EXHIBIT 10.20
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), dated as of April 1, 1997, is
entered into by and between PINNACLE OIL INTERNATIONAL, INC., a Nevada
corporation (the "Company"), whose principal executive office is located at 000-
0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx, X0X 0X0; and R.
XXXX XXXXXXX (the "Executive"), an individual whose principal office is located
at 000-0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx, X0X 0X0,
with reference to the following facts:
RECITALS:
--------
WHEREAS, the Executive is the President of the Company, as well as a
director and a stockholder of the Company;
WHEREAS, the Company is the parent of two wholly owned subsidiaries,
namely, Pinnacle Oil, Inc., a Nevada corporation and Pinnacle Oil Canada, Inc.,
a federal Canadian corporation, and the Company (and/or its subsidiaries)
participate as a partner(s) in one or more joint ventures;
WHEREAS, the Company desires to continue to employ the Executive as the
President of the Company, and as an officer of the Company's subsidiaries, in
order to avail itself of the skill, knowledge and experience of the Executive
and to assure the successful management of the Company (and its subsidiaries),
and the Executive desires to continue his employment as the President of the
Company, and as an officer of the Company's subsidiaries;
WHEREAS, the Company (and its subsidiaries) and the Executive desire to
enter into a written employment agreement formally documenting their
relationship and setting forth the duties and responsibilities the Executive has
agreed to undertake as the President of the Company, and as an officer of the
Company's subsidiaries;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and for valuable consideration, the receipt and sufficiency of
which are hereby mutually acknowledged, the parties to this Agreement
(collectively "parties" and individually a "party") agree as follows:
AGREEMENT:
---------
1. DEFINITIONS
Set forth below are definitions of capitalized terms which are
generally used throughout this Agreement, or references to sections containing
those definitions (capitalized terms used only in a specific section of this
Agreement are defined in that section):
(A) "ADVANCE" is defined in section 10.
----------
(B) "AFFILIATE" means any "Person" (as defined below) controlling,
controlled by, or under common control with a party.
(C) "AGREEMENT" means this Agreement, as originally executed and as
amended, modified, supplemented and/or restated from time to time.
1
(D) "ANNUAL BONUS" is defined in section 4(b).
------------
(E) "AUTOMOBILE ALLOWANCE" is defined in section 5(a).
------------
(F) "BOARD" means the Board of Directors of the Company, as such body
may be reconstituted from time to time.
(G) "CELL PHONE ALLOWANCE" is defined in section 5(b).
------------
(H) "CHANGE IN CONTROL" shall mean, subject to subparagraphs (iv) and
(v) below, the occurrence of any of the following events:
(i) An acquisition of control by an "Acquiring Person" where,
immediately after the subject acquisition, such "Person" holds "Beneficial
Ownership" of more than fifty percent (50%) of the "Total Combined Voting Power"
of the Company's then outstanding "Voting Securities". The terms in quotations
in the immediately preceding sentence shall, for purposes of this Agreement,
have the following meanings:
(A) "Acquiring Person" shall mean any "Person" which
acquires the defined percentage of securities, with the exception of:
(A) any Employee Benefit Plan (or a trust forming a part thereof)
maintained by the Company, or any corporation or entity in which the
Company holds fifty percent (50%) or more of the "Voting Securities"
(each, a "Controlled Subsidiary"); (B) the Company or any Controlled
Subsidiary; or (C) any "Person" which acquires the threshold
percentage of "Voting Securities" through a "Non-Control Transaction"
(as defined below).
(B) "Non-Control Transaction" shall mean any transaction in
which the stockholders of the Company immediately before such
transaction, directly or indirectly own immediately following such
transaction at least a majority of the "Total Combined Voting Power"
of the outstanding "Voting Securities" of the surviving corporation
(or other entity) resulting from such transaction, in substantially
the same proportion as such stockholders' ownership of the Company's
"Voting Securities" immediately before such transaction.
(C) "Person," "Beneficial Ownership," "Total Combined Voting
Power" and "Voting Securities" shall have the meanings ascribed to
such terms in Sections 13(d) and 14(d) of the Securities Exchange Act
and Rule 13d-3 promulgated thereunder; or
(ii) During any period of three (3) consecutive years after the
date of this Agreement, the individuals who constituted the Board at the
beginning of such period (the "Incumbent Board") cease to constitute a majority
of the Board, for any reason(s) other than (A) the voluntary resignation of one
or more Board members; (B) the refusal by one or more Board members to stand for
election to the Board; and/or (C) the removal of one or more Board members for
good cause; provided, however, (1) that if the nomination or election of any new
director of the Company was approved by a vote of at least a majority of the
Incumbent Board, such new director shall be deemed a member of the Incumbent
Board; and (2) that no individual shall be considered a member of the Incumbent
Board if such individual initially assumed office as a result of either an
actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated
under the Securities Exchange Act of 1934), or as a result of a solicitation of
proxies or consents by or on behalf of an Acquiring Person, other than a member
of the Board (a "Proxy Contest"), or as a result of any agreement intended to
avoid or settle any Election Contest or Proxy Contest; or
2
(iii) The Board or the stockholders of the Company approve:
(A) A merger or consolidation or reorganization of the
Company reorganization with:
(1) any Controlled Subsidiary, and such transaction is
not a Non-Control Transaction; or
(2) any other corporation or other entity, and such
transaction is not a Non-Control Transaction; or
(B) A complete liquidation or dissolution of the Company,
and such transaction is not a Non-Control Transaction; or
(C) An agreement for the sale or other disposition of all
or substantially all of the assets of the Company to (1) any
Controlled Subsidiary, and such transaction is not a Non-Control
Transaction, or (2) to any other Person, and such transaction is not a
Non-Control Transaction.
(iv) Notwithstanding clauses (i) through (iii) above, a Change
-------------------------
In Control shall not be deemed to have occurred solely because any Person
acquired Beneficial Ownership of more than the threshold percentage of the
outstanding Voting Securities as a result of an acquisition of Voting Securities
by the Company (each, a "Redemption") which, by reducing the number of Voting
Securities outstanding, increased the percentage of outstanding Voting
Securities Beneficially Owned by such Person; provided, however, that if (A) a
Change In Control would occur as a result of a Redemption but for the operation
of this sentence, and (B) after such Redemption, such Person becomes the
Beneficial Owner of any additional Voting Securities, which increase the
percentage of the then outstanding Voting Securities Beneficially Owned by such
Person over the percentage owned as a result of the Redemption, then a Change In
Control be deemed to occur.
(v) Notwithstanding any other provision of this subsection (h),
if the Executive or an Affiliate of the Executive who is then a stockholder or
director of the Company, either: (i) expressly voted in favor of the transaction
constituting the Change In Control in such Person's capacity as either a
stockholder or as a director of the Company; or (ii) expressly abstained from
voting (other than by reason of an "interest" in a matter or transaction, as
defined in the Nevada Revised Statutes); and/or (iii) failed or refused to vote,
then the transaction shall not constitute a Change in Control.
(I) "COMPANY" means Pinnacle Oil International, Inc., a Nevada
Corporation, and any successor and assign of the Company, as more particularly
described in section 17(e).
-------------
(J) "DISABILITY" (or the related term "Disabled") means any of the
following: (i) the receipt of any disability insurance benefits by the
Executive; (ii) a declaration by a court of competent jurisdiction that the
Executive is legally incompetent; (iii) the Executive's material inability due
to medically documented mental or physical illness or disability to fully
perform the Executive's regular obligations of his office and as an employee of
the Company (and/or its Subsidiaries) (with reasonable accommodations for such
disability, if then required by applicable federal or state laws or
regulations), for a six (6) month continuous period, or for nine (9) cumulative
months within any one (1) year continuous period; or (iv) the reasonable
determination by the Board that the Executive will not be able to fully perform
the Executive's regular obligations of his office and as an employee of the
Company (and/or its Subsidiaries) (with reasonable accommodations if then
required by applicable federal or state laws or regulations) for a six (6) month
3
continuous period. If the Board determines that the Executive is Disabled under
clause (iv) above, and the Executive disagrees with the conclusion of the Board,
-----------
then the Company (and/or its Subsidiaries) shall engage a qualified independent
physician reasonably acceptable to the Executive to examine the Executive at the
Company's (and/or its Subsidiaries') sole expense. The determination of such
physician shall be provided in writing to the parties and shall be final and
binding upon the parties for all purposes of this Agreement. The Executive
hereby consents to examination in the manner set forth above, and waives any
physician-patient privilege arising from any such examination as it relates to
the determination of the purported disability. If the parties cannot agree upon
a physician, a physician shall be appointed by the American Arbitration
Association located in Xxxxx County, Nevada, according to the rules and
practices of the American Arbitration Association from time-to-time in force.
(K) "EMPLOYEE BENEFIT PLAN" is defined in section 4(d).
------------
(L) "EMPLOYEE DEDUCTIONS" are defined in section 7.
---------
(M) "MONTHLY SALARY" is defined in section 4(a).
------------
(N) "MOMENTUM" means Momentum Resources Corporation, a Bahamas
corporation, and its successors and assigns including, without limitation, any
successor (whether direct or indirect, or by means of merger, consolidation,
conversion, purchase of assets, purchase of securities, or otherwise) to all or
substantially all of such corporation's business or assets, or both.
(O) "PERFORMANCE BONUS" is defined in section 4(c).
------------
(P) "PERSON" (other than for purposes of determining a Change in
Control) means an individual or natural person, a corporation, partnership
(limited or general), joint-venture, association, business trust, limited
liability company/partnership, business trust, trust (whether revocable or
irrevocable), pension or profit sharing plan, individual retirement account, or
fiduciary or custodial arrangement.
(Q) "PERSONAL TIME-OFF" is defined in section 8.
---------
(R) "SUBSIDIARY" shall mean any corporation, partnership (limited or
general), joint-venture, association, business trust, limited liability
company/partnership, business trust or trust in which the Company holds a
controlling interest, including but not limited to Pinnacle Oil, Inc., a Nevada
corporation ("Pinnacle Oil"), and Pinnacle Oil Canada, Inc., a British Columbia
corporation ("Pinnacle Canada").
(S) "RELOCATION ALLOWANCE" is defined in section 5(c).
------------
(T) "TAX WITHHOLDINGS" is defined in section 7.
---------
(U) "TERMINATION BY COMPANY FOR CAUSE" means a termination of the
Executive caused by a determination of two-thirds of the Board, excluding the
Executive if then a member of the Board, that one of the following events has
occurred:
(i) Any of the Executive's representations or warranties in this
Agreement is not materially true, accurate and/or complete;
(ii) The Executive has intentionally and continually breached or
wrongfully failed and/or refused to fulfill and/or perform (A) any of the
Executive's obligations, promises or covenants under this Agreement, or (B) any
of the warranties, obligations, promises or covenants in any agreement (other
than this
4
Agreement) entered into between the Company (and/or its Subsidiaries) and the
Executive, without cure, if any, as provided in such agreement;
(iii) The Executive has intentionally failed and/or refused to
obey any lawful and proper order or directive of the Board, and/or the Executive
has intentionally interfered with the compliance by other employees of the
Company (and/or its Subsidiaries) with any such orders or directives;
(iv) The Executive has intentionally breached the Executive's
fiduciary duties to the Company (and/or its Subsidiaries);
(v) The Executive has intentionally caused the Company (and/or
its Subsidiaries) to be convicted of a crime, or to incur criminal penalties in
material amounts;
(vi) The Executive has committed: (A) any act of fraud,
misrepresentation, theft, embezzlement or misappropriation, and/or any other
dishonest act against the Company (and/or its Subsidiaries) and/or any of its
Affiliates, subsidiaries, joint ventures; or (B) any other offense involving
moral turpitude, which offense is followed by conviction or by final action of
any court of law; or (C) a felony;
(vii) The Executive repeatedly and intemperately used alcohol or
drugs, to the extent that such use (A) interfered with or is likely to interfere
with the Executive's ability to perform the Executive's duties, and/or (B)
endangered or is likely to endanger the life, health, safety, or property of the
Executive, the Company (and/or its Subsidiaries), or any other person;
(viii) The Executive has intentionally demonstrated or committed
such acts of racism, sexism or other discrimination as would tend to bring the
Company (and/or its Subsidiaries) into public scandal or ridicule, or could
otherwise result in material and substantial harm to the Company's (and/or its
Subsidiaries')'s business, reputation, operations, affairs or financial
position; and/or
(ix) The Executive engaged in other conduct constituting legal
cause for termination.
No act, nor failure to act, on the Executive's part shall be
considered "intentional" unless the Executive has acted, or failed to act, with
a lack of good faith and with a lack of reasonable belief that the Executive's
action or failure to act was in the best interests of the Company (and/or its
Subsidiaries). In the event the Executive is both Disabled and the provisions of
clause (vii) of this subsection are applicable, the Company shall nevertheless
------------
have the right to deem such event as a Termination By Company For Cause.
If any event described above in clause (ii) or clause (viii) of
----------- -------------
this subparagraph occurs, and such event is reasonably susceptible of being
cured, then the Executive shall be entitled to a grace period of thirty (30)
days following receipt of written notice of such event. If the Company
determines, in its sole discretion, that such event is not reasonably
susceptible of being cured within a period of thirty (30) days), the Company may
grant a longer cure period to the Executive to cure such event to the reasonable
satisfaction of the Company, provided the Executive promptly commences and
diligently pursues such cure. The noted grace periods shall not apply to any
other event described in this subsection.
(v) "TERMINATION BY EXECUTIVE FOR GOOD REASON" means the Executive's
termination of this Agreement based on his reasonable determination that one of
the following events has occurred:
(i) Any of the Company's representations or warranties in this
Agreement is not materially true, accurate and/or complete;
5
(ii) The Company intentionally and continually breached or
wrongfully failed to fulfill or perform (A) its obligations, promises or
covenants under this Agreement; or (B) any warranties, obligations, promises or
covenants of the Company (and/or its Subsidiaries) in any agreement (other than
this Agreement) entered into between the Company (and/or its Subsidiaries) and
the Executive, without cure, if any, as provided in such agreement;
(iii) The Company terminated this Agreement and the Executive's
employment hereunder, and such termination does not constitute Termination By
Company For Cause;
(iv) Without the consent of the Executive, the Company: (A)
substantially altered or materially diminished the position, nature, status,
prestige or responsibilities of the Executive from those in effect by mutual
agreement of the parties from time-to-time; (B) assigned additional duties or
responsibilities to the Executive which were wholly and clearly inconsistent
with the position, nature, status, prestige or responsibilities of the Executive
then in effect; or (C) removed or failed to reappoint or re-elect the Executive
to the Executive's offices under this Agreement (as they may be changed or
augmented from time-to-time with the consent of the Executive), or as a director
of the Company, except in connection with the Disability of the Executive;
(v) Without the consent of the Executive, the Company
relocated the Company's principal operating offices from their present location,
and as a result increased the Executive's ordinary commute from the Executive's
temporary residence by more than thirty-five (35) miles;
(vi) Without the consent ratification (express or implied) of
the Executive, the Executive was removed from the Board without his consent; or
the Company failed to nominate or reappoint the Executive to the Board (unless
the Executive is deceased or Disabled, or such removal or failure is
attributable to an event which would constitute Termination By Company For
Cause), or if the Executive was so nominated, the stockholders of the Company
failed to re-elect the Executive to the Board;
(vii) The Company (and/or its Subsidiaries) intentionally
required the Executive to commit or participate in any felony or other serious
crime; and/or
(viii) The Company (and/or its Subsidiaries) engaged in other
conduct constituting legal cause for termination.
In the event any of the events described above in this
subparagraph occurs, and such event is reasonably susceptible of being cured,
------------
the Company shall be entitled to a grace period of thirty (30) days following
receipt of written notice of such event. If the Company determines, in its sole
discretion, that such event is not reasonably susceptible of being cured within
a period of thirty (30) days, the Company may grant a longer cure period to the
Executive to cure such event to the reasonable satisfaction of the Company,
provided the Executive promptly commences and diligently pursues such cure. The
noted grace periods shall not apply to any other event described in this
subparagraph.
------------
2. EMPLOYMENT OBLIGATIONS
(A) ENGAGEMENT; DUTIES. The Company hereby engages the Executive as
------------------
its President, and as an officer of its Subsidiaries, and the Executive accepts
such engagement, upon the terms and conditions set forth below. As President of
the Company, and as an officer of the Subsidiaries, the Executive shall do and
perform all services, acts, or things necessary or advisable that a President of
the Company and an executive officer of the Subsidiaries would customarily be
empowered and authorized to do, and perform by law and under
6
the Company's (and/or its Subsidiaries') Bylaws, including without limitation:
(i) Managing, conducting and supervising the day-to-day
business of the Company (and/or its Subsidiaries) such as, by way of example and
not limitation, hiring and firing employees and consultants and establishing
compensation levels for such employees and consultants; and negotiating and
entering into contracts on behalf of the Company (and/or its Subsidiaries) with
respect to the ordinary operations of the business of the Company (and/or its
Subsidiaries) such as, by way of example and not limitation, exploration,
equipment, purchase and lease contracts;
(ii) On behalf of the Company (and/or its Subsidiaries),
negotiating and entering into agreements, contracts and/or joint ventures with
third parties relating to the provision of SFD Data;
(iii) Acting as the Company's liaison with its attorneys,
certified public accountants, bankers, joint venture partners, market makers for
the Company's securities and the investment community; and
(iv) Developing and implementing long-term strategic, business
and fiscal planning for the Company (and/or its Subsidiaries) and their
businesses, including but not limited to plans or capital requirements for
financing, the commercial exploitation of SFD Data, finance, and positioning the
Company's securities in the various capital markets.
The Executive shall report only to the Board, and any significant
employment decisions and/or agreements, contracts and/or joint ventures
negotiated by the Executive shall be subject to the review and
approval/ratification of the Board. The Executive's responsibilities with
respect to the Company and each of its Subsidiaries may be changed or
supplemented by the Board from time-to-time, in their discretion. The Executive
shall also hold such offices with the Subsidiaries and/or joint ventures of the
Company (and/or its Subsidiaries) as the Board may, in its discretion and with
the consent of the Executive, from time-to-time determine. The Board shall
determine the amount of the Executive's total remuneration which will be
allocated to and paid by the Company and by each of its Subsidiaries. The
Executive shall be reasonably available to travel as the needs of the business
of the Company (and/or its Subsidiaries) may require.
(B) PERFORMANCE. The Executive shall devote the Executive's entire
-----------
and undivided business time, energy, abilities and attention solely and
exclusively to the performance of the Executive's duties hereunder and the
business of the Company (and/or its Subsidiaries); provided, however, the
Executive may devote a portion of the Executive's business time, energy,
abilities and attention to the Executive's duties as an executive officer of
Momentum, so long as such performance does not materially impair the performance
of the Executive in discharging the Executive's duties hereunder. The Executive
shall at all times faithfully, loyally, conscientiously, diligently and, to the
best of the Executive's ability, perform all of the Executive's duties and
obligations under this Agreement, and otherwise promote the interests and
welfare of the Company (and/or its Subsidiaries), all consistent with the
highest and best standards of the Company's (and/or its Subsidiaries') industry.
The Executive: (i) shall strictly comply with and adhere to all applicable laws,
and the Company's (and/or its Subsidiaries') Articles of Incorporation, Bylaws
and policies; (ii) shall obey all reasonable rules and regulations and policies
now in effect or as subsequently modified governing the conduct of employees of
the Company (and/or its Subsidiaries), and (iii) shall not commit any acts of
gross negligence, willful misconduct, dishonesty, fraud or misrepresentation,
racism, sexism or other discrimination, or any other acts which would tend to
bring the Company (and/or its Subsidiaries) into public scandal or ridicule, or
would otherwise result in material harm to the Company's (and/or its
Subsidiaries') business or reputation.
(C) FACILITIES AND SERVICES. The Company (and/or its Subsidiaries)
-----------------------
shall provide such
7
support staff, facilities, equipment and supplies as are reasonably necessary or
suitable for the adequate performance of the Executive's duties and obligations
under this Agreement, including technical and secretarial help.
(D) ACKNOWLEDGMENT AND WAIVER RELATIVE TO DUAL EMPLOYMENT AND
---------------------------------------------------------
POTENTIAL CONFLICT OF INTEREST. The parties acknowledge that the Executive is
------------------------------
also employed as an executive officer of Momentum, which corporation provides
certain SFD Data to the Company (and/or its Subsidiaries) pursuant to the terms
of certain agreements between the Company (and/or its Subsidiaries) and
Momentum, and is also a director and holds an indirect beneficial interest in
Momentum. The Company (and its Subsidiaries) hereby waive any claim for breach
of the Executive's fiduciary duties to the Company (and its Subsidiaries),
including potential conflicts of interest, as a result of such dual employment,
or arising as a result of the Executive's present or future status as an
employee, officer, director, trustee of, or as the holder of a direct or
indirect beneficial interest in, Momentum (and/or of its subsidiaries and/or of
its joint-ventures). Notwithstanding the foregoing waiver, the Executive shall
use his best efforts to act in good faith with respect to performing the
Executive's present and future duties for the Company and for its Subsidiaries
and/or joint-ventures.
3. TERM
(A) INITIAL TERM. The Company (and/or its Subsidiaries) hereby employ
------------
the Executive pursuant to the terms of this Agreement, and the Executive hereby
accepts such employment, for the period beginning on the date of this Agreement
and ending on December 31, 2002 (the "Initial Term").
(B) AUTOMATIC RENEWAL; TERMINATION BY THE COMPANY. Unless this
---------------------------------------------
Agreement is previously terminated by either party as provided in section 12
----------
below, this Agreement will be automatically renewed for additional and
consecutive one (1) year terms (each, a "Renewal Term") following the expiration
of each Initial or Renewal Term, (each a "Term"), unless either party gives
------
written notice to the other party, no later than sixty (60) days prior to the
expiration of the then pending Term, of its election not to automatically renew
---
this Agreement for an additional year.
4. COMPENSATION
(A) MONTHLY BASE SALARY. From the date of this Agreement to December
-------------------
31, 1997, the Company (and/or its Subsidiaries) shall pay to the Executive a
monthly base salary of Seven Thousand United States dollars (US $7,000). From
January 1, 1998, and throughout the remainder of the Term (subject to periodic
adjustment as described below), the Company (and/or its Subsidiaries) shall pay
to the Executive a monthly base salary of Ten Thousand United States dollars (US
$10,000) (the "Monthly Salary"). The Monthly Salary shall be payable in periodic
installments as agreed from time-to-time by the Executive and the Board, but at
least monthly, and shall be subject to any Tax Withholdings and/or Employee
Deductions that are applicable. In any pay period in which the Executive shall
be employed for less than the entire number of business days in such pay period,
the Monthly Salary for such pay period shall be prorated on the basis of the
number of business days during which the Executive was actually employed during
such pay period, divided by the actual number of business days in such pay
period. Commencing on the first annual anniversary date of this Agreement, and
on each annual anniversary date thereafter, the Monthly Salary then effective
shall be increased by an amount equal to five percent (5%) of the Monthly Salary
for the immediately prior year. Additionally, commencing on or prior to the
first annual anniversary date of this Agreement, and on or prior to each annual
anniversary date thereafter, the Board shall review the Executive's Monthly
Salary to determine whether to increase the Monthly Salary by an amount in
excess of said five percent (5%) increment, without any obligation by the Board
to authorize such increase.
8
(B) ANNUAL BONUS.
------------
(i) Amount. In the event the Company's "Net Income After Taxes"
------
(as defined below) for any fiscal year during the Term exceeds Five Million
United States dollars (US $5,000,000), the Company (and/or its Subsidiaries)
shall pay the Executive, no later than thirty (30) days after the completion of
the Company's audited financial statements for the subject fiscal year, an
amount equal to five percent (5%) of the "Net Income After Taxes" of the Company
for such fiscal year (the "Annual Bonus"), subject to any Applicable Tax
Withholdings and/or Employee Deductions. The term "Net Income After Income
Taxes" shall mean the net income of the Company after income taxes, computed in
accordance with United States generally accepted accounting principles and as
reflected on the audited financial statements of the Company. Appropriate
adjustments shall be made to the Annual Bonus to be paid to reflect customary
and ordinary accounting adjustments made at year end with respect to the prior
fiscal year.
(ii) Written Statement. The Company shall deliver to the
-----------------
Executive with each Annual Bonus payment a written statement setting forth the
basis of its calculation of the Annual Bonus. The Executive and the Executive's
independent representatives shall have the right, at the Executive's sole cost,
one time per fiscal year, to inspect the records of the Company with respect to
the calculations and to make copies of said records utilizing the Company's
facilities without charge, and shall have free and full access thereto on
reasonable notice during the normal business hours of the Company. In the event
that such inspection reveals an underpayment by the Company of any Annual Bonus
due the Executive, then the Company shall immediately pay to the Executive the
balance of all such amounts found to be due. Further, if such inspection
discloses that the Company has underpaid the Annual Bonus due for the period by
ten percent (10%) or more, and the Executive is no longer employed by the
Company, then the Company shall also pay the reasonable professional fees of the
independent representatives engaged to conduct or review such inspection or
audit.
(C) PERFORMANCE BONUS. The Board shall from time-to-time, but not
-----------------
more than one (1) time per year, evaluate the performance of the Executive and
award to the Executive a performance bonus (the "Performance Bonus") in such
amount as the Board may determine, in its sole discretion, to be reasonable,
after taking into consideration other compensation paid or payable to the
Executive under this Agreement, as well as the financial and non-financial
progress of the business of the Company (and/or its Subsidiaries) and the
contributions of the Executive toward that progress. Payment of the Performance
Bonus shall be subject to any applicable Tax Withholdings and/or Employee
Deductions.
(D) PARTICIPATION IN EMPLOYEE BENEFIT PLANS. The Executive shall have
---------------------------------------
the same rights, privileges, benefits and opportunities to participate in any
employee benefit plans of the Company (and/or its Subsidiaries) which may now or
hereafter be in effect on a general basis for executive officers or employees,
including without limitation retirement, pension, profit-sharing, savings and
insurance (including, but not limited to, health, dental, disability and/or
group insurance) (collectively, "Employee Benefit Plans"). In the event the
Executive receives payments from a disability plan maintained by the Company
(and/or its Subsidiaries), the Company (and/or its Subsidiaries) shall have the
right to offset such payments against Monthly Salary otherwise payable to the
Executive during the period for which payments are made by such disability plan.
(E) STOCK OPTIONS. In addition to the remuneration noted above, the
-------------
Executive shall receive such qualified or unqualified stock options, subject to
such terms and conditions, as the Board of Directors shall determine, in their
sole and absolute discretion.
9
5. ALLOWANCES
(A) AUTOMOBILE ALLOWANCE. The Company (and/or its Subsidiaries) shall
--------------------
provide a late model luxury automobile to the Executive for his or her use on
behalf of the Company (and/or its Subsidiaries) and for incidental personal use,
during the term of this Agreement, and shall pay all purchase-installment and/or
lease payments to acquire such automobile, as well as the cost to insure the
automobile. Should the Company (and/or its Subsidiaries) fail to provide the
automobile during any portion of the term of this Agreement, the Company (and/or
its Subsidiaries) shall pay the Executive the sum of Seven Hundred United States
dollars (US $700) for each month such automobile is not provided, to cover
and/or reimburse the Executive for the cost of an automobile and for the payment
of insurance in connection therewith. The Company (and/or its Subsidiaries)
shall additionally reimburse the Executive for all gasoline, operation,
maintenance and repair costs associated with the Executive's use of the
automobile provided by the Company (and/or its Subsidiaries) (or the Executive's
personal automobile should the Company and/or its Subsidiaries fail to provide
an automobile) upon submission of itemized receipts therefore. Payment and/or
provision of the aforesaid allowance (the "Automobile Allowance") shall be
subject to any applicable Tax Withholdings and/or Employee Deductions. The
Executive shall be responsible for all income taxes imposed on the Executive by
reason of the Automobile Allowance.
(B) CELLULAR TELEPHONE ALLOWANCE. The Company (and/or its
----------------------------
Subsidiaries) shall provide a cellular phone to the Executive during the term of
this Agreement, to be used by the Executive as necessary for the business of the
Company (and/or its Subsidiaries), and for incidental personal use. In addition,
the Company (and/or its Subsidiaries) shall pay all charges associated with the
Executive's use of the cellular telephone for the business of the Company
(and/or its Subsidiaries) upon submission of itemized receipts therefore.
Payment and/or provision of the aforesaid allowance (the "Cell Phone Allowance")
shall be subject to any applicable Tax Withholdings and/or Employee Deductions.
The Executive shall be responsible for all income taxes imposed on the Executive
by reason of the Cell Phone Allowance.
(C) RELOCATION ALLOWANCE. In the event the Company relocates its
--------------------
principal executive offices from its present location, and, as a result,
increases the Executive's ordinary commute from the Executive's then permanent
residence by more than thirty-five (35) miles (each, a "Relocation"), then the
Company (and/or its Subsidiaries) shall have the following obligations to the
Executive (collectively, the "Relocation Allowance"):
(i) Rental Expenses. The Company (and/or its Subsidiaries) shall
---------------
pay all costs to rent a new residence which is located within thirty-five (35)
miles of the location of the Company's new principal executive offices, to be
selected by the Executive and which is comparable to the Executive's then
current residence including all utilities, maintenance, insurance and other
occupancy costs (the "Old Residence"); provided, however, in the event the
Executive rents the Old Residence to a third party, the amount of the rental the
Company (and/or its Subsidiaries) pay shall be reduced by the amount of rent
(net of expenses) received by the Executive with respect to the Old Residence.
The Company's (and/or its Subsidiaries') obligation shall terminate upon the
earlier of (i) such time as the Executive, without any obligation to do so,
sells or disposes of the Old Residence; or (ii) thirty (30) months after the
date of the Relocation.
(ii) Moving Expenses. The Company (and/or its Subsidiaries) shall
---------------
cover all costs incurred by the Executive as a result of the Relocation, to move
the Executive and his or her family and their personal property to such new
location (or subsequently back to the Old Residence), including without
limitation all costs to move the Executive's personal belongings from the Old
Residence to the new residence, or vice versa.
10
(iii) Loss and Expenses Incurred Upon Sale of Old Residence. In
-----------------------------------------------------
the event the Executive sells or disposes of the Old Residence as a result of
the Relocation, the Company shall pay to the Executive the following: (i) the
Executive's costs incurred as a result of such sale or disposition, including
closing costs, broker's commissions and costs to place the Old Residence in a
condition to be sold; and (ii) any actual economic loss incurred by the
Executive in selling the Old Residence, which loss shall be defined as the
amount by which the fair market value of the Old Residence (as of the date the
Relocation is announced, as such value shall be determined by an appraisal by an
appraiser satisfactory to both parties) exceeds the actual sales price for the
Old Residence (excluding costs). In the event of such purchase the Company
(and/or its Subsidiaries) shall be solely responsible for, and shall indemnify
and hold the Executive harmless with respect to, any subsequent costs or
expenses incurred with respect to the Old Residence, including debt service,
property taxes and assessments, insurance, expenses and repairs.
(iv) Certain Expenses Incurred Upon Purchase of New Residence.
--------------------------------------------------------
In the event the Executive purchases a new residence within thirty-five (35)
miles of the location of the Company's new principal executive offices as a
result of the Relocation, the Company (and/or its Subsidiaries) shall pay all
costs incurred by the Executive in acquiring the new residence, including loan
and closing costs, but excluding the Executive's down payment, mortgage loan and
mortgage points.
(v) Income Tax Consequences. Payment and/or provision of the
-----------------------
Relocation Allowance shall be subject to any Tax Withholdings and/or Employee
Deductions as may be applicable. The Executive shall be responsible for all
income taxes imposed on the Executive by reason of the Relocation Allowance.
6. BUSINESS EXPENSES
During the Term of this Agreement the Executive is authorized to
incur, and the Company (and/or its Subsidiaries) shall directly pay or reimburse
the Executive for his or her payment of the Executive's reasonable and necessary
business expenses, duly and actually incurred by the Executive in connection
with the duties and services to be performed by the Executive under this
Agreement, including without limitation entertainment, meals, travel, lodging
and other similar out-of-pocket expenses, upon the Executive's submission to the
Company (and/or its Subsidiaries) of itemized expense statements setting forth
the date, purpose and amount of the expense incurred, together with
corresponding receipts showing payment by the Executive in cases where he or she
seeks reimbursement, all in conformity with business expense payment and/or
reimbursement policies as may be established by the Company (and/or its
Subsidiaries) from time to time, all of which shall comply with the
substantiation requirements of any applicable taxing authorities, and
regulations promulgated by such authorities thereto, pertaining to the
deductibility of such expenses. Direct payment and/or reimbursement shall be
made by the Company (and/or its Subsidiaries) no later than thirty (30) days of
the Executive submission of the foregoing documentation. The Executive shall be
entitled to direct payment and/or reimbursement in full for the aforesaid
business expenses. The Company (and/or its Subsidiaries) shall have the option
to pay directly the persons entitled to payment for such business expenses.
7. TAX WITHHOLDINGS AND EMPLOYEE DEDUCTIONS
The Company (and/or its Subsidiaries) shall be entitled to deduct from
any payments to the Executive pursuant to the terms of this Agreement (including
any payments arising from the early termination of this Agreement), amounts
sufficient to cover any applicable federal, provincial, state, local and/or
foreign income tax withholdings and/or deductions as may be required in
connection with such payment, including without limitation old-age and
survivor's and other social security payments, state disability and other
withholdings payment as may be required by the tax laws or regulations of any
applicable jurisdiction (collectively, the "Tax Withholdings"), as well as all
other elective employee deductions applicable to such
11
payment such as, for example, deductions relating to any Employee Benefit Plan
in which the Executive participates (collectively, the "Employee Deductions").
8. PERSONAL TIME-OFF
The Executive shall be entitled each calendar year during the term of
this Agreement to such number of personal time-off days for such purposes,
including vacations and time for personal affairs ("Personal Time-Off") as are
approved by the Board, but not less than the greater of (i) twenty (20) business
days, or (ii) the number of personal time-off days (including vacation and
personal days) generally given by the Company (and/or its Subsidiaries) to its
employees. Personal Time-Off shall be in addition to regular paid holidays
provided to all employees of the Company (and/or its Subsidiaries). The
Executive's compensation shall be paid in full with respect to approved Personal
Time-Off days. Should the Executive fail to use all Personal Time-Off days in
any calendar year, the Executive shall have the option of (i) receiving payment
for such days on a pro rata basis, or (ii) "carrying-over" unused Personal Time-
Off days to succeeding years. Personal time-off shall be taken during a period
or periods mutually satisfactory to both the Company (and/or its Subsidiaries)
and the Executive.
9. INSURANCE
If requested by the Company (and/or its Subsidiaries), the Executive
shall submit to such physical examinations and otherwise take such actions and
execute and deliver such documents as may be reasonably necessary to enable the
Company (and/or its Subsidiaries), at its expense and for its own benefit, to
obtain disability and/or life insurance on the life of the Executive. The
Executive represents and warrants that he has no reason to believe that he is
not insurable for disability or life coverage with a reputable insurance company
at rates now prevailing in the city of the Company's principal executive
offices, for healthy persons of the Executive's own age and gender.
10. ADVANCES
The Company (and/or its Subsidiaries) may from time-to-time, upon
written consent from the Chairman of the Board or the Board, and without any
obligation to do so, make advances to the Executive against any compensation or
other amounts to be paid by the Company (and/or its Subsidiaries) to the
Executive (each, an "Advance"). Any amounts due hereunder to the Executive
shall, at the election of the Company (and/or its Subsidiaries), be offset by
any then outstanding Advances.
In the event of termination of employment of executive, the Executive
agrees that the Company (and/or its Subsidiaries) shall have the right to offset
the amount of any and all outstanding Advance(s) against any salary or wages
due, or any other amounts due to the Executive from the Company (and/or its
Subsidiaries), and that any remaining balance of the Advance(s) shall be repaid
by the Executive within thirty (30) days after the Executive's termination date.
If such Advance(s) are not repaid within said thirty (30) days, simple interest
shall accrue on the unpaid balance at the rate of ten percent (10%) per annum.
The Executive agrees to pay all costs of collection incurred by the Company
(and/or its Subsidiaries) with respect thereto, including reasonable attorneys'
fees and legal costs.
The Company's (and/or its Subsidiaries') obligation to make payments
to the Executive hereunder shall not, except with respect to Advance(s) as
provided above, be affected by any circumstance, including without limitation
any set-off, counterclaim, recoupment, defense or other right which the Company
(and/or its Subsidiaries) may have against the Executive or others.
12
11. TERMINATION OF AGREEMENT BEFORE EXPIRATION OF TERM
(A) DEATH OR DISABILITY. Notwithstanding any other term of this
-------------------
Agreement, the applicable Term shall terminate upon the death or Disability of
the Executive, subject to compliance with such federal and state laws and
regulations as may then be applicable.
(B) CHANGE IN CONTROL. Notwithstanding any other term of this
-----------------
Agreement, the applicable Term shall, at the election of the Executive,
delivered by written notice to the Company, terminate effective upon the Change
In Control.
(C) TERMINATION OF AGREEMENT BY COMPANY FOR CAUSE. Subject to
---------------------------------------------
compliance with any applicable federal and state laws and regulations, the
Company may terminate this Agreement and the Executive's employment hereunder at
any time in the event such termination constitutes Termination By Company For
Cause, upon giving written notice to the Executive specifying in reasonable
detail (i) the event which constitutes the cause; (ii) the pertinent facts and
circumstances underlying the cause; and (iii) the effective date of the
termination (not to exceed ninety {90} days from the date of such notice, but
which date may, at the Company's election, be effective upon receipt of said
written notice by the Executive). Such notice shall also afford the Executive an
opportunity to be heard in person by the Board (with the assistance of the
Executive's legal counsel, if the Executive so desires). Such hearing shall be
held reasonably promptly after such notice but, in any event, before the
effective date of the prospective termination.
(D) TERMINATION OF AGREEMENT BY EXECUTIVE FOR GOOD REASON. The
-----------------------------------------------------
Executive may terminate this Agreement and the Executive's employment hereunder
at any time in the event such termination constitutes Termination By Executive
For Good Reason, upon giving written notice to the Company specifying in
reasonable detail (i) the event which constitutes the good reason; (ii) the
pertinent facts and circumstances underling the good reason; and (iii) the
effective date of termination (not to exceed ninety {90} days from the date of
such notice, but which date may, at the Executive's election, be effective upon
receipt of said written notice by the Company).
12. EFFECT OF TERMINATION ATTRIBUTABLE TO DEATH OR DISABILITY; TERMINATION
BY COMPANY FOR CAUSE; TERMINATION BY EXECUTIVE WITHOUT GOOD REASON
In the event the Executive's employment hereunder is terminated before
the expiration of a Term, and such termination is attributable to (i) an event
defined as Death or Disability; (ii) an event defined as Termination By Company
For Cause; and/or (iii) termination by the Executive which does not constitute
---
Termination By Executive For Good Reason, then all rights and obligations of the
Company and the Executive under section 2 [Employment Obligations], section 4
--------- ---------
[Compensation], section 5 [Allowances], section 6 [Business Expenses] and
--------- ---------
section 8 [ Personal Time-Off] shall terminate as of the effective date of the
---------
termination; provided, however:
(a) The Company (and/or its Subsidiaries) shall pay the Executive's
accrued but unpaid Monthly Salary and Personal Time-Off days through the
effective date of the termination on or before the close of business on such
effective date; and the Executive shall not be entitled to Monthly Salary and/or
Personal Time-Off days after the effective date of the termination;
(b) The Company (and/or its Subsidiaries) shall pay the Executive's
accrued but unpaid Annual Bonus through the last date of the Executive's
employment within one hundred and twenty (120) days after the end of the fiscal
period to which the Annual Bonus relates. The amount of the Annual Bonus shall
be
13
determined by calculating the Annual Bonus the Executive would ordinarily be
entitled to for the entire fiscal year, and then dividing such amount by a
fraction wherein the numerator equals the number of days the Executive was
employed in such year and the denominator equals the total number of calendar
days in such year; the Executive shall not be entitled to earn or accrue any
Annual Bonus after the effective date of the termination;
(c) The Company (and/or its Subsidiaries) shall pay any declared but
unpaid Performance Bonus;
(d) The Company (and/or its Subsidiaries) shall reimburse the
Executive for any Automobile Allowance and Cell Phone Allowance incurred prior
to the effective date of the termination;
(e) The Company (and/or its Subsidiaries) shall reimburse the
Executive for any business expenses incurred prior to the effective date of the
termination, within three (3) business days after the Executive's submission of
the Executive's expense report to the Company (and/or its Subsidiaries);
(f) The Executive shall not be entitled to continue to participate in
any Employee Benefit Plans except to the extent provided in such plans for
terminated participants, or as may be required by applicable law.
Notwithstanding the foregoing, amounts which are vested in any Employee Benefit
Plans shall be payable in accordance with such plan; and
(g) If, as the effective date of the termination, the Company has
announced a Relocation, and the Executive has, prior to such effective date,
relocated pursuant to such announcement, or has entered into binding agreements
in connection therewith, the rights of the Executive and obligations of the
Company (and/or its Subsidiaries) under section 5(c) shall continue with respect
------------
to the pending Relocation; otherwise, all rights of the Executive and
obligations of the Company (and/or its Subsidiaries) under section 5(c) shall
------------
terminate as of the date of the notice.
13. EFFECT OF TERMINATION WHERE TERMINATION ATTRIBUTABLE TO CHANGE IN
CONTROL; TERMINATION BY EXECUTIVE FOR GOOD REASON; TERMINATION BY
COMPANY WITHOUT CAUSE
In the event the Executive's employment hereunder is terminated before
the expiration of a Term, and such termination is attributable to (i) an event
defined as a Change in Control; (ii) an event defined as a Termination by
Executive for Good Reason; and/or (iii) termination by the Company which does
not constitute a Termination By Company for Cause; then all rights and
obligations of the Company (and/or its Subsidiaries) and the Executive under
section 2 [Employment Obligations], section 4 [Compensation], section 5
--------- --------- ---------
[Allowances], section 6 [Business Expenses], and section 8 [ Personal Time-Off]
--------- ---------
shall terminate as of the effective date of the termination date; provided,
however:
(a) The Company (and/or its Subsidiaries) shall continue to pay the
Executive's then effective Monthly Salary through the pending Term of this
Agreement, on the same basis as previously paid to the Executive, but subject to
such minimum increases as are described in section 4;
---------
(b) The Company (and/or its Subsidiaries) shall continue to accrue
and pay the Executive's Annual Bonus through the pending Term of this Agreement,
on the same basis as previously paid to the Executive, and subject to the other
provisions of section 4;
---------
(c) The Company (and/or its Subsidiaries) shall pay the Executive's
declared but unpaid Performance Bonus;
14
(d) At the election of the Executive, the Company (and/or its
Subsidiaries) shall (i) permit the Executive to continue to participate in any
Employee Benefit Plans, except to the extent prohibited in such plans for
terminated employees, or as may be required by applicable law; or (ii) provide
the Executive with additional compensation, payable on a monthly basis, which
would approximate the cost to the Executive to obtain comparable benefits;
(e) The Company (and/or its Subsidiaries) shall continue to pay the
Executive's monthly Automobile Allowance (but not gasoline, insurance and
repair, maintenance and operating expenses) through the pending Term of this
Agreement, on the same basis as previously paid to the Executive;
(f) The Company (and/or its Subsidiaries) shall reimburse the
Executive for the Cell Phone Allowance through the effective date of the
termination;
(g) The Company (and/or its Subsidiaries) shall reimburse the
Executive for the Executive's business expenses incurred through the effective
date of the termination, within three (3) business days of the Executive's
submission of the Executive's expense report to the Company (and/or its
Subsidiaries);
(h) If, as the effective date of termination, the Company has
announced a Relocation, and the Executive has, prior to such effective date,
relocated pursuant to such announcement, or has entered into binding agreements
in connection therewith, the rights of the Executive and obligations of the
Company (and/or its Subsidiaries) under section 5(c) shall continue with respect
------------
to the pending Relocation; otherwise, all rights of the Executive and
obligations of the Company (and/or its Subsidiaries) under section 5(c) shall
------------
terminate; and
(i) If both (A) the termination is directly or indirectly
attributable to a sale of all or substantially all of the assets of the Company
(each, a "Sale"); and (B) the prospective Sale is approved by a "disinterested"
majority of the Board of Directors (as defined under the Nevada Revised
Statutes), then the Company (and/or its Subsidiaries) shall pay to the Executive
an amount equal to two percent (2%) of the total consideration (including cash,
securities, debt or any other form of property) received by the Company (and/or
its Subsidiaries) in connection with such Sale.
The Executive shall not be required to mitigate the amount of any
payment pursuant to this section by seeking other employment or otherwise, and
-------
no such payment shall be offset or reduced by the amount of any compensation or
benefits provided to the Executive in any subsequent employment. The provisions
of this section shall not be deemed to prejudice the rights of the Company
-------
(and/or its Subsidiaries) or the Executive to any remedy or damages to which
such party may be entitled by reason of a breach of this Agreement by the other
party, whether at law or equity.
14. REPRESENTATIONS AND WARRANTIES OF PARTIES
(A) BY ALL PARTIES. Each of the parties to this Agreement hereby
--------------
represents and warrants to each of the other parties to this Agreement, each of
which is deemed to be a separate representation and warranty, as follows:
(i) Organization, Power and Authority. Such party, if an entity,
---------------------------------
is duly organized, validly existing and in good standing under the laws of its
state, territory or province of incorporation or organization, and has all
requisite corporate or other power and authority to enter into this Agreement.
(ii) Authorization and Validity of Agreement. The execution and
---------------------------------------
delivery of this Agreement by such party, and the performance by such party of
the transactions herein contemplated, have, if
15
such party is an entity, been duly authorized by its governing organizational
documents, and are not prohibited by its governing organization documents, and
no further corporate or other action on the part of such party is necessary to
authorize this Agreement, or the performance of such transactions. This
Agreement has been duly executed and delivered by such party and, assuming due
authorization, execution and delivery by all of the other parties hereto, is
valid and binding upon such party in accordance with its terms, except as
limited by: (1) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditor rights generally;
and (2) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
(iii) No Breach or Conflict. Neither the execution or delivery of
---------------------
this Agreement, nor the performance by such party of the transactions
contemplated herein: (i) if such party is an entity, will breach or conflict
with any of the provisions of such party's governing organizational documents;
or (ii) to the best of such party's knowledge and belief, will such actions
violate or constitute an event of default under any agreement or other
instrument to which such party is a party.
(B) BY EXECUTIVE. The Executive hereby represents and warrants to the
------------
Company (and/or its Subsidiaries) that the Executive is not Disabled at the time
of the execution and delivery of this Agreement by the Executive.
15. PERFORMANCE ON BUSINESS DAY
In the event the date on which a party is required to take any action
under the terms of this Agreement is not a business day, the action shall,
unless otherwise provided herein, be deemed to be required to be taken on the
next succeeding business day.
16. NON-LIABILITY FOR DEBTS
The Executive's rights and obligations under this Agreement shall not
be subject to encumbrance or to the claims of the Executive's creditors (other
than the Company, and/or its Subsidiaries), or subject to the debts, contracts
or engagements of the Executive or the Executive's heirs, successors and
assigns, and any attempt to do any of the foregoing shall be null and void ab
initio and without force and effect.
17. MISCELLANEOUS
(A) PREPARATION OF AGREEMENT; COSTS AND EXPENSES. This Agreement was
--------------------------------------------
prepared by the Company solely on behalf of such party. Each party acknowledges
that: (i) he, she or it had the advice of, or sufficient opportunity to obtain
the advice of, legal counsel separate and independent of legal counsel for any
other party hereto; (ii) the terms of the transactions contemplated by this
Agreement are fair and reasonable to such party; and (iii) such party has
voluntarily entered into the transactions contemplated by this Agreement without
duress or coercion. Each party further acknowledges that such party was not
represented by the legal counsel of any other party hereto in connection with
the transactions contemplated by this Agreement, nor was he, she or it under any
belief or understanding that such legal counsel was representing his, her or its
interests. Except as expressly set forth in this Agreement, each party shall pay
all legal and other costs and expenses incurred or to be incurred by such party
in negotiating and preparing this Agreement; in performing due diligence or
retaining professional advisors; in performing any transactions contemplated by
this Agreement; or in complying with such party's covenants, agreements and
conditions contained herein. Each party agrees that no conflict, omission or
ambiguity in this Agreement, or the interpretation thereof, shall be presumed,
implied or otherwise construed against any other party to this Agreement on the
basis that such party was responsible for drafting this Agreement.
16
(B) COOPERATION. Each party agrees, without further consideration, to
-----------
cooperate and diligently perform any further acts, deeds and things, and to
execute and deliver any documents that may be reasonably necessary or otherwise
reasonably required to consummate, evidence, confirm and/or carry out the intent
and provisions of this Agreement, all without undue delay or expense.
(C) INTERPRETATION.
--------------
(i) Survival. All representations and warranties made by any
--------
party in connection with any transaction contemplated by this Agreement shall,
irrespective of any investigation made by or on behalf of any other party
hereto, survive the execution and delivery of this Agreement, and the
performance or consummation of any transaction described in this Agreement.
(ii) Entire Agreement/No Collateral Representations. Each party
----------------------------------------------
expressly acknowledges and agrees that this Agreement, and the agreements and
documents referenced herein: (1) are the final, complete and exclusive statement
of the agreement of the parties with respect to the subject matter hereof; (2)
supersede any prior or contemporaneous agreements, memorandums, proposals,
commitments, guaranties, assurances, communications, discussions, promises,
representations, understandings, conduct, acts, courses of dealing, warranties,
interpretations or terms of any kind, whether oral or written (collectively and
severally, the "prior agreements"), and that any such prior agreements are of no
force or effect except as expressly set forth herein; and (3) may not be varied,
supplemented or contradicted by evidence of prior agreements, or by evidence of
subsequent oral agreements. No prior drafts of this Agreement, and no words or
phrases from any prior drafts, shall be admissible into evidence in any action
or suit involving this Agreement.
(iii) Amendment; Waiver; Forbearance. Except as expressly
------------------------------
provided herein, neither this Agreement nor any of the terms, provisions,
obligations or rights may be amended, modified, supplemented, augmented,
rescinded, discharged or terminated (other than by performance), except by a
written instrument or instruments signed by all of the parties to this
Agreement. No waiver of any breach of any term, provision or agreement, or of
the performance of any act or obligation under this Agreement, or of any
extension of time for performance of any such act or obligation, or of any right
granted under this Agreement, shall be effective and binding unless such waiver
shall be in a written instrument or instruments signed by each party claimed to
have given or consented to such waiver. Except to the extent that the party or
parties claimed to have given or consented to a waiver may have otherwise agreed
in writing, no such waiver shall be deemed a waiver or relinquishment of any
other term, provision, agreement, act, obligation or right granted under this
Agreement, or of any preceding or subsequent breach thereof. No forbearance by a
party in seeking a remedy for any noncompliance or breach by another party
hereto shall be deemed to be a waiver by such forbearing party of its rights and
remedies with respect to such noncompliance or breach, unless such waiver shall
be in a written instrument or instruments signed by the forbearing party.
(iv) Remedies Cumulative. The remedies of each party under this
-------------------
Agreement are cumulative and shall not exclude any other remedies to which such
party may be lawfully entitled.
(v) Severability. If any term or provision of this Agreement or
------------
the application thereof to any person or circumstance shall, to any extent, be
determined to be invalid, illegal or unenforceable under present or future laws,
then, and in that event: (1) the performance of the offending term or provision
(but only to the extent its application is invalid, illegal or unenforceable)
shall be excused as if it had never been incorporated into this Agreement, and,
in lieu of such excused provision, there shall be added a provision as similar
in terms and amount to such excused provision as may be possible and be legal,
valid and enforceable; and (2) the remaining part of this Agreement (including
the application of the offending term or provision to persons or circumstances
other than those as to which it is held invalid, illegal or unenforceable) shall
not be
17
affected thereby, and shall continue in full force and effect to the fullest
legal extent.
(vi) Parties in Interest. Nothing in this Agreement shall
-------------------
confer any rights or remedies under or by reason of this Agreement on any
persons other than the parties hereto and their respective successors and
assigns, if any, or as may be permitted hereunder; nor shall anything in this
Agreement relieve or discharge the obligation or liability of any third person
to any party to this Agreement; nor shall any provision give any third person
any right of subrogation or action over or against any party to this Agreement.
(vii) No Reliance Upon Prior Representation. Each party
-------------------------------------
acknowledges that: (1) no other party has made any oral representation or
promise which would induce them prior to executing this Agreement to change
their position to their detriment, to partially perform, or to part with value
in reliance upon such representation or promise; and (2) such party has not so
changed its position, performed or parted with value prior to the time of the
execution of this Agreement, or such party has taken such action at its own
risk.
(viii) Headings; References; Incorporation; Gender; Statutory
------------------------------------------------------
References. The headings used in this Agreement are for convenience and
----------
reference purposes only, and shall not be used in construing or interpreting the
scope or intent of this Agreement or any provision hereof. References to this
Agreement shall include all amendments or renewals thereof. All cross-references
in this Agreement, unless specifically directed to another agreement or
document, shall be construed only to refer to provisions within this Agreement,
and shall not be construed to be referenced to the overall transaction or to any
other agreement or document. Any Exhibit referenced in this Agreement shall be
construed to be incorporated in this Agreement by such reference. As used in
this Agreement, each gender shall be deemed to include the other gender,
including neutral genders appropriate for entities, if applicable, and the
singular shall be deemed to include the plural, and vice versa, as the context
requires. Any reference to statutes or laws will include all amendments,
modifications, or replacements of the specific sections and provisions
concerned.
(D) ENFORCEMENT.
-----------
(i) Applicable Law. This Agreement and the rights and remedies
--------------
of each party arising out of or relating to this Agreement (including, without
limitation, equitable remedies) shall (with the exception of the applicable
securities laws) be solely governed by, interpreted under, and construed and
enforced in accordance with the laws (without regard to the conflicts of law
principles) of the State of Nevada, as if this Agreement were made, and as if
its obligations are to be performed, wholly within the State of Nevada.
(ii) Consent to Jurisdiction; Service of Process. Any "action
-------------------------------------------
or proceeding" (as such term is defined below) arising out of or relating to
this Agreement shall be filed in and heard and litigated solely before the state
courts of Nevada. Each party generally and unconditionally accepts the exclusive
jurisdiction of such courts and venue therein; consents to the service of
process in any such action or proceeding by certified or registered mailing of
the summons and complaint in accordance with the notice provisions of this
Agreement; and waives any defense or right to object to venue in said courts
based upon the doctrine of "forum non conveniens." The term "action or
proceeding" is defined as any and all claims, suits, actions, hearings,
arbitrations or other similar proceedings, including appeals and petitions
therefrom, whether formal or informal, governmental or non-governmental, or
civil or criminal.
(iii) Waiver of Right to Jury Trial. Each party hereby waives
-----------------------------
such party's respective right to a jury trial of any claim or cause of action
based upon or arising out of this Agreement. Each party acknowledges that this
waiver is a material inducement to each other party hereto to enter into the
transaction contemplated hereby; that each other party has already relied upon
this waiver in entering into this Agreement; and that each other party will
continue to rely on this waiver in their future dealings. Each party warrants
and represents that such party has reviewed this waiver with such party's legal
counsel, and that such
18
party has knowingly and voluntarily waived its jury trial rights following
consultation with such legal counsel.
(iv) Consent to Specific Performance and Injunctive Relief and
---------------------------------------------------------
Waiver of Bond or Security. Each party acknowledges that the other party(s)
--------------------------
hereto may, as a result of such party's breach of its covenants and obligations
under this Agreement, sustain immediate and long-term substantial and
irreparable injury and damage which cannot be reasonably or adequately
compensated by damages at law. Consequently, each party agrees that in the event
of such party's breach or threatened breach of its covenants and obligations
hereunder, the other non-breaching party(s) shall be entitled to obtain from a
court of competent equitable relief including, without limitation, enforcement
of all of the provisions of this Agreement by specific performance and/or
temporary, preliminary and/or permanent injunctions enforcing any of the rights
of such non-breaching party(s), requiring performance by the breaching party, or
enjoining any breach by the breaching party, all without proof of any actual
damages that have been or may be caused to such non-breaching party(s) by such
breach or threatened breach and without the posting of bond or other security in
connection therewith. The party against whom such action or proceeding is
brought waives the claim or defense therein that the party bringing the action
or proceeding has an adequate remedy at law and such party shall not allege or
otherwise assert the legal position that any such remedy at law exists. Each
party agrees and acknowledges: (i) that the terms of this subsection are fair,
reasonable and necessary to protect the legitimate interests of the other
party(s); (ii) that this waiver is a material inducement to the other party(s)
to enter into the transaction contemplated hereby; (iii) that the other party(s)
has already relied upon this waiver in entering into this Agreement; and (iv)
that each party will continue to rely on this waiver in their future dealings.
Each party warrants and represents that such party has reviewed this provision
with such party's legal counsel, and that such party has knowingly and
voluntarily waived its rights following consultation with legal counsel.
(v) Recovery of Fees and Costs. If any party institutes or
--------------------------
should the parties otherwise become a party to any action or proceeding based
upon or arising out of this Agreement including, without limitation, to enforce
or interpret this Agreement or any provision hereof, or for damages by reason of
any alleged breach of this Agreement or any provision hereof, or for a
declaration of rights in connection herewith, or for any other relief, including
equitable relief, in connection herewith, the "prevailing party" (as such term
is defined below) in any such action or proceeding, whether or not such action
or proceeding proceeds to final judgment or determination, shall be entitled to
receive from the non-prevailing party as a cost of suit, and not as damages, all
fees, costs and expenses of enforcing any right of the prevailing party
(collectively, "fees and costs"), including without limitation, (1) reasonable
attorneys' fees and costs and expenses, (2) witness fees (including experts
engaged by the parties, but excluding shareholders, officers, employees or
partners of the parties), (3) accountants' fees, (4) fees of other
professionals, and (5) any and all other similar fees incurred in the
prosecution or defense of the action or proceeding; including, without
limitation, fees incurred in the following: (A) postjudgment motions; (B)
contempt proceedings; (C) garnishment, levy, and debtor and third party
examinations; (D) discovery; and (E) bankruptcy litigation. All of the aforesaid
fees and costs shall be deemed to have accrued upon the commencement of such
action and shall be paid whether or not such action is prosecuted to judgment.
Any judgment or order entered in such action shall contain a specific provision
providing for the recovery of attorney the aforesaid fees, costs and expenses
incurred in enforcing such judgment and an award of prejudgment interest from
the date of the breach at the maximum rate of interest allowed by law. The term
"prevailing party" is defined as the party who is determined to prevail by the
court after its consideration of all damages and equities in the action or
proceeding, whether or not the action or proceeding proceeds to final judgment
(the court shall retain the discretion to determine that no party is the
prevailing party in which case no party shall be entitled to recover its costs
and expenses under this subsection).
19
(E) ASSIGNMENT AND DELEGATION; SUCCESSORS AND ASSIGNS.
-------------------------------------------------
(i) Prohibition Against Assignment or Delegation. Except as
--------------------------------------------
specifically provided in this Agreement, neither party may sell, license,
transfer or assign (whether direct or indirect, merger, consolidation,
conversion, sale of assets, sale or exchange of securities, or by operation of
law, or otherwise) any of such party's rights or interests or delegate such
party's duties or obligations under this Agreement, in whole or in part,
including to any subsidiary or any Affiliate, without the prior written consent
of the other party, which consent may be withheld in such other party's sole
discretion, provided, however:
(A) Subject to clauses (B) and (C) below, the Company may,
----------- ---
with the prior written consent of the Executive, which consent the Executive
shall not unreasonably withhold, assign all of the rights and delegate all of
the obligations of the Company under this Agreement to any other Person in
connection with the transfer or sale of the entire business of the Company
(including its Subsidiaries and its interests in its joint ventures), or the
merger or consolidation of the Company with or into any other Person, so long as
such transferee, purchaser or surviving Person shall expressly assumes such
obligations of the Company;
(B) Notwithstanding clause (A) above to the contrary, no
----------
assignment or transfer under clause (A) may be effectuated unless the proposed
----------
transferee or assignee first executes such agreements (including a restated
employment agreement) in such form as Executive may deem reasonably satisfactory
to (1) evidence the assumption by the proposed transferee or assignee of the
obligations of the Company; and (2) to ensure that the Executive continues to
receive such rights, benefits and protections (both legal and economic) as were
contemplated by the Executive when entering into this Agreement; and
(C) Notwithstanding clause (A) above to the contrary: (1)
----------
any assumption by a successor or assign under clause (A) above shall in no way
----------
release the Company from any of its obligations or liabilities while a party to
this Agreement; and (2) and any merger, consolidation, reorganization, sale or
conveyance under clause (A) above shall not be deemed to abrogate the rights of
----------
the Executive elsewhere contained in this Agreement, including without
limitation those resulting from a Change In Control.
Any purported assignment or transfer in violation of the
terms of this subsection shall be null and void ab initio and of no force and
----------
effect, and shall vest no rights or interests in the purported assignee or
transferee.
(ii) Successors and Assigns. Subject to subsection (e)(i) above,
---------------------- -----------------
each and every representation, warranty, covenant, condition and provision of
this Agreement as it relates to each party hereto shall be binding upon and
shall inure to the benefit of such party and his, her or its respective
successors and permitted assigns, spouses, heirs, executors, administrators and
personal and legal representatives, including without limitation any successor
(whether direct or indirect, or by merger, consolidation, conversion, purchase
of assets, purchase of securities or otherwise).
(iii) Company and Subsidiaries. In accordance with the provisions
------------------------
of section 2, the Board of the Company shall determine, in their sole
------- -
discretion, (1) the responsibilities and duties to be performed by Executive for
each of the Company and the Subsidiaries; and (2) the amount of the Executive's
total remuneration to be allocated and paid by the Company and each of its
Subsidiaries. Such determinations and allocations shall not be deemed an
assignment or delegation under the terms of this section.
(F) COUNTERPARTS; ELECTRONICALLY TRANSMITTED DOCUMENTS. This
--------------------------------------------------
Agreement may be executed in counterparts, each of which shall be deemed an
original, and all of which together shall constitute one and the same
instrument, binding on all parties hereto. Any signature page of this Agreement
may be detached from any counterpart of this Agreement and reattached to any
other counterpart of this Agreement
20
identical in form hereto by having attached to it one or more additional
signature pages. If a copy or counterpart of this Agreement is originally
executed and such copy or counterpart is thereafter transmitted electronically
by facsimile or similar device, such facsimile document shall for all purposes
be treated as if manually signed by the party whose facsimile signature appears.
(G) NOTICES. Unless otherwise specifically provided in this
-------
Agreement, all notices, demands, requests, consents, approvals or other
communications (collectively and severally called "notices") required or
permitted to be given hereunder, or which are given with respect to this
Agreement, shall be in writing, and shall be given by: (i) personal delivery
(which form of notice shall be deemed to have been given upon delivery), (ii) by
telegraph or by private airborne/overnight delivery service (which forms of
notice shall be deemed to have been given upon confirmed delivery by the
delivery agency), (iii) by electronic or facsimile or telephonic transmission,
provided the receiving party has a compatible device or confirms receipt thereof
(which forms of notice shall be deemed delivered upon confirmed transmission or
confirmation of receipt), or (iv) by mailing in the United States mail by
registered or certified mail, return receipt requested, postage prepaid (which
forms of notice shall be deemed to have been given upon the fifth {5th} business
day following the date mailed. Notices shall be addressed at the addresses first
set forth above, or to such other address as the party shall have specified in a
writing delivered to the other parties in accordance with this paragraph. Any
notice given to the estate of a party shall be sufficient if addressed to the
party as provided in this section.
WHEREFORE, the parties hereto have executed this Agreement in the City of
Vancouver, Province of British Columbia, Canada, as of the date first set forth
above.
COMPANY: PINNACLE OIL INTERNATIONAL, INC.,
a Nevada corporation
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------
Xxxxxx Xxxxxxxxx, Chief Executive Officer
EXECUTIVE: R. XXXX XXXXXXX,
an individual
/s/ R. Xxxx Xxxxxxx
---------------------------------
21
