Employment Agreement
THIS
EMPLOYMENT AGREEMENT (the
“Agreement”) is made and entered into as of March 1, 2008 (the “Effective Date”)
by and between Zulu Energy Corp., a
Colorado corporation (the “Company”) and Xxxx Xxxxxx, an
individual (“Employee”).
WHEREAS,
the Company desires to retain the services of Employee as set forth herein,
and
WHEREAS,
Employee is willing to be employed by the Company as set forth
herein.
NOW,
THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:
1.
Employment.
Employee
is hereby employed and engaged to serve the Company as Chief Executive Officer,
President and Chief Operating Officer, or such additional titles as the Company
shall specify from time to time with the consent of Employee, and Employee
does
hereby accept and agrees to such engagement and employment.
2.
Duties.
Employee’s duties shall be such duties and responsibilities as the Company,
through its Board of Directors or otherwise, shall specify from time to time.
Employee shall have such authority, discretion, power and responsibility, and
shall be entitled to office, secretarial and other facilities and conditions
of
employment, as are customary or appropriate to Employee’s position. Employee
shall diligently and faithfully execute and perform such duties and
responsibilities, subject to the general supervision and control of the
Company’s Board of Directors. Employee shall be responsible and report to the
Company’s Board of Directors.
The
Employee will devote his time, attention, and energies to the Company’s business
and, during the term of this Agreement, will not engage in any other business
activity, except as set forth herein. Nothing
in
this Agreement shall preclude Employee from devoting time to the
following activities, provided such activities: (i) do not materially interfere
with the performance of Employee’s duties and responsibilities under this
Agreement; (ii) there is no conflict of interest with the interests of the
Company, and (iii) if Employee receives direct compensation for an activity
set
forth in subsection (d), below, such activity has been disclosed in writing
by
the Employee and approved by the Company’s Board of Directors as set forth
herein:
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(a)
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serving
as a director or member of a committee of any organization or
corporation;
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(b)
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serving
as a consultant in his area of expertise to government, industrial,
and
academic panels;
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(c)
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managing
personal investments; or
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(d)
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engaging,
directly or indirectly, in any other non-competing
business.
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Employee
agrees to disclose in writing to the Company’s Board of Directors any
non-competing business activity for which Employee receives or shall receive
direct compensation. Approval of such business activity shall be granted by
the
Board within 30 (thirty) days of receipt of Employee’s disclosure unless the
Board determines, in good faith, that there is an irreconcilable conflict of
interest or such activity materially interferes with Employee’s duties to the
Company. Such activities shall be deemed approved if the Board fails to respond
to Employee’s disclosure within 30 (thirty) days of receipt of
same.
3. Term.
The
term of this Agreement shall be ongoing unless terminated by either party
pursuant to Section 13.
4.
Compensation
of Employee.
(a) Base
Compensation.
As
compensation for the services provided by Employee under this Agreement, the
Company shall pay Employee an annual salary in accordance with the Company's
usual payroll procedures as follows:
| (i) |
So
long as the Company secures cumulative financing totaling less
than
$5,000,000.001 (five million dollars), base compensation shall
be $180,000 (one hundred eighty thousand dollars) per
year;
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| (ii) |
Immediately
upon securing cumulative financing totaling $5,000,000.00 (five million
dollars) – $10,000,000.00 (ten million dollars), base compensation
shall be $240,000 (two hundred forty thousand dollars) per
year;
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| (iii) |
Immediately
upon securing cumulative financing totaling more than $10,000,000.00
(ten
million dollars), base compensation shall be $300,000.00 (three hundred
thousand dollars) per year.
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(b) Stock
Options.
Upon
execution of this Agreement, the Company shall grant Employee options to
purchase up to 1,500,000 (one million five hundred thousand) shares of the
Company’s common stock with an exercise price equal to $1.00 per share. Upon the
Company’s adoption of a qualified stock option plan, Employee may exchange such
options for qualified options under the Company’s stock option plan, with
vesting and terms to be in accordance with the stock option plan. The stock
of
the Company that is provided to Employee pursuant to this provision or any
stock
option plan shall be properly registered shares with the United States
Securities and Exchange Commission.
(c) Phantom
Stock Plan.
In
addition to the stock options set forth above, the Company agrees to credit
Employee with 2,000,000 (two million) shares of stock, with 40% (forty percent)
of such shares allocated on January 1, 2009; 30% (thirty percent) allocated
on
January 1, 2010; and the remaining 30% (thirty percent) allocated on January
1,
2011, as set forth in a separate Phantom Stock Plan. The Company agrees to
provide a Phantom Stock Plan to Employee within 30 (thirty) days of the
Effective Date. Any stock of the Company that is provided to Employee pursuant
to this provision shall be properly registered shares with the United States
Securities and Exchange Commission.
(d) Signing
Bonus.
Employee
shall receive a signing bonus of $100,000.00 (one hundred thousand dollars)
immediately upon the Company securing $5,000,000.00 (five million dollars)
in
financing.
(e) Annual
Bonus. Employee
shall be eligible to receive an annual bonus determined by the Board of
Directors based on the performance of the Company and Employee.
(f) Automobile
Allowance.
In
addition to the compensation set forth above, the Company shall provide Employee
with $800.00 (eight hundred dollars) per month as an automobile
allowance.
1 All references to monetary amounts in this Agreement shall be in United States dollars.
2
5.
Benefits. Employee shall be entitled to participate in any and
all Company benefit plans, in effect from time to time, including, but
not
limited to, pension and 401k plans, short-term disability, long-term disability,
health, dental and vision insurance plans available to the Company's senior
management executives and their dependents. Such participation shall be
subject
to the terms of the applicable plan documents and generally applicable
Company
policies.
6.
Vacation,
Sick Leave and Holidays.
Employee
shall be entitled to 5 (five) weeks of paid vacation, with such vacation to
be
scheduled and taken in accordance with the Company's standard vacation policies.
All unused, accrued vacation can be carried into the next year. Remaining
unused, accrued vacation time will be paid during the first quarter of the
following year. In addition, Employee shall be entitled to such sick leave
and
holidays at full pay in accordance with the Company's policies established
and
in effect from time to time.
7.
Business
Expenses.
The
Company shall promptly reimburse Employee for all reasonable out-of-pocket
business expenses incurred in performing Employee’s duties and responsibilities
hereunder in accordance with the Company's policies, including reimbursement
of
no less than business class airfare on international flights and first-class
airfare on domestic flights, provided Employee promptly furnishes to the Company
adequate records of each such business expense. Such expenses shall be
reimbursed in accordance with the Company’s regular reimbursement
practices.
8.
Location
of Employee's Activities. The
Company shall maintain its principal place of business at a fully operational
office located in Sheridan, Wyoming area as determined by the Company’s Board of
Directors. The Company shall maintain a secondary place of business at a fully
operational office located in the metro Denver, Colorado area. The employee’s
primary work location shall be the Sheridan, Wyoming office. The Company may
open other offices in other locations, as necessary. The Company agrees to
reimburse Employee for all reasonable travel expenses between such locations,
including accommodations, mileage, and meal expenses. Employee will engage
in
such travel and spend such time in other places as may be reasonably necessary
or appropriate in discharging Employee’s duties hereunder.
9.
Confidential
Information/Documents/Inventions.
(a) Confidential
Information.
Employee
shall not, in any manner, for any reason, either directly or indirectly, divulge
or communicate to any person, firm or corporation, any confidential information
concerning any matters not generally known or otherwise made public by Company
which affects or relates to the Company’s business, finances, marketing and/or
operations, research, development, inventions, products, designs, plans,
procedures, or other data (collectively, “Confidential Information”) except in
the ordinary course of business, as necessary to joint venture partners or
as
required by applicable law. Confidential Information shall not include: (i)
information obtained or which became known to Employee other than through his
employment by the Company; (ii) information in the public domain at the time
of
the disclosure of such information by Employee; (iii) information that Employee
can document was independently developed by Employee; (iv) information that
is
disclosed by Employee with the prior written consent of the Company; and (v)
information that is disclosed by Employee as required by law, governmental
regulation or court order.
This
provision shall survive the termination of this Agreement.
(b) Documents.
All
documents and materials furnished to Employee by the Company and relating to
the
Company’s business or prospective business are and shall remain the exclusive
property of the Company. Employee shall deliver all such documents and materials
and all copies thereof to the Company upon demand therefore and in any event
upon termination of this Agreement.
3
(c) Inventions.
All
ideas, inventions, and other developments or improvements conceived or reduced
to practice by Employee, alone or with others, during the term of this
Agreement, during working hours, that are within the scope of the business
of
the Company or that relate to or result from any of Employee’s work or projects
or the services provided by Employee to the Company pursuant to this Agreement,
shall be the exclusive property of the Company. Employee agrees to assist the
Company, at the Company’s expense, to obtain patents and copyrights on any such
ideas, inventions, writings, and other developments, and agrees to execute
all
documents necessary to obtain such patents and copyrights in the name of the
Company. In consideration of said assistance, Company agrees to share with
the
Employee (and any others who conceived or reduced to practice an invention)
a
total of no less than 25% (twenty-five percent) of the portion of any net
profits realized by the Company’s commercialization of said invention. This
clause excludes all intellectual property work initiated prior to the execution
of this Agreement.
10.
Non-Compete.
During
the term of this Agreement and, if this Agreement is terminated pursuant to
Section 13(a), for a period of 6 (six) months following the termination of
this
Agreement, Employee shall not: (a) engage directly or indirectly in any business
or activity in Botswana, Africa which is substantially similar to any business
or activity engaged in (or proposed to be engaged in) by the Company in
Botswana; (b) engage directly or indirectly in any business or activity in
Botswana, Africa competitive with any business or activity engaged in (or
proposed to be engaged in) by the Company in Botswana; (c) solicit directly
or
indirectly any employee, agent, representative, contractor, supplier, vendor,
customer, franchisee, lender or investor of the Company, or attempting to do
so;
or (d) interfere directly or indirectly with any contractual or other
relationship between the Company and any employee, agent, representative,
contractor, supplier, vendor, customer, franchisee, lender or investor. The
parties agree that this restriction is reasonable as to time and geographic
area. Any potentially competing activity is expressly excluded from application
of this section if (a) Employee notifies Company of the nature and scope of
the
activity in advance of undertaking said activity and (b) Company consents to
the
undertaking of said activity by Employee upon notification of intent to
undertake.
11.
Injunctive
Relief. Employee
acknowledges and agrees that the covenants and obligations of Employee set
forth
in Sections 9 and 10 with respect to non-competition, non-solicitation,
confidentiality and the Company’s property relate to special, unique and
extraordinary matters and that a violation of any of the terms of such covenants
and obligations will cause the Company irreparable injury for which adequate
remedies are not available at law. Therefore, Employee agrees that the Company
shall be entitled to an injunction, restraining order or such other equitable
relief (without the requirement to post bond) as a court of competent
jurisdiction may deem necessary or appropriate to restrain Employee from
committing any violation of the covenants and obligations referred to in this
Section 11. These injunctive remedies are cumulative and in addition to any
other rights and remedies the Company may have at law or in equity.
12.
Survival
of Sections 9, 10 and 11.
Notwithstanding the foregoing, if this Agreement is terminated upon the
dissolution of the Company, the filing of a petition in bankruptcy by the
Company or upon an assignment for the benefit of creditors of the assets of
the
Company, Sections 9, 10 and 11 shall be of no further force or
effect.
13.
Termination.
Employee’s employment hereunder shall terminate under the following
circumstances and terms:
(a) Termination
by Employee.
Employee
shall have the right to terminate this Agreement and his employment hereunder
at
any time for any reason during the term of this Agreement upon 30 (thirty)
days’
written notice to the Company. Upon such termination, the Company shall pay
Employee a cash lump sum equal to all accrued base salary through the date
of
termination plus all accrued vacation pay and bonuses, if any. Any shares of
common stock, including phantom stock, or options granted to Employee that
have
not vested shall become immediately vested. If any stock granted to Employee
is
not registered as of the date of Employee’s termination, the Company shall
register such shares within 6 (six) months following the date of Employee’s
termination. All stock options shall be exercisable for 3 (three) years
following the date of Employee’s termination.
4
(b) Termination
by the Company. The
Company shall have the right to terminate Employee’s employment as
follows:
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(i)
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Without
Cause. The
Company shall have the right to terminate this Agreement and Employee’s
employment hereunder without cause at any time upon 30 (thirty) days’
written notice. “Without cause” shall mean for no reason or any reason
other than as set forth in subsection (b)(ii) below. If the Company
terminates Employee without cause, the Company agrees to pay Employee
a
lump-sum separation fee at the time of termination equal to 12 (twelve)
months salary plus benefits. Any shares of common stock, including
phantom
stock, or options granted to Employee that have not vested shall
become
immediately vested. If any stock granted to Employee is not registered
as
of the date of Employee’s termination, the Company shall register such
shares within 6 (six) months following the date of Employee’s termination.
All stock options shall be exercisable for 3 (three) years following
the
date of Employee’s termination.
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| (ii) |
For
Cause.
The Company shall have the right to terminate this Agreement and
Employee’s employment hereunder at any time for cause upon written notice.
The term “for cause” shall mean Employee's personal dishonesty, willful
misconduct, breach of fiduciary duty involving personal profit, willful
violation of any law, rule or regulation relating to the operation
of the
business or to the Company, or a material breach by Employee of any
provision of this Agreement. If Employee is terminated “for cause,” the
written notice given hereunder by the Company to Employee shall specify
in
reasonable detail the cause for termination. If Employee is terminated
“for cause” under this subsection (b)(ii), any shares of common stock or
options granted to Employee that have not vested shall be
terminated.
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(c) Event
of Sale, Merger or Change of Control.
In
the
event of the sale, merger or change of control of the Company, or an agreement
to sell, merge or change control of the Company during the term of this
Agreement, the Company or its successor(s) agrees to immediately vest all
unvested stock, including phantom stock, and options and offer Employee
employment under the terms set forth herein, for a period of at least 12
(twelve) months after the sale or merger closing date. If this employment
extension is not given by the Company or its successor(s) and accepted by
Employee, then the Company or its successor(s) shall comply with the termination
provisions of Section 13(b)(i), above.
(d) Termination
Upon Death.
If
Employee dies during the term of this Agreement, Employee’s estate shall be
entitled to receive any earned but unpaid compensation or expense reimbursement
due hereunder through the date of death and any shares of common stock,
including phantom stock, or options granted to Employee by the Company, which
shall become immediately vested. Employee’s estate shall have the right of
option exercise of such shares for 3 (three) years following the Employee’s
death. If any stock granted to Employee is not registered as of the date of
Employee’s death, the Company shall register such shares within 6 (six) months
following the date of Employee’s death. In the event of a merger, consolidation,
sale, or change of control, the Employee’s rights hereunder shall be assigned to
the surviving or resulting company, which company shall then honor this
Agreement with Employee and Employee’s estate. In addition, if Employee dies
during the term of this Agreement and Employee’s death occurs as a direct result
of activities undertaken on behalf of the Company, in addition to any other
insurance benefits available to Employee, the Company agrees to pay Employee’s
estate a lump-sum amount equivalent to 12 (twelve) months salary from the date
of Employee’s death.
5
(e) Termination
Upon Disability.
If,
during the term of this Agreement, Employee suffers and continues to suffer
from
a “Disability” (as defined below), then the Company may terminate this Agreement
by delivering to Employee 30 (thirty) calendar days’ prior written notice of
termination based on such Disability, setting forth with specificity the nature
of such Disability and the reasons for the Company’s determination of
Disability. “Disability” shall mean Employee’s inability, with reasonable
accommodation, to substantially perform Employee’s duties, services and
obligations under this Agreement due to physical or mental illness or other
disability for a continuous, uninterrupted period of 180 (one hundred and
eighty) calendar days or 210 (two hundred and ten) days during any twelve (12)
month period. Upon any such termination for Disability, Employee shall receive
(i) a cash lump sum equal to all accrued base salary through the date of
termination plus all accrued vacation pay and bonuses, if any; (ii) a lump
sum
amount equivalent to 12 (twelve) months of salary from the date of termination;
and (iii) any shares of common stock, including phantom stock, or options
granted to Employee that have not vested shall become immediately vested. All
options shall be exercisable by the Employee’s estate for 3 (three) years
following Employee’s termination. If any stock granted to Employee is not
registered as of the date of Employee’s termination, the Company shall register
such shares within 6 (six) months following the date of Employee’s
termination
14.
Resignation
as Officer.
In the
event that Employee’s employment with the Company is terminated for any reason,
Employee agrees to immediately resign as an Officer and/or Director of the
Company and any related entities. “Related entities” shall include subsidiaries,
parents, and affiliates of the Company.
15.
Governing
Law, Jurisdiction and Venue.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Colorado without giving effect to any applicable conflicts of law
provisions.
16.
Independent
Legal Advice.
The
Company has requested that Employee obtain independent legal advice with respect
to this Agreement before executing same. Employee, in executing this Agreement,
represents and warranties to the Company that he has been so advised to obtain
independent legal advice, and that prior to the execution of this Agreement
he
has so obtained independent legal advice, or has, in his discretion, knowingly
and willingly elected not to do so.
17.
Indemnification.
(a) The
Company agrees that if Employee is made a party, or is threatened to be made
a
party, to any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "Proceeding"), by reason of the fact that
he
is or was a director, officer or employee of the Company or is or was serving
at
the request of the Company as a director, officer, member, employee or agent
of
another corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether or not the
basis of such Proceeding is Employee’s alleged action in an official capacity
while serving as a director, officer, member, employee or agent, Employee shall
be indemnified and held harmless by the Company to the fullest extent permitted
or authorized by the Company's certificate of incorporation or bylaws or, if
greater, by the laws of the State of Colorado, against all cost, expense,
liability and loss (including, without limitation, attorney's fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by Employee in connection therewith,
and such indemnification shall continue as to Employee even if he has ceased
to
be a director, member, employee or agent of the Company or other entity and
shall inure to the benefit of Employee’s heirs, executors and administrators.
The Company shall advance to Employee to the extent permitted by law all
reasonable costs and expenses incurred by him in connection with a Proceeding
within 20 (twenty) days after receipt by the Company of a written request,
with
appropriate documentation, for such advance. Employee shall repay the amount
of
such advance if it shall ultimately be determined that Employee is not entitled
to be indemnified against such costs and expenses.
6
(b) Neither
the failure of the Company (including its Board of Directors, independent legal
counsel or stockholders) to have made a determination prior to the commencement
of any proceeding concerning payment of amounts claimed by Employee that
indemnification of Employee is proper because he has met the applicable standard
of conduct, nor a determination by the Company (including its Board of
Directors, independent legal counsel or stockholders) that Employee has not
met
such applicable standard of conduct, shall create a presumption that Employee
has not met the applicable standard of conduct.
(c) The
Company agrees to maintain at all times on behalf of Employee a Director &
Officer Liability Insurance Policy issued by a nationally known insurance
carrier in a reasonable amount for a comparably sized company in the
industry.
(d) Promptly
after receipt by Employee of notice of any claim or the commencement of any
action or proceeding with respect to which Employee is entitled to indemnity
hereunder, Employee shall notify the Company in writing of such claim or the
commencement of such action or proceeding, and the Company shall (i) assume
the
defense of such action or proceeding, (ii) employ counsel reasonably
satisfactory to Employee, and (iii) pay the reasonable fees and expenses of
such
counsel. Notwithstanding the preceding sentence, Employee shall be entitled
to
employ counsel separate from counsel for the Company and from any other party
in
such action if Employee reasonably determines that a conflict of interest exists
which makes representation by counsel chosen by the Company not advisable.
In
such event, the reasonable fees and disbursements of such separate counsel
for
Employee shall be paid by the Company to the extent permitted by
law.
(e) After
the
termination of this Agreement and upon the request of Employee, the Company
agrees to reimburse Employee for all reasonable travel, legal and other
out-of-pocket expenses related to assisting the Company to prepare for or defend
against any action, suit, proceeding or claim brought or threatened to be
brought against the Company or to prepare for or institute any action, suit,
proceeding or claim to be brought or threatened to be brought against a third
party arising out of or based upon the transactions contemplated herein and
in
providing evidence, producing documents or otherwise participating in any such
action, suit, proceeding or claim. In the event Employee is required to appear
after termination of this Agreement at a judicial or regulatory hearing in
connection with Employee's employment hereunder, or Employee's role in
connection therewith, the Company agrees to pay Employee a sum, to be mutually
agreed upon by Employee and the Company, a daily fee and reasonable expenses
for
each day of his appearance and each day of preparation therefor.
18.
Notices.
All
demands, notices, and other communications to be given hereunder, if any, shall
be in writing and shall be sufficient for all purposes if personally delivered,
sent by facsimile or sent by United States mail to the address below or such
other address or addresses as such party may hereafter designate in writing
to
the other party as herein provided.
7
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Company:
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Employee:
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Xxxx
Xxxxxx
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000
X. Xxxx Xxxxxx
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0000
Xxxxxxxxxx Xxxx
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Xxxxxxxx,
XX 00000
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Xxxxxxxx,
Xxxxxxx 00000
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Fax: ________________________________
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Fax: ________________________________
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19. Successors.
This
Agreement is personal to Employee, and Employee’s duties hereunder shall not be
assignable. This Agreement shall inure to the benefit of, and be enforceable
by,
Employee's legal representatives. This Agreement shall inure to the benefit
of
and be binding upon the Company and its successors and assigns.
20. Amendment.
This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties or their respective successors and legal
representatives.
21. Entire
Agreement.
This
Agreement contains the entire agreement of the parties and there are no other
promises or conditions in any other agreement, whether oral or written. This
Agreement supersedes any prior written or oral agreements between the parties.
This Agreement may be modified or amended, if the amendment is made in writing
and is signed by both parties. This Agreement is for the unique personal
services of Employee and is not assignable or delegable, in whole or in part,
by
Employee. This Agreement may be assigned or delegated, in whole or in part,
by
the Company and, in such case, shall be assumed by and become binding upon
the
person, firm, company, corporation or business organization or entity to which
this Agreement is assigned, subject to the provisions of section 13(d). The
headings contained in this Agreement are for reference only and shall not in
any
way affect the meaning or interpretation of this Agreement. If any provision
of
this Agreement shall be held to be invalid or unenforceable for any reason,
the
remaining provisions shall continue to be valid and enforceable. The failure
of
either party to enforce any provision of this Agreement shall not be construed
as a waiver or limitation of that party's right to subsequently enforce and
compel strict compliance with every provision of this Agreement. This Agreement
may be executed in two or more counterparts, each of which shall be deemed
an
original, but all of which together shall constitute one and the same instrument
and, in pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.
22. Enforcement
of Agreement.
If
either party commences litigation to enforce any provision of this Agreement
or
to recover damages for breach hereof, the prevailing party shall be entitled
to
recover all expenses of litigation including, without limitation, reasonable
attorneys’ fees.
IN
WITNESS WHEREOF, the parties have executed this Agreement to be effective as
of
the day and year first above written.
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XXXX
XXXXXX:
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By:
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/s/
Xxxxxx Xxxxxxxx
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/s/
Xxxx Xxxxxx
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Name:
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Xxxxxx
Xxxxxxxx
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Xxxx
Xxxxxx, Employee
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Title:
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Director
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