SEPARATION AGREEMENT AND GENERAL RELEASE OF CLAIMS
SEPARATION
AGREEMENT AND GENERAL RELEASE OF CLAIMS
THIS
SEPARATION AGREEMENT AND GENERAL RELEASE OF CLAIMS (the “Agreement”) is made
and entered into by and between Victory Energy Corporation, a Nevada corporation
(“Company”),
Xxx Xxxxxxxxxx, an individual (“Xxxxxxxxxx”), and Xxx
Xxxxxxxxxx, as Trustee of the Virgin Family Trust, LLP (“Trust”).
A. The
Company and Xxxxxxxxxx entered into an Employment Agreement dated effective as
of January 2, 2005 (the “Employment
Agreement”).
X. Xxxxxxxxxx
voluntarily resigned from all positions with the Company, including his position
as its President, Chief Executive Officer, employee and as a member of its Board
of Directors, effective April 28, 2009 (the “Separation
Date”).
X. Xxxxxxxxxx
is owed (i) an aggregate of approximately $1,014,000 as reflected on the books
of the Company as of April 29, 2009 (the “Original Related Party
Debt”), and (ii) an aggregate of approximately $10,000 of unreimbursed
expenses incurred during the first quarter of 2009 (the “Unreimbursed
Expenses”).
D. The
parties have agreed to (i) reduce the amount of the Original Related Party Debt
to a total of $500,000 (including imputed interest) (the “Revised Related Party
Debt”), (ii) repay the Revised Related Party Debt over time in accordance
with the Payment Schedule set forth in Section 4 below,
(iii) pay to Xxxxxxxxxx the amount of the Unreimbursed Expenses, and (iv) issue
to Fullenkamp10,000,000 shares of the Company’s common stock that were issuable
to Xxxxxxxxxx under the terms of the Employment Agreement (the “Employment Agreement
Shares”).
E. The
Company desires to obtain the assistance of Xxxxxxxxxx in connection with
certain matters relating to the Company’s ongoing business operations in Texas
and Xxxxxxxxxx is willing to provide such assistance, at the Company’s request,
in consideration of the Company’s agreement to accelerate the payment of a
portion of the Revised Related Party Debt in accordance with the provision
contained in Section
5(a).
F. On
April 18, 2008, the Company purportedly issued 2,000,000 shares of the Company’s
preferred stock (the “Preferred Shares”) to
Xxxxxxxxxx in full payment of $200,000 owed by the Company to Xxxxxxxxxx (which
amount represented a portion of the total amount owed by the Company to
Xxxxxxxxxx at that time). Recently, the Company has determined that
the Preferred Shares have not been legally created under applicable provisions
of Nevada Law and, as a result, have not been validly issued by the
Company. As a result, the Company desires to issue to Xxxxxxxxxx, and
Xxxxxxxxxx desires to accept, 1,000,000 shares (the “Replacement Shares”)
of the Company’s common stock, $0.001 par value per share (the “Common Stock”) in
lieu of the Preferred Shares that were issued by the Company to Xxxxxxxxxx in
full consideration of the repayment of $200,000 of the Company’s total
indebtedness to Xxxxxxxxxx that existed at the time of the issuance of the
Preferred Shares.
|
672/027557-0001
1010103.06
a05/15/09
|
G. The
parties desire to terminate the Employment Agreement effective as of the
Separation Date and desire to implement certain restrictions on the ability of
Xxxxxxxxxx and the Trust to vote and transfer the Xxxxxxxxxx Shares (as defined
below).
1. Effective
Date; Term. The effective date of this Agreement shall be
seven days after each of Xxxxxxxxxx and the Trust executes and delivers the
Agreement to the Company, unless Xxxxxxxxxx and/or the Trust otherwise revokes
this Agreement in writing before expiration of such seven-day period (“Effective
Date”). The provisions of this Agreement shall continue in
full force and effect until the fifth anniversary of the Effective
Date.
2. Payment
of All Accrued Wages; Termination of Employment
Agreement. Xxxxxxxxxx acknowledges and represents that the
Company has paid Xxxxxxxxxx for all wages, bonuses, business expenses (other
than the Unreimbursed Expenses, the amount of which shall by paid to Xxxxxxxxxx
in accordance with Section 7) and unused
vacation benefits due and owing to Xxxxxxxxxx through the Separation Date, and
that, except as described herein, Xxxxxxxxxx is not and shall not be entitled to
any other wages, bonuses, compensation or benefits, whether pursuant to the
Employment Agreement or otherwise, including, without limitation, salary,
bonuses, incentive compensation, stock, stock options, accrued vacation
payments, severance pay, unvested pension benefits, employer-paid health
benefits, fringe benefits, expense reimbursements, or any other employment
benefits. Xxxxxxxxxx and the Company acknowledge and agree that the
Employment Agreement is hereby terminated effective as of the Separation
Date.
3. Reduction
in the Amount of Original Related Party Debt. In exchange for
the Company entering into this Agreement and agreeing to the terms hereof
including the terms of the Payment Schedule (defined below), Xxxxxxxxxx agrees
to reduce the amount of the Original Related Party Debt to the amount of the
Revised Related Party Debt.
4. Payment
Schedule. Subject to the provisions of Section 5(a), the
Company agrees to pay the Revised Related Party Debt to Xxxxxxxxxx as follows:
(i) $10,000 on the Effective Date, and (ii) 49 monthly installments of $10,000
on the first day of every calendar month beginning June 1, 2009 (the “Payment
Schedule”). The parties acknowledge and agree that the
aggregate $500,000 in payments under the Payment Schedule includes $34,374 of
imputed interest relating to the 49 monthly payments of $10,000 calculated at a
rate of 3.52 % per annum. The parties further acknowledge and agree
that to the extent the Company makes a payment to Xxxxxxxxxx pursuant to the
provisions of Section
5(a), the total number of monthly installments shall be appropriately
reduced to take into account the dollar amount paid as a result of the
provisions of Section
5(a).
5. Cooperation
and Assistance.
(a) In
the Company’s sole discretion, the Company may request that Xxxxxxxxxx provide
certain services to the Company, including, but not limited to,
|
672/027557-0001
1010103.06
a05/15/09
|
2
|
assisting
the Company with its on-going drilling operations in Texas. If the
Company requests Xxxxxxxxxx to provide such services and if, in the Company’s
sole discretion, the Company determines that Xxxxxxxxxx’x services and
assistance have had a significantly favorable impact on the Company, the Company
may, in its sole discretion and solely in consideration of such services,
accelerate up to ten payments (i.e., up to $100,000), due to Xxxxxxxxxx pursuant
to the Payment Schedule. If such acceleration payment is made, the
Company will continue to make monthly payments in accordance with the Payment
Schedule commencing on the first day of the month after the date of the
acceleration payment, with the total number of such payments appropriately
reduced to take into account the acceleration payment.
(b) Xxxxxxxxxx
shall cooperate and provide reasonable assistance to the Company (including its
agents, owners, employees and attorneys), as requested by the Company, (i) to
affect a smooth and orderly transition and continuation of the business of the
Company, (ii) in the preparation and/or defense and/or pursuit of any litigation
involving the Company, and (iii) in connection with any issues related to
Xxxxxxxxxx’x employment with the Company, Xxxxxxxxxx’x performance as an
employee of the Company, or any related matters, except as may be prevented by
law.
(c) Xxxxxxxxxx
shall not (i) voluntarily aid, assist, cooperate with or encourage any person in
connection with the pursuit of any claim or dispute against the Company, unless
compelled by deposition or other proper legal process, or (ii) voluntarily
involve himself or participate in any action in which the Company or any of the
other Releasees (as defined below) is a party without first obtaining the
Company’s advance written consent or unless requested to do so by the Company
pursuant to Section
5(b) above.
(d) Xxxxxxxxxx
shall provide advance written notice to the Company in the event he is
subpoenaed to testify, or provide documents at deposition or at trial, relating
to (i) any actual, possible, alleged or perceived violation by the Company or
any other Releasee (as defined below) of any federal, state, local, or
administrative law, rule, or regulation; (ii) the negotiations relating to, and
the terms of, this Agreement; and (iii) any acts or omissions by the Company or
any of the other Releasees (as defined below) occurring prior to the Effective
Date of this Agreement.
(e) Nothing
in Sections 5(c) and
(d) is intended to (i) preclude Xxxxxxxxxx from assisting the Company in
the manner described above, (ii) interfere with any protected right to file
charges, testify, assist or participate in any manner in an EEOC investigation,
hearing or proceeding, or (iii) influence the substance of such aid or
involvement which is properly compelled by legal process.
(f) Xxxxxxxxxx
shall be reimbursed for expenses he incurs on behalf of the Company provided
that he shall not be authorized to incur on behalf of the Company any expenses
in excess of $1,500 without the prior consent of the Company’s Chief Financial
Officer, which
consent shall be evidenced in writing for any expenses in excess of
$1,500. As a condition to receipt of reimbursement, Xxxxxxxxxx shall
be required to
|
672/027557-0001
1010103.06
a05/15/09
|
3
|
submit to
the Company reasonable evidence that the amount involved was expended and
related to services provided under this Agreement.
6. Issuance
of Replacement Shares. On the Effective Date, the Company will
issue to Xxxxxxxxxx the Replacement Shares in lieu of the Preferred Shares and
in full consideration of the repayment of $200,000 of the Company’s indebtedness
to Xxxxxxxxxx that existed at the time of the issuance of the Preferred
Shares.
7. Payment
of Unreimbursed Expenses. On the Effective Date, the Company
will pay to Xxxxxxxxxx by check the amount of the Unreimbursed Expenses to the
extent Xxxxxxxxxx provides the Company with receipts evidencing the payment of
such amounts by Xxxxxxxxxx.
8. Voting
Agreement.
(a) Each
of Xxxxxxxxxx and the Trust hereby irrevocably grants to, and appoints Xxxxxx
Xxxxxx, and any other individual who shall hereafter be designated by Xxxxxxxxxx
and agreed to by the Company, as Xxxxxxxxxx’x and the Trust’s proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of Xxxxxxxxxx and the Trust, to vote the Xxxxxxxxxx Shares, or grant a
consent or approval in respect of the Xxxxxxxxxx Shares, at any meeting of
shareholders of the Company or at any adjournment thereof or in any other
circumstances upon which their vote, consent or other approval is sought in
favor of any matter brought before the Company’s shareholders.
(b) Each
of Xxxxxxxxxx and the Trust represents and warrants that any prior proxies
heretofore given in respect of any portion of the Xxxxxxxxxx Shares are not
irrevocable, and that any such prior proxies are hereby revoked.
(c) Each of Xxxxxxxxxx and the Trust
hereby affirms that the proxy set forth in this Section
8 is coupled with an
interest and is irrevocable until such time as this Agreement terminates in
accordance with its terms. Each of Xxxxxxxxxx and the Trust
hereby further affirms that the irrevocable proxy is given in connection with
the execution of this Agreement, and that such irrevocable proxy is given in
consideration of the terms of this Agreement. Each of Xxxxxxxxxx and
the Trust hereby ratifies and confirms all that such irrevocable proxy may
lawfully do or cause to be done by virtue hereof. Such irrevocable
proxy is executed and intended to be irrevocable in accordance with the
provisions of Section 78.355(5) of the Nevada Revised Statutes.
(d) During
the term of this Agreement, neither Xxxxxxxxxx nor the Trust shall Transfer any
portion of the Xxxxxxxxxx Shares unless the person receiving Transfer of such
Xxxxxxxxxx Shares executes an Instrument of Accession in the form attached
hereto as Exhibit
A agreeing to be bound by the terms of this Agreement. As used
herein, “Transfer” shall mean
and include any sale (other than a sale made in a brokers’ transaction, as that
term is defined in Rule 144(g) under the Securities Act of 1933, as amended
(the “Securities
Act”)), assignment, encumbrance, hypothecation, pledge, conveyance in
trust, gift, transfer by request, devise or descent, or other transfer or
disposition of any kind, including, but not limited to, transfers in connection
with a
|
672/027557-0001
1010103.06
a05/15/09
|
4
|
marital
separation or dissolution, transfers to receivers, levying creditors, trustees
or receivers in bankruptcy proceedings or general assignees for the benefit of
creditors, whether voluntary or by operation of law, directly or indirectly, of
any of the Xxxxxxxxxx Shares.
(e) Each
of Xxxxxxxxxx and the Trust will, from time to time, execute and deliver, or
cause to be executed and delivered, such additional or further transfers,
assignments, endorsements, consents and other instruments as the Company may
reasonably request for the purpose of effectively carrying out the transactions
contemplated by this Agreement and to vest the power to vote the Xxxxxxxxxx
Shares as contemplated by this Section
8.
9. Lock-up
Agreement. In connection with the issuance of the Employment
Agreement Shares to Xxxxxxxxxx pursuant to the terms of this Agreement,
Xxxxxxxxxx agrees that until the fifth anniversary of the Effective Date,
Xxxxxxxxxx will not, directly or indirectly, through an “affiliate,” “associate”
(as such terms are defined in the rules and regulations promulgated under the
Securities Act), a family member or otherwise offer, pledge, hypothecate, sell,
contract to sell, or otherwise dispose of, or transfer any of the Employment
Agreement Shares; provided, however, that
Xxxxxxxxxx may sell, transfer, pledge, hypothecate or otherwise dispose
(provided such sale, transfer, pledge, hypothecation or disposition is made in
compliance with all applicable state and Federal securities laws), on a monthly
basis, of up to that number of Employment Agreement Shares which is equal to 15%
of the total number of shares of the Company’s common stock that were traded on
the principal trading market upon which shares of the Company’s common stock
then trades during the preceding month.
10. Representations
and Warranties of Xxxxxxxxxx and the Trust. Each of Xxxxxxxxxx
and the Trust represents and warrants to the Company as follows:
(a) Each
of Xxxxxxxxxx and the Trust has all requisite power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by Xxxxxxxxxx and the Trust. This Agreement has been duly
executed and delivered by Xxxxxxxxxx and the Trust and creates valid and binding
obligations enforceable against Xxxxxxxxxx and the Trust in accordance with its
terms. Neither the execution, delivery or performance of this
Agreement by Xxxxxxxxxx and the Trust nor the consummation by Xxxxxxxxxx and the
Trust of the transactions contemplated hereby will (i) require any filing with,
or permit, authorization, consent or approval of, any federal, state, local or
municipal foreign or other government or subdivision, branch, department or
agency thereof or any governmental or quasi-governmental authority of any
nature, including any court or other tribunals, (ii) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default under, or give rise to any right of termination, amendment,
cancellation or acceleration under, or result in the creation of any pledge,
claim, lien, option, charge, encumbrance or security interest of any kind or
nature whatsoever (a “Lien”) upon any of
Xxxxxxxxxx’x or the Trust’s properties or assets under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
permit, concession, franchise, contract, agreement or other instrument
or
|
672/027557-0001
1010103.06
a05/15/09
|
5
|
obligation
to which he or it is a party or by which he or it or any of his or its
properties or assets, including the Xxxxxxxxxx Shares, may be bound or (iii)
violate any judgment, order, writ, preliminary or permanent injunction or decree
or any statute, law, ordinance, rule or regulation of any Governmental Entity
applicable to Xxxxxxxxxx or the Trust or any of the properties or assets of
Xxxxxxxxxx or the Trust, including the Xxxxxxxxxx Shares;
(b) Xxxxxxxxxx
and the Trust are the record and beneficial owners, or the trustee of a trust
(including the Trust) whose beneficiaries are the beneficial owners, of such
number of shares of the Company’s Common Stock set forth on Schedule I hereto
(such shares of Common Stock, as such shares may be adjusted by stock dividend,
stock split, recapitalization, combination or exchange of shares, merger,
consolidation, reorganization or other change or transaction, together with
shares of Common Stock that may be acquired after the date hereof by him,
including shares of Common Stock issued upon the exercise of options or warrants
to purchase Common Stock (as the same may be adjusted as aforesaid), being
collectively referred to herein as the “Xxxxxxxxxx
Shares”);
(c) Subject
to the terms of this Agreement, the Xxxxxxxxxx Shares and the certificates
representing the Xxxxxxxxxx Shares are now, and at all times during the term
hereof will be, held by Xxxxxxxxxx or the Trust, as the case may be, or by a
nominee or custodian for his or its benefit. Each of Xxxxxxxxxx and
the Trust has good and marketable title to such portion of the Xxxxxxxxxx Shares
owned by such person or entity, free and clear of any Liens, proxies, voting
trusts or agreements, understandings or arrangements. Neither
Xxxxxxxxxx nor the Trust owns of record or beneficially any Common Stock or
other voting interest in the Company other than the Xxxxxxxxxx Shares and shares
of Common Stock issuable upon the exercise of options and warrants, in each case
as set forth on Schedule I
hereto;
(d) Other
than for whatever is specifically referenced or provided for in this Agreement,
there are no other sums or benefits of any nature whatsoever due and owing to
Xxxxxxxxxx or the Trust by the Company;
(e) Other
than for whatever is specifically provided for in this Agreement, there are no
rights of any nature whatsoever due and owing to Xxxxxxxxxx or the Trust by the
Company;
(f) Xxxxxxxxxx
has provided to the Company a disk containing a true and correct copy of all
files contained on his personal laptop computer in his possession and used for
business purposes relating to information and/or documents pertaining to the
business of the Company through the close of business on the Separation
Date;
(g) Neither
Xxxxxxxxxx nor the Trust has, at anytime, taken possession of or claimed a right
to any monies or other property of the Company that Xxxxxxxxxx or the Trust was
not legally or contractually entitled to receive;
(h) Xxxxxxxxxx
will cooperate fully with the investigation being conducted by a committee of
the Board of Directors of the Company relating to matters presented
to
|
672/027557-0001
1010103.06
a05/15/09
|
6
|
the Board
of Directors by the Company’s Chief Financial Officer at a meeting of the Board
of Directors on April 28, 2009; and
(i) Xxxxxxxxxx
has no interest to any of the Preferred Shares, and has been fully and fairly
compensated for the $200,000 owed by the Company to him on the date of issuance
of the Preferred Shares by virtue of the issuance of the Replacement
Shares.
11. Company
Property. Xxxxxxxxxx has returned to the Company and has not
copied or duplicated in any manner whatsoever, all tangible and intangible
property (including, without limitation, all computer hardware, whether portable
or stationary, and software), books, records, documents and reports owned by, or
pertaining to the business of, the Company or any of the Company’s existing or
prospective customers that was in Xxxxxxxxxx’x possession or under Xxxxxxxxxx’x
direct or indirect control as of the Separation Date. If Xxxxxxxxxx
shall come into possession of any property (tangible or intangible), books,
records, documents or reports of the type described above after the Separation
Date, Xxxxxxxxxx will promptly return them to the Company.
12. Failure
to Make Payments Pursuant to Payment Schedule; Remedies. If
the Company fails to make any payment pursuant to the Payment Schedule
(including any acceleration payment contemplated under Section 5(a)), and
such failure continues for a period of 30 days after the date on which such
failure first occurs, Xxxxxxxxxx shall have the right to declare all amounts due
and owing pursuant to the Payment Schedule (including any acceleration payments
under Section
5(a)) which have not otherwise been paid by the Company to Xxxxxxxxxx,
immediately due and payable.
13. Release. Subject
to the continuing rights and obligations created by or acknowledged in this
Agreement, Xxxxxxxxxx, for the Trust, himself and his heirs, assigns, executors,
administrators, agents and successors, past and present (collectively, the
“Xxxxxxxxxx
Affiliates”), hereby fully and without limitation releases, covenants not
to xxx, and forever discharges the Company, its subsidiaries, parent companies,
divisions, affiliated corporations, affiliated partnerships, trustees,
directors, officers, shareholders, partners, agents, employees, consultants,
insurance carriers, attorneys, assigns, executors and administrators, trustees,
predecessors and successors, past and present (collectively with the Company,
the “Releasees”), both
individually and collectively, to the fullest extent permitted by law, from any
and all rights, claims, demands, liabilities, actions and causes of action
whether in law or in equity, suits, damages, losses, attorneys’ fees, costs, and
expenses, of whatever nature whatsoever, known or unknown, fixed or contingent,
suspected or unsuspected (collectively, the “Claims”), that
Xxxxxxxxxx or the Xxxxxxxxxx Affiliates now have, or may ever have, against any
of the Releasees based upon or arising out of any acts or omissions by the
Company or any of the other Releasees, or any other facts or matters, occurring
or existing on or prior to the Effective Date of this Agreement.
Without
limiting the generality of the foregoing, Xxxxxxxxxx understands and agrees
that, except as otherwise prohibited by law, the Release provisions of this
Section 13
apply to any Claims that Xxxxxxxxxx or the Xxxxxxxxxx Affiliates now have, or
may ever have, against the Company or any of the other Releasees occurring prior
to the Effective Date that arise out of or
|
672/027557-0001
1010103.06
a05/15/09
|
7
|
are in
any manner related to: (i) Xxxxxxxxxx’x employment by the Company or
any of the other Releasees, and (ii) the termination of Xxxxxxxxxx’x employment
with the Company.
Without
limiting the generality of the foregoing, Xxxxxxxxxx specifically and expressly
releases, to the fullest extent permitted by law, any Claims against the Company
and the other Releasees occurring prior to the Effective Date of this Agreement
arising out of or related to violations of any federal or state employment
discrimination laws, including the California Fair Employment and Housing Act;
the Age Discrimination In Employment Act; Title VII of the Civil Rights Act of
1964; the Americans With Disabilities Act; the National Labor Relations Act; the
Equal Pay Act; the Employee Retirement Income Security Act of 1974; as well as
Claims arising out of or related to violations of the provisions of the
California Labor Code; the California Government Code; the California Business
& Professions Code, including Business & Professions Code Section 17200
et seq.; state and federal wage and hour laws, including the federal Fair Labor
Standards Act; breach of contract; fraud; misrepresentation; common counts;
unfair competition; unfair business practices; negligence; defamation;
infliction of emotional distress; invasion of privacy; assault; battery; false
imprisonment; wrongful termination; and any other state or federal law, rule, or
regulation.
Xxxxxxxxxx
acknowledges and represents that Xxxxxxxxxx did not suffer any work-related
injuries while employed by the Company, that Xxxxxxxxxx has no intention of
filing any claims for workers’ compensation benefits of any type against the
Company, and that Xxxxxxxxxx will not file or attempt to file any claims for
workers’ compensation benefits of any type against the
Company. Xxxxxxxxxx acknowledges that the Company has relied upon
these representations, and that the Company would not have entered into this
Agreement but for these representations. As a result, Xxxxxxxxxx
agrees, covenants, and represents that the Company may, but is not obligated to,
submit this Agreement to the Workers’ Compensation Appeals Board for approval as
a compromise and release as to any workers’ compensation claims that Xxxxxxxxxx
files.
14. All
Disputes. Each of Xxxxxxxxxx and the Trust acknowledges that
Xxxxxxxxxx and the Trust is aware of and familiar with the provisions of Section
1542 of the California Civil Code, which provides as follows:
“A
general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her, must have materially affected his or her settlement with
the debtor.”
Each of
Xxxxxxxxxx and the Trust hereby waives and relinquishes all rights and benefits
that Xxxxxxxxxx or the Trust has or may have under Section 1542 of the
California Civil Code, or the law of any other country, territory, state or
jurisdiction, or common law principle, to the same or similar
effect.
15. Older
Worker’s Benefit Protection Act. This Agreement is subject to
the terms of the Older Workers Benefit Protection Act of 1990 (the “OWBPA”). The
OWBPA provides that an individual cannot waive a right or claim under the Age
Discrimination in Employment Act (“ADEA”) unless the
waiver is knowing and voluntary. Pursuant to the terms of
the
|
672/027557-0001
1010103.06
a05/15/09
|
8
|
OWBPA,
Xxxxxxxxxx acknowledges and agrees that Xxxxxxxxxx has executed this Agreement
voluntarily, and with full knowledge of its consequences.
In
addition, Xxxxxxxxxx hereby acknowledges and agrees that: (a) this Agreement has
been written in a manner that is calculated to be understood, and is understood,
by Xxxxxxxxxx; (b) the release provisions of this Agreement apply to rights and
claims that Xxxxxxxxxx may have under the ADEA, including the right to file a
lawsuit against the Company for age discrimination; (c) the release provisions
of this Agreement do not apply to any rights or claims that Xxxxxxxxxx may have
under the ADEA that arise after the date Xxxxxxxxxx executes this Agreement; (d)
the Company does not have a preexisting duty to pay the Separation Amount
identified in this Agreement; (e) Xxxxxxxxxx has been advised in writing to
consult with an attorney prior to executing this Agreement; (f) Xxxxxxxxxx shall
have a period of 21 days in which to consider the terms of this Agreement prior
to its execution; and (g) Xxxxxxxxxx shall have a period of seven days after
execution of this Agreement in which to revoke this
Agreement. Xxxxxxxxxx further understands that this Agreement shall
not become effective until expiration of this seven-day period.
16. Trade
Secrets. Xxxxxxxxxx
acknowledges that, in the course of Xxxxxxxxxx’x employment with the Company,
Xxxxxxxxxx had access to confidential information, including information,
processes, and/or ideas that are not generally known in the industry; that the
Company considers confidential; that give the Company a competitive advantage;
and/or that affect or relate to the Company, its business, or its methods of
operation. Xxxxxxxxxx acknowledges that such confidential information
is a valuable trade secret and the sole property of the Company.
Xxxxxxxxxx
acknowledges and agrees that the Company’s Confidential Information and trade
secrets include, for example, computer program listing, source code, and object
code; product design, contents, formulas, packaging, marketing, or anything
related to the unique character of products; the names and addresses of the
Company’s customers and prospective customers and all other confidential
information relating to those actual or prospective customers, marketing
information, price lists, cost information, business forms, and financial
records; as well as all other information that has or could have commercial
value or other utility in the business in which the Company or its customers are
engaged or in which they contemplate engaging and information, regardless of
whether the Company previously identified or labeled such information as
confidential. By way of further example, the Company’s confidential
information and trade secrets include all information not generally known
outside of the Company that relates to the Company or its customers and that
Xxxxxxxxxx obtained or learned about solely as a result of Xxxxxxxxxx performing
services for the Company.
If
Xxxxxxxxxx is not sure whether certain information is confidential information
within the scope of this Agreement, then Xxxxxxxxxx agrees to treat that
information as confidential unless informed in writing by the Company to the
contrary.
Accordingly,
except as required by law, legal process, or in connection with any litigation
between the parties hereto with respect to matters arising out this Agreement,
Xxxxxxxxxx agrees that Xxxxxxxxxx will not disclose or furnish any such
information to any person other than an
|
672/027557-0001
1010103.06
a05/15/09
|
9
|
officer
of the Company, and Xxxxxxxxxx will make no use of any such information for
Xxxxxxxxxx’x personal benefit.
Xxxxxxxxxx
further represents and warrants that prior to or concurrently with the execution
of this Agreement, Xxxxxxxxxx has returned to the Company all such information
and property which belongs to the Company. This includes all
information tangible or intangible whether in written, machine-readable, or any
information disclosed orally or visually.
Xxxxxxxxxx
agrees and acknowledges that Xxxxxxxxxx has not, by virtue of Xxxxxxxxxx’x
association with the Company, acquired any rights in any confidential
information, goodwill, or other asset or property of the Company, whether
tangible or intangible, and whether or not created by Xxxxxxxxxx. If
any such rights become vested in Xxxxxxxxxx by operation of law or otherwise,
Xxxxxxxxxx agrees to assign the same to the Company without further
consideration immediately upon the Company’s request.
17. Xxxxxxxxxx
Non-Solicitation. Xxxxxxxxxx agrees that, during the time
period in which the Company is making payments pursuant to the Payment Schedule,
he will not directly or indirectly recruit, or attempt to recruit, any other
employee of the Company or its affiliates, or induce or attempt to induce any
employee of the Company to terminate or cease employment with the
Company. During this period, if Xxxxxxxxxx is contacted by the
Company’s employee(s) with regard to employment opportunities, Xxxxxxxxxx agrees
to inform such employee(s) at the first discussion thereof that he cannot
encourage, follow-up on, hire or promote the hiring of such employee(s) unless
consent is provided to Xxxxxxxxxx by the Company’s owners to continue such
discussions.
18. No Other
Claims and No Assignment. Xxxxxxxxxx represents and warrants
that Xxxxxxxxxx has not filed any Claims for benefits against the Company or any
of the Releasees with any state or federal court or local, state or federal
agency. Xxxxxxxxxx also represents and warrants that Xxxxxxxxxx has
not assigned or transferred any interest in any Claims that Xxxxxxxxxx may have
against the Company or any other Releasee. Accordingly, Xxxxxxxxxx
agrees to indemnify and hold the Company and the other Releasees harmless from
any liability, claims, demands, damages, expenses, and attorneys’ fees incurred
as a result of any person or entity asserting any such Claims, assignment or
transfer of any right or claim. This Agreement may be pleaded as a
defense, cross-complaint, counter-suit, cross-claim, or third party complaint in
any action involving the Company or any of the other Releasees. This
indemnity provision does not require payment as a condition precedent to
recovery by the Releasees hereunder.
19. Remedies. If
any of the representations of a party contained in this Agreement are discovered
to be untrue, or any of the obligations of a party in this Agreement are
breached, the party whose representation is untrue, or who has breached an
obligation, shall (a) be liable for any and all damages caused by such
misrepresentation or breach, (b) take all actions necessary to insure that the
other party to this Agreement (the “Other Party”) is not
damaged by reason of such misrepresentation or breach, and (c) indemnify and
hold the Other Party harmless from damages, losses, claims, or expenses
resulting therefrom (including, without limitation, attorneys’
fees). If any of the representations of a party contained in this
Agreement are discovered to be untrue, or any of the obligations of a party in
this Agreement are breached, the Other Party shall be entitled to recover
damages and to pursue all other remedies available under
|
672/027557-0001
1010103.06
a05/15/09
|
10
|
contract
or law by reason of any such untrue or inaccurate representations or the breach
of any warranty, covenant or other obligation under this Agreement.
20. Choice of
Law, Jurisdiction and Venue. This Agreement is made and
entered into in the State of California and shall in all respects be interpreted
and enforced pursuant to the laws of the State of California, without regard to
or application of any of California’s conflict of laws rules. Any
dispute arising out of or related to this Agreement shall be litigated
exclusively in the state or federal courts located in Orange County,
California. The Parties expressly consent to personal jurisdiction
and venue in the state and federal courts located in Orange County,
California.
21. Integrated
Agreement. This Agreement constitutes a single, integrated
written contract expressing the entire agreement of the
parties. There is no other agreement, written or oral, express or
implied, between the parties with respect to the subject matter hereof, except
this Agreement. This Agreement may not be orally modified, and may be
modified only in a written instrument signed by the parties.
22. Severability. The
parties to this Agreement agree, covenant and represent that each and every
provision of this Agreement shall be deemed to be contractual, and that they
shall not be treated as mere recitals at any time or for any
purpose. Therefore, the parties further agree, covenant and represent
that each and every provision of this Agreement shall be considered
severable. If a court of competent jurisdiction finds any provision,
or part thereof, to be invalid or unenforceable for any reason, that provision,
or part thereof, shall remain in force and effect to the extent allowed by law,
and all of the remaining provisions of this Agreement shall remain in full force
and effect and enforceable.
23. Captions. The
captions and section numbers in this Agreement are inserted for the reader’s
convenience, and in no way define, limit, construe, or describe the scope or
intent of the provisions of this Agreement.
24. Counterparts. This
Agreement may be executed in counterparts, and when each party has signed and
delivered at least one such counterpart, each counterpart shall be deemed an
original, and, when taken together with other signed counterparts, shall
constitute one agreement, which shall be binding upon and effective as to all
parties.
25. Binding
Agreement. Xxxxxxxxxx represents and warrants that Xxxxxxxxxx
has the authority to enter into this Agreement on Xxxxxxxxxx’x behalf
individually and to bind all persons and entities claiming through Xxxxxxxxxx,
including the Trust. This Agreement shall be binding upon and shall
inure to the benefit of the respective heirs, assigns, executors,
administrators, successors, subsidiaries, divisions and affiliated corporations
and partnerships, past and present, and trustees, directors, officers,
shareholders, partners, agents and employees, past and present, of Xxxxxxxxxx
and the Company.
THE
UNDERSIGNED HAVE READ THE FOREGOING AGREEMENT AND ACCEPT AND AGREE TO THE
PROVISIONS CONTAINED THEREIN, AND HEREBY EXECUTE IT, KNOWINGLY AND VOLUNTARILY,
AND WITH FULL UNDERSTANDING OF ITS CONSEQUENCES.
|
672/027557-0001
1010103.06
a05/15/09
|
11
|
XXXXXXXXXX
FURTHER ACKNOWLEDGES AND UNDERSTANDS THAT XXXXXXXXXX HAS BEEN GIVEN 21 DAYS IN
WHICH TO CONSIDER THE TERMS OF THIS AGREEMENT, AND THAT XXXXXXXXXX HAS
VOLUNTARILY CHOSEN TO EXECUTE THIS AGREEMENT ON THE DATE INDICATED
BELOW.
|
Dated: May
15, 2009
|
By:
|
/s/ | |
| XXXX XXXXXXXXXX | |||
|
VICTORY
ENERGY CORPORATION
|
|||
|
Dated: May
15, 2009
|
By:
|
/s/ | |
| Xxxxxx Xxxxxxx | |||
|
Interim
Chief Executive Officer
|
|||
|
XXX
XXXXXXXXXX, AS TRUSTEE OF THE VIRGIN FAMILY TRUST, LLP
|
|||
|
Date: May
15, 2009
|
By:
|
/s/ | |
|
Xxxx
Xxxxxxxxxx, Trustee
|
|||
|
672/027557-0001
1010103.06
a05/15/09
|
12
|
SCHEDULE
I
Share
Ownership
| Name |
|
Number of Shares |
|
||
|
Xxx
Xxxxxxxxxx
|
9,097,500
|
||||
|
Virgin
Family Trust, LLP
|
6,103,250
|
||||
Option and Warrant
Ownership
| Name |
|
Number of Options/Warrants |
|
||
|
Xxx
Xxxxxxxxxx
|
1,200,000
options
|
||||
|
|
|
||||
|
672/027557-0001
1010103.06
a05/15/09
|
13
|
EXHIBIT
A
Form of Instrument of
Accession
Instrument of
Accession
Reference
is made to Section 7 of that certain Separation Agreement and General
Release of Claims dated as of May 15, 2009, a copy of which is attached
hereto (as amended and in effect from time to time, the “Separation
Agreement”), between Victory Energy Corporation, a Nevada corporation
(the “Company”), Xxx
Xxxxxxxxxx, an individual (“Xxxxxxxxxx”) and Xxx
Xxxxxxxxxx as Trustee of the Virgin Family Trust, LLP (the “Trust”).
The
undersigned, ____________________________________, in order to become the owner
or holder of _______________ (collectively, the “Shares”) of the
Company hereby agrees that by his, her or its execution hereof the undersigned
is a party to the Separation Agreement with respect to Section 8 thereof,
subject to all of the restrictions and conditions applicable to Xxxxxxxxxx and
the Trust set forth in such Section 8 of the Separation Agreement, and all
of the Shares purchased by the undersigned in connection herewith (and any and
all debt and equity of the Company issued in respect hereof) are subject to all
the restrictions and conditions applicable to such Shares as set forth in
Section 8 of the Separation Agreement. This Instrument of
Accession shall take effect and shall become a part of Section 8 of the
Separation Agreement immediately upon execution.
|
Executed
as of the date set forth below under the laws of the State of
Nevada.
|
|||
|
Signature
|
|||
|
Address
|
|||
|
|
|||
|
|
|||
|
Date
|
|||
|
672/027557-0001
1010103.06
a05/15/09
|
14
|
CONSENT
OF SPOUSE
I,
Xxxxxxx Xxxxxxxxxx, acknowledge that I have read the foregoing Separation
Agreement and General Release (the “Agreement”) and that
I understand its contents. I am aware that pursuant to the terms of Section 8 of
the Agreement, my spouse agrees (i) to grant to Xxxxxx Xxxxxx, and any other
individual who shall hereafter be designated by my spouse and agreed to by the
Company, an irrevocable proxy to vote the Xxxxxxxxxx Shares (as that term is
defined in the Agreement) and (ii) not to Transfer (as that term is defined in
the Agreement) the Xxxxxxxxxx Shares, including a Transfer of all or a portion
of the Xxxxxxxxxx Shares to me upon his death or upon our divorce or legal
separation, unless the transferee executes an Instrument of Accession whereby
the transferee agrees to be bound by the provisions of Section 8 of the
Agreement. I am also aware that pursuant to Section 9 of the
Agreement, my spouse agrees to certain restrictions on his ability to sell the
Employment Agreement Shares (as that term is defined in the
Agreement).
Being
fully convinced of the reasonableness and wisdom of the Agreement, including the
provisions contained in Sections 8 and 9 of the Agreement, I hereby approve and
consent to it and hereby agree to be bound by its provisions.
Dated: May 15,
2009
| /s/ | |
|
Xxxxxxx
Xxxxxxxxxx
|
|
672/027557-0001
1010103.06
a05/15/09
|
15
|