EMPLOYMENT AGREEMENT
Exhibit
99.2
EMPLOYMENT
AGREEMENT, dated as of June
23, 2008
(this “Employment
Agreement”),
by
and between South Texas Oil Company, a Nevada corporation (the “Company”),
having a place of business at 000 X. Xxxxxxxx Xxxx., Xxx Xxxxxxx, Xxxxx 00000,
and Xxxxx Xxxxxxx (the “Employee”).
RECITAL
WHEREAS, the
Company
desires to engage Employee’s services, and Employee desires to perform such
services, upon the terms, and subject to the conditions, set forth
herein.
NOW,
THEREFORE, in consideration of the covenants and promises contained herein,
the
compensation and benefits received by the Employee from the Company and the
access given the Employee to the Company’s confidential information and the
Company’s customers, and for other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, and with the Company’s
recognition of the knowledge and expertise provided by the Employee being
acknowledged, the Company and the Employee hereby agree as follows:
1. Term
of Employment.
Subject
to the termination provisions set forth elsewhere in this Employment Agreement,
the initial term of this Employment Agreement and the Employee’s employment
hereunder shall be for a term of ninety (90) days from the date of this
Employment Agreement (the “Initial
Term”).
Upon
the ratification of this Employment Agreement by the Company’s stockholders in
accordance with Article XII of the Company’s bylaws (“Shareholder
Ratification”),
this
Employment Agreement shall be extended after the Initial Term for an additional
three (3) year term (the “Extended
Term”),
and
all other terms and conditions of this Employment Agreement shall continue
to be
binding on the Company without change, modification or amendment. If
this
Employment Agreement is so ratified, then the Extended Term shall
be
automatically extended after
such three-year Extended Term for
additional successive one (1) year terms
(the
“Additional
Terms”)
unless
either party gives written notice of termination to the other party not less
than ninety (90) days prior to the end of the Extended Term or any such
Additional Term (in which event this Employment Agreement shall terminate
effective as of the close of the then existing Employment Term). The
Initial Term, Extended Term, and any Additional Terms of this Employment
Agreement as provided in accordance with this Section 1, to the extent each
is
applicable, if at all, are collectively referred to in this Employment Agreement
as the “Employment
Term.”
This
Employment Agreement and the parties’ obligations hereunder shall terminate at
the end of the Employment Term, except as otherwise provided herein; for
avoidance of doubt, at the end of the Employment Term, the Employee shall be
an
at-will employee of the Company if the Company and the Employee agree to such
continued employment.
2. Position
and Duties.
(a) During
the Employment Term, the Employee shall serve as Chief Operating Officer. The
Employee shall have such duties, functions, responsibilities, and authority
as
are from time to time delegated to the Employee by the Board of Directors of
the
Company (the “Board”)
or are
otherwise consistent with the duties, responsibilities and authority of the
executive office held by the Employee; provided that with respect to any
specifically delegated duties, functions, responsibilities and authority, such
duties, functions, responsibilities, and authority are reasonable and customary
for a person serving in the office/position of a public company comparable
to
the Company.
(b) During
the Employment Term, the Employee shall: (i) devote substantially all of his
time during normal business hours to the business of the Company, fulfill his
duties and obligations under this Employment Agreement and use his best efforts,
judgment and energy to perform, improve and advance the business and interests
of the Company in a manner consistent with the duties of his position; provided,
however, that Employee shall not be prevented from serving as a member of the
board of directors of a corporation if the Company determines that such
membership is not adverse to its interests; (ii) not engage in any business
activities that are directly or indirectly competitive with any business
conducted by the Company or any of its subsidiaries or affiliates; (iii) observe
and carry out such reasonable rules, regulations, policies, directions and
restrictions as may be established from time to time by the Board, including
but
not limited to, the standard policies and procedures of the Company as in effect
from time to time; and (iv) do such traveling as may be required in connection
with the performance of such duties and responsibilities.
(c) The
Employee acknowledges that this Employment Agreement contains a non-disclosure
of proprietary information and non-competition provisions, and the Employee
agrees to comply with these provisions. The Employee understands that entering
into and complying with these provisions is a condition to the Employee’s
continued employment with the Company and that failure to comply with the terms
of these provisions may result in immediate termination from
employment.
(d) In
connection with the Employee’s employment by the Company under this Employment
Agreement, the Employee shall be based at the principal executive offices of
the
Company, located as of the date hereof in San Antonio, Texas, except for such
reasonable travel or field work as the performance of the Employee’s duties in
the business of the Company may require. Notwithstanding the foregoing, the
Board may, in its discretion, determine to relocate the principal offices of
the
Company for any necessary business purpose, and doing so shall not be a breach
of this Employment Agreement.
3. Hours
of Work.
The
Employee’s normal days and hours of work shall coincide with the Company’s
regular business hours. The nature of the Employee’s employment with the Company
requires flexibility in the days and hours that the Employee must work, and
may
necessitate that the Employee works on other or additional days and hours.
The
Company reserves the right to require the Employee, and the Employee agrees,
to
work during other or further days or hours than the Company’s normal business
hours.
4. Compensation
and Benefits.
(a) Base
Salary.
During
the Employment Term, the Company shall pay to the Employee for his services
hereunder a base salary (“Base
Salary”)
at the
rate of $180,000.00 per year, payable in installments in accordance with the
general payroll practices of the Company, or as otherwise mutually agreed upon
by the Company and the Employee, but no less often than twice monthly. The
Employee’s Base Salary may be subject to such adjustments as may be determined
from time to time by the Board in its sole discretion; provided,
however,
in no
event shall the Employee’s Base Salary be reduced unless such reduction is part
of a salary reduction applicable to all similarly situated employees of the
Company based upon the Company’s financial condition.
(b) Equity
Awards.
(i) Stock
Award.
The
Company shall grant to the Employee, within seven (7) days of the date of this
Employment Agreement (the date of such grant, the “Grant
Date”)
the
right to be issued by the Company that number of shares of the common stock
of
the Company (“Common
Stock”)
equal
in value to an aggregate of $3,000,000, in three separate tranches, each tranche
having a value of $1,000,000 to be calculated as set forth below (the
“Stock
Award Rights”),
on
the following dates (the “Issue
Dates”),
provided that as of each such issuance this Employment Agreement has not
terminated: first
tranche,
within
five (5) days after the Grant Date; second
tranche,
June
23, 2009; third
tranche,
June
23, 2010. The shares of Common Stock to be issued pursuant to the Stock Awards
Rights (the “Restricted Shares”)
may
not be sold, transferred or hypothecated by the Employee unless and until such
date, if any, that both (X) the respective Lapse Date for such Restricted Shares
has occurred, and (Y) the Employee has been continuously employed by the Company
from and including the date hereof and through and including the respective
Lapse Date. Notwithstanding anything to the contrary herein, in no event shall
any Restricted Shares be issued after the termination of this Employment
Agreement.
Upon
the
satisfaction of the conditions set forth above in subparts (X) and (Y) of
Section 4(b)(i) with respect to any Restricted Shares, the restrictions on
sale,
transfer and hypothecation of such Restricted Shares shall lapse, without the
necessity of further action by Employee or the Company, as to such Restricted
Shares. The “Lapse
Dates”
for
the
Restricted Shares shall be the following dates: January 1, 2009 (first
tranche),
January 1, 2010 (second
tranche),
and
January 1, 0000 (xxxxx
xxxxxxx).
Xxxxx
Xxxxx Oil Company
Xxxxxxx
Employment Agreement
June
2008
3
The
number of Restricted Shares issued in the first
tranche
shall be
determined by dividing $1,000,000 by the average of the Weighted Average Price
of a share of Common Stock on for the most recent five (5) trading days
preceding the Grant Date on which the Common Stock was traded on the Principal
Market for the Common Stock. The number of Restricted Shares issued in the
second
and
third
tranches,
respectively, shall be determined by dividing $1,000,000 by the average of
the
Weighted Average Price of a share of Common Stock on for the most recent five
(5) trading days preceding the first (second
tranche)
and
second (third
tranche)
anniversary dates of this Agreement, respectively, on which the Common Stock
was
traded on the Principal Market for the Common Stock.
The
Stock
Award Rights and the Restricted Shares, and the issuance of both, shall be
subject to the terms and conditions of an award agreement to be entered into
between the Employee and the Company upon the grant of the Stock Award Rights,
which award agreement shall be in a form acceptable to the Company in its
discretion.
(ii)
Performance
Option Award.
The
Company’s Board of Directors shall, within seven (7) days of the date of this
Employment Agreement, approve the award to the Employee of the right to be
issued by the Company an option under the Option Plan (as defined below) to
purchase 833,334 shares of Common Stock (the “Performance
Option”)
and an
equity incentive compensation plan pursuant to which the Performance Option
may
be issued to the Employee (the “Option
Plan”);
provided
that,
the
Performance Option, the right to be issued the Performance Option and the award
of both shall be effective and binding on the Company only upon
and
subject to Shareholder Ratification and stockholder approval of the Option
Plan,
and in no event shall the Performance Option be issued or exercisable until
stockholder approval of the Option Plan.
The
Performance Option shall be subject to the terms and conditions of a Stock
Option Agreement between
the Employee and the Company (the
“Option
Agreement”)
in the
form attached hereto as Exhibit B, and such terms and conditions shall include
the following: (A) the grant date of the right to be issued the Performance
Option shall be the date on which the Company’s Board of Directors approves the
award of the Performance Option (the “Option
Grant Date”),
(B)
the exercise price
under
the Performance Option shall be the “fair market value” of Common Stock on the
Option Grant Date (if “fair market value” is defined in the Option Plan), or
such other exercise price as determined pursuant to the Option Plan, (C) the
term of the Performance Option shall be ten (10) years, and (D) the Performance
Option shall vest and become exercisable with respect to shares thereunder
to
the extent that the Company
has achieved its Performance Objectives as
set
forth in Exhibit
A
(so long
as the Employee is an employee of the Company on such date of vesting).
(iii) Other
Definitions.
For
purposes of this Employment Agreement, “Weighted
Average Price”
means,
for the Common Stock, the volume-weighted average price for the Common Stock
on
the Principal Market during the period beginning at 9:30 a.m., New York City
Time (or such other time as the Principal Market publicly announces is the
official open of trading), and ending at 4:00 p.m., New York City Time (or
such
other time as the Principal Market publicly announces is the official close
of
trading), as reported by Bloomberg through its “Volume at Price” function. If
the Weighted Average Price cannot be calculated for the Common Stock on such
date on any of the foregoing bases, the Weighted Average Price of the Common
Stock on such date shall be the fair market value of the Common Stock as
determined by the Board in its sole discretion. All determinations of Weighted
Average Price shall be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during any period during
which the Weighted Average Price is being determined. For purposes of this
Employment Agreement, “Principal
Market”
means
the
NASDAQ Global Market as long as the Common Stock is listed on the NASDAQ Global
Market; provided that if after the date of this Employment Agreement the Common
Stock is listed on another national securities exchange, then “Principal Market”
shall mean such national securities exchange.
(iv) Other
Awards.
The
Employee shall be eligible to receive other awards of Common Stock, options
and
other securities of the Company pursuant to and in accordance with the terms
and
conditions set forth in any equity plan adopted by the Board and approved by
the
Company’s stockholders, if required.
(v) Representations.
In
connection with the grant to the Employee of the Common Stock pursuant to be
Sections 4(b)(i) and Options
pursuant
4(b)(ii)
(collectively, the “Equity
Awards”),
Employee represents, warrants and covenants to the Company that:
(A) The
Equity Awards to be acquired by Employee pursuant to this Employment Agreement
will be acquired for Employee’s own account and not with a view to, or intention
of, distribution thereof in violation of the Securities Act of
1933
(the “Securities
Act”)
or any
applicable state securities laws, and the Equity Awards will not be disposed
of
in contravention of the Securities Act or any applicable state securities
laws.
(B) Employee
is an executive officer of the Company and Employee is sophisticated in
financial matters and is able to evaluate the risks and benefits of the
investment in the Equity Awards.
(C) Employee
is able to bear the economic risk of his investment in the Equity Awards for
an
indefinite period of time because the Executive Securities have not been
registered under the Securities Act and, therefore, cannot be sold unless
subsequently registered under the Securities Act or an exemption from such
registration is available.
(D) Employee
has had an opportunity to ask questions and receive answers concerning the
terms
and conditions of the offering of the Equity Awards and has had full access
to
such other information concerning the Company as he has requested.
(E) Employee
is a resident of the State of Texas.
(F) Employee
has been advised to consult with independent legal counsel regarding his rights
and obligations under this Employment Agreement, in particular with respect
to
the Equity Awards. Employee fully understands the terms and conditions contained
herein. Employee has been advised to obtain advice from Persons other than
the
Company and its counsel regarding the tax effects of the Equity Awards
contemplated hereby.
(G) Employee
has read, executed and delivered to Company a counterpart to the Option
Agreement attached hereto as Exhibit B,
by
which Employee agreed to be bound by all of the terms and conditions
thereof.
(vi) Reaffirmation
of Representations.
The
Company and the Employee agree that the Company shall be obligated to make
the
grants of Equity Awards pursuant to Sections 4(b)(i), 4(b)(ii), and 4(b)(iv)
only if the Employee confirms in writing at the time of such grants, that each
of the representations and warranties set forth in Section 4(b)(v) are true
and
accurate in all respects, as of such grant date, as if made on such grant date.
(vii) Legend.
In
addition to any other legends required by the Company, certificates representing
the Equity Awards shall bear a legend in substantially the following form unless
when granted they have been registered under the Securities Act:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR UNDER THE SECURITIES LAWS OF
ANY STATE OR OTHER JURISDICTION. SUCH SECURITIES MAY NOT BE SOLD OR OFFERED
FOR
SALE UNLESS THE HAVE BEEN REGISTERED UNDER THE ACT AND SUCH SECURITIES LAWS
OR
AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION,
HAS BEEN GIVEN BY COUNSEL SATISFACTORY TO THE CORPORATION, TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED.”
(viii) Employment
Obligation.
As an
inducement to the Company to issue the Equity Awards to Employee pursuant to
Section 4(b), and as a condition thereto, Employee acknowledges and agrees
that
neither the issuance of the Equity Awards to Employee, nor any provision
contained in this Employment Agreement, shall entitle Employee to remain in
the
employment of the Company or any of its subsidiaries or shall affect the right
of the Company or any of its subsidiaries to terminate Employee’s employment at
any time for any reason.
(c) Employee
Benefits.
During
the Employment Term, the Employee shall be entitled to participate in all
employee benefit plans (including executive bonus plans, cash bonus awards
and
long-term incentive plans), programs and arrangements that are generally made
available by the Company to its senior executives. In addition to the rights
of
the Employee set forth in the preceding sentence, the Company shall provide
health, dental, disability and life insurance for the Employee under such group
health, dental, disability and life insurance plans maintained by the Company
for its full-time, salaried employees (subject to the terms and conditions
thereof). Nothing herein shall require the Company to adopt or maintain any
type
of benefit plan or policy; provided, however, the Company shall provide health
insurance for the Employee and his family at all times during the Employment
Term. The Employee acknowledges that any such plan or policy will be subject
to
deductibles and co-pay requirements
(d) Expenses. During
the Employment Term, the Employee shall be entitled to receive reimbursement
upon a timely basis (according to the then-current practices of the Company)
for
all reasonable and necessary out-of-pocket expenses incurred by the Employee
in
connection with performing his duties and responsibilities hereunder, that
are
reimbursable in accordance with the Company’s policies from time to time in
effect, upon the presentation by the Employee of an itemized monthly accounting
of such expenditures, including receipts where required by Company policy or
federal income tax regulations.
5.
Vacation.
The
Employee shall be entitled to accrue, pro
rata,
fifteen
(15) vacation days for each annual period during the Employment Term. Vacation
days shall be used during the applicable annual period in which they are
accrued. The Employee shall be entitled to carry over up to five (5) accrued
vacation days from one annual period to the next and all the rest of the accrued
vacation time that the Employee does not use during the applicable annual period
in which they were accrued shall be forfeited unless the Company shall have
requested the Employee, in writing, to modify or postpone a previously planned
vacation.
6. Termination
of Employment.
(a)
For
Cause.
The
Company may terminate the Employee’s employment at any time hereunder for Cause
(as defined below) (a “For
Cause Termination”)
upon
written notice to the Employee. For purposes of this Employment Agreement,
“Cause”
means
any of
the following:
(i) dishonesty
by the Employee in the performance of his duties and obligations to the
Company;
(ii) the
Employee’s conviction of, or entering a plea of guilty, nolo
contendere
or
comparable plea to, any felony or to any misdemeanor involving moral
turpitude;
(iii)
any
willful act or omission by the Employee that is, or is likely to be, materially
injurious to the financial condition or business reputation of the Company,
as
determined by the Board of the Company or an independent committee of the Board
of the Company, after written notice from the Company specifying the facts
which
constitute Cause under this subsection is delivered to the Employee, and the
Employee is given the opportunity to address the Board or such independent
committee with respect to such Cause;
(iv) a
breach
by the Employee of any material covenant contained in this Employment Agreement
that is to be observed or performed by the Employee, and the Employee fails
to
cure such breach or its effects within 30 days of receiving written notice
from
the Company specifying the facts which constitute Cause under this
subsection;
(v) a
breach
by the Employee of any of the written policies of the Company the result of
which is, or is likely to be, materially injurious to the Company, as determined
by the Board of the Company or an independent committee of the Board of the
Company, and the Employee fails to cure such breach or its effects within 30
days of receiving written notice from the Company specifying the facts which
constitute Cause under this subsection;
(vi) any
appropriation by the Employee of a corporate opportunity or a material corporate
asset;
(vii) the
Company being unable to register its securities with the United States
Securities and Exchange Commission or listed on a stock exchange due to the
failure of the Employee to make a disclosure with respect to the Employee’s
background; or
(viii) the
failure or refusal by the Employee to comply with a written lawful directive
by
the Board or any committee of the Board that is not inconsistent with the terms
hereof, and the Employee fails to cure such failure or refusal or its effects
within 30 days of receiving written notice from the Company specifying the
facts
which constitute Cause under this subsection.
(b)
Without
Cause.
The
Company may in its sole and absolute discretion terminate Employee’s employment
hereunder at any time without Cause for any or no reason. For purposes of this
Employment Agreement, a “Without
Cause Termination”
means
a
termination by the Company of Employee’s employment hereunder other than
pursuant to a For Cause Termination.
For
avoidance of doubt, termination by reason of Disability is not a termination
by
the Company.
(c) Death.
The
Employee’s employment hereunder shall terminate automatically upon his
death.
(d) Disability.
If the
Disability (as defined below) of the Employee occurs during the Employment
Term,
the Company may notify the Employee of the Company’s intention to terminate the
Employee’s employment hereunder for Disability. In such event, the Employee’s
employment hereunder shall terminate effective on the 30th day following the
date such notice of termination is received by the Employee (the “Disability
Effective Date”).
For
purposes of this Employment Agreement, the “Disability”
of
the
Employee shall be deemed to have occurred at such time as the Board determines,
in its reasonable discretion, (i) that despite any reasonable accommodation
required by law, the Employee is unable to perform the essential functions
of
his position hereunder as a result of his physical or mental incapacity and
(ii)
that such inability has existed or is likely to exist for a period of ninety
(90) days or more in any twelve (12) month period or for sixty (60) consecutive
days.
(e) Termination
by
the
Employee
for
Good Reason.
The
Employee may terminate his employment hereunder if (i) there occurs a material
breach by the Company of any provision of this Employment Agreement; or (ii)
the
Employee’s Base Salary is reduced by 25% of Employee’s then current salary; or
(iii) the Company’s Board of Directors, in its reasonable discretion, determines
to relocate the principal offices of the Company out of San Antonio, Texas,
for
any necessary business purpose, provided
that the
Employee has given the Company written notice within ninety (90) days of the
occurrence of any event described in (i) through (iii) hereof and the event
is
not cured within thirty (30) days after such notice, and the Employee terminates
his employment hereunder within thirty (30) days of the expiration of the
aforesaid thirty (30) day cure period. For purposes of this Employment
Agreement, a “Good
Reason Termination”
means
a
termination by the Employee of Employee’s employment hereunder pursuant to this
Section 6(e).
(f)
Notice
of Termination.
Any
termination of the Employee’s employment hereunder by the Company or by the
Employee (other than a termination pursuant to Section 6(c)) shall be
communicated by a Notice of Termination (as defined below) to the other party
hereto. For purposes of this Employment Agreement, a “Notice
of Termination”
means
a
written notice which (i) indicates the specific termination provision in this
Employment Agreement relied upon, (ii) in the case of a termination for
Disability or a For Cause Termination or a Good Reason Termination, sets forth
in reasonable detail the facts and circumstances claimed to provide a basis
for
termination of the Employee’s employment under the provision so indicated, and
(iii) specifies the Employment Termination Date (as defined in Section 6(g)
below). The failure by the Company or Employee, as applicable, to set forth
in
the Notice of Termination any fact or circumstance which contributes to a
showing of Disability, Cause or Good Reason shall not waive any right of the
Company or Employee hereunder or preclude the Company or Employee from asserting
such fact or circumstance in enforcing the Company’s or Employee’s rights
hereunder.
(g)
Employment
Termination Date.
For
purposes of this Employment Agreement, “Employment
Termination Date”
means
the
effective date of termination of the Employee’s employment hereunder, which date
shall be (i) if the Employee’s employment is terminated by his death, the date
of his death, (ii) if the Employee’s employment is terminated because of his
Disability, the Disability Effective Date, (iii) if the Employee’s employment is
terminated by the Company pursuant to a For Cause Termination, the date
specified in the Notice of Termination, (iv) if the Employee’s employment is
terminated by the Company pursuant to a Without Cause Termination, the date
specified in the Notice of Termination,
(iv) if
the Employee’s employment is terminated by the Employee pursuant to a Good
Reason Termination, the date on which the Notice of Termination is
given,
and (v)
otherwise, the date on which the Notice of Termination is given, and if none
is
given, then the date recorded by the Company as the date of termination for
purposes of its payroll records.
(h)
Resignation.
In the
event of termination of the Employee’s employment hereunder for any reason
whatsoever other than the death of the Employee, the Employee agrees that if
at
such time he is a member of the Board of Directors or officer of the Company
or
a director or officer of any of the Company’s subsidiaries, he shall promptly
deliver to the Company his written resignation from all such positions, such
resignation to be effective as of the Employment Termination Date.
7. Company
Obligations Upon Termination of Employment.
(a) Death.
If the
Employee’s employment hereunder is terminated during
the Employment Term by
reason
of the Employee’s death, the Company shall pay to the Employee’s estate, in a
lump sum in cash within thirty (30) days after the Employment Termination Date,
a sum equal to the Employee’s accrued and unpaid Base Salary,
reimbursable expenses and vacation accrued but unpaid in each case through
the
Employment Termination Date, and thereafter the Company shall have no further
obligation to the Employee under this Employment Agreement.
(b) Disability.
If the
Employee’s employment hereunder is terminated during
the Employment Term by
reason
of the Employee’s Disability, the Company shall pay to the Employee, in a lump
sum in cash within thirty (30) days after the Employment Termination Date,
a sum
equal to the Employee’s accrued and unpaid Base Salary, reimbursable expenses
and vacation accrued but unpaid in each case through the Employment Termination
Date, and thereafter the Company shall have no further obligation to the
Employee under this Employment Agreement, except as provided in the immediately
following sentence. In addition, the Company shall continue to provide at its
expense group medical and dental insurance, as in effect on the Employment
Termination Date, to the Employee and to the Employee’s immediate family for a
period of six (6) months after the Employment Termination Date.
(c) For
Cause Termination.
If the
Employee’s employment hereunder is terminated during
the Employment Term pursuant
to a For Cause Termination, the Company shall pay to the Employee, in a lump
sum
in cash within thirty (30) days after the Employment Termination Date, the
Employee’s accrued and unpaid Base Salary, reimbursable expenses and vacation
accrued but unpaid in each case through the Employment Termination Date, to
the
extent not theretofore paid, and, thereafter, the Company shall have no further
obligations to the Employee under this Employment Agreement.
(d) Without
Cause Termination and Good Reason Termination.
If the
Employee’s employment hereunder is terminated during
the Employment Term by
reason
of a Without Cause Termination or a Good Reason Termination pursuant to Section
6(e), the Company shall pay to the Employee the Employee’s Base Salary for a
period equal to the lesser of six (6) months and the remainder of the then
current Employment Term, at the regularly scheduled payment intervals following
the Employment Termination Date, and shall pay within thirty (30) days following
the Employment Termination Date all reimbursable expenses and vacation accrued
but unpaid in each case through the Employment Termination Date and shall
continue to provide group medical and dental insurance at the Company’s expense,
as in effect on the Employment Termination Date, to the Employee and to the
Employee’s immediate family for the six-(6)-month period after the Employment
Termination Date and thereafter the Company shall have no further obligation
to
the Employee under this Employment Agreement.
(e) Sole
Remedy.
The
receipt of payments
and/or
benefits,
if any,
provided for under Section 7(d) shall be the Employee’s sole and exclusive
remedy for any
termination of his employment hereunder and shall be in lieu of any claim that
he might otherwise have under this Employment Agreement against the Company
arising from such termination. All payments (if
any)
that
are
to be made by, and
all
benefits
(if
any)
that
are
to be provided
by,
the
Company to the Employee following the Employment Termination Date shall be
subject to the Employee complying with any covenants hereunder to be observed
or
performed by the Employee following termination of the Employee’s employment
hereunder including, without limitation, Sections 9, 10, 11, and 12 hereof,
except as may be otherwise expressly provided in this Employment Agreement.
(f) Release.
Any
severance payments due to Employee under Section 7(d) shall be contingent upon
Employee executing a full and general release of any and all claims against
the
Company, the Board of Directors and officers of the Company and any affiliates
and representatives of the Company arising out of Employee’s employment with the
Company or this Employment Agreement, in a form acceptable to the
Company.
(g) No
Duty to Mitigate.
Employee’s rights and privileges under the first sentence of Section 7(d) shall
be considered severance pay in consideration of his past service to the Company,
and his entitlement thereto shall neither be governed by any duty to mitigate
his damages by seeking further employment nor offset by any compensation that
he
may receive from future employment unless such employment is a violation of
Section 11 hereof.
8. Employee’s
Compliance With Company Policies And The Law.
The
Employee shall comply fully with all Company policies, procedures and rules,
as
determined, promulgated and modified by the Company from time to time,
including, without limitation, the Company’s policies, procedures and rules
prohibiting discrimination and harassment, and concerning email and Internet
use, and the Company’s Xxxxxxx Xxxxxxx Policy and Procedures. The Company
reserves the right to add, delete or modify any Company policy, procedure or
rule in its respective sole discretion. The Employee shall also comply fully
with all applicable U.S. federal, state and local laws, regulations and
ordinances, including, without limitation the Xxxxxxxx-Xxxxx Act of 2002.
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Texas Oil Company
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Employment Agreement
June
2008
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9. Nondisclosure
of Confidential and Proprietary Information
During
the Employment Term, the Employee agrees to the following:
(a) The
Employee acknowledges that during the Employment Term, the Employee will have
access to and possession of trade secrets,
confidential information, and proprietary information (collectively, as defined
more extensively below, “Confidential
Information”)
of the
Company, its parents, subsidiaries and affiliates and their respective
customers, suppliers and other third parties
that do
business with them. The Employee recognizes and acknowledges that this
Confidential Information is valuable, special and unique to the Company’s
business, is owned solely by and is the exclusive property of the Company,
is to
be used only for the Company’s benefit, and that access to and knowledge thereof
are essential to the performance of the Employee’s duties to the Company. During
the Employment Term and, thereafter, the Employee shall keep secret and shall
not use or disclose, reveal, transfer, reproduce, sell, capitalize upon or
take
advantage of such Confidential Information relating to the Company, its
customers, suppliers or other third parties
that do
business with it except at the request of the Company, and in addition,
the
Employee
shall exercise all reasonable efforts and precautions to prevent such
disclosure, breach of confidentiality, or other conduct or action inconsistent
herewith; provided,
however,
that
Confidential Information may be disclosed to the extent (i) required by law
or
court order or (ii) generally available to the public other than
by
unauthorized disclosure.
(b) The
term
“Confidential
Information,”
means
information in whatever form be it written, digital, graphic, electronically
stored, orally transmitted or memorized concerning:
(i) the
Company’s business or operations plans, strategies, portfolio, prospects or
objectives;
(ii) the
Company’s structure, products, product development, technology, distribution,
sales, services, support and marketing plans, practices, and
operations;
(iii) the
prices, costs, and details of the Company’s services;
(iv) research
and development, new products, licenses, operations or plans;
(v) Inventions
(as defined below);
(vi) customers
and customer lists, including (A) present customers, customer files and records,
and (B) potential customers, prospects or targets (including without limitation,
the identities of customers, names, addresses, contact, persons and the
customers’ business status or needs) that the Company has identified as
potential customers, prospects or targets prior to the termination of Employee’s
employment for any reason under this Employment Agreement;
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Texas Oil Company
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Employment Agreement
June
2008
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(vii) information
regarding the skills, compensation and benefits of other employees of the
Company;
(viii) financial
records, unpublished financial statements, financial condition, results of
the
Company’s operations and related information about the Company;
(ix) any
other
financial, commercial, business or technical information related to any of
the
products or services made, developed or sold by the Company or its
customers.
(c)
Employee
does not have an obligation to treat any information as Confidential Information
that is: (A) in the public domain through no act, omission or fault of the
Employee; (B) within the legitimate possession of the Employee prior to the
date
hereof, with no confidentiality obligations to a third party; (C) lawfully
received from a third party having rights in the information without
restriction, and without notice of any restriction against its further
disclosure or use; (D) independently developed by the Employee without breaching
this Agreement; or (E) disclosed or used by Employee with the prior written
consent of the Company. If Confidential Information is required or requested
to
be produced by law, court order, governmental authority or other third party,
the Employee shall immediately notify the Company of that requirement or request
and shall assist the Company in obtaining a protective order or other
appropriate relief to prevent such production. The burden of establishing the
existence of these exceptions shall be the Employee’s.(d) The
Employee further recognizes that the Company has received and in the future
will
receive from third parties confidential or proprietary information
(“Third Party
Information”)
subject to a duty on the Company’s part to maintain the confidentiality of such
information and to use it only for certain limited purposes,
and
Employee shall disclose all such Third Party Information to the
Company.
During
the Employment Term and thereafter, the Employee shall hold Third Party
Information in the strictest confidence and shall not disclose to anyone (other
than Company personnel who need to know such information in connection with
their work for the Company) or use, except in connection with work for the
Company, Third Party Information unless expressly authorized by the Company
in
writing.
(e) The
Employee further agrees to store and maintain all Confidential Information
and
Third
Party Information in
a
secure place. On the termination of employment, Employee agrees to deliver
all
records, data, information, and other documents produced or acquired during
the
Employment Term, and all copies thereof, to the Company. Such material at all
times shall remain the exclusive property of the Company, unless otherwise
agreed to in writing by the Company. Upon termination of the employment, the
Employee agrees to make no further use of any Confidential Information on his
own behalf or on behalf of any other person or entity other than the Company.
(f)
During
the Employment Term and thereafter, the Employee shall not improperly use or
disclose any confidential information or trade secrets, if any, of any former
employer or any other person to whom the Employee has an obligation of
confidentiality, and shall not bring onto the premises of the Company any
unpublished documents or any property belonging to any former employer or any
other person to whom the Employee has an obligation of confidentiality unless
consented to in writing by that former employer or person.
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Texas Oil Company
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Employment Agreement
June
2008
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10.
Assignment
of Inventions and Intellectual Property
(a) The
term
“Proprietary
Rights”
means
all
trade secret, trademark, service xxxx, patent, copyright, mask work and other
intellectual property rights throughout the world. The term “Inventions”
means
all
trade secrets, proprietary
information, trade
and
service marks, inventions, mask works, ideas, processes, formulas, source and
object codes, data, programs, technology, writings, software programs, other
works of authorship, know how, discoveries, developments, designs,
techniques,
schematics, manuals, drawings, computer disks and programs, employee
suggestions, development tools, computer printouts or
any
claim of
rights (or any related improvements or modifications to the
foregoing).
(b) In
consideration of the Employee’s employment, the Employee hereby assigns and
agrees to assign in the future (when any such Inventions or Proprietary
Rights
are
first reduced to practice or first fixed in an tangible medium, as applicable)
to the Company all right, title and interest in and to any and all Inventions
(and all Proprietary Rights with respect thereto) whether or not patentable
or
registrable under copyright or similar statutes, made or conceived or reduced
to
practice or learned by the Employee, either alone or jointly with others, during
or at any time before or after the period of employment with the Company, which
(i) relate to methods, apparatus, designs, products, processes or devices sold,
leased, used or under construction or development by the Company or any
subsidiary or otherwise relate to or pertain to the actual or anticipated
business, functions, operations, research or development of the Company or
any
subsidiary, (ii) arise (wholly or partly) from the Employee’s efforts during any
time that the Employee is either physically present on the Company’s premises or
utilizing any physical or intellectual property owned or leased by the Company,
or (iii) are based on any information or knowledge gained by the Employee
through his or her employment with the Company. Inventions assigned to the
Company, or to a third party as directed by the Company pursuant to this
Section, are hereinafter referred to as “Company
Inventions.”
(c) During
the Employment Term and for eighteen (18) months thereafter, the Employee shall
promptly disclose to the Company, fully and in writing, all Inventions authored,
conceived or reduced to practice by the Employee, either alone or jointly with
others. In addition, the Employee shall promptly disclose to the Company all
patent applications filed by the Employee or on behalf of the Employee within
eighteen (18) months after termination of employment. At the time of each such
disclosure, the Employee shall advise the Company in writing of any Inventions
that he believes fully qualifies for protection under the Law; and the Employee
shall at that time provide to the Company in writing all evidence necessary
to
substantiate that belief.
South
Texas Oil Company
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Employment Agreement
June
2008
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(d) The
Employee also agrees to assign all right, title and interest in and to any
particular Company Invention to a third party, as directed by the
Company.
(e) The
Employee shall assist the Company in every proper way to obtain, and from time
to time enforce,
the
Company’s Proprietary Rights relating to Company Inventions in any and all
countries. To that end the Employee shall execute, verify and deliver such
documents and perform such other acts (including appearances as a witness)
as
the Company may reasonably request for use in applying for, obtaining,
perfecting, evidencing, sustaining and enforcing such Proprietary Rights and
the
assignment thereof. In addition, the Employee shall execute, verify and deliver
assignments of such Proprietary Rights to the Company or its designee. The
Employee’s obligation to assist the Company with respect to Proprietary Rights
relating to such Company Inventions in any and all countries shall continue
beyond the termination of employment, and the Company shall provide compensation
at a reasonable rate after termination for the time actually spent by
the
Employee
at the
Company’s request on any such assistance.
(f) In
the
event the Company is unable for any reason, after reasonable effort, to secure
the Employee’s signature on any document needed in connection with the actions
specified in the preceding paragraph, the Employee hereby irrevocably appoints
the Company and its duly authorized officers and agents as the Employee’s agent
and attorney in fact to act for and in his or her behalf to sign, execute,
verify and file any and all documents and to do all other lawfully permitted
acts to further the purposes of the preceding paragraph with the same legal
force and effect as if executed by the Employee. The Employee hereby waives
and
quitclaims to the Company any and all claims, of any nature whatsoever, which
the Employee now or may hereafter have for infringement of any proprietary
rights assigned to the Company.
(g) Notwithstanding
the foregoing, the Employee shall not be prohibited by this Section 10 from
using, after the Employment Term, ideas, data, technology, know how or
techniques that are acquired or generated from the general knowledge of the
industry that the Company is engaged in.
11. Non-Competition.
(a) Employee
will, as a result of his employment with the Company, be involved with and
exposed to substantial business resources and assets of the Company and certain
of its affiliates and will develop additional contacts and relationships with
numerous individuals and companies, which are also involved in the business
of
the Company or businesses related thereto. Such individuals and organizations
will have business and contractual relationships with the Company and/or its
affiliates that will be a valuable asset thereof. The Employee also recognizes
and agrees with the Company that the services which the Employee will render
during the Employment Term are unique, special and of extraordinary character,
that the Company will be substantially dependent upon such services to develop
and market its products and to earn a profit, and that the application of the
Employee’s knowledge and services to any competitive business would be
substantially detrimental to the Company. Accordingly, in consideration for
employment by the Company and compensation and other benefits, including any
compensation the Employee may receive pursuant
to this Employment Agreement
after
his employment is terminated, the Employee shall not, directly or indirectly
(whether as an employee, officer, executive, director, manager, stockholder,
member, lender, consultant or any other capacity), during the Employment Term,
and for a period of six (6) months after termination thereof for any reason
whatsoever, engage in any business or activity or otherwise compete anywhere
in
the United States, with any business or activity that is competitive with any
business or activity engaged in by the Company or any of its subsidiaries or
affiliates or contemplated to be engaged in (as of the time of the termination
of employment) by the Company or any such subsidiary or affiliate. In addition,
for a period of two (2) years from the end of Employment Term the Employee shall
not induce or attempt to induce any person or entity that is engaged in any
business activity or relationship with the Company or any subsidiary or
affiliate of the Company to terminate that activity or relationship to reduce
such activity or relationship.
South
Texas Oil Company
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Employment Agreement
June
2008
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(b) The
term
“compete”
as
used
herein means to engage, directly or indirectly, either as a proprietor, partner,
employee, commissioned salesperson, agent, consultant, director, officer,
stockholder or in any other capacity or manner whatsoever. The provisions of
this Section shall not prevent the Employee from investing any assets in
securities of any publicly-traded corporation, provided that such investments
do
not, directly or indirectly, result in the Employee, his spouse or his children
collectively (i) owning beneficially at any time five percent (5%) or more
of
the equity securities of any corporation engaged in a business competitive
with
the Company, or (ii) otherwise being able to control or actively participate
in
the business decisions of such corporation.
12. Non-Solicitation.
For
the
Employment Term and for two (2) years after
the
termination thereof, the Employee shall not (i) induce, solicit or seek to
influence, either directly or indirectly, any employee of, or any person under
written contract with, Company or any of its affiliates, to leave the employ
of
Company, any of its affiliates or any division of either, or to enter into
any
employment agreement, independent contractor arrangement, or any other
arrangement whereby such individual would perform services for compensation,
either directly or indirectly, for any person, firm, corporation or other entity
engaged in business in competition with Company or any of its affiliates, or
(ii) solicit any third party with whom the Company or any of its subsidiaries
has a mineral rights contract, a joint operating agreement or a partnership
interest, or solicit any such third party that has been identified by the
Company as a prospect for a mineral rights contract or a joint operating
agreement or a partnership interest, or to which a marketing proposal or
presentation was made during the twelve-12-month period immediately preceding
termination of Employee’s employment with Company (other than on behalf of
Company) for any business of the type conducted by Company.
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Texas Oil Company
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Employment Agreement
June
2008
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13. No
Conflicting Obligations.
The
Employee represents and warrants that the Employee has the full right and
authority to enter into this Employment Agreement and to render the services
as
required under this Employment Agreement, and that the execution, delivery,
and
performance by the Employee of this Employment Agreement do not and will not
conflict with or result in a violation of any provision of, or constitute a
default under, any contract, agreement,, instrument, or obligation to which
the
Employee is a party or by which the Employee is bound, including any agreement
to keep in confidence information acquired by the Employee in confidence or
in
trust prior to employment by the Company. The Employee shall not enter into
any
agreement or business relationship or incur any obligations to any third party
following the date hereof that may conflict with, or interfere with the
Employee’s abilities to perform, the Employees duties and responsibilities
pursuant to this Employment Agreement.
14. Return
of Company Property.
When
the
Employee leaves the employ of the Company, the Employee shall deliver to the
Company (and shall not keep in his possession, recreate or deliver to anyone
else) any and all devices, records, recordings, data, notes, reports, proposals,
lists, correspondence, specifications, drawings, blueprints, sketches,
materials, computer materials, equipment, other documents or property, together
with all copies thereof (in whatever medium recorded), belonging to the Company,
its successors or assigns. The Employee further agrees that any property
situated on the Company’s premises and owned by the Company, including computer
disks and other digital, analog or hard copy storage media, filing cabinets
or
other work areas, is subject to inspection by Company personnel at any time
with
or without notice. Prior to leaving, the Employee shall cooperate with the
Company in completing and signing the Company’s termination statement for
management personnel.
15. Notification
of New Employer.
In
the
event that the Employee leaves the employ of the Company, the Employee hereby
agrees to notify his new employer of those of the Employee’s obligations which
are continuing under this Employment Agreement after the termination
hereof.
16. Remedies.
(a) The
Company shall be entitled to equitable relief, including injunctive relief
and
specific performance as against the Employee and his agents, without the
requirement of posting bond or other security or proving actual
damages
or
irreparable injury,
for the
Employee’s or his agent’s threatened or actual breach of Section 8, 9,
10,
11, or 12
of this
Employment Agreement, as money damages for a breach thereof would be incapable
of precise estimation, uncertain, and an insufficient remedy for an actual
or
threatened breach of Section 8, 9,
10,
11, or 12
of this
Employment Agreement. Nothing herein shall be construed as prohibiting the
Company from pursuing any other remedies available for such breach or threatened
breach of Section 8, 9,
10,
11, and 12
of this
Employment Agreement, including the recovery of damages.
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Texas Oil Company
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Employment Agreement
June
2008
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(b)
The
prevailing party in any legal actions arising under this Employment Agreement
shall be reimbursed in full the legal fees for enforcement in favor of such
prevailing party.
17. Public
Statements.
Employee
agrees that he shall not make any speeches, publish articles, appear as a guest
or a commentator on any television or radio show or issue statements to the
press regarding,
or
that in
anyway pertain to,
the
Company or to Employee’s employment with same without the
Company’s
prior approval unless pursuant to the Employee’s duties to the Company.
Violation of this provision by Employee is a material breach of this Employment
Agreement.
18. Notices.
Any
notices, requests, demands or other communications required or permitted under
this Employment Agreement shall be in writing and shall be deemed to have been
given when delivered personally or three (3) days after being mailed by
certified mail, return receipt requested, addressed to the party being notified
at the address of such party first set forth herein, or at such other address
as
such party may hereafter have designated by notice; provided,
however,
that
any notice of change of address shall not be effective until its receipt by
the
party to be charged therewith.
19. Miscellaneous.
(a) The
Company shall use its commercially reasonable efforts (i) to hold a meeting
of
stockholders on or before September 30, 2008 and to cause one or more equity
compensation plans constituting an Option Plan to be submitted to the Company’s
stockholders for approval at such meeting, or (ii) otherwise to cause such
plan(s) to be duly approved by the Company’s stockholders on or before such date
and all related notices, correspondence and other documents necessary for such
plan(s) to be effective and to permit the Equity Awards to be issued thereunder,
to be executed, mailed, delivered, posted on the internet and/or filed, as
applicable.
(b) Employee
represents, warrants and covenants to the Company that (i) this Employment
Agreement constitutes the legal, valid and binding obligation of Employee,
enforceable in accordance with its terms, and the execution, delivery and
performance of this Employment Agreement by Employee does not and will not
conflict with, violate or cause a breach of any agreement, contract or
instrument to which Employee is a party or any judgment, order or decree to
which Employee is subject, and (ii) the Employee is not a party to or bound
by
any employment agreement, noncompetition agreement or confidentiality agreement
with any Person, other than the Employment Agreement between Employee and
Sonterra Resources, Inc. dated February 14, 2008.
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Texas Oil Company
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Employment Agreement
June
2008
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(c) Telephones,
stationery, postage, e-mail, the internet and other resources made available
to
the Employee by the Company are solely for the furtherance of the Company
business.
(d) All
construction and interpretation of this Employment Agreement shall be governed
by and construed in accord with the internal laws of the State of Texas, without
giving effect to that State’s principles of conflicts of law.
(e) The
Employee and the Company agree that any provision of this Employment Agreement
deemed unenforceable or invalid by any court of competent jurisdiction, such
provision shall be reformed and modified to make such provision valid and to
permit enforcement of the objectionable provision to the fullest permissible
extent. It is the intent of the Company and the Employee that this Employment
Agreement be enforced to the fullest extent permitted by applicable law. Any
provision of this Employment Agreement deemed unenforceable after modification
shall be deemed stricken from this Employment Agreement, with the remainder
of
the Employment Agreement being given its full force and effect. If any term
or
other provision of this Employment Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced
by
any rule of law or public policy, all other terms, provisions
and
conditions of this Employment Agreement shall nevertheless remain in full force
and effect.
(f) Any
waiver granted by a party of any breach of or failure to comply with any
provision or condition of this Employment Agreement by the other party shall
not
be construed as, or constitute, a continuing waiver of such provision or
condition, or a waiver of any other breach of, or failure to comply with, any
other provision or condition of this Employment Agreement, any such waiver
to be
limited to the specific matter and instance for which it is given. No waiver
of
any such breach or failure or of any provision or condition of this Employment
Agreement shall be effective unless in a written instrument signed by the party
granting the waiver.
(g) The
Employee and the Company independently have made all inquiries regarding the
qualifications and business affairs of the other which either party deems
necessary. The Employee affirms that the Employee is knowledgeable and
sophisticated as to business matters, including the subject matter of this
Employment Agreement, and has read and fully understands this Employment
Agreement’s meaning and legally binding effect. The Employee further affirms
that, prior to assenting to the terms of this Employment Agreement, the Employee
had been provided with a reasonable time to review it, consult with counsel
of
the Employee’s own choice, and to negotiate at arm’s length with the Company as
to the contents of the Employment Agreement. The Employee further affirms that
the provisions in this Employment Agreement represent accurately the expression
of the parties’ mutual intent, and that the Employee has entered into this
Employment Agreement freely and voluntarily and without pressure or coercion
from anyone. Each party assumes the risk of any misrepresentation or mistaken
understanding or belief relied upon by either party in entering into this
Employment Agreement. In resolving any dispute or construing any term or
provision in this Employment Agreement, there shall be no presumption made
or
inference drawn because of the inclusion of a provision not contained in a
prior
draft or the deletion of a provision contained in a prior draft. The parties
acknowledge and agree that this Employment Agreement was negotiated and drafted
with each party being represented by competent counsel of its choice and with
each party having an opportunity to participate in the drafting of the
provisions hereof and shall therefore be construed as if drafted jointly by
the
parties.
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Texas Oil Company
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Employment Agreement
June
2008
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(h) Employee
agrees that Employee’s obligations under Sections 8, 9, 10, 11, and 12 of this
Employment Agreement will continue in effect after termination of Employee’s
employment for any reason, except as otherwise specifically provided herein.
Employee’s obligations under this Employment Agreement also will be binding upon
Employee’s heirs, executors, assigns, and administrators and will inure to the
benefit of the Company, its subsidiaries, successors, and assigns.
(i) The
Company and the Employee agree that the Employee’s obligations to the Company
during the Employee’s employment with the Company, as well as any other
obligation of the Employee under this Employment Agreement, may be assigned
to
any successor in interest to the Company or any division or affiliate of the
Company in its sole discretion and without additional consideration or prior
notice to the Employee, but that nothing requires the Company to do so. The
Employee’s obligations under this Employment Agreement are personal in nature
and may not be assigned by the Employee to any other person or
entity.
(j) This
Employment Agreement contains
the
entire understanding and agreement of the parties relating to the subject matter
hereof and supersede
all
prior and/or contemporaneous understandings and agreements of any kind and
nature (whether written or oral) among the parties with respect to such subject
matter, all of which are merged herein. This Employment Agreement may not be
modified, amended, altered or supplemented, except by a written agreement
executed by each of the parties hereto.
(k) This
Employment Agreement and any amendments hereto may be executed and delivered
in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original,
but
all of which taken together shall constitute one and the same agreement, and
shall become effective when counterparts have been signed by each party hereto
and delivered to the other parties hereto, it being understood that all parties
need not sign the same counterpart. In the event that any signature to this
Employment Agreement or any amendment hereto is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof. At the request of
any party,
each
other party shall promptly re-execute an original form of this Employment
Agreement or any amendment hereto and deliver the same to the other party.
No
party hereto shall raise the use of a facsimile machine or e-mail delivery
of a
“.pdf” format data file to deliver a signature to this Employment Agreement or
any amendment hereto or the fact that such signature was transmitted or
communicated through the use of a facsimile machine or e-mail delivery of a
“.pdf” format data file as a defense to the formation or enforceability of a
contract, and each party hereto forever waives any such
defense.
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Texas Oil Company
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Employment Agreement
June
2008
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(l) The
headings of this Employment Agreement are for convenience of reference and
shall
not form part of, or affect the interpretation of, this Employment
Agreement.
[Signature
page follows]
South
Texas Oil Company
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Employment Agreement
June
2008
21
IN
WITNESS WHEREOF,
the
parties have executed and delivered this Employment Agreement on the date first
above written.
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By:
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Name:
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Title:
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EMPLOYEE:
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Xxxxx
Xxxxxxx
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Address:
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South
Texas Oil Company
Xxxxxxx
Employment Agreement
June
2008
22
EXHIBIT
A
PERFORMANCE
OPTIONS
Performance
Periods
The
performance period for the Performance Options is that period commencing on
the
first day of the Employment Term and ending on the earlier of December 31,
2011
and the date of the termination of Employee’s employment by the Company.
“Percentage
Performance Option Shares”
means
that number of shares, expressed as a percentage of the total amount of shares
of Common Stock underlying the Performance Option, as set forth below. Vesting
of Percentage Performance Option Shares shall occur upon the achievement of
two
(2) separate incremental Performance Objectives measures (a Production Objective
and a Reserve Objective), with the vesting of fifty percent (50%) of the
Percentage Performance Option Shares based on the incremental achievement of
measures of each Performance Objective, as set forth below.
Performance
Objectives
The
“Performance
Objectives”
for
each of the Percentage Performance Option Shares are as follows:
20%
Percentage Performance Option Shares
|
1.
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“Production
Objective” –
The Company's production of crude oil and natural gas at a monthly
average
of 500 BOE per day (net)
for a period of three (3) consecutive months, as reported by the
Company
in a Current Report on Form 8-K (an “Interim Report”), as filed with the
Securities and Exchange Commission (“SEC”).
Upon the Company’s filing with the SEC of an Interim Report containing the
disclosure of the achievement of this Production Objective, Employee
shall
vest in 50% of the 20%
Percentage Performance Option Shares as
set forth in the Performance Option Vesting Schedule
below.
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2.
|
“Reserve
Objective” –
An increase in the Company's proven crude oil and natural gas reserves
of
fifty percent (50%), measured as of any date subsequent to the
commencement of the Extended Term of this Employment Agreement, compared
to the Company's proven crude oil and natural gas reserves as set
forth in
the Netherland, Xxxxxx & Associates, Inc. Independent Reserve Report,
as of December 31, 2007 (the “NSAI 2007 Report”). The amount of such
reserves shall be determined in accordance with SEC guidelines and
based
on an independent reserve report prepared in good faith by an independent,
registered Petroleum Engineer in a form acceptable to the Company
(an
“Independent
Reserve Report”);
provided that the Independent Reserve Report shall be valid for such
purposes only if the Petroleum Engineer that prepared it has properly
certified its accurateness. Upon the Company’s filing with the SEC of an
Interim Report containing the disclosure of the
Independent Reserve Report
and achievement of this Reserve Objective, Employee shall vest in
50% of
the 20%
Percentage Performance Option Shares as
set forth in the Performance Option Vesting Schedule
below.
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South
Texas Oil Company
Xxxxxxx
Employment Agreement
June
2008
23
35%
Percentage Performance Option Awards
|
1.
|
“Production
Objective” –
The Company's production of crude oil and natural gas at a monthly
average
of 1,000 BOE per day (net) for
a period of three (3) consecutive months, as reported by the Company
in an
Interim Report as filed with the Securities and Exchange Commission
(“SEC”).
Upon the Company’s filing with the SEC of an interim report containing the
disclosure of the achievement of this Production Objective, Employee
shall
vest in 50% of the 35%
Percentage Performance Option Shares as
set forth in the Performance Option Vesting Schedule
below.
|
|
2.
|
“Reserve
Objective”
–
An increase in the Company's proven crude oil and natural gas reserves
of
one hundred fifty percent (150%), measured as of any date subsequent
to
the commencement of the Extended Term of this Employment Agreement,
compared to the Company's proven crude oil and natural gas reserves
as set
forth in the NSAI 2007 Report. The amount of such reserves shall
be
determined in accordance with SEC guidelines and based on an independent
reserve report prepared in good faith by an independent, registered
Petroleum Engineer in a form acceptable to the Company (an “Independent
Reserve Report”);
provided that the Independent Reserve Report shall be valid for such
purposes only if the Petroleum Engineer that prepared it has properly
certified its accurateness. Upon the Company’s filing with the SEC of an
Interim Report containing the disclosure of the
Independent Reserve Report
and achievement of this Reserve Objective, Employee shall vest in
50% of
the 35%
Percentage Performance Option Shares as
set forth in the Performance Option Vesting Schedule
below.
|
45%
Percentage Performance Option Awards
|
1.
|
“Production
Objective” –
The Company's production of crude oil and natural gas at a monthly
average
of 1,500 BOE per day (net) for
a period of three (3) consecutive months, as reported by the Company
in an
Interim Report as filed with the Securities and Exchange Commission
(“SEC”).
Upon the Company’s filing with the SEC of an Interim Report containing the
disclosure of the achievement of this Production Objective, Employee
shall
vest in 50% of the 45%
Percentage Performance Option Shares as
set forth in the Performance Option Vesting Schedule
below.
|
|
2.
|
“Reserve
Objective” –
An increase in the Company's proven crude oil and natural gas reserves
of
two hundred fifty percent (250%), measured as of any date subsequent
to
the commencement of the Extended Term of this Employment Agreement,
compared to Company's proven crude oil and natural gas reserves as
set
forth in the NSAI 2007 Report. The amount of such reserves shall
be
determined in accordance with SEC guidelines and based on an independent
reserve report prepared in good faith by an independent, registered
Petroleum Engineer in a form acceptable to the Company (an “Independent
Reserve Report”);
provided that the Independent Reserve Report shall be valid for such
purposes only if the Petroleum Engineer that prepared it has properly
certified its accurateness. Upon the Company’s filing with the SEC of an
Interim Report containing the disclosure of the
Independent Reserve Report
and achievement of this Reserve Objective, Employee shall vest in
50% of
the 45%
Percentage Performance Option Shares as
set forth in the Performance Option Vesting Schedule
below.
|
South
Texas Oil Company
Xxxxxxx
Employment Agreement
June
2008
24
Performance
Option Vesting Schedule
|
Percentage
Performance
Option
Shares
under
Performance
Option
|
Production
Objective
|
Shares
that
Vest
based on
Achievement
of
Production
Objective
|
Reserve
Objective
|
Shares
that
Vest
based on
Achievement
of
Reserve
Objective
|
Total
of
Percentage
Performance
Option
Shares
to
Vest
|
|||||||||||
|
20%
|
500 BOE (net) |
|
83,334
|
50
percent
|
83,334
|
166,668
|
||||||||||
|
35%
|
1,000 BOE (net) |
|
145,833
|
150
percent
|
145,833
|
291,666
|
||||||||||
|
45%
|
1,500 BOE (net) |
|
187,500
|
250
percent
|
187,500
|
375,000
|
||||||||||
|
Total
Options
|
416,667
|
416,667
|
833,334
|
|||||||||||||
South
Texas Oil Company
Xxxxxxx
Employment Agreement
June
2008
25
EXHIBIT
B
STOCK
OPTION AGREEMENT
South
Texas Oil Company
Xxxxxxx
Employment Agreement
June
2008
26
