Employment Agreement
Exhibit 10.1
Employment Agreement (this “Agreement”) dated as of September 6, 2011 (the “Effective Date”)
by and between Prospect Global Resources Inc. a Nevada corporation (the “Company”), and Xxxxx X.
Xxxx (the “Executive”).
WHEREAS, the Company recognizes that the Executive’s talents and abilities are unique, and are
integral to the success of the Company, and thus wishes to secure the ongoing services of the
Executive on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the promises and the mutual covenants set forth below,
Company and the Executive agree as follows:
| 1. | Employment: The Company hereby agrees to employ the Executive as the Chief
Financial Officer and Vice President of Finance (“CFO”) of the Company, and the Executive
hereby accepts such employment, on the terms and conditions set forth below. |
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| 2. | Compensation and Related Matters: |
| a. | Base Salary. During the Executive’s term of service (the
“Employment Period”), the Company shall pay the Executive a base salary at the
rate of not less than $275,000 per year (“Base Salary”). The Executive’s base
Salary shall be paid in accordance with the Company’s normal payroll practice or,
if no such practice is established, in equal installments at the end of each month
(with a partial month for the month of September, 2011). If the Executive’s Base
Salary is increased by the Company, such increased Base Salary shall then
constitute the Base Salary for all purposes of this agreement. |
| b. | Stock Options: Subject to approval by the Company’s Board of
Directors, within 60 days of the Effective Date the Executive will be granted
options to purchase 1,000,000 shares (the “Base Options”) of the Company’s common
stock (“Common Stock”) at fair market value (as determined pursuant to the
Company’s 2011 Employee Equity Incentive Plan). The Options shall vest, subject
to acceleration as provided below, as follows: 250,000 Base Options on the grant
date, 250,000 Base Options on the 180th day after the Effective Date
and 500,000 Base Options on the one year anniversary of the Effective Date, in
each case so long as the Executive either (i) is employed as the Company’s CFO on
such date or (ii) has died or become permanently disabled prior to such date and
was employed as the Company’s CFO at the time of death or disability. If the
exercise price of the Base Options is greater than $4.50 per share, subject to
approval by the Company’s Board of Directors, at the
time the Base Options are granted the Executive will be granted additional options
to purchase 200,000 shares (the “Additional Options” and, together with the Base
Options, the “Options”) of Common Stock at the same exercise price as the Base
Options. The Additional Options shall vest, subject to acceleration as provided
below, on the one year anniversary of the Effective Date, in each case so long as
the Executive either (i) is employed as the Company’s CFO on such date or (ii) has
died or become permanently disabled prior to such date and was employed as the
Company’s CFO at the time of death or disability. |
Notwithstanding any provision to the contrary, the Options shall immediately
vest in full upon either a “Change in Control” or the termination of the
Executive’s services as CFO by the Company other than for “Cause” (as defined
below).
For purposes of this Agreement, “Change in Control” shall mean the occurrence,
subsequent to the Effective Date, of any of the following: (A) by a transaction or
series of transactions, any “person” or “group” (within the meaning of Section
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of more than 35% of the combined voting
power of the Company’s then outstanding securities (provided such person or group
was not a beneficial owner of more than 35% of the combined voting power of the
Company’s then outstanding securities as of the Effective Date); (B) as a result of
any merger, consolidation, combination or sale or issuance of securities of the
Company, or as a result of or in connection with a contested election of directors,
the persons who were directors of the Company as of the Effective Date cease to
constitute a majority of the Board of Directors of the Company (the “Board”); (C)
by a transaction or series of transactions, the authority of the Board over any
activities of the Company becomes subject to the consent, agreement or cooperation
of a third party other than shareholders of the Company.
For purposes of this Agreement, “Cause” shall mean (A) the Executive’s
conviction by a court of competent jurisdiction as to which no further appeal can
be taken of a felony (other than a violation based on operation of a vehicle) or
entering the plea of nolo contendere to such crime by the Executive; (B) the
Executive’s commission of a crime involving fraud or intentional dishonesty, which
results in the Executive’s substantial personal enrichment and material adverse
effect to the Company; or (C) the Executive becoming subject to any securities
related sanctions related to the Company other than those based on an act
of the Company itself for which the Executive is charged solely as a result of
his position with the Company.
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| c. | Annual Bonus: For each full fiscal year of the Company that
begins and ends during the Employment Period, and for the portion of the fiscal
year of the Company that begins in 2011 (“Fiscal Year 2011”), the Executive shall
be eligible to earn an annual cash bonus in such amount as shall be determined by
the Compensation Committee of the Board (the “Compensation Committee”) (the
“Annual Bonus”) based on the achievement by the Company of performance goals
established by the Compensation Committee (or the Board if there is no
Compensation Committee) for each such fiscal year (or portion of Fiscal Year
2011), which may include targets related to the earnings before interest, taxes,
depreciation and amortization (“EBITDA”), financial reporting, financial controls,
acquisitions, leases, permitting, etc. of the Company; provided, that the Annual
Bonus shall be no less than 80% and no greater than 120% of the then-current Base
Salary and the Annual Bonus for 2011 shall be not less than $100,000. The
Compensation Committee (or the Board if there is no Compensation Committee) shall
establish objective criteria to be used to determine the extent to which
performance goals have been satisfied. This criteria shall be established within
60 days of the Effective Date. The amount of each annual bonus shall be not less
than 80% nor greater than 120% of the then-current Base Salary). |
| d. | Vacation: The Executive shall be entitled to four weeks of
vacation per fiscal year. Up to three weeks of vacation not taken during the
applicable fiscal year shall be carried over to the next following fiscal year.
Vacation shall accrue to the Executive at rate of not less than one week per
quarter in advance. |
| e. | Expenses: The Company will reimburse the Executive for all
expenses related to Company business, including, but not limited to travel,
marketing, communication, due diligence, legal fees and expenses, etc. |
| f. | Welfare, Pension and Incentive Benefit Plans: During the
Employment Period, the Executive (and his eligible spouse and dependents) shall be
entitled to participate in all the welfare benefit plans and programs maintained
by the Company from time to time for the benefit of its senior executives
including, without limitation, all medical, hospitalization, dental, disability,
accidental death and dismemberment and travel accident insurance plans and
programs. In addition, during the Employment Period, the Executive shall be
eligible to participate in all pension, retirement, savings and other employee
benefit plans and
programs maintained from time to time by the Company for the benefit of its senior
executives. |
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| g. | Professional Development. The Company will reimburse the
Executive for education and professional development expenses related to courses
or programs selected by the Executive in the natural resources sector up to
$10,000 per calendar year. The Executive may take such courses during normal
business hours and will not be required to utilize vacation time. |
| 3. | Responsibilities: As the CFO, the Executive will have the responsibilities of
a chief financial officer and shall also assist the Company’s President and Chief
Executive Officer in developing the Company’s strategic direction, identifying and
pursuing acquisition targets, personnel hiring, budget preparation, development of an
annual operating plan and periodic long range plans, overseeing all portfolio companies’
operations, finances, budgets and strategic direction, and compliance with all regulatory
requirements developing and implementing the Company’s business plan. The CFO shall
report directly to the Company’s President and Chief Executive Officer. With the approval
of the President and Chief Executive Officer, finance and accounting staff may be hired by
the Executive. |
| 4. | At-Will Employment; Severance: The Executive’s employment with the Company is
on an at-will basis. If terminated by the Company for any reason other than Cause,
including a change of control, the Company shall provide severance to the Executive,
payable in accordance with the Company’s normal payroll practice, of 12 month’s Base
Salary, an Annual Bonus of 120% of the then-current Base Salary, accrued vacation, and any
reimbursement of all business and professional development expenses incurred but not yet
reimbursed. In addition the Company shall reimburse the Executive for COBRA payments made
by the Executive for 12 months following termination by the Company for any reason other
than Cause. |
| 5. | Location: The Executive will be based in the Denver, Colorado, metropolitan
area. During the Employment Period, the Company shall provide the Executive with an
office and appropriate equipment and support staff. |
| 6. | Representations and Warranties: The Company represents and warrants to the
Executive that this Agreement has been duly authorized, executed and delivered by the
Company and, assuming the due execution by the Executive, constitutes a legal, valid and
binding agreement of the Company, enforceable against the Company in accordance with its
terms. |
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| 7. | Indemnity: The Company agrees that if the Executive 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 the Executive
is or was a trustee, director, member, agent or officer of the Company or any predecessor
to the Company or any of their affiliates or is or was serving at the request of the
Company, any predecessor to the Company or any of their affiliates as a trustee, director,
officer, member, employee or agent of another corporation or a partnership, joint venture,
limited liability company, trust or other enterprise, including, without limitation,
service with respect to employee benefit plans, whether or not the basis of such
Proceeding is alleged action in an official capacity as a trustee, director, officer,
member, employee or agent while serving as a trustee, director, officer, member, employee
or agent, the Executive shall be indemnified and held harmless by the Company to the
fullest extent authorized by Delaware law, as the same exists or may hereafter be amended,
against all Expenses incurred or suffered by the Executive in connection therewith, and
such indemnification shall continue as to the Executive even if the Executive has ceased
to be an officer, director, trustee or agent, or is no longer employed by the Company and
shall inure to the benefit of his heirs, executors and administrators. |
| a. | Expenses. As used in this Section 7, the term “Expenses”
shall include, without limitation, damages, losses, judgments, liabilities, fines,
penalties, excise taxes, settlements, and costs, attorneys’ fees, accountants’
fees, and disbursements and costs of attachment or similar bonds, investigations,
and any expenses of establishing a right to indemnification under this Agreement. |
| b. | Enforcement. If a claim or request under this Section 7 is
not paid by the Company or on its behalf, within 30 days after a written claim or
request has been received by the Company, the Executive may at any time thereafter
bring suit against the Company to recover the unpaid amount of the claim or
request and if successful in whole or in part, the Executive shall be entitled to
be paid also the expenses of prosecuting such suit. All obligations for
indemnification hereunder shall be subject to, and paid in accordance with,
applicable Colorado law. |
| c. | Advances of Expenses. Expenses incurred by the Executive in
connection with any Proceeding shall be paid by the Company in advance upon
request of the Executive that the Company pay such Expenses, but only in the event
that the Executive shall have delivered in writing to the Company (i) an
undertaking to reimburse the Company for Expenses with respect to which the
Executive is not entitled to indemnification and (ii) a statement of his good
faith belief that the
standard of conduct necessary for indemnification by the Company has been met. |
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| d. | Insurance. The Company will maintain a Director’s and
Officer’s Insurance Policy naming the Executive as a covered party in an amount
deemed mutually sufficient to the Company and the Executive. The Company will use
its best commercial efforts to have this policy in place within 90 days of the
Effective Date. |
| 8. | Survival of Certain Provisions: The representations, warranties and covenants
and indemnity provisions contained in Sections 2, 4, 6 and 7 of this Agreement and the
Company’s obligation to pay the Executive any compensation earned pursuant hereto shall
remain operative and in full force and effect regardless of any completion or termination
of this Agreement and shall be binding upon, and shall inure to the benefit of, any
successors, assigns, heirs and personal representatives of the Company, the indemnified
parties and any such person. |
| 9. | Notices: Any notice given with respect to this Agreement shall be in writing
and shall be mailed or delivered (a) if to the Company, at its offices at 000
00xx Xxxxxx, Xxxxx 0000-Xxxxx, Xxxxxx, XX 00000, and (b) if to the Executive,
at 00000 Xxxxxxxxx Xxxxxx, Xxxxxxxxx Xxxxx, XX 00000, in either case with a copy to the
Company’s legal counsel, Xxxx Xxxxxxx, Xxxxxxxxxx Xxxxx Xxxxxx Xxxxxxx, LLP, 000
00xx Xxxxxx, 00xx Xxxxx, Xxxxxx, XX 00000. |
| 10. | Counterparts: This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which shall constitute
one and the same instrument. |
| 11. | Third Party Beneficiaries: This Agreement has been and is made solely for the
benefit of the parties hereto, and their respective successors and assigns, and no other
person shall acquire or have any right under or by virtue of this Agreement. |
| 12. | Validity: The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. |
| 13. | Dispute Resolution: If a dispute arises out of or relating to this Agreement
or the breach of this Agreement, and if the dispute cannot be settled through direct
discussions, the parties agree to first endeavor to settle the dispute in an amicable
manner by mediation. Mediation shall consist of an informal, nonbinding conference or
conferences between the parties and the mediator jointly, and at the discretion of the
mediator, then in separate caucuses in which the mediator will seek to guide the parties
to a resolution of the case. Each party
shall pick a mediator selector and the two mediator selectors shall then pick and appoint a
mediator. The Company will pay all mediation related costs, including, without limitation,
the Executive’s costs and reasonable fees, including attorneys’ fees, incurred in selecting
a mediator and obtaining counsel for purposes of the mediation. |
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| 14. | Choice of Law, Jurisdiction and Venue: This Agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Colorado. Any and all
actions, suits, or judicial proceedings upon any claim arising from or relating to this
Agreement, shall be instituted and maintained in the State or Federal courts sitting in
the State of Colorado. Each party waives the right to change of venue. |
| 15. | Miscellaneous: No provisions of this Agreement may be amended, modified, or
waived unless such amendment or modification is agreed to in writing signed by the
Executive and by a duly authorized officer or a director of the Company, and such waiver
is set forth in writing and signed by the party to be charged. No waiver by either party
hereto at any time of any breach by the other party hereto of any condition or provision
of this Agreement to be performed by such other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth expressly in
this Agreement. The respective rights and obligations of the parties hereunder of this
Agreement shall survive the Executive’s termination of employment and the termination of
this Agreement to the extent necessary for the intended preservation of such rights and
obligations. |
| 16. | Section Headings: The section headings in this Agreement are for convenience
of reference only, and they form no part of this Agreement and shall not affect its
interpretation. |
The parties have executed this Agreement as of the Effective Date, as defined above.
| Xxxxx X. Xxxx | Prospect Global Resources Inc. | |||||
| By: | ||||||
| President and Chief Executive Officer | ||||||
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