Exhibit 10.2
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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (hereafter the "Agreement"), dated as of April
11, 2007 (hereafter the "Effective Date"), is between Spirit Exploration, Inc.,
a Delaware corporation (hereafter the "Company") and Xxxxx Xxxxxx (hereafter the
"Executive").
1. Employment. The Company hereby employs the Executive, and the Executive
hereby agrees to employment with the Company, upon all the terms and conditions
set forth below. Executive represents and warrants that: (a) he has full power
and authority to enter into this Employment Agreement, (b) he is not restricted
in any manner whatsoever from performing the duties described below, and (c) no
agreement, covenant or other matter prohibits or limits his ability or authority
to enter into this Agreement or perform all of the duties described below.
Executive's employment with the Company shall include service for the Company's
direct and indirect subsidiaries and affiliated entities (the "Subsidiaries").
2. Employment Term. The "Employment Term" and Executive's employment under
this Agreement shall commence on the Effective Date and shall continue for a
period of five (5) years from the Effective Date, ending at the close of
business on April 11, 2012, provided, however, that the Employment Term shall
automatically extend for successive one-year periods (such extensions also being
referred to as the "Employment Term"), as long as neither party has given
written notice to the other party at least 180 days prior to the end of the then
current term that such term shall not be extended, and further provided that the
Agreement has not been terminated earlier in accordance with the provisions of
Section 8 below. If the Executive's employment terminates for any reason, with
or without Cause, the Executive shall not be entitled to any payments, benefits,
damages, awards, or compensation other than as provided in Section 8 below or as
otherwise provided by law or by any applicable employee benefit plan in which he
participates. The parties acknowledge that certain obligations under this
Agreement survive the end of Executive's employment.
3. Position and Duties.
(a) Chief Executive Officer and Secretary. The Company shall employ
the Executive as its Chief Executive Officer and Secretary. Executive shall
report to the Company's Board of Directors (the "Board") or the Board's
designee. Executive shall be appointed to the Board, without any additional
compensation. Executive shall serve as a member of the Board and as an
officer and/or director of any Subsidiaries. Executive shall have such
responsibilities and duties as are commensurate with the positions of Chief
Executive Officer and Secretary in an entity comparable to the Company,
including, without limitation, developing and implementing an overall
strategic plan and annual business plans for the Company, raising new
capital, and supervising day-to-day operations of the Company. The Board
shall have the right to modify Executive's duties and responsibilities from
time to time as the Board may deem necessary or appropriate.
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(b) Manner of Employment. Executive shall faithfully, diligently and
competently perform his responsibilities and duties.
4. Base Compensation. Commencing on the Effective Date, the Company shall
pay the Executive base compensation in the gross amount of $10,000 per month for
the first twelve months, which payment shall be deferred until April 11, 2008 or
until funding of the Company, whichever is earlier. Commencing on April 11,
2008, the Company shall pay the Executive base compensation in the gross amount
of $20,000 per month, which payment shall be paid periodically in accordance
with normal Company payroll practices. Thereafter Base Compensation shall
increase by 5% annually. Base compensation shall also be subject to reviews and
increases in the sole discretion of the Board ("Base Compensation").
5. Additional Consideration. In addition to Base Compensation, Executive
shall be entitled:
(a) To an immediate grant of a Common Stock Purchase Warrant, in the
form attached as Exhibit A hereto, to purchase 800,000 shares of the
Company's common stock for a period of five years at an exercise price of
$1.00 per share.
6. Employment Benefits. Executive shall be entitled to the following
benefits during the Employment Term:
(a) Expense Allowance. Executive shall be reimbursed for business
related expenses reasonably and necessarily incurred and advanced by
Executive in performing his duties for the Company, subject to review by
the Chairman of the Board or his designee and in accordance with Company
policy as it exists from time to time.
(b) Other Benefits. Executive may participate in all other employee
benefit plans and programs as the Company may, from time to time, offer to
its executive employees, subject to the same terms and conditions as such
benefits are generally provided by the Company. All such benefits are
subject to plan documents (where applicable) and the Company's policies and
procedures. Nothing in this Section 6(c) guarantees that any specific
benefit will be provided or offered by the Company which has the right to
add, modify, or terminate benefits at any time.
7. Bonus. For fiscal years during the Employment Term commencing with the
Effective Date, Executive shall be eligible to receive a target bonus of up to
50% of his Base Compensation for such year, based upon the Company's performance
and Executive's performance of objectives during that time period as determined
by the Board, in its reasonable discretion.
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8. Termination and Severance Benefits.
(a) Death. The death of Executive shall automatically terminate the
Company's obligations under this Agreement; provided however, that the
Company shall pay to Executive's estate Executive's Base Compensation and
accrued benefits through the date of termination and for a one year period
thereafter, and shall pay to Executive's estate the Net Smelter Return
Royalty for the full term specified in Section 5(b) above.
(b) Disability. If Executive is unable, in the reasonable
determination of the Board, to render services of substantially the kind
and nature, and to substantially the extent, required to be rendered by
Executive under this Agreement due to illness, injury, physical or mental
incapacity or other disability, for 120 days, whether consecutive or not,
within any 12 month period, Executive's employment may be terminated by the
Company, and the Company's only obligations shall be (i) to pay to
Executive his Base Compensation and accrued benefits through the date of
termination and for a period of one year thereafter, and (ii) to pay to
Executive the Net Smelter Return Royalty for the full term specified in
Section 5(b) above.
(c) Resignation. If Executive resigns his employment during the
Employment Term other than for Good Reason, as defined in subsection (i)
below, the Company shall have no liability to Executive except to pay (i)
Executive's Base Compensation and any accrued benefits through his last day
worked, and (ii) the Net Smelter Return Royalty for the full term specified
in Section 5(b) above. Executive shall not be entitled to receive severance
or other benefits. Notice given by Executive of non-renewal of this
Agreement as provided for in Section 2 shall be treated as a resignation
for purposes of this Section 8.
(d) Resignation for Good Reason. If Executive resigns his employment
for Good Reason, as defined in subsection (i) below, he shall be entitled
to receive (i) all accrued but unpaid salary and benefits through the date
of termination, (ii) the Net Smelter Return Royalty for the full term
specified in Section 5(b) above, and (iii) the Severance Benefit, as
defined in subsection (k) below.
(e) Termination by Company for Cause. If the Executive's employment is
terminated for Cause, as defined in subsection (h) below, the Company shall
have no liability to Executive except to pay (i) Executive's Base
Compensation and any accrued benefits through his last day worked, and (ii)
the Net Smelter Return Royalty for the full term specified in Section 5(b)
above. Executive shall not be entitled to receive severance or other
benefits.
(f) Termination by Company without Cause. If the Company terminates
Executive's employment during the Employment Term without Cause (and for
reasons other than Death, Disability or Change in Control as provided for
in subsection (g) below), Executive shall be entitled to receive (i) all
accrued but unpaid salary and benefits through the date of termination,
(ii) Net Smelter Return Royalty for the full term specified in Section 5(b)
above, and (iii) the Severance Benefit. Notice given by the Company of
non-renewal of this Agreement
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as provided for in Section 2 shall be treated as a termination without
Cause, unless the Notice specifically sets forth a basis for Cause, for
purposes of this Section 8.
(g) Termination Due to Change in Control. If the Company terminates
Executive's employment without Cause (and for reasons other than Death or
Disability) in conjunction with a Change in Control, as defined in
subsection (j) below, Executive shall be entitled to receive (i) all
accrued but unpaid salary and benefits through the date of termination,
(ii) the Net Smelter Return Royalty for the full term specified in Section
5(b) above, and (iii) the Change in Control Benefit, as defined in
subsection (l) below.
(h) Cause. The following acts by Executive, as determined by the Board
in its reasonable discretion, shall constitute "Cause" for termination:
i. Theft or embezzlement, or attempted theft or embezzlement, of
money or material tangible or intangible assets or property of the
Company, its Subsidiaries or its employees or business relations;
ii. An intentional violation of any law or any act or acts of
moral turpitude which negatively affects the interests, property,
business, operations or reputation of the Company or its Subsidiaries;
iii. Other than as a result of a disability, a material failure
to carry out effectively Executive's duties and obligations to the
Company, or failure to devote to the Company's business the time
required in Section 3(b) above, upon not less than ten (10) days'
advance written notice of the asserted problem and a reasonable
opportunity to cure;
iv. Gross negligence or willful misconduct in the performance of
Executive's duties;
v. Executive's material breach of this Agreement which, after
written notice by the Company of such breach, is not cured within ten
(10) days of such notice.
(i) Good Reason. Resignation by Executive of his employment for "Good
Reason" shall mean a resignation by Executive within sixty (60) days after
any of the following events which occur without Executive's consent:
i. A material diminution in Executive's position, duties or
responsibilities;
ii. A relocation of the Company's headquarters more than 50 miles
from its present location;
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iii. A reduction in Executive's then Base Compensation; or
iv. The Company's material breach of this Agreement.
Prior to a Resignation for Good Reason, Executive shall give the
Company written notice of the basis for his claim that he has Good Reason
to terminate his employment and allow the Company ten (10) days to cure.
(j) Change in Control. For purposes of this Agreement, a "Change in
Control" shall mean the occurrence of any of the following events:
i. A merger or consolidation involving the Company or any
subsidiary of the Company after the completion of which: (A) in the
case of a merger (other than a triangular merger) or a consolidation
involving the Company, the stockholders of the Company immediately
prior to the completion of such merger or consolidation beneficially
own (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or comparable
successor rules), directly or indirectly, outstanding voting
securities representing less than fifty percent (50%) of the combined
voting power of the surviving entity in such merger or consolidation,
and (B) in the case of a triangular merger involving the Company or a
subsidiary of the Company, the stockholders of the company immediately
prior to the completion of such merger beneficially own (within the
meaning of Rule 13d-3 promulgated under the Exchange Act, or
comparable successor rules), directly or indirectly, outstanding
voting securities representing less than fifty percent (50%) of the
combined voting power of the surviving entity in such merger and less
than fifty percent (50%) of the combined voting power of the parent of
the surviving entity in such merger;
ii. An acquisition by any person, entity or "group" (within the
meaning of Sections 13(d) or 14(d) of the Exchange Act or any
comparable successor provisions), other than any employee benefit
plan, or related trust, sponsored or maintained by the Company or an
affiliate of the Company and other than in a merger or consolidation
of the type referred to in clause (i)" of this Section 9(j)(i), of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act, or comparable successor rules) of outstanding
voting securities of the Company representing more than fifty percent
(50%) of the combined voting power of the
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Company (in a single transaction or series of related transactions);
or
iii. In the event that the individuals who, as of the Effective
Date, are members of the Board (the "Incumbent Board"), cease for any
reason to constitute at least fifty percent (50%) of the Board.
(However, if the subsequent election, or nomination by the Board for
election by the Company's stockholders, of any new member of the Board
is approved by a vote of at least fifty percent (50%) of the Incumbent
Board, such new member of the Board shall be considered as a member of
the Incumbent Board.)
(k) Severance Benefit. The "Severance Benefit" shall mean: (i)
continuation of Executive's Base Compensation in effect immediately prior
to such termination or resignation for the term of this Employment
Agreement, but in any event such compensation shall be for no less than
twelve (12) months ("Severance Benefit Period"); and (ii) continuation of
Executive's employment benefits for the Severance Benefit Period.
(l) Change in Control Benefit. The "Change in Control Benefit" shall
mean:
i. Continuation of Executive's Base compensation in effect
immediately prior to such termination or resignation for a period
equal to twice the amount of the Severance Benefit Period or the
remainder of the then current Employment Term ("Change in Control
Benefit Period"), whichever is longer; and
ii. Continuation of Executive's employment benefits for the
Change in Control Benefit Period.
9. Key Executive Insurance. The Company, at its discretion, may apply for
and procure in its own name, or Executive's name, life and/or disability
insurance on Executive in any amount specified by the Company. Executive agrees
to cooperate in any medical or other examination, supply information and execute
such applications as may be reasonably necessary to obtain and continue such
insurance at the Company's expense.
10. Confidential and Proprietary Information.
(a) Executive agrees that he will not use or disclose to any person,
entity, association, firm or corporation, any of the Company's Confidential
Information, except with the written authorization of the Board or as
necessary to perform his duties under this Agreement. The term
"Confidential Information" means information and data not generally known
outside of the Company (unless as a result of Executive's breach of any of
the obligations imposed by this Agreement or the duties imposed by any then
existing statute, regulation, ordinance or common law) concerning the
Company's business and technical information, and includes, without
limitation, information relating to: (i) the identities of clients and the
Company's other Business
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Relations (as defined below) and their purchasing habits, needs, business
information, contact personnel and other information; (ii) suppliers' and
vendors' costs, products, contact personnel and other information; and
(iii) the Company's trade secrets, products, research and development,
financial and marketing information, personnel and compensation
information, and business plans. Executive understands that this Section 10
applies to computerized as well as written information and to other
information, whether or not in written form. It is expressly understood,
however, that the obligations of this Section 10 shall only apply for as
long as and to the extent that the Confidential Information has not become
generally known to or available for use by the public other than by
Executive's act(s) or omission(s) in violation of this Agreement.
(b) Executive agrees that upon the end of his employment with the
Company for any reason, he will not take with him any Confidential
Information that is in written, computerized, machine readable, model,
sample, or other form capable of physical delivery, without the prior
written consent of the Board. The Executive also agrees that upon the end
of his employment with the Company for any reason or at any other time that
the Company may request, he will deliver promptly and return to the Company
all such documents and materials in his possession or control, along with
all other property and documents of the Company or relating to the
Company's employees, suppliers, customers, and business.
11. Non-Solicitation. Executive agrees that he will not through the date
one (1) year after the end of his employment with the Company for any reason,
directly or indirectly, on his own behalf or on behalf of any other person or
entity, without the express written permission of the Board: (a) solicit or
attempt to solicit any employee or representative of the Company to terminate or
modify his or her relationship with the Company or to work for or provides
services to another person or entity; or (b) solicit or attempt to solicit, any
client, vendor, service provider or other business relation of the Company (each
a "Business Relation"), about whom he learned or with whom he came into contact
during his employment with the Company on behalf of any entity or with respect
to any service or products which is or may be competitive with the Company or
its services or products.
12. Non-Competition.
(a) Executive agrees that during the Restrictive Period, as defined in
subsection (b) below, he will not, without the express written consent of
the Board, be associated with or engage in, directly or indirectly, as
employee, consultant, proprietor, stockholder, partner, agent,
representative, officer, or otherwise, the operation of any business that
competes directly with the Company in business activities that are the same
or substantially similar to the business activities engaged in by the
Company within the United States or any other geographic area in which the
Company does business during the Restrictive Period (the "Restricted
Territory").
(b) The term "Restrictive Period" shall mean a period of twelve (12)
months after the Executive's termination of employment for any reason.
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(c) Passive investment in less than two percent (2%) of the
outstanding equity securities of an entity which is listed on a national or
regional securities exchange shall not, in itself, constitute a violation
of this Section 12.
13. Intellectual Property Rights. Executive will, during the period of his
employment, disclose to the Company promptly and fully all Intellectual Property
made or conceived by Executive (either solely or jointly with others) including
but not limited to Intellectual Property which relate to the business of the
Company or the Company's actual or anticipated research or development, or
result from work performed by him for the Company. All Intellectual Property and
all records related to Intellectual Property, whether or not patentable, shall
be and remain the sole and exclusive property of the Company. "Intellectual
Property" means all copyrights, trademarks, trade names, trade secrets,
proprietary information, inventions, designs, developments, and ideas, and all
know-how related thereto. Executive hereby assigns and agrees to assign to the
Company all his rights to Intellectual Property and any patents, trademarks, or
copyrights which may be issued with respect to Intellectual Property. Executive
further acknowledges that all work shall be work made for hire. During and after
the Employment Term, Executive agrees to assist the Company, without charge to
the Company but at its request and expense, to obtain and retain rights in
Intellectual Property, and will execute all appropriate related documents at the
request of the Company.
Executive understands that this Section 13 shall not apply to any intellectual
Property for which no equipment, supplies, facilities, trade secrets, or other
confidential information of the Company was used and which was developed
entirely on his own time, and does not relate to the business of the Company,
its actual or anticipated research, and does not result from any work performed
by him for the Company.
14. Successors and Assignees. This Agreement may be assigned by the Company
to any successor or assignee of a substantial portion of the business of the
Company (whether by transfer of assets or stock, merger or other business
combination). Executive may not assign his rights or obligations under this
Agreement.
15. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties and their respective heirs, successors, legal
representatives and permitted assigns.
16. Notices. Any notice required or permitted to be given tinder this
Agreement shall be sufficient if in writing and either delivered in person by
reputable messenger or overnight delivery service, by telecopy (with
confirmation of receipt) or sent by certified mail, postage prepaid, if to the
Company at the Company's principal place of business, c/o Chairman of the Board,
and if to the Executive, at his home address most recently filed with the
Company, or to such other address as either party shall have designated in
writing to the other party.
17. Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada.
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18. Severability and Construction. If any provision of this Agreement is
declared void or unenforceable or against public policy, such provision shall be
deemed severable and severed from this Agreement and the balance of this
Agreement shall remain in full force and effect. If a court of competent
jurisdiction determines that any restriction in this Agreement is overbroad or
unreasonable under the circumstances, such restriction shall be modified or
revised by such court to include the maximum reasonable restriction allowed by
law.
19. Reasonable Restrictions/Remedies. Executive acknowledges that the
provisions contained in Sections 11 through 14 of this Agreement are reasonable
in scope, area and duration and are necessary for the Company to protect its
legitimate business interests, including its confidential information and
business relationships. Executive and Company acknowledge and agree that damages
would not adequately compensate Company if Executive were to breach any of his
covenants contained in Sections 11 through 14 above. Consequently, Executive
agrees that in the event of any such breach, Company shall be entitled to
enforce this Agreement by means of an injunction or other equitable relief, in
addition to any other remedies, including without limitation monetary damages
set off against any amounts due Executive by Company.
20. Arbitration. Any dispute, claim or controversy arising out of or
relating to this Agreement or the breach, termination, enforcement,
interpretation or validity thereof, including the determination of the scope or
applicability of this agreement to arbitrate, shall be determined by arbitration
in Las Vegas, Nevada, before one arbitrator. The arbitration shall be
administered by the American Arbitration Association pursuant to its Employment
Arbitration Rules and Procedures. Judgment on the Award may be entered in any
court having jurisdiction. This clause shall not preclude the parties from
seeking provisional remedies in aid of arbitration from a court of appropriate
jurisdiction. All fees and costs of any arbitration conducted pursuant to this
Agreement shall be divided equally between the parties, with each paying his or
its own attorney's fees, costs and expenses.
21. Waiver. Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition.
22. Entire Agreement; Modifications. This Agreement constitutes the entire
agreement of the parties with respect to its subject matter and supersedes all
prior agreements, oral and written, between the parties with respect to the
subject matter of this Agreement. This Agreement may be modified or amended only
by an instrument in writing signed by both parties.
23. Employment and Income Taxes. All payments made to Executive by the
Company will be subject to withholding of income and employment taxes and other
lawful deductions, as applicable.
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IN WITNESS WHEREOF, the undersigned have set forth their hands as of this
11th day of April, 2007.
EXECUTIVE SPIRIT EXPLORATION, INC.
\s\ Xxxxx Xxxxxx By: \s\ Xxxxx X. Laipnieks
-------------------------- --------------------------------
Xxxxx Xxxxxx Name: Xxxxx X. Laipnieks
Title: President
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