EMPLOYMENT AGREEMENT
EMPLOYMENT
AGREEMENT, dated as of October
2,
2008
(this “Employment
Agreement”),
by
and between South Texas Oil Company, a Nevada corporation (the “Company”),
having a place of business at 000 X. Xxxxxxxx Xxxx., Xxx Xxxxxxx, Xxxxx 00000,
and Xxxxxxxx X. Xxxxx (the “Employee”).
RECITAL
WHEREAS, the
Company
desires to engage Employee’s services, and Employee desires to perform such
services, upon the terms, and subject to the conditions, set forth
herein.
NOW,
THEREFORE, in consideration of the covenants and promises contained herein,
the
compensation and benefits received by the Employee from the Company and the
access given the Employee to the Company’s confidential information and the
Company’s business affiliates, and for other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, and with the
Company’s recognition of the knowledge and expertise provided by the Employee
being acknowledged, the Company and the Employee hereby agree as
follows:
1. Term
of Employment.
Subject
to the termination provisions set forth elsewhere in this Employment Agreement,
the term of this Employment Agreement and the Employee’s employment hereunder
shall be for a term of ninety (90) days from the date of this Employment
Agreement (the “Employment Term”).
This
Employment Agreement and the parties’ obligations hereunder shall terminate at
the end of the Employment Term. The employment of Employee shall be
reviewed at end of the Employment Term for a possible new ninety (90) day term
(review provision to be included in any employment contract for a new term).
The
Company shall use its best efforts to amend its Bylaws to remove the requirement
of shareholder approval for any employment contact for a period of time in
excess of ninety (90) days. The Company shall present a proposed amendment
to
its Bylaws at its 2008 annual shareholder meeting, to be held prior to the
end
of the Company’s second quarter for its 2009 fiscal year.
2. Position
and Duties.
(a) During
the Employment Term, the Employee shall serve as the Company’s Executive Vice
President of Corporate Development. The Employee shall report to the Company’s
Chief Executive Officer, have such duties, functions, responsibilities, and
authority as are from time to time delegated to the Employee by the Board of
Directors of the Company (the “Board”)
and
will
be responsible for directing corporate strategy, corporate finance and other
strategic transactions including mergers, acquisitions and capital raising
responsibilities,
as such are reasonable and customary for a person serving in the office/position
of a public company comparable to the Company.
(b) During
the Employment Term, the Employee shall: (i) devote substantially all of his
time during normal business hours to the business of the Company, fulfill his
duties and obligations under this Employment Agreement and use his best efforts,
judgment and energy to perform, improve and advance the business and interests
of the Company in a manner consistent with the duties of his position; provided,
however, that Employee shall not be prevented from serving as a member of the
board of directors of a corporation if the Company determines that such
membership is not adverse to its interests; (ii) not engage in any business
activities that are directly or indirectly competitive with any business
conducted by the Company or any of its subsidiaries or affiliates; (iii) observe
and carry out such reasonable rules, regulations, policies, directions and
restrictions as may be established from time to time by the Board, including
but
not limited to, the standard policies and procedures of the Company as in effect
from time to time; and (iv) do such traveling as may be required in connection
with the performance of such duties and responsibilities.
(c) The
Employee acknowledges that this Employment Agreement contains a non-disclosure
of proprietary information and non-competition provisions, and the Employee
agrees to comply with these provisions. The Employee understands that entering
into and complying with these provisions is a condition to the Employee’s
continued employment with the Company and that failure to comply with the terms
of these provisions may result in immediate termination from
employment.
(d) In
connection with the Employee’s employment by the Company under this Employment
Agreement, the Employee shall be based at the principal executive offices of
the
Company, located as of the date hereof in San Antonio, Texas, except for such
reasonable travel or field work as the performance of the Employee’s duties in
the business of the Company may require. Notwithstanding the foregoing, the
Board may, in its discretion, determine to relocate the principal offices of
the
Company for any necessary business purpose, and doing so shall not be a breach
of this Employment Agreement.
3. Hours
of Work.
The
Employee’s normal days and hours of work shall coincide with the Company’s
regular business hours. The nature of the Employee’s employment with the Company
requires flexibility in the days and hours that the Employee must work, and
may
necessitate that the Employee works on other or additional days and hours.
The
Company reserves the right to require the Employee, and the Employee agrees,
to
work during other or further days or hours than the Company’s normal business
hours.
4. Compensation
and Benefits.
(a) Base
Salary.
During
the Employment Term, the Company shall pay to the Employee for his services
hereunder a base salary (“Base
Salary”)
at the
rate of $12,500 per month, payable in installments in accordance with the
general payroll practices of the Company, or as otherwise mutually agreed upon
by the Company and the Employee, but no less often than twice monthly. The
Employee’s Base Salary may be subject to such adjustments as may be determined
from time to time by the Board in its sole discretion; provided,
however,
in no
event shall the Employee’s Base Salary be reduced unless such reduction is part
of a salary reduction applicable to all similarly situated employees of the
Company based upon the Company’s financial condition.
(b) Equity
Awards
(i) Performance
Option Award.
Contemporaneous with the execution of this Employment Agreement, Employee shall
receive an option under the EICP (as defined herein) to purchase 500,000 shares
of Common Stock (the “Performance
Option”),
issued under the Company’s Equity Incentive Compensation Plan (the “EICP”),
pursuant to which the Performance Option may be issued to the Employee;
provided
that,
the
vesting of Performance Option shall be as set forth in the Option Agreement
(as
defined herein), except that if Employee’s employment hereunder terminates or is
terminated,
in no
event shall the Performance Option be vested or exercisable except in accordance
with conditions set forth in Section 7 of this Employment
Agreement.
The
Performance Option shall be subject to the terms and conditions of this
Employment Agreement and a Stock Option Agreement between
the Employee and the Company (the
“Option
Agreement”)
in the
form attached hereto as Exhibit
A,
and
such terms and conditions shall include the following: (A) the grant date of
the
right to be issued the Performance Option shall be the date on which the
Company’s Board of Directors approves the award of the Performance Option (the
“Option
Grant Date”),
(B)
the exercise price
under
the Performance Option shall be as determined by the Board, pursuant to the
EICP, (C) the term of the Performance Option shall be ten (10) years, and (D)
the Performance Option shall vest and become exercisable with respect to shares
thereunder to the extent that the Company
has achieved its Performance Objectives as
set
forth in Appendix
A to Exhibit A.
(ii) Other
Awards.
The
Employee shall be eligible to receive other awards of Common Stock, options
and
other securities of the Company pursuant to and in accordance with the terms
and
conditions set forth in the EICP,
as
adopted
by the Board on June 23, 2008 and approved by the Company’s stockholders on
September 19, 2008.
(iii) Representations.
In
connection with any issuance to the Employee of the Common Stock pursuant to
Performance
Option
or the
EICP (collectively, the “Equity
Awards”),
Employee represents, warrants and covenants to the Company that:
(A) The
Equity Awards to be acquired by Employee pursuant to the Performance
Option
or the
EICP will be acquired for Employee’s own account and not with a view to, or
intention of, distribution thereof in violation of the Securities Act
of
1933
(the “Securities
Act”)
or any
applicable state securities laws, and the Equity Awards will not be disposed
of
in contravention of the Securities Act or any applicable state securities
laws.
(B) Employee
is an executive officer of the Company and Employee is sophisticated in
financial matters and is able to evaluate the risks and benefits of the
investment in the Equity Awards.
(C) Employee
is able to bear the economic risk of his investment in the Equity Awards for
an
indefinite period of time because the Executive Securities have not been
registered under the Securities Act and, therefore, cannot be sold unless
subsequently registered under the Securities Act or an exemption from such
registration is available.
(D) Employee
has had an opportunity to ask questions and receive answers concerning the
terms
and conditions of the offering of the Equity Awards and has had full access
to
such other information concerning the Company as he has requested.
(E) Employee
is a resident of the State of Texas.
(F) Employee
has been advised to consult with independent legal counsel regarding his rights
and obligations under this Employment Agreement, in particular with respect
to
the Equity Awards. Employee fully understands the terms and conditions contained
herein. Employee has been advised to obtain advice from Persons other than
the
Company and its counsel regarding the tax effects of the Equity Awards
contemplated hereby.
(G) Employee
has read, executed and delivered to Company a counterpart to the Option
Agreement attached hereto as Exhibit B,
by
which Employee agreed to be bound by all of the terms and conditions
thereof.
(iv) Reaffirmation
of Representations.
The
Company and the Employee agree that the Company shall be obligated to make
the
grants of Equity Awards pursuant to Sections 4(b)(i) and 4(b)(ii) only if the
Employee confirms in writing at the time of such grants, that each of the
representations and warranties set forth in Section 4(b)(iii) are true and
accurate in all respects, as of such grant date, as if made on such grant date.
(v) Legend.
In
addition to any other legends required by the Company, certificates representing
the Equity Awards shall bear a legend in substantially the following form unless
when granted they have been registered under the Securities Act:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR UNDER THE SECURITIES LAWS OF
ANY STATE OR OTHER JURISDICTION. SUCH SECURITIES MAY NOT BE SOLD OR OFFERED
FOR
SALE UNLESS THE HAVE BEEN REGISTERED UNDER THE ACT AND SUCH SECURITIES LAWS
OR
AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION,
HAS BEEN GIVEN BY COUNSEL SATISFACTORY TO THE CORPORATION, TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED.”
(vi) Employment
Obligation.
As an
inducement to the Company to issue the Equity Awards to Employee pursuant to
Section 4(b) of this Employment Agreement, and as a condition thereto, Employee
acknowledges and agrees that neither the issuance of the Equity Awards to
Employee, nor any provision contained in this Employment Agreement, shall
entitle Employee to remain in the employment of the Company or any of its
subsidiaries or shall affect the right of the Company or any of its subsidiaries
to terminate Employee’s employment at any time for any reason.
(c) Employee
Benefits.
During
the Employment Term, at the discretion of the Board, Employee may be entitled
to
participate in all employee benefit plans (including executive bonus plans,
cash
bonus awards and long-term incentive plans), programs and arrangements that
are
generally made available by the Company to its senior executives. In addition
to
the rights of the Employee set forth in the preceding sentence, the Company
shall provide health, dental, disability and life insurance for the Employee
under such group health, dental, disability and life insurance plans maintained
by the Company for its full-time, salaried employees (subject to the terms
and
conditions thereof). Nothing herein shall require the Company to adopt or
maintain any type of benefit plan or policy; provided, however, the Company
shall provide health insurance for the Employee and his family at all times
during the Employment Term. The Employee acknowledges that any such plan or
policy will be subject to deductibles and co-pay requirements
(d) Expenses. During
the Employment Term, the Employee shall be entitled to receive reimbursement
upon a timely basis (according to the then-current practices of the Company)
for
all reasonable and necessary out-of-pocket expenses incurred by the Employee
in
connection with performing his duties and responsibilities hereunder, that
are
reimbursable in accordance with the Company’s policies from time to time in
effect, upon the presentation by the Employee of an itemized monthly accounting
of such expenditures, including receipts where required by Company policy or
federal income tax regulations.
5.
Vacation.
The
Employee shall be entitled to accrue, pro
rata,
four
(4) vacation days for during the Employment Term. Vacation days shall be used
during the Employment Term in which they are accrued. The accrued vacation
time
that the Employee does not use during the applicable period in which they were
accrued shall be forfeited unless the Company shall have requested the Employee,
in writing, to modify or postpone a previously planned vacation.
6. Termination
of Employment.
(a)
For
Cause.
The
Company may terminate the Employee’s employment at any time hereunder for Cause
(as defined below) (a “For
Cause Termination”)
upon
written notice to the Employee. For purposes of this Employment Agreement,
“Cause”
means
any of
the following:
(i)
dishonesty
by the Employee in the performance of his duties and obligations to the
Company;
(ii)
the
Employee’s conviction of, or entering a plea of guilty, nolo
contendere
or
comparable plea to, any felony or to any misdemeanor involving moral
turpitude;
(iii)
any
willful act or omission by the Employee that is, or is likely to be, materially
injurious to the financial condition or business reputation of the Company,
as
determined by the Board of the Company or an independent committee of the Board
of the Company, after written notice from the Company specifying the facts
which
constitute Cause under this subsection is delivered to the Employee, and the
Employee is given the opportunity to address the Board or such independent
committee with respect to such Cause;
(iv)
a
breach
by the Employee of any material covenant contained in this Employment Agreement
that is to be observed or performed by the Employee, and the Employee fails
to
cure such breach or its effects within 30 days of receiving written notice
from
the Company specifying the facts which constitute Cause under this
subsection;
(v)
a
breach
by the Employee of any of the written policies of the Company the result of
which is, or is likely to be, materially injurious to the Company, as determined
by the Board of the Company or an independent committee of the Board of the
Company, and the Employee fails to cure such breach or its effects within 30
days of receiving written notice from the Company specifying the facts which
constitute Cause under this subsection;
(vi)
any
appropriation by the Employee of a corporate opportunity or a material corporate
asset;
(vii)
the
Company being unable to register its securities with the United States
Securities and Exchange Commission or listed on a stock exchange due to the
failure of the Employee to make a disclosure with respect to the Employee’s
background; or
(viii)
the
failure or refusal by the Employee to comply with a written lawful directive
by
the Board or any committee of the Board that is not inconsistent with the terms
hereof, and the Employee fails to cure such failure or refusal or its effects
within 30 days of receiving written notice from the Company specifying the
facts
which constitute Cause under this subsection.
(b) Without
Cause.
The
Company may in its sole and absolute discretion terminate Employee’s employment
hereunder at any time without Cause for any or no reason. For purposes of this
Employment Agreement, a “Without
Cause Termination”
means
a
termination by the Company of Employee’s employment hereunder other than
pursuant to a For Cause Termination.
For
avoidance of doubt, termination by reason of Disability is not a termination
by
the Company.
(c) Death.
The
Employee’s employment hereunder shall terminate automatically upon his
death.
(d) Disability.
If the
Disability (as defined below) of the Employee occurs during the Employment
Term,
the Company may notify the Employee of the Company’s intention to terminate the
Employee’s employment hereunder for Disability. In such event, the Employee’s
employment hereunder shall terminate effective on the earlier of the 30th day
following the date such notice of termination is received by the Employee,
or
the expiration of the Employment Term (the “Disability
Effective Date”).
For
purposes of this Employment Agreement, the “Disability”
of
the
Employee shall be deemed to have occurred at such time as the Board determines,
in its reasonable discretion, (i) that despite any reasonable accommodation
required by law, the Employee is unable to perform the essential functions
of
his position hereunder as a result of his physical or mental incapacity and
(ii)
that such inability has existed or is likely to exist for a period of sixty
(60)
or more consecutive days.
(e) Notice
of Termination.
Any
termination of the Employee’s employment hereunder by the Company or by the
Employee (other than a termination pursuant to Section 6(c)) of this Agreement
shall be communicated by a Notice of Termination (as defined below) to the
other
party hereto. For purposes of this Employment Agreement, a “Notice
of Termination”
means
a
written notice which (i) indicates the specific termination provision in this
Employment Agreement relied upon, (ii) in the case of a termination for
Disability or a For Cause Termination, sets forth in reasonable detail the
facts
and circumstances claimed to provide a basis for termination of the Employee’s
employment under the provision so indicated, and (iii) specifies the Employment
Termination Date (as defined in Section 6(f) below). The failure by the Company
or Employee, as applicable, to set forth in the Notice of Termination any fact
or circumstance which contributes to a showing of Disability or Cause shall
not
waive any right of the Company or Employee hereunder or preclude the Company
or
Employee from asserting such fact or circumstance in enforcing the Company’s or
Employee’s rights hereunder.
(f)
Employment
Termination Date.
For
purposes of this Employment Agreement, “Employment
Termination Date”
means
the
effective date of termination of the Employee’s employment hereunder, which date
shall be (i) if the Employee’s employment is terminated by his death, the date
of his death, (ii) if the Employee’s employment is terminated because of his
Disability, the Disability Effective Date, (iii) if the Employee’s employment is
terminated by the Company pursuant to a For Cause Termination, the date
specified in the Notice of Termination, (iv) if the Employee’s employment is
terminated by the Company pursuant to a Without Cause Termination, the date
specified in the Notice of Termination,
and (iv)
otherwise,
the date on which the Notice of Termination is given, and if none is given,
then
the date recorded by the Company as the date of termination for purposes of
its
payroll records.
(g)
Resignation.
In the
event of termination of the Employee’s employment hereunder for any reason
whatsoever other than the death of the Employee, the Employee agrees that if
at
such time he is a member of the Board of Directors or officer of the Company
or
a director or officer of any of the Company’s subsidiaries, he shall promptly
deliver to the Company his written resignation from all such positions, such
resignation to be effective as of the Employment Termination Date.
7. Company
Obligations Upon Termination of Employment.
(a) Death.
If the
Employee’s employment hereunder is terminated during
the Employment Term by
reason
of the Employee’s death, the Company shall pay to the Employee’s estate, in a
lump sum in cash within thirty (30) days after the Employment Termination Date,
a sum equal to the Employee’s accrued and unpaid Base Salary,
reimbursable expenses and vacation accrued but unpaid in each case through
the
Employment Termination Date, and thereafter the Company shall have no further
obligation to the Employee under this Employment Agreement.
(b) Disability.
If the
Employee’s employment hereunder is terminated during
the Employment Term by
reason
of the Employee’s Disability, the Company shall pay to the Employee, in a lump
sum in cash within thirty (30) days after the Employment Termination Date,
a sum
equal to the Employee’s accrued and unpaid Base Salary, reimbursable expenses
and vacation accrued but unpaid in each case through the Employment Termination
Date, and thereafter the Company shall have no further obligation to the
Employee under this Employment Agreement, except as provided in the immediately
following sentence. In addition, the Company shall continue to provide at its
expense group medical and dental insurance, as in effect on the Employment
Termination Date, to the Employee and to the Employee’s immediate family for a
period of three (3) months after the Employment Termination Date.
(c) For
Cause Termination.
If the
Employee’s employment hereunder is terminated during
the Employment Term pursuant
to a For Cause Termination, the Company shall pay to the Employee, in a lump
sum
in cash within thirty (30) days after the Employment Termination Date, the
Employee’s accrued and unpaid Base Salary, reimbursable expenses and vacation
accrued but unpaid in each case through the Employment Termination Date, to
the
extent not theretofore paid, and, thereafter, the Company shall have no further
obligations to the Employee under this Employment Agreement.
(d) Without
Cause Termination.
If the
Employee’s employment hereunder is terminated during
the Employment Term by
reason
of a Without Cause Termination, the Company shall pay to the Employee the
Employee’s Base Salary for a period equal to the lesser of three (3) months and
the remainder of the then current Employment Term, at the regularly scheduled
payment intervals following the Employment Termination Date, and shall pay
within thirty (30) days following the Employment Termination Date all
reimbursable expenses and vacation accrued but unpaid in each case through
the
Employment Termination Date and shall continue to provide group medical and
dental insurance at the Company’s expense, as in effect on the Employment
Termination Date, to the Employee and to the Employee’s immediate family for the
three (3)-month period after the Employment Termination Date and thereafter
the
Company shall have no further obligation to the Employee under this Employment
Agreement.
(e) Sole
Remedy.
The
receipt of payments
and/or
benefits,
if any,
provided for under Section 7(d) shall be the Employee’s sole and exclusive
remedy for any
termination of his employment hereunder and shall be in lieu of any claim that
he might otherwise have under this Employment Agreement against the Company
arising from such termination. All payments (if
any)
that
are
to be made by, and
all
benefits
(if
any)
that
are
to be provided
by,
the
Company to the Employee following the Employment Termination Date shall be
subject to the Employee complying with any covenants hereunder to be observed
or
performed by the Employee following termination of the Employee’s employment
hereunder including, without limitation, Sections 9, 10, 11, and 12 hereof,
except as may be otherwise expressly provided in this Employment Agreement.
(f) Release.
Any
severance payments due to Employee under Section 7(d) shall be contingent upon
Employee executing a full and general release of any and all claims against
the
Company, the Board of Directors and officers of the Company and any affiliates
and representatives of the Company arising out of Employee’s employment with the
Company or this Employment Agreement, in a form acceptable to the
Company.
(g) No
Duty to Mitigate.
Employee’s rights and privileges under the first sentence of Section 7(d) shall
be considered severance pay in consideration of his past service to the Company,
and his entitlement thereto shall neither be governed by any duty to mitigate
his damages by seeking further employment nor offset by any compensation that
he
may receive from future employment unless such employment is a violation of
Section 11 hereof.
8. Employee’s
Compliance With Company Policies And The Law.
The
Employee shall comply fully with all Company policies, procedures and rules,
as
determined, promulgated and modified by the Company from time to time,
including, without limitation, the Company’s policies, procedures and rules
prohibiting discrimination and harassment, and concerning email and Internet
use, and the Company’s Xxxxxxx Xxxxxxx Policy and Procedures. The Company
reserves the right to add, delete or modify any Company policy, procedure or
rule in its respective sole discretion. The Employee shall also comply fully
with all applicable U.S. federal, state and local laws, regulations and
ordinances, including, without limitation the Xxxxxxxx-Xxxxx Act of 2002.
9. Nondisclosure
of Confidential and Proprietary Information
During
the Employment Term, the Employee agrees to the following:
(a) The
Employee acknowledges that during the Employment Term, the Employee will have
access to and possession of trade secrets,
confidential information, and proprietary information (collectively, as defined
more extensively below, “Confidential
Information”)
of the
Company, its parents, subsidiaries and affiliates and their respective
customers, suppliers and other third parties
that do
business with them. The Employee recognizes and acknowledges that this
Confidential Information is valuable, special and unique to the Company’s
business, is owned solely by and is the exclusive property of the Company,
is to
be used only for the Company’s benefit, and that access to and knowledge thereof
are essential to the performance of the Employee’s duties to the Company. During
the Employment Term and, thereafter, the Employee shall keep secret and shall
not use or disclose, reveal, transfer, reproduce, sell, capitalize upon or
take
advantage of such Confidential Information relating to the Company, its
customers, suppliers or other third parties
that do
business with it except at the request of the Company, and in addition,
the
Employee
shall exercise all reasonable efforts and precautions to prevent such
disclosure, breach of confidentiality, or other conduct or action inconsistent
herewith; provided,
however,
that
Confidential Information may be disclosed to the extent (i) required by law
or
court order or (ii) generally available to the public other than
by
unauthorized disclosure.
(b) The
term
“Confidential
Information,”
means
information in whatever form be it written, digital, graphic, electronically
stored, orally transmitted or memorized concerning:
(i) the
Company’s business or operations plans, strategies, portfolio, prospects or
objectives;
(ii) the
Company’s structure, products, product development, technology, distribution,
sales, services, support and marketing plans, practices, and
operations;
(iii) the
prices, costs, and details of the Company’s services;
(iv) research
and development, new products, licenses, operations or plans;
(v) Inventions
(as defined below);
(vi) customers
and customer lists, including (A) present customers, customer files and records,
and (B) potential customers, prospects or targets (including without limitation,
the identities of customers, names, addresses, contact, persons and the
customers’ business status or needs) that the Company has identified as
potential customers, prospects or targets prior to the termination of Employee’s
employment for any reason under this Employment Agreement;
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
10
(vii) information
regarding the skills, compensation and benefits of other employees of the
Company;
(viii) financial
records, unpublished financial statements, financial condition, results of
the
Company’s operations and related information about the Company;
(ix) any
other
financial, commercial, business or technical information related to any of
the
products or services made, developed or sold by the Company or its
customers.
(c)
Employee
does not have an obligation to treat any information as Confidential Information
that is: (A) in the public domain through no act, omission or fault of the
Employee; (B) within the legitimate possession of the Employee prior to the
date
hereof, with no confidentiality obligations to a third party; (C) lawfully
received from a third party having rights in the information without
restriction, and without notice of any restriction against its further
disclosure or use; (D) independently developed by the Employee without breaching
this Agreement; or (E) disclosed or used by Employee with the prior written
consent of the Company. If Confidential Information is required or requested
to
be produced by law, court order, governmental authority or other third party,
the Employee shall immediately notify the Company of that requirement or request
and shall assist the Company in obtaining a protective order or other
appropriate relief to prevent such production. The burden of establishing the
existence of these exceptions shall be the Employee’s.(d) The
Employee further recognizes that the Company has received and in the future
will
receive from third parties confidential or proprietary information
(“Third Party
Information”)
subject to a duty on the Company’s part to maintain the confidentiality of such
information and to use it only for certain limited purposes,
and
Employee shall disclose all such Third Party Information to the
Company.
During
the Employment Term and thereafter, the Employee shall hold Third Party
Information in the strictest confidence and shall not disclose to anyone (other
than Company personnel who need to know such information in connection with
their work for the Company) or use, except in connection with work for the
Company, Third Party Information unless expressly authorized by the Company
in
writing.
(d) The
Employee further agrees to store and maintain all Confidential Information
and
Third
Party Information in
a
secure place. On the termination of employment, Employee agrees to deliver
all
records, data, information, and other documents produced or acquired during
the
Employment Term, and all copies thereof, to the Company. Such material at all
times shall remain the exclusive property of the Company, unless otherwise
agreed to in writing by the Company. Upon termination of the employment, the
Employee agrees to make no further use of any Confidential Information on his
own behalf or on behalf of any other person or entity other than the Company.
(e)
During
the Employment Term and thereafter, the Employee shall not improperly use or
disclose any confidential information or trade secrets, if any, of any former
employer or any other person to whom the Employee has an obligation of
confidentiality, and shall not bring onto the premises of the Company any
unpublished documents or any property belonging to any former employer or any
other person to whom the Employee has an obligation of confidentiality unless
consented to in writing by that former employer or person.
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
11
10.
Assignment
of Inventions and Intellectual Property
(a) The
term
“Proprietary
Rights”
means
all
trade secret, trademark, service xxxx, patent, copyright, mask work and other
intellectual property rights throughout the world. The term “Inventions”
means
all
trade secrets, proprietary
information, trade
and
service marks, inventions, mask works, ideas, processes, formulas, source and
object codes, data, programs, technology, writings, software programs, other
works of authorship, know how, discoveries, developments, designs,
techniques,
schematics, manuals, drawings, computer disks and programs, employee
suggestions, development tools, computer printouts or
any
claim of
rights (or any related improvements or modifications to the
foregoing).
(b) In
consideration of the Employee’s employment, the Employee hereby assigns and
agrees to assign in the future (when any such Inventions or Proprietary
Rights
are
first reduced to practice or first fixed in an tangible medium, as applicable)
to the Company all right, title and interest in and to any and all Inventions
(and all Proprietary Rights with respect thereto) whether or not patentable
or
registrable under copyright or similar statutes, made or conceived or reduced
to
practice or learned by the Employee, either alone or jointly with others, during
or at any time before or after the period of employment with the Company, which
(i) relate to methods, apparatus, designs, products, processes or devices sold,
leased, used or under construction or development by the Company or any
subsidiary or otherwise relate to or pertain to the actual or anticipated
business, functions, operations, research or development of the Company or
any
subsidiary, (ii) arise (wholly or partly) from the Employee’s efforts during any
time that the Employee is either physically present on the Company’s premises or
utilizing any physical or intellectual property owned or leased by the Company,
or (iii) are based on any information or knowledge gained by the Employee
through his or her employment with the Company. Inventions assigned to the
Company, or to a third party as directed by the Company pursuant to this
Section, are hereinafter referred to as “Company
Inventions.”
(c) During
the Employment Term, the Employee shall promptly disclose to the Company, fully
and in writing, all Inventions authored, conceived or reduced to practice by
the
Employee, either alone or jointly with others. In addition, the Employee shall
promptly disclose to the Company all patent applications filed by the Employee
or on behalf of the Employee within eighteen (18) months after termination
of
employment. At the time of each such disclosure, the Employee shall advise
the
Company in writing of any Inventions that he believes fully qualifies for
protection under the Law; and the Employee shall at that time provide to the
Company in writing all evidence necessary to substantiate that
belief.
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
12
(d) The
Employee also agrees to assign all right, title and interest in and to any
particular Company Invention to a third party, as directed by the
Company.
(e) The
Employee shall assist the Company in every proper way to obtain, and from time
to time enforce,
the
Company’s Proprietary Rights relating to Company Inventions in any and all
countries. To that end the Employee shall execute, verify and deliver such
documents and perform such other acts (including appearances as a witness)
as
the Company may reasonably request for use in applying for, obtaining,
perfecting, evidencing, sustaining and enforcing such Proprietary Rights and
the
assignment thereof. In addition, the Employee shall execute, verify and deliver
assignments of such Proprietary Rights to the Company or its designee. The
Employee’s obligation to assist the Company with respect to Proprietary Rights
relating to such Company Inventions in any and all countries shall continue
beyond the termination of employment, and the Company shall provide compensation
at a reasonable rate after termination for the time actually spent
by the
Employee
at the
Company’s request on any such assistance.
(f) In
the
event the Company is unable for any reason, after reasonable effort, to secure
the Employee’s signature on any document needed in connection with the actions
specified in the preceding paragraph, the Employee hereby irrevocably appoints
the Company and its duly authorized officers and agents as the Employee’s agent
and attorney in fact to act for and in his or her behalf to sign, execute,
verify and file any and all documents and to do all other lawfully permitted
acts to further the purposes of the preceding paragraph with the same legal
force and effect as if executed by the Employee. The Employee hereby waives
and
quitclaims to the Company any and all claims, of any nature whatsoever, which
the Employee now or may hereafter have for infringement of any proprietary
rights assigned to the Company.
(g) Notwithstanding
the foregoing, the Employee shall not be prohibited by this Section 10 from
using, after the Employment Term, ideas, data, technology, know how or
techniques that are acquired or generated from the general knowledge of the
industry that the Company is engaged in.
11. Non-Competition.
(a) Employee
will, as a result of his employment with the Company, be involved with and
exposed to substantial business resources and assets of the Company and certain
of its affiliates and will develop additional contacts and relationships with
numerous individuals and companies, which are also involved in the business
of
the Company or businesses related thereto. Such individuals and organizations
will have business and contractual relationships with the Company and/or its
affiliates that will be a valuable asset thereof. The Employee also recognizes
and agrees with the Company that the services which the Employee will render
during the Employment Term are unique, special and of extraordinary character,
that the Company will be substantially dependent upon such services to develop
and market its products and to earn a profit, and that the application of the
Employee’s knowledge and services to any competitive business would be
substantially detrimental to the Company. Accordingly, in consideration for
employment by the Company and compensation and other benefits, including any
compensation the Employee may receive pursuant
to this Employment Agreement
after
his employment is terminated, the Employee shall not, directly or indirectly
(whether as an employee, officer, executive, director, manager, stockholder,
member, lender, consultant or any other capacity), during the Employment Term,
and for a period of three (3) months after termination thereof for any reason
whatsoever, engage in any business or activity or otherwise compete anywhere
in
the United States, with any business or activity that is competitive with any
business or activity engaged in by the Company or any of its subsidiaries or
affiliates or contemplated to be engaged in (as of the time of the termination
of employment) by the Company or any such subsidiary or affiliate. In addition,
for a period of two (2) years from the end of Employment Term the Employee
shall
not induce or attempt to induce any person or entity that is engaged in any
business activity or relationship with the Company or any subsidiary or
affiliate of the Company to terminate that activity or relationship to reduce
such activity or relationship.
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
13
(b) The
term
“compete”
as
used
herein means to engage, directly or indirectly, either as a proprietor, partner,
employee, commissioned salesperson, agent, consultant, director, officer,
stockholder or in any other capacity or manner whatsoever. The provisions of
this Section shall not prevent the Employee from investing any assets in
securities of any publicly-traded corporation, provided that such investments
do
not, directly or indirectly, result in the Employee, his spouse or his children
collectively (i) owning beneficially at any time five percent (5%) or more
of
the equity securities of any corporation engaged in a business competitive
with
the Company, or (ii) otherwise being able to control or actively participate
in
the business decisions of such corporation.
12. Non-Solicitation.
For
the
Employment Term and for two (2) years after
the
termination thereof, the Employee shall not (i)
induce, solicit or seek to influence, either directly or indirectly, any
employee of, or any person under written contract with, Company or any of its
affiliates, to leave the employ of Company, any of its affiliates or any
division of either, or to enter into any employment agreement, independent
contractor arrangement, or any other arrangement whereby such individual would
perform services for compensation, either directly or indirectly, for any
person, firm, corporation or other entity engaged in business in competition
with Company or any of its affiliates, or (ii) solicit any third party with
whom
the Company or any of its subsidiaries has a mineral rights contract, a joint
operating agreement or a partnership interest, or solicit any such third party
that has been identified by the Company as a prospect for a mineral rights
contract or a joint operating agreement or a partnership interest, or to which
a
marketing proposal or presentation was made during the twelve-12-month period
immediately preceding termination of Employee’s employment with Company (other
than on behalf of Company) for any business of the type conducted by
Company.
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
14
13. No
Conflicting Obligations.
The
Employee represents and warrants that the Employee has the full right and
authority to enter into this Employment Agreement and to render the services
as
required under this Employment Agreement, and that the execution, delivery,
and
performance by the Employee of this Employment Agreement do not and will not
conflict with or result in a violation of any provision of, or constitute a
default under, any contract, agreement,, instrument, or obligation to which
the
Employee is a party or by which the Employee is bound, including any agreement
to keep in confidence information acquired by the Employee in confidence or
in
trust prior to employment by the Company. The Employee shall not enter into
any
agreement or business relationship or incur any obligations to any third party
following the date hereof that may conflict with, or interfere with the
Employee’s abilities to perform, the Employees duties and responsibilities
pursuant to this Employment Agreement.
14. Return
of Company Property.
When
the
Employee leaves the employ of the Company, the Employee shall deliver to the
Company (and shall not keep in his possession, recreate or deliver to anyone
else) any and all devices, records, recordings, data, notes, reports, proposals,
lists, correspondence, specifications, drawings, blueprints, sketches,
materials, computer materials, equipment, other documents or property, together
with all copies thereof (in whatever medium recorded), belonging to the Company,
its successors or assigns. The Employee further agrees that any property
situated on the Company’s premises and owned by the Company, including computer
disks and other digital, analog or hard copy storage media, filing cabinets
or
other work areas, is subject to inspection by Company personnel at any time
with
or without notice. Prior to leaving, the Employee shall cooperate with the
Company in completing and signing the Company’s termination statement for
management personnel.
15. Notification
of New Employer.
In
the
event that the Employee leaves the employ of the Company, the Employee hereby
agrees to notify his new employer of those of the Employee’s obligations which
are continuing under this Employment Agreement after the termination
hereof.
16. Remedies.
(a) The
Company shall be entitled to equitable relief, including injunctive relief
and
specific performance as against the Employee and his agents, without the
requirement of posting bond or other security or proving actual
damages
or
irreparable injury,
for the
Employee’s or his agent’s threatened or actual breach of Section 8, 9,
10,
11, or 12
of this
Employment Agreement, as money damages for a breach thereof would be incapable
of precise estimation, uncertain, and an insufficient remedy for an actual
or
threatened breach of Section 8, 9,
10,
11, or 12
of this
Employment Agreement. Nothing herein shall be construed as prohibiting the
Company from pursuing any other remedies available for such breach or threatened
breach of Section 8, 9,
10,
11, and 12
of this
Employment Agreement, including the recovery of damages.
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
15
(b)
The
prevailing party in any legal actions arising under this Employment Agreement
shall be reimbursed in full the legal fees for enforcement in favor of such
prevailing party.
17. Public
Statements.
Employee
agrees that he shall not make any speeches, publish articles, appear as a guest
or a commentator on any television or radio show or issue statements to the
press regarding,
or
that in
anyway pertain to,
the
Company or to Employee’s employment with same without the
Company’s
prior approval unless pursuant to the Employee’s duties to the Company.
Violation of this provision by Employee is a material breach of this Employment
Agreement.
18. Notices.
Any
notices, requests, demands or other communications required or permitted under
this Employment Agreement shall be in writing and shall be deemed to have been
given when delivered personally or three (3) days after being mailed by
certified mail, return receipt requested, addressed to the party being notified
at the address of such party first set forth herein, or at such other address
as
such party may hereafter have designated by notice; provided,
however,
that
any notice of change of address shall not be effective until its receipt by
the
party to be charged therewith.
19. Miscellaneous.
(a) Moving
Expenses. The Company shall reimburse Employee for his actual out of pocket
expenses to move his family to the San Antonio area, which reimbursement shall
not in any event exceed twenty thousand ($20,000) dollars.
(b)
Employee
represents, warrants and covenants to the Company that (i) this Employment
Agreement constitutes the legal, valid and binding obligation of Employee,
enforceable in accordance with its terms, and the execution, delivery and
performance of this Employment Agreement by Employee does not and will not
conflict with, violate or cause a breach of any agreement, contract or
instrument to which Employee is a party or any judgment, order or decree to
which Employee is subject, and (ii) the Employee is not a party to or bound
by
any employment agreement, noncompetition agreement or confidentiality agreement
with any Person.
(c)
Telephones,
stationery, postage, e-mail, the internet and other resources made available
to
the Employee by the Company are solely for the furtherance of the Company
business.
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
16
(d)
All
construction and interpretation of this Employment Agreement shall be governed
by and construed in accord with the internal laws of the State of Texas, without
giving effect to that State’s principles of conflicts of law.
(e) The
Employee and the Company agree that any provision of this Employment Agreement
deemed unenforceable or invalid by any court of competent jurisdiction, such
provision shall be reformed and modified to make such provision valid and to
permit enforcement of the objectionable provision to the fullest permissible
extent. It is the intent of the Company and the Employee that this Employment
Agreement be enforced to the fullest extent permitted by applicable law. Any
provision of this Employment Agreement deemed unenforceable after modification
shall be deemed stricken from this Employment Agreement, with the remainder
of
the Employment Agreement being given its full force and effect. If any term
or
other provision of this Employment Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced
by
any rule of law or public policy, all other terms, provisions
and
conditions of this Employment Agreement shall nevertheless remain in full force
and effect.
(f) Any
waiver granted by a party of any breach of or failure to comply with any
provision or condition of this Employment Agreement by the other party shall
not
be construed as, or constitute, a continuing waiver of such provision or
condition, or a waiver of any other breach of, or failure to comply with, any
other provision or condition of this Employment Agreement, any such waiver
to be
limited to the specific matter and instance for which it is given. No waiver
of
any such breach or failure or of any provision or condition of this Employment
Agreement shall be effective unless in a written instrument signed by the party
granting the waiver.
(g) The
Employee and the Company independently have made all inquiries regarding the
qualifications and business affairs of the other which either party deems
necessary. The Employee affirms that the Employee is knowledgeable and
sophisticated as to business matters, including the subject matter of this
Employment Agreement, and has read and fully understands this Employment
Agreement’s meaning and legally binding effect. The Employee further affirms
that, prior to assenting to the terms of this Employment Agreement, the Employee
had been provided with a reasonable time to review it, consult with counsel
of
the Employee’s own choice, and to negotiate at arm’s length with the Company as
to the contents of the Employment Agreement. The Employee further affirms that
the provisions in this Employment Agreement represent accurately the expression
of the parties’ mutual intent, and that the Employee has entered into this
Employment Agreement freely and voluntarily and without pressure or coercion
from anyone. Each party assumes the risk of any misrepresentation or mistaken
understanding or belief relied upon by either party in entering into this
Employment Agreement. In resolving any dispute or construing any term or
provision in this Employment Agreement, there shall be no presumption made
or
inference drawn because of the inclusion of a provision not contained in a
prior
draft or the deletion of a provision contained in a prior draft. The parties
acknowledge and agree that this Employment Agreement was negotiated and drafted
with each party being represented by competent counsel of its choice and with
each party having an opportunity to participate in the drafting of the
provisions hereof and shall therefore be construed as if drafted jointly by
the
parties.
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
17
(h) Employee
agrees that Employee’s obligations under Sections 8, 9, 10, 11, and 12 of this
Employment Agreement will continue in effect after termination of Employee’s
employment for any reason, except as otherwise specifically provided herein.
Employee’s obligations under this Employment Agreement also will be binding upon
Employee’s heirs, executors, assigns, and administrators and will inure to the
benefit of the Company, its subsidiaries, successors, and assigns.
(i) The
Company and the Employee agree that the Employee’s obligations to the Company
during the Employee’s employment with the Company, as well as any other
obligation of the Employee under this Employment Agreement, may be assigned
to
any successor in interest to the Company or any division or affiliate of the
Company in its sole discretion and without additional consideration or prior
notice to the Employee, but that nothing requires the Company to do so. The
Employee’s obligations under this Employment Agreement are personal in nature
and may not be assigned by the Employee to any other person or
entity.
(j) This
Employment Agreement contains
the
entire understanding and agreement of the parties relating to the subject matter
hereof and supersede
all
prior and/or contemporaneous understandings and agreements of any kind and
nature (whether written or oral) among the parties with respect to such subject
matter, all of which are merged herein. This Employment Agreement may not be
modified, amended, altered or supplemented, except by a written agreement
executed by each of the parties hereto.
(k) This
Employment Agreement and any amendments hereto may be executed and delivered
in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original,
but
all of which taken together shall constitute one and the same agreement, and
shall become effective when counterparts have been signed by each party hereto
and delivered to the other parties hereto, it being understood that all parties
need not sign the same counterpart. In the event that any signature to this
Employment Agreement or any amendment hereto is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof. At the request of
any party,
each
other party shall promptly re-execute an original form of this Employment
Agreement or any amendment hereto and deliver the same to the other party.
No
party hereto shall raise the use of a facsimile machine or e-mail delivery
of a
“.pdf” format data file to deliver a signature to this Employment Agreement or
any amendment hereto or the fact that such signature was transmitted or
communicated through the use of a facsimile machine or e-mail delivery of a
“.pdf” format data file as a defense to the formation or enforceability of a
contract, and each party hereto forever waives any such defense.
(l) The
headings of this Employment Agreement are for convenience of reference and
shall
not form part of, or affect the interpretation of, this Employment
Agreement.
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
18
IN
WITNESS WHEREOF,
the
parties have executed and delivered this Employment Agreement on the date first
above written.
| SOUTH TEXAS OIL COMPANY | ||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |
|
Name:
Xxxxxxx X. Xxxxxxx
Title:
Chief Executive Officer
|
||
| EMPLOYEE: | ||
| /s/ Xxxxxxxx X. Xxxxx | ||
| Xxxxxxxx X. Xxxxx | ||
| Address: | ||
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
19
EXHIBIT
A
STOCK
OPTION AGREEMENT
FOR
PERFORMANCE
OPTIONS
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
00
XXXXX
XXXXX OIL COMPANY
PERFORMANCE
STOCK OPTION AGREEMENT
STOCK
OPTION AGREEMENT, dated as of October 2, 2008 (this "Agreement"), by and between
South Texas Oil Company,
a Nevada
corporation (the "Company"), and Xxxxxxxx X. Xxxxx (the "Optionee").
The
Optionee and the Company have entered into an employment agreement, pursuant
to
which Optionee shall serve as the Company’s Vice President of Business
Development (the “Employment Agreement”). On September 29, 2008 (the “Grant
Date”), the Company's Board of Directors accepted and adopted the determination
of the Compensation Committee to grant to the Optionee an Option (as hereinafter
defined) to purchase shares of Common Stock, pursuant to the Employment
Agreement and the Equity Incentive Compensation Plan of South Texas Oil Company
(the “Plan”), and such grant has been made conditioned upon the Optionee
entering into this Agreement with the Company with respect to such options.
Capitalized terms used in this Agreement not defined herein shall have the
meaning set forth in the Plan, the terms of which shall be incorporated herein
by reference.
NOW,
THEREFORE, for good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged by the parties, the parties hereby
agree as follows:
1.
Grant.
The Company hereby grants to the Optionee an option to purchase 500,000 shares
of Common Stock, (the “Option”) at the price and on the terms and provisions set
forth herein. This Option is intended to be an ISO; provided, however, to the
extent the Option becomes exercisable as to more than $100,000 in any given
year, the portion Option will be treated as a NQSO.
2.
Date
of
Grant; Term of Options. The grant of the Options is effective as of the Grant
Date. None of the Options may be exercised later than 5:00 p.m. on June 30,
2018 (the "Expiration Date").
3.
Option
Exercise Price. The Option shall have an exercise price of $2.00 per share
of
Common Stock (the "Exercise Price").
4.
Exercise
of Option.
(a)
Vesting.
The Option shall be exercisable only in accordance with the terms and provisions
of this Agreement and the Employment Agreement and shall only be exercisable
as
to the number of shares that have vested under such Option. The shares under
the
Option shall vest upon satisfaction of the “Performance Objectives” and in the
numbers of Option shares as set forth in Appendix A attached hereto. In
addition, all unvested shares under the Option shall fully vest and become
exercisable upon (i) a termination of Optionee’s employment as described in
Section 7(d) of the Employment Agreement and (ii) the occurrence of a
Significant Transaction as described in Section 13(b).
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
21
(b)
Right
to
Exercise. The Option, to the extent then vested and exercisable, may be
exercised at such times and subject to such procedures as are set forth in
this
Agreement and as the Company from time to time may establish. Any unvested
portion of an Option may not be exercised. In no event may the Option be
exercised after the Expiration Date.
(c)
Method
of
Exercise Payment of Exercise Price.
(i)
The
Option (or any part thereof), to the extent then vested and exercisable, shall
be exercised by giving written notice to the Company at its principal office
to
the attention of the General Counsel, indicating that this Option is being
exercised, specifying the number of shares of Common Stock as to which such
Option is being exercised and accompanied by payment in full of the aggregate
Exercise Price thereof.
(ii)
The
Exercise Price for the Option being exercised may be paid by (A) in cash and/or
by certified check, (B) with the authorization of the Company’s Board of
Directors (the “Board”), with previously acquired shares of Common Stock having
an aggregate Fair Market Value, on the date of exercise, equal to the aggregate
Exercise Price of all Options being exercised, or (C) some combination thereof.
The Company shall not be required to issue any shares of Common Stock pursuant
to the exercise of any Option until all required payments with respect thereto,
including payments for any required withholding taxes and other withholding
amounts, if applicable, have been paid in full to the Company.
(iii)
In
addition, as long as the shares of Common Stock underlying the Options have
been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and under any other applicable federal securities laws, and the applicable
registration statement remains in effect, the aggregate Exercise Price of the
Options being exercised may be paid by the Optionee delivering a properly
executed notice to the Company (as aforesaid), together with a copy of the
Optionee’s irrevocable instructions to a brokerage firm acceptable to the
Committee to deliver promptly to the Company the amount of sale or loan proceeds
sufficient to pay such Exercise Price.
(iv)
In
no
case may a fraction of a share of Common Stock be purchased or issued to the
Optionee pursuant hereto.
5.
Restrictions
on Exercise. It shall be a condition to the issuance of any share of Common
Stock upon the exercise of the Options either that (a) a registration statement
under the Securities Act, with respect to the shares of Common Stock to be
issued upon such exercise shall be effective and current at the time of
exercise, or (b) there is an exemption from registration under the Securities
Act for the issuance of the shares of Common Stock upon such exercise. The
Options may not be exercised if the issuance of the shares of Common Stock
upon
such exercise would constitute a violation of the Securities Act or any
applicable federal or state securities laws or regulations or any other
applicable laws or regulations. As a condition precedent to the exercise of
any
of the Options, the Company may require the Optionee to make such
representations and warranties, to agree to such covenants for the benefit
of
the Company and enter into such agreements with the Company, as the Company
may
consider necessary or convenient to facilitate compliance with any such
applicable law or regulation.
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
22
6.
Continuation
as an Employee. Nothing in this Agreement shall confer upon the Optionee any
right to continue as an officer or employee of the Company or any of its
subsidiaries, if applicable, or interfere in any way with the right of the
Company or any such Subsidiary, if applicable, to terminate the Optionee as
an
officer or employee at any time or for any reason whatsoever, subject to, in
the
case of an officer, to any employment agreement between the Company or any
such
Subsidiary, as the case may be, and the Optionee.
7.
Continuation
as an Employee or a Consultant. Nothing in this Agreement shall confer on the
Optionee any right to continue as an employee of, or consultant to, the Company
or any of its subsidiaries, or interfere in any way with any right of the
Company or any such Subsidiary to terminate such relationship at any time for
any reason whatsoever, subject to any other applicable agreement between the
Company and such Subsidiary, as the case may be, or the Optionee.
8.
Conflicts.
In the event of any conflict or inconsistency between the terms and provisions
of this Agreement and the terms and provisions of any employment agreement
or
severance agreement between the Company and the Optionee, the terms and
provisions of this Agreement shall control.
9.
Withholding
Taxes. The Company, or any of its subsidiaries, may withhold (a) cash or (b)
with the consent of the Board through a “net issuance” of shares, shares of
Common Stock to be issued upon exercise of any Options having an aggregate
value
(based upon the Fair Market Value of such shares of Common Stock on the date
on
which the applicable taxes are incurred), or (c) a combination of cash and
shares as described in (b) above equal to the amount which the Board determines
is necessary to satisfy the obligation of the Company such Subsidiary to
withhold federal, state and local income taxes or other amounts incurred by
reason of the grant, vesting, exercise or disposition of any Options, or the
disposition of the underlying shares of Common Stock. Alternatively, the Company
may require the Optionee to pay to the Company such amount, in cash, promptly
upon demand.
10.
Non-Transferability.
No Options shall be transferable other than by will, the laws of descent and
distribution or Order of a Court of competent jurisdiction, except as may
otherwise be expressly provided in this Agreement. Except to the extent provided
herein, the Options may not be assigned, transferred, pledged, hypothecated
or
disposed of in any way (whether by operation of law or otherwise) and shall
not
be subject to execution, attachment or similar process, and any such attempted
assignment, transfer, pledge, hypothecation or disposition shall be null and
void ab initio and of no force or effect.
11.
Termination
of Relationship. Except as otherwise be expressly provided in the Employment
Agreement or other applicable agreement between the Company and the Optionee,
if
an Optionee's relationship with the Company or any its Subsidiaries as an
employee, a director or a consultant has terminated for any reason (other than
as a result of the Optionee's death or Disability), the Optionee may exercise
the Options, to the extent exercisable on the date of such termination, at
any
time within three (3) months after the date of termination, but not thereafter
and in no event may any Expiration Date of the Options be extended; provided,
however, that if such relationship is terminated by the Company or the
Subsidiaries for Cause (as defined in the Employment Agreement) or by reason
of
the expiration of the Employment Term, the Options shall terminate
immediately.
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
23
12.
Death
or
Disability. Except as may otherwise be expressly provided in an employment
agreement or other applicable agreement between the Company and the Optionee,
if
an Optionee (a) dies while he is an employee or director of, or consultant
to, the Company or any of its Subsidiaries or (b) the relationship between
the Company the Optionee terminates as result of the Disability (as hereinafter
defined) of the Optionee, then within one (1) year following the Optionee's
death or the termination of such relationship by reason of his Disability,
the
Options that were granted to the Optionee, may be exercised, to the extent
exercisable on the date of the Optionee's death, by his Legal Representative
(as
hereinafter defined ) at any time within one (1) year after death, or by the
Optionee in the case of Disability, for the one (1) year period following
termination due to Disability, but in no event any Options be exercised after
the Expiration Date.
13.
Adjustments
upon Change in Common Stock.
(a)
Except
as
may otherwise be provided in an employment agreement or other applicable
agreement between the Company and the Optionee, in the event of a stock
dividend, recapitalization, merger in which the Company is the surviving
corporation, spin-off, split-up, combination or exchange of shares or the like
which results in a change in the number of kind of shares of Common Stock which
is outstanding immediately prior to such event, the aggregate number and kind
of
shares subject to the Option, the exercise price of each Option, shall be
appropriately adjusted by the Board, whose determination shall be conclusive
and
binding on all parties.
(b)
In
the
event of a Significant Transaction, as defined in Section 11 of the EICP, any
unvested shares under all outstanding Options, shall immediately vest prior
to
the occurrence of any such Significant Transaction. Upon the closing of a
Significant Transaction in which the Option is not otherwise assumed by a third
party as a result of the Significant Transaction, each vested and unexercised
share under such outstanding Option shall be automatically exchanged for the
same type of consideration received by stockholders of the Company as a result
of the Significant Transaction, less the value of the Exercise Price for each
such share.
14.
Legends;
Payment of Expenses. The Company may endorse such legend or legends upon the
certificates for shares of Common Stock issued upon exercise of an Option and
may issue each "stop transfer" instructions to its transfer agent in respect
of
such shares as it the Company determines, in its discretion, to be necessary
or
appropriate to (a) prevent a violation of, or to perfect an exemption from,
the
registration requirements of the Securities Act and any applicable securities
laws, (b) implement the provisions of any agreement between the Company and
the
Optionee with respect to such shares of Common Stock.
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
24
15.
Entire
Agreement. The Plan and this Agreement, together with the Employment Agreement
or other applicable agreement(s) between the Company or any Subsidiary of the
Company, on the one hand, and the Optionee, on the other hand, represent and
constitute the entire understanding and agreement between the parties with
respect to the subject matter thereof and, taken together, supersede all prior
and or contemporaneous understandings and agreements (written or oral) between
them with respect to such subject matter, all of which are merged
herein.
16.
Governing
Law. This Agreement and all related matters shall be governed by, and construed
in accordance with, the laws of the State of Nevada, without regard to conflict
or choice of law provisions that would result in the application of the
substantive laws of another jurisdiction.
17.
This
Agreement may only be amended by a written instrument by the Company and the
Optionee.
18.
Headings;
Counterparts. The section headings in this Agreement are inserted for
convenience of reference only, and shall not be given any effect in connection
with the construction or interpretation of this Agreement. This Agreement may
be
executed in multiple counterparts, each of which shall be an original, and
all
of which, when taken together, shall constitute one and the same
instrument.
IN
WITNESS WHEREOF, the Company and the Optionee have executed this Agreement
as of
the date first above written.
| South Texas Oil Company | ||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |
|
Name:
Xxxxxxx X. Xxxxxxx
Title:
Chief Executive Officer
|
||
| OPTIONEE | ||
| /s/ Xxxxxxxx X. Xxxxx | ||
| Name: Xxxxxxxx X. Xxxxx | ||
| Address: | ||
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
25
Appendix A
PERFORMANCE
OPTIONS
Performance
Objectives
Performance
Periods
The
performance period for the Performance Options is that period commencing on
the
first day of the Employment Term and ending on the earlier of December 31,
2011
and the date of the termination of Employee’s employment by the Company.
“Percentage
Performance Option Shares”
means
that number of shares, expressed as a percentage of the total amount of shares
of Common Stock underlying the Performance Option, as set forth below. Vesting
of Percentage Performance Option Shares shall occur upon the achievement of
two
(2) separate incremental Performance Objectives measures (a Production Objective
and a Reserve Objective), with the vesting of fifty percent (50%) of the
Percentage Performance Option Shares based on the incremental achievement of
measures of each Performance Objective, as set forth below.
Performance
Objectives
The
“Performance
Objectives”
for
each of the Percentage Performance Option Shares are as follows:
20%
Percentage Performance Option Shares
|
1.
|
“Production
Objective”
-
The Company's production of crude oil and natural gas at a monthly
average
of 500 BOE per day (net)
for a period of three (3) consecutive months, as reported by the
Company
in a Current Report on Form 8-K (an “Interim Report”), as filed with the
Securities and Exchange Commission (“SEC”).
Upon the Company’s filing with the SEC of an Interim Report containing the
disclosure of the achievement of this Production Objective, Employee
shall
vest in 50% of the 20%
Percentage Performance Option Shares as
set forth in the Performance Option Vesting Schedule
below.
|
|
2.
|
“Reserve
Objective”
-
An increase in the Company's proven crude oil and natural gas reserves
of
fifty percent (50%), measured as of any date subsequent to the
commencement of the Extended Term of this Employment Agreement, compared
to the Company's proven crude oil and natural gas reserves as set
forth in
the Netherland, Xxxxxx & Associates, Inc. Independent Reserve Report,
as of December 31, 2007 (the “NSAI 2007 Report”). The amount of such
reserves shall be determined in accordance with SEC guidelines and
based
on an independent reserve report prepared in good faith by an independent,
registered Petroleum Engineer in a form acceptable to the Company
(an
“Independent
Reserve Report”);
provided that the Independent Reserve Report shall be valid for such
purposes only if the Petroleum Engineer that prepared it has properly
certified its accurateness. Upon the Company’s filing with the SEC of an
Interim Report containing the disclosure of the
Independent Reserve Report
and achievement of this Reserve Objective, Employee shall vest in
50% of
the 20%
Percentage Performance Option Shares as
set forth in the Performance Option Vesting Schedule
below.
|
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
26
35%
Percentage Performance Option Awards
|
1.
|
“Production
Objective”
-
The Company's production of crude oil and natural gas at a monthly
average
of 1,000 BOE per day (net) for
a period of three (3) consecutive months, as reported by the Company
in an
Interim Report as filed with the Securities and Exchange Commission
(“SEC”).
Upon the Company’s filing with the SEC of an interim report containing the
disclosure of the achievement of this Production Objective, Employee
shall
vest in 50% of the 35%
Percentage Performance Option Shares as
set forth in the Performance Option Vesting Schedule
below.
|
|
2.
|
“Reserve
Objective”
-
An increase in the Company's proven crude oil and natural gas reserves
of
one hundred fifty percent (150%), measured as of any date subsequent
to
the commencement of the Extended Term of this Employment Agreement,
compared to the Company's proven crude oil and natural gas reserves
as set
forth in the NSAI 2007 Report. The amount of such reserves shall
be
determined in accordance with SEC guidelines and based on an independent
reserve report prepared in good faith by an independent, registered
Petroleum Engineer in a form acceptable to the Company (an “Independent
Reserve Report”);
provided that the Independent Reserve Report shall be valid for such
purposes only if the Petroleum Engineer that prepared it has properly
certified its accurateness. Upon the Company’s filing with the SEC of an
Interim Report containing the disclosure of the
Independent Reserve Report
and achievement of this Reserve Objective, Employee shall vest in
50% of
the 35%
Percentage Performance Option Shares as
set forth in the Performance Option Vesting Schedule
below.
|
45%
Percentage Performance Option Awards
|
1.
|
“Production
Objective”
-
The Company's production of crude oil and natural gas at a monthly
average
of 1,500 BOE per day (net) for
a period of three (3) consecutive months, as reported by the Company
in an
Interim Report as filed with the Securities and Exchange Commission
(“SEC”).
Upon the Company’s filing with the SEC of an Interim Report containing the
disclosure of the achievement of this Production Objective, Employee
shall
vest in 50% of the 45%
Percentage Performance Option Shares as
set forth in the Performance Option Vesting Schedule
below.
|
|
2.
|
“Reserve
Objective”
-
An increase in the Company's proven crude oil and natural gas reserves
of
two hundred fifty percent (250%), measured as of any date subsequent
to
the commencement of the Extended Term of this Employment Agreement,
compared to Company's proven crude oil and natural gas reserves as
set
forth in the NSAI 2007 Report. The amount of such reserves shall
be
determined in accordance with SEC guidelines and based on an independent
reserve report prepared in good faith by an independent, registered
Petroleum Engineer in a form acceptable to the Company (an “Independent
Reserve Report”);
provided that the Independent Reserve Report shall be valid for such
purposes only if the Petroleum Engineer that prepared it has properly
certified its accurateness. Upon the Company’s filing with the SEC of an
Interim Report containing the disclosure of the
Independent Reserve Report
and achievement of this Reserve Objective, Employee shall vest in
50% of
the 45%
Percentage Performance Option Shares as
set forth in the Performance Option Vesting Schedule
below.
|
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
27
Performance
Option Vesting Schedule
|
Percentage
Performance Option Shares under Performance
Option
|
Production
Objective
|
Shares
that Vest based on Achievement of Production
Objective
|
Reserve
Objective
|
Shares
that Vest based on Achievement of Reserve Objective
|
Total
of Percentage Performance Option Shares to
Vest
|
|
20%
|
500
BOE (net)
|
50,000
|
50
percent
|
50,000
|
100,000
|
|
35%
|
1,000
BOE (net)
|
87,500
|
150
percent
|
87,500
|
175,000
|
|
45%
|
1,500
BOE (net)
|
112,500
|
250
percent
|
112,500
|
225,000
|
|
Total
Options
|
250,000
|
250,000
|
500,000
|
South
Texas Oil Company
Wicks
Employment Agreement
October
2008
28
