This Employment Agreement (the
“Agreement”) is made and entered into by and between Eternal Energy Corp. (the
“Company”) and Xxxx Xxxxxxxx (“Executive”), on the 28th day of May, 2008,
and will be effective as of the 2nd day of
June, 2008 (the “Effective Date”). The parties hereto agree as
follows:
1. Employment
and Duties. The Company shall employ Executive in the position
of Chief Financial Officer (or such other senior executive position as may be
assigned to him by the Company’s Chief Executive
Officer). Executive’s responsibilities shall include, but not be
limited to, overseeing all accounting, financial, compliance, SEC reporting
and/or other regulatory activities typically associated with a publicly traded
company (such as overseeing the Company’s Treasury, Human Resources, Risk
Management and Investor Relations functions), managing the Company’s
relationship with its external audit firm and such other senior executive duties
as may be assigned to Executive from time to time by the Company’s Chief
Executive Officer. In addition, Executive shall perform such services
for Xxxxxx Oil Corporation, Roadrunner Oil and Gas, Inc. and their parents and
subsidiaries as the Company shall direct from time to time. Executive
shall report to the Company’s Chief Executive Officer. Executive
shall devote his full time, attention and energy exclusively to the business and
interests of the Company and to the performance of his duties and obligations
under this Agreement, unless otherwise provided by this
Agreement. Notwithstanding the foregoing, however, Executive shall
have the right to perform incidental accounting, tax consulting and tax
compliance services at such times and in such manner as will not interfere with
the performance of his duties for the Company.
3.3 Stock
Options. The Company grants Executive, as of the date of this
Agreement, the option to purchase One Million (1,000,000) shares of the
Company’s common stock at a per share exercise price of eighteen US Cents ($0.18
USD), subject to all of the terms set forth below and in the Stock Option
Agreement memorializing the grant of this option (“Stock Option”). A
condition to the grant of this Stock Option will be that the parties memorialize
the grant of this Stock Option in a written stock option agreement (“Stock
Option Agreement”) containing the customary terms and conditions which the
Company includes in stock options granted to members of its Board of Directors
and other employees and containing the other terms and conditions set forth in
this Paragraph. The Stock Option will vest and be exercisable as to
twenty-five percent (25%) of the optioned shares every six (6) months over a
period of two years, with the first twenty-five percent (25%) becoming
exercisable six (6) months from the Effective Date. If the Company
terminates Executive’s employment without “Cause,” defined below, Executive’s
severance benefits (including vesting of the Stock Options) will be governed by
the Sub-section of this Agreement entitled “Termination Without
Cause.” If the Company terminates Executive’s employment for “Cause,”
then all of Executive’s un-vested Stock Options shall expire and become
un-exercisable as of the date of such termination “for
Cause.” The Stock Option Agreement will provide that the vested Stock
Options shall be exercisable, in whole or in part, for a period of five years
from the Effective Date, expiring on June 1, 2013, subject to earlier
termination in accordance with the provisions of this Agreement and the Stock
Option Agreement. In addition, the Stock Option Agreement will
provide that the Stock Options shall expire ninety (90) days after termination
of Executive's employment. The Stock Option Agreement will also
provide that the purchase price for the shares to be purchased upon the exercise
of the Stock Option must be paid in cash at the time of the exercise of the
Stock Option.
A. If,
immediately prior to or within twelve months following a Change in Control
(defined below), (i) Executive’s employment is terminated by the
Company without Cause or (ii) Executive’s employment is terminated for Good
Reason (defined below), Executive shall receive: (x) payment of Executive’s Base
Salary through and including the date of termination; (y) payment for all
accrued and unused vacation time existing as of the date of termination, which
will be paid at a rate calculated in accordance with Executive’s Base Salary at
the time of termination; and (z) reimbursement of business expenses incurred
prior to the date of termination. In addition, if the severance of
Executive’s employment falls within the terms of this Sub-section, then, subject
to the condition that Executive sign a general release of all claims in a form
approved by the Company in the exercise of its sole discretion, Executive shall
receive the following additional benefits: (i) a severance payment in an amount
equal to the product of two times Executive’s annual Base Salary as the same may
have been changed through the date of the severance of Executive’s employment,
less applicable withholdings; and (ii) immediate vesting in full of any unvested
Stock Options issued to Executive pursuant to the Stock Option Agreement
referred to in the Sub-section of this Agreement entitled “Stock
Options.”
B. If
Executive xxxxxx employment with the Company within sixty (60) days of a Change
in Control (defined below) for any reason other than Good Reason (defined
below), Executive shall receive: (x) payment of Executive’s Base Salary through
and including the date of termination; (y) payment for all accrued and unused
vacation time existing as of the date of termination, which will be paid at a
rate calculated in accordance with Executive’s Base Salary at the time of
termination; and (z) reimbursement of business expenses incurred prior to the
date of termination. In addition, if Executive xxxxxx employment with
the Company within sixty (60) days of a Change in Control for any reason other
than Good Reason, then, subject to the condition that Executive sign a general
release of all claims in a form approved by the Company in the exercise of its
sole discretion, Executive shall receive the following additional benefits: (i)
a severance payment in an amount equal to Executive’s annual Base Salary as the
same may have been changed through the date of the severance of Executive’s
employment, less applicable withholdings; and (ii) immediate vesting in full of
any unvested Stock Options issued to Executive pursuant to the Stock Option
Agreement referred to in the Sub-section of this Agreement entitled “Stock
Options.”
C. For
purposes of this Section, the term “Change in Control” shall have the meaning
given that term in the Stock Option Agreement referred to in the Sub-section of
this Agreement entitled “Stock Options.”
4.1.4 “Cause.” As used in this
Agreement, “Cause” shall be defined as:
4.1.5 “Good
Reason.” As used in this
Agreement, “Good Reason” means the occurrence of any of the following without
Executive’s prior written consent and in the absence of any circumstance that
constitutes Cause: (i) the regular assignment to Executive of duties
materially inconsistent with the position and status of Executive; (ii) a
material reduction in the nature, status or prestige of Executive’s
responsibilities or a materially detrimental change in Executive’s title or
reporting level, excluding for this purpose an isolated, insubstantial or
inadvertent action by the Company which is remedied by the Company promptly
after the Company’s receipt of written notice from Executive; or (iii) a
reduction by the Company of Executive’s annual Base Salary.
4.2 Termination
upon Death or Permanent Disability. This Agreement will
terminate automatically on Executive’s death or if Executive becomes Permanently
Disabled (as defined below) and the Base Salary, Fringe Benefits and other
payments and benefits which Executive, or Executive’s beneficiaries or estate,
shall be entitled to receive shall be determined exclusively by operation of
this Subsection. In the event of such termination, Executive, or
Executive’s beneficiaries or estate, shall be entitled to receive such amounts
of the Base Salary and Fringe Benefits as would have been payable to Executive
under a termination without Cause under the Sub-section of this Section entitled
“Termination Without Cause” as of the date of death or on which the Company
determines in its reasonable discretion that Executive has become Permanently
Disabled. In addition, as of the date of the termination of
Executive’s employment pursuant to this Sub-section, Executive shall be
immediately vested in full as to any unvested Stock Options issued to Executive
pursuant to the Stock Option Agreement referred to in the Sub-section of this
Agreement entitled “Stock Options.” As used in this Agreement,
“Permanently Disabled” shall mean the incapacity of Executive due to illness,
accident, or any other reason to perform his duties for a period of ninety (90)
days, whether or not consecutive, during any twelve month period of the Term,
all as determined by the Company in its reasonable discretion. All
determinations as to the date and extent of incapacity of Executive shall be
made by the Company’s Board of Directors, upon the basis of such evidence,
including independent medical reports and data, as the Board of Directors in its
discretion deems necessary and desirable. All such determinations of
the Board of Directors shall be final.
5.2 Confidential
Information. Executive acknowledges and agrees that the
Company is engaged in business activities in which it is or may be crucial to
develop and retain proprietary, trade secret, or confidential information for
the benefit of the Company (collectively, “Confidential
Information”). Accordingly, Executive shall not at any time during or
after the Term, either directly or indirectly, (i) divulge or convey any
Confidential Information to any entity or individual, except as may be expressly
authorized in writing by the Company or as required in the course of Executive’s
performance of his duties hereunder, or (ii) use any Confidential Information
for Executive’s own benefit or the benefit of any entity or individual except
the Company. The Confidential Information to which Executive may have
access may include, but is not limited to, matters of a technical or
intellectual nature such as inventions, designs, improvements, processes of
discovery, techniques, methods, ideas, discoveries, developments, know-how,
formulae, compounds, compositions, specifications, trade secrets, specialized
knowledge, or matters of a business nature such as information about costs and
profits, records, customer lists, customer data or sales data.
5.3 Ownership
of Ideas. The Company shall own, and Executive hereby
transfers and assigns to the Company, all rights, of every kind and character
throughout the world, in perpetuity, in and to any material or ideas, and all
results and proceeds of the performance of Executive’s services hereunder,
conceived of or produced during the Term by Executive in the performance of his
services hereunder. The parties acknowledge and agree, however, that
such transfer and assignment shall not apply to, or attach in and to, any
material or ideas which were not conceived or produced in the performance of
Executive’s services hereunder. Executive shall execute and deliver
to the Company such assignments, certificates of authorship, or other
instruments as the Company may require from time to time to evidence ownership
of such material, ideas, the results and proceeds of the performance of
Executive’s services under this Agreement. Executive’s agreement to
assign to the Company any of his rights as set forth in this Sub-section shall
not apply to any invention for which no equipment, supplies, facility or trade
secret information of the Company was used and that was developed entirely upon
Executive’s own time and that does not result from any work performed by
Executive for the Company.
5.4 Company
Property. All records, papers, documents, materials, and
electronically stored data kept, made, or received by Executive while employed
by the Company, or generated for, in the course of, or in connection with the
business of the Company, whether or not containing Confidential Information,
shall be and remain the exclusive property of the Company (collectively referred
to as “Company Property”) at all times during and after Executive’s employment
with the Company, without regard to how Executive came into possession of any
Company Property or whether Executive played any role in creating any Company
Property. Executive shall not destroy any Company Property or remove
any Company Property from the Company’s premises, whether during or after
employment at the Company, except as expressly directed for the purpose of
performing services on behalf of the Company. Upon the termination of
Executive’s employment with the Company at any time and for any reason, or upon
the Company’s request at any time and for any reason, Executive shall promptly
return all Company Property to the Company, without keeping a copy of any such
Company Property for himself or any other entity or
individual. Executive will, upon request by Company, certify his
compliance with the terms of this Sub-section.
5.5.1 Not Hire
Away. For so long as Executive is employed by the Company, and
for a three-year period thereafter, Executive shall not, directly or indirectly,
whether for his own benefit or for the benefit of any other entity or
individual, (i) solicit, encourage, or in any way influence any person employed
by, or engaged to render services on behalf of, the Company, to cease performing
services for the Company, or to engage in any activity contrary to or
conflicting with the interests of the Company; (ii) hire away any person
employed by, or engaged to render services on behalf of, the Company; or (iii)
otherwise interfere to the Company’s detriment in any way in the Company’s
relationship with any person who is employed by, or engaged to render services
on behalf of, the Company.
If
to Executive:
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Xxxx
X. Xxxxxxxx
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0000
Xxxxxx Xxxxx
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Xxxx
Xxxx, XX 00000
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If
to the Company:
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0000
Xxxx Xxxx Xxxxxx, Xxxxx 000
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Xxxxxxxxx,
XX 00000
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Executive:
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/s/ Xxxx X.
Xxxxxxxx |
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By:
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/s/ Xxxxxxx X.
Xxxxx |
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Xxxx
X. Xxxxxxxx
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Its:
Chief Executive Officer |
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