parties
and is not resolved at arbitration, such dispute shall be
brought in a proper jurisdiction located within Xxxxxx County,
Texas.
16. Attorney's Fees. If any action at law or in equity, including
an action for declaratory relief or any form of dispute
resolution, is brought to enforce or interpret the provisions
of this Agreement, the prevailing party shall be entitled to
recover actual attorney's fees, court costs, and other costs
incurred in proceeding with the action from the other party.
The attorney's fees, court costs or other costs, may be
ordered by the fact finder, in any decision of any action
described in this section or may be enforced in a separate
action brought for determining attorney's fees, court costs,
or other costs. In the event Company is represented by
in-house counsel and Company prevails in any such action or
dispute resolution, all parties agree that Company may recover
attorney's fees incurred by that in-house counsel in an amount
equal to that attorney's normal fees for similar matters, or,
should that attorney not normally charge a fee, by the
prevailing rate charged by attorneys with similar background
in that legal community.
17. Assignment. This Agreement shall not be assignable by any
party to this Agreement, except upon the written consent of
all parties hereto. Executive shall not have the right to
pledge, encumber, or dispose of the right to receive any
Compensation Benefits under this Agreement, which Compensation
Benefits and the right thereto are expressly declared to be
non-assignable and nontransferable and, in the event of any
attempted assignment or transfer, Company shall have no
further liability hereunder.
18. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original but
both of which together shall constitute one and the same
agreement.
19. Right to Counsel. Executive hereby agrees that Company has
advised and encouraged him to retain his own counsel and that
he has had full opportunity to retain such counsel to review
this document and advise him of the terms and conditions set
forth herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal the day and year first above written.
FAR EAST ENERGY CORPORATION, XXXXX X. XXXX
a Nevada corporation
/s/ Xxxxxxx X. XxXxxxxxx /s/ Xxxxx X. Xxxx
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Xxxxxxx X. XxXxxxxxx, President Xxxxx X. Xxxx
