EMPLOYMENT AGREEMENT
Exhibit 10.1
This EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into effective as of January 1, 2015 (the “Effective Date”), by and between Emerald Oil, Inc., a Delaware corporation (the “Company”), and Xxxxxxx Xxxxxxxxx (“Employee”). Notwithstanding the foregoing, the provisions of Section 8 shall be effective immediately on the signing of this Agreement by the Company and the Employee.
(a) “2011 Equity Incentive Plan” shall mean the Emerald Oil, Inc. Second Amended and Restated 2011 Equity Incentive Plan, as may be amended from time to time.
(b) “Accounting Firm” shall have the meaning set forth in Section 9(b).
(c) “Accrued Obligations” shall mean (i) all accrued but unpaid Base Salary through the date of termination of Employee’s employment, (ii) any unpaid or unreimbursed expenses incurred in accordance with Section 7 below, (iii) any benefits provided under the Company’s employee benefit plans upon a termination of employment, in accordance with the terms contained therein, and (iv) reasonable relocation costs, to the extent unpaid or unreimbursed, payable to Employee by the Company, in accordance with written Company policy.
(d) “Affiliate” shall mean any person controlling, controlled by, or under common control with, another Person.
(e) Intentionally left blank.
(f) “Annual Bonus” shall mean the aggregate value of the Annual Cash Bonus and the Annual Equity Bonus.
(g) “Annual Cash Bonus” shall have the meaning set forth in Section 4(b).
(h) “Annual Equity Bonus” shall have the meaning set forth in Section 4(c).
(i) “Agreement” shall have the meaning set forth in the preamble hereto.
(j) “Base Salary” shall mean the salary provided for in Section 4(a) or any increased salary granted to Employee pursuant to Section 4(a).
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(k) “Board” shall mean the Board of Directors of the Company.
(l) “Cause” shall mean (i) a material breach of the terms and conditions of Employee’s employment agreement with the Company, (ii) Employee’s act(s) of gross negligence or willful misconduct in the course of Employee’s employment hereunder that is injurious to the Company or any other member of the Company Group, (iii) willful failure or refusal by Employee to perform in any material respect Employee’s duties or responsibilities, (iv) misappropriation by Employee of any assets of the Company or any other member of the Company Group, (v) embezzlement or fraud committed by Employee, or at Employee’s direction, (vi) Employee’s conviction of, or pleading “guilty” or “no contest” to a felony under state or federal law.
(m) Intentionally left blank.
(n) “COBRA” shall mean the health care continuation provisions of Section 4980B(f) of the Code.
(o) “Code” shall mean the Internal Revenue Code of 1986, as amended.
(p) “Company” shall have the meaning set forth in the preamble hereto, and shall include any of its successors or assigns.
(q) “Company Business” shall have the meaning in set forth in Section 13(a).
(r) “Company Group” shall mean the Company together with any direct or indirect subsidiaries of the Company or any of its Affiliates.
(s) “Compensation Committee” shall mean the committee of the Board designated to make compensation decisions relating to senior executive officers of the Company Group.
(t) “Confidential Information” shall have the meaning in set forth in Section 11(b).
(u) “Disability” shall mean any physical or mental disability or infirmity of the Employee that has prevented the performance of Employee’s duties for a period of (i) ninety (90) consecutive days or (ii) one hundred twenty (120) non-consecutive days during any six (6) month period. Any question as to the existence, extent, or potentiality of Employee’s Disability upon which Employee and the Company cannot agree shall be determined by a qualified, independent physician selected by the Company and approved by Employee (which approval shall not be unreasonably withheld). The determination of any such physician shall be final and conclusive for all purposes of this Agreement.
(v) “Xxxx-Xxxxx Act” shall have the meaning in set forth in Section 24.
(w) “Effective Date” shall have the meaning set forth in the preamble hereto.
(x) “Employee” shall have the meaning set forth in the preamble hereto.
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(y) “Excise Tax” shall have the meaning in set forth in Section 9(a).
(z) “Good Reason” shall mean, without Employee’s consent, (i) a material diminution in Employee’s title, duties, or responsibilities, (ii) the failure of the Company to pay any compensation hereunder when due or to perform any other obligation of the Company under this Agreement, or (iii) the relocation of Employee’s Principal Place of Employment by more than fifty (50) miles.
(aa) “Non-Exempt Deferred Compensation” shall have the meaning set forth in Section 14(d).
(bb) “Original Agreement” shall have the meaning set forth in the recitals hereto.
(cc) “Parachute Payments” shall have the meaning in set forth in Section 9(a).
(dd) “Performance Criteria” shall have the meaning set forth in Section 4(b).
(ee) “Person” shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust (charitable or non-charitable), unincorporated organization, or other form of business entity.
(ff) “Principal Place of Employment” shall mean Denver, Colorado or any future geographic location that is mutually agreed upon by the Company and Employee.
(gg) “Required Delay Period” shall have the meaning in set forth in Section 14(d)(i).
(hh) “Restricted Territory” shall have the meaning set forth in Section 13(a).
(ii) “Rules” shall have the meaning set forth in Section 20.
(jj) “Severance Benefits” shall have the meaning in set forth in Section 8(h).
(kk) “Specified Employee” shall have the meaning set forth in Section 14(d).
(ll) “Term” shall mean the period specified in Section 2.
(mm) “Work Product” shall have the meaning set forth in Section 12.
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Section 3. Position, Duties, and Responsibilities; Place of Performance.
(a) During the Term, Employee shall be employed and serve as the Chief Operating Officer of the Company and shall have such duties and responsibilities as are commensurate with such title. The Employee shall report to the Chief Executive Officer of the Company and shall carry out and perform all orders, directions and policies given to Employee by the Chief Executive Officer of the Company consistent with his position and title.
(b) Employee shall devote his best efforts to the performance of his duties under this Agreement and shall not engage in any other business or occupation during the Term that interferes with Employee’s exercise of judgment in the Company’s best interests. Notwithstanding the foregoing, nothing herein shall preclude Employee from (i) serving as a member of the boards of directors or advisory boards (or their equivalents in the case of a non-corporate entity) of non-competing businesses, (ii) engaging in charitable activities and community affairs, and (iii) managing his personal investments and affairs; provided, however, that the activities set out in clauses (i), (ii), and (iii) shall be limited by Employee so as not to materially interfere, individually or in the aggregate, with the performance of his duties and responsibilities hereunder.
Section 4. Compensation. During the Term, Employee shall be entitled to the following compensation:
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Closing Price Per Share of the Company’s Common Stock on December 31, 2015 | Value of Restricted Stock Units to Be Granted to Employee | |||
Between $3.00 and $3.99 | $ | 500,000.00 | ||
Between $4.00 and $4.99 | $ | 1,000,000.00 | ||
Between $5.00 and $5.99 | $ | 1,500,000.00 | ||
Between $6.00 and $6.99 | $ | 2,500,000.00 | ||
$7.00 or Greater | $ | 3,000,000.00 |
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Section 8. Termination of Employment.
(i) The Accrued Obligations, which amount shall be paid within thirty (30) days from the date of such termination; and
(ii) Any unpaid Annual Bonus in respect of any completed fiscal year that has ended prior to the date of such termination with such amount determined based on actual performance during such fiscal year as determined by the Compensation Committee, which amount shall be paid on the sixtieth (60th) day following the date of such termination; and
(iii) Any Annual Bonus that would have been payable based on actual performance with respect to the year of termination in the absence of the Employee’s death or Disability, pro-rated for the period the Employee worked prior to his death or Disability, and payable at the same time as the bonus would have been paid in the absence of the Employee’s death or Disability; and
(iv) Immediate vesting of any and all equity or equity-related awards previously awarded to the Employee, irrespective of type of award.
Following such termination of Employee’s employment by reason of death or Disability, except as set forth in this Section 8(b), Employee shall have no further rights to any compensation or any other benefits under this Agreement.
(c) Termination by the Company for Cause.
(i) The Company may terminate Employee’s employment at any time for Cause.
(ii) In the event the Company terminates Employee’s employment for Cause, Employee shall be entitled only to the Accrued Obligations, which amount shall be paid within thirty (30) days from the date of such termination, and any equity awards or equity-related awards that are not vested as of the date of termination shall be cancelled. Following such termination of Employee’s employment for Cause, except as set forth in this Section 8(c)(ii), Employee shall have no further rights to any compensation or any other benefits under this Agreement (including, but not limited to, any payment of any bonus that has not been paid as of the date of Employee’s termination of employment).
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(i) The Accrued Obligations; and
(ii) Any unpaid Annual Bonus in respect of any completed fiscal year that has ended prior to the date of such termination with such amount determined based on actual performance during such fiscal year as determined by the Compensation Committee; and
(iii) A lump sum cash payment equal to eighteen (18) times the “applicable percentage” of the monthly COBRA premium cost applicable to Employee if Employee (or his dependents) were to elect COBRA coverage, or similar coverage as provided by similar state law, in connection with such termination, (for purposes hereof, the “applicable percentage” shall be the percentage of Employee’s health care premium costs covered by the Company as of the date of termination); and
(iv) Immediate vesting of any and all equity or equity-related awards previously awarded to the Employee, irrespective of type of award.
Any amounts payable to Employee under clause (i), (ii), or (iii) of this Section 8(d) shall be paid in lump sum on the sixtieth (60th) day following the date of Employee’s termination of employment, subject to Section 8(h) of this Agreement. Following such termination of Employee’s employment by the Company without Cause, except as set forth in this Section 8(d), Employee shall have no further rights to any compensation or any other benefits under this Agreement.
(i) The Accrued Obligations; and
(ii) Any unpaid Annual Bonus in respect of any completed fiscal year that has ended prior to the date of such termination with such amount determined based on actual performance during such fiscal year as determined by the Compensation Committee; and
(iii) A lump sum cash payment equal to eighteen (18) times the “applicable percentage” of the monthly COBRA premium cost applicable to Employee if Employee (or his dependents) were to elect COBRA coverage, or similar coverage as provided by similar state law, in connection with such termination, (for purposes hereof, the “applicable percentage” shall be the percentage of Employee’s health care premium costs covered by the Company as of the date of termination).
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Any amounts payable to Employee under clause (i), (ii), or (iii) of this Section 8(e) shall be paid in lump sum on the sixtieth (60th) day following the date of Employee’s termination of employment, subject to Section 8(h) of this Agreement. Following such termination of Employee’s employment by Employee with Good Reason, except as set forth in this Section 8(e), Employee shall have no further rights to any compensation or any other benefits under this Agreement.
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Section 9. Parachute Payments; Modified Cutback.
(a) If any payment, benefit or distribution of any type to or for the benefit of Executive, whether paid or payable, provided or to be provided, or distributed or distributable pursuant to the terms of this Agreement or otherwise (collectively, the “Parachute Payments”) would subject Employee to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), the Parachute Payments shall be reduced so that the maximum amount of the Parachute Payments (after reduction) shall be one dollar ($1.00) less than the amount which would cause the Parachute Payments to be subject to the Excise Tax; provided that the Parachute Payments shall only be reduced to the extent the after-tax value of amounts received by Employee after application of the above reduction would exceed the after-tax value of the amounts received without application of such reduction. For this purpose, the after-tax value of an amount shall be determined taking into account all federal, state, and local income, employment and excise taxes applicable to such amount. Unless Employee shall have given prior written notice to the Company to effectuate a reduction in the Parachute Payments if such a reduction is required, any such notice consistent with the requirements of Section 409A to avoid the imputation of any tax, penalty or interest thereunder, the Company shall reduce or eliminate the Parachute Payments by first reducing or eliminating any cash severance benefits (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of stock options or similar awards, then by reducing or eliminating any accelerated vesting of restricted stock or similar awards, then by reducing or eliminating any other remaining Parachute Payments; provided, that no such reduction or elimination shall apply to any non-qualified deferred compensation amounts (within the meaning of Section 409A) to the extent such reduction or elimination would accelerate or defer the timing of such payment in manner that does not comply with Section 409A.
(b) An initial determination as to whether (i) any of the Parachute Payments received by Employee in connection with the occurrence of a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company shall be subject to the Excise Tax, and (ii) the amount of any reduction, if any, that may be required pursuant to Section 9(a) above, shall be made by an independent accounting firm selected by the Company and reasonably acceptable to Employee (the “Accounting Firm”) prior to the consummation of such change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company. Employee shall be furnished with notice of all determinations made as to the Excise Tax payable with respect to Employee’s Parachute Payments, together with the related calculations of the Accounting Firm, promptly after such determinations and calculations have been received by the Company.
(c) For purposes of this Section 9:
(i) no portion of the Parachute Payments, the receipt or enjoyment of which Employee shall have effectively waived in writing prior to the date of payment of the Parachute Payments, shall be taken into account;
(ii) no portion of the Parachute Payments shall be taken into account which in the opinion of the Accounting Firm does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code;
(iii) the Parachute Payments shall be reduced only to the extent necessary so that the Parachute Payments (other than those referred to in the immediately preceding clause (i) or (ii)) in their entirety constitute reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code or are otherwise not subject to disallowance as deductions, in the opinion of the Accounting Firm; and
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(iv) the value of any non-cash benefit or any deferred payment or benefit included in the Parachute Payments shall be determined by the Accounting Firm based on Sections 280G and 4999 of the Code, or on substantial authority within the meaning of Section 6662 of the Code.
(a) Employee is entering into this Agreement voluntarily and that Employee’s employment hereunder and compliance with the terms and conditions hereof will not conflict with or result in the breach by Employee of any agreement to which Employee is a party or by which Employee may be bound;
(b) Employee has not violated, and in connection with Employee’s employment with the Company will not violate, any non-solicitation, non-competition, or other similar covenant or agreement of a prior employer by which Employee is or may be bound; and
(c) in connection with Employee’s employment with the Company, Employee will not use any confidential or proprietary information Employee may have obtained in connection with employment with any prior employer.
Section 11. Nondisclosure and Nonuse of Confidential Information.
(a) Employee will not disclose or use at any time, either during the Term or thereafter, any Confidential Information (as defined below) of which Employee is or becomes aware, whether or not such information is developed by him, except to the extent that such disclosure or use is directly related to and required by Employee’s performance in good faith of duties assigned to Employee by the Company. Employee will take all appropriate steps to safeguard Confidential Information and to protect it against disclosure, misuse, espionage, loss and theft. Employee shall deliver to the Company at the termination of the Term, or at any time the Company may request, all memoranda, notes, plans, records, reports, disks, computer tapes and software and other documents and data (and copies thereof, regardless of the form thereof, including electronic copies) relating to the Confidential Information or the Work Product (as defined below) of the business of the Company or any of the Company’s Affiliates, which Employee may then possess or have under his control.
(b) As used in this Agreement, the term “Confidential Information” means confidential, proprietary, trade secret, proprietary, scientific, technical, business or financial information that is not generally known to the public and that is used, developed or obtained by the Company or any Affiliate, in connection with their respective businesses, including, but not limited to, information, observations and data obtained or learned by Employee while employed by the Company or any of its Affiliates (including those obtained or learned prior to the date of this Agreement) concerning (i) the business or affairs of the Company or any Affiliate, (ii) products or services, (iii) geologic data, (iv) seismic data, (v) analyses, (vi) drawings, photographs and reports, (vii) computer software, including operating systems, applications and program listings, (viii) flow charts, manuals and documentation, (ix) data bases, (x) accounting and business methods, (xi) inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not reduced to practice, (xii) customers, clients, suppliers and subcontractors and customer, client, supplier and subcontractor lists, (xiii) other copyrightable works, (xiv) all drilling methods, processes, technology and trade secrets, (xv) business strategies, acquisition plans and target properties, financial or other performance data and personnel lists and data, and (xvi) all similar and related information in whatever form. All such Confidential Information is extremely valuable and is intended to be kept secret to the Company and its clients and customers, is the sole and exclusive property of the Company or its clients and customers, and is subject to the restrictive covenants set forth herein.
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Notwithstanding anything to the contrary contained herein, Employee shall not be required to maintain as confidential any information or material which:
(i) is now, or hereafter becomes, through no act or failure to act on the part of Employee which would constitute a breach of this Section 11, generally known or available to the public;
(ii) is furnished to Employee by a third party who, to the knowledge of Employee, is not under obligations of confidentiality to the Company or any of its Affiliates, without restriction on disclosure;
(iii) is disclosed with the written approval of the Company;
(iv) is required to be disclosed by law, court order, or similar compulsion; provided, however, that such disclosure shall be limited to the extent so required or compelled; and provided, further, that Employee shall give the Company notice of such disclosure and cooperate (without cost to Employee) with the Company in seeking suitable protection; or
(v) is disclosed pursuant to or in connection with any legal proceeding involving Employee and/or the Company or any Affiliate thereof.
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Section 13. Post-Termination Non-Compete, Non-Solicitation.
(a) If Employee’s employment terminates pursuant to Sections 8(c), 8(d), 8(e), or 8(f) hereof during the Term or for any reason thereafter, Employee agrees that, for a period ending one (1) year from the date of his termination of employment, Employee shall not (except on behalf of the Company or with the prior written consent of the Company), directly or indirectly, (i) engage in the business in which the Company is engaged or proposes to be engaged (the “Company Business”), within the Restricted Territory (as defined below), (ii) interfere with the Company Business or the business of any Affiliate, or (iii) own, manage, control, participate in, consult with, render services for or in any manner engage in or represent any business within the Restricted Territory that is competitive with the Company Business or the business of any Affiliate thereof or any product of the Company or any Affiliate, as such business is conducted or proposed to be conducted from and after the date of this Agreement. As used in this Agreement, the term “Restricted Territory” means any county in the United States where the company holds mineral lease interests. Nothing herein shall prohibit Employee from being a passive owner of not more than two percent (2%) of the outstanding stock of any class of a corporation that is competitive with the Company Business and which is publicly traded, so long as Employee has no active participation in the business of such corporation.
(b) If Employee’s employment terminates pursuant to Sections 8(c), 8(d), 8(e), or 8(f) hereof during the Term or for any reason thereafter, Employee agrees that, for a period ending one (1) year from the date of his termination of employment, Employee shall not directly or indirectly through another person or entity (i) induce or attempt to induce any employee of the Company or any Affiliate of the Company to leave the employ of the Company or such Affiliate, or in any way interfere with the relationship between the Company or any such Affiliate, on the one hand, and any employee or consultant thereof, on the other hand, (ii) hire or engage as a consultant or otherwise any person who is or was an employee or consultant of the Company or any Affiliate thereof until six (6) months after such individual’s employment or consulting relationship with the Company or such Affiliate has been terminated or (iii) induce or attempt to induce any customer, supplier, subcontractor, licensee or other business relation of the Company or any Affiliate to cease doing business with the Company or such Affiliate, or in any way interfere with the relationship between any such customer, supplier, subcontractor, licensee or business relation, on the one hand, and the Company or any Affiliate, on the other hand.
(c) Employee acknowledges that the covenants contained in this Section 13, including those related to duration, geographic scope, and the scope of prohibited conduct, are reasonable and necessary to protect the legitimate interests of the Company. Employee acknowledges that he is an executive and management level employee as referenced in, and governed by, C.R.S. § 8-2-113(2)(d). Employee further acknowledges that the covenants contained in this Section 13 are necessary to protect, and reasonably related to the protection of, the Company’s trade secrets, to which Employee will be exposed and with which Employee will be entrusted.
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(d) Employee shall inform any prospective or future employer of any and all restrictions contained in this Agreement and provide such employer with a copy of such restrictions (but no other terms of this Agreement), prior to the commencement of that employment.
(i) the amount of such Non-Exempt Deferred Compensation that would otherwise be payable during the six-month period immediately following Employee’s separation from service will be accumulated through and paid or provided on the first day of the seventh month following Employee’s separation from service (or, if Employee dies during such period, within 30 days after Employee’s death) (in either case, the “Required Delay Period”); and
(ii) the normal payment or distribution schedule for any remaining payments or distributions will resume at the end of the Required Delay Period.
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For purposes of this Agreement, the term “Specified Employee” has the meaning given such term in Treas. Reg. §1.409A-1(i).
Section 16. Successors and Assigns; No Third-Party Beneficiaries.
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Section 19. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, without regard to its conflicts of law or choice of law provisions which would result in the application of the law of any other jurisdiction.
Section 20. Arbitration. Any controversy or claim arising out of or relating to this Agreement or any transactions provided for herein, or the breach thereof, other than a claim for injunctive relief for a breach of Sections 11, 12 and 13, will be settled by arbitration in accordance with the commercial Arbitration Rules of the American Arbitration Association (the “Rules”) in effect at the time demand for arbitration is made by any party. The evidentiary and procedural rules in such proceedings will be kept to the minimum level of formality that is consistent with the Rules. The Company and Employee shall agree on a sole arbitrator of the controversy or claim. The arbitrator must be experienced in the matters in dispute. If the sole arbitrator cannot be agreed upon by the Company and the Employee within 10 business days, either the Company or Employee may request the American Arbitration Association to name a sole arbitrator. Arbitration will occur in Denver, Colorado, or such other location agreed to by the Company and the Employee. The award made by the arbitrator will be final and binding, and judgment may be entered in any court of law having competent jurisdiction. The award is subject to confirmation, modification, correction or vacation only as explicitly provided in Title 9 of the United States Code. The prevailing party will be entitled to an award of pre- and post-award interest as well as reasonable attorneys' fees incurred in connection with the arbitration and any judicial proceedings related thereto and any costs incurred paying the fees or expenses of the arbitrator.
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(a) Every notice or other communication relating to this Agreement shall be in writing, and shall be mailed to or delivered to the party for whom or which it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided; provided, that unless and until some other address be so designated, all notices and communications by Employee to the Company shall be mailed or delivered to the Company at its principal executive office at 0000 Xxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, and all notices and communications by the Company to Employee may be given to Employee personally or may be mailed to Employee at Employee’s last known address, as reflected in the Company’s records.
(b) Any notice so addressed shall be deemed to be given (i) if delivered by hand, on the date of such delivery, (ii) if mailed by courier or by overnight mail, on the first business day following the date of such mailing, and (iii) if mailed by registered or certified mail, on the third business day after the date of such mailing.
Section 22. Section Headings; Mutual Drafting.
(a) The headings of the sections and subsections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof or affect the meaning or interpretation of this Agreement or of any term or provision hereof.
(b) The parties are sophisticated and have been represented (or have had the opportunity to be represented) by their separate attorneys throughout the transactions contemplated by this Agreement in connection with the negotiation and drafting of this Agreement and any agreements and instruments executed in connection herewith. As a consequence, the parties do not intend that the presumptions of laws or rules relating to the interpretation of contracts against the drafter of any particular clause should be applied to this Agreement or any document or instrument executed in connection herewith, and therefore waive their effects.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.
COMPANY: | |||
EMERALD OIL, INC. | |||
By: | /s/ Xxxx Xxxxxxxxx | ||
Name: | Xxxx Xxxxxxxxx | ||
Title: | Chairman of the Compensation Committee | ||
Date: | December 8, 2014 | ||
EMPLOYEE: | |||
By: | /s/ Xxxxxxx Xxxxxxxxx | ||
Name: | Xxxxxxx Xxxxxxxxx | ||
Date: | December 8, 2014 |
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Exhibit A:
Bonus Test Xxxxx
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