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GASCO ENERGY, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of this 22nd day of June 2001 by X. Xxxx
Xxxxx, III at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, XX 00000, ("Executive"), and GASCO
ENERGY, INC., a Nevada corporation, with offices at 00 Xxxxxxxxx Xxxxx Xxxx,
Xxxxx X000, Xxxxxx, Xxxxxxxx 00000 (the "Company"), for the purpose of setting
forth the terms and conditions of Executive's employment by the Company and to
protect the Company's knowledge, expertise, customer relationships and the
confidential information the Company has developed regarding clients, customers,
shareholders, option holders, employees, products, business operations and
services. As of the Effective Date, this Agreement supersedes any prior
understandings or agreements between Executive and the Company or any of the
Company's subsidiaries or affiliates.
RECITALS:
WHEREAS, the Board desires to provide for the continued employment of
Executive and to make certain changes in Executive's employment arrangements
with the Company which the Board has determined will reinforce and encourage the
continued attention and dedication to the Company of Executive as a member of
the Company's management, in the best interest of the Company and its
shareholders. Executive is willing to commit himself to continue to serve the
Company, on the terms and conditions herein provided, although this Agreement
may be amended at any time by written agreement among the parties; and
WHEREAS, in order to effect the foregoing, the Company and Executive
wish to enter into an employment agreement on the terms and conditions set forth
below,
NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. TIME AND EFFORTS
1.1 Executive shall be employed as the Company's Chief Financial
Officer and Executive Vice President and shall devote his full-time attention,
except as allowed in subsections 1.3 and 1.6 below, to the duties and
responsibilities of Chief Financial Officer and Executive Vice President in
furtherance of the Company's business for a minimum of ten day per business
month. Subject to consultation with and the direction of the Board of Directors,
Executive shall have full responsibility for, and specific authority as
described in the bylaws of the Corporation, Article V, Section 11.0
(Attached-Exhibit A).
1.2 In the performance of all of his responsibilities hereunder,
Executive shall be subject to all of the Company's policies, rules, and
regulations applicable to its officers and employees generally. Executive shall
report to the President and Chief Executive Officer.
1.3 Without the prior express authorization of the Board, which shall
not unreasonably be withheld, Executive shall not, directly or indirectly,
during the Term of this Agreement engage in any activity competitive with or
adverse to the Company's business, whether alone, as a partner or independent
contractor, or as an officer, director, or employee of any other corporation.
This Agreement shall not be interpreted to prohibit Executive from making
passive personal investments, conducting private business affairs, or engaging
in educational or charitable activities, if those activities do not materially
interfere with the services required hereunder. Subject to the reasonable prior
approval of the Board, Executive may act as a director of any profit or
non-profit corporation or other business entity, if such activity is not
inconsistent with the business of the Company. Executive's oil and gas holdings
are detailed in Exhibit B of this agreement.
1.4 In order to induce the Company to enter into this Agreement,
Executive represents and warrants to the Company that (i) Executive is not a
party or subject to any employment agreement or arrangement with any other
person, firm, company, corporation or other business entity which is in
competition with the Company; and (ii) Executive is subject to no restraint,
limitation or restriction by virtue of any agreement or arrangement, or by
virtue of any law or rule of law or otherwise which would impair Executive's
right or ability to enter the employ of the Company or to perform fully his
duties and obligations pursuant to this Agreement.
1.5 Without first obtaining the written permission of the Board in each
instance, Executive will not authorize or permit the Company to engage the
services, of, or engage in any business activity with, or provide any financial
or other benefit to, any affiliate of Executive. The phrase "affiliate of
Executive" as used in this Agreement shall mean and include Executive's family
by blood or marriage (including, without limitation, parents, spouse, siblings,
children and in-laws), and any business or business entity which is directly or
indirectly owned or controlled by Executive or any member of Executive's family
or in which Executive or any member of Executive's family has any direct or
indirect financial interest whatsoever.
1.6 The Company acknowledges that Executive is working on the basis of
a ten (10) calendar days per month work base. Executive may procure outside
consulting clients in accordance with subsection 1.3 above.
1.7 Location. Executive shall not be required to make his office in the
Company's offices in Englewood, Colorado or elsewhere, or to be present in the
Company's offices for more than five calendar days per month during any
consecutive three-month period.
2. TERM
The initial Term of this Agreement is from 6/01/01 (the "Effective
Date") until 5/31/04; however on each anniversary of the Effective Date after
5/31/03, this Agreement shall be automatically extended for an additional
one-year Term from such anniversary date unless the Company notifies Executive
in writing 90 days prior to the anniversary of the Effective Date that the
Company will not be renewing this Agreement on the next anniversary of the
Effective Date, or unless sooner terminated pursuant to Section 4. References
hereinafter to the "Term" of this Agreement shall refer to both the initial term
and any extended term of Executive's employment hereunder.
3. COMPANY'S AUTHORITY
Executive agrees to observe and comply with the reasonable rules and
regulations of Company as adopted by the Board of Directors of the Company or
committee of the Board of Directors respecting performance of Executive's duties
and to carry out and perform orders, directions, and policies of Company as they
may be, from time-to-time, stated to Executive either verbally or in writing.
4. TERMINATION
This Agreement shall be terminated upon the happening of any of the
following events:
4.1 Upon the death of Executive.
4.2 Whenever the Company and Executive shall mutually agree to
termination.
4.3 At the option of the Company, upon written notice by the Company to
Executive, for Cause. "Cause" shall exist for such termination if Executive (i)
pleads or is found guilty of a felony involving an act of dishonesty or moral
turpitude by a court of competent jurisdiction; (ii) has engaged in gross
misconduct, materially and demonstratively injurious to the company; (iii) has
made any material misrepresentation or omission to the Company under Section 1.5
hereof; (iv) has committed an unexcused material breach of his duty in the
course of Executive's employment; (v) has been guilty of habitual neglect of his
duties; (vi) has usurped a corporate opportunity, is guilty of fraudulent
embezzlement of property or funds of the Company, or committed any act of fraud
or intentional misrepresentation, moral turpitude, dishonesty or other
misconduct that would constitute a felony; or (vii) has committed a material,
unexcused breach of this Agreement. Prior to any termination for Cause, Company
shall give Executive written notice and the opportunity to cure to the extent
curable.
4.4 The Company may terminate Executive's employment under this
Agreement at any time without Cause, on at least ninety (90) working days
written notice, subject to provisions for payment of compensation as specified
under Section 5.5 of this Agreement. Should the Company (i) demote the Executive
below the status of Chief Financial Officer, (ii) significantly diminish
Executive's responsibilities without Cause, (iii) fail to obtain and
subsequently maintain appropriate directors' and officers' liability insurance
prior to the earlier of (a) obtaining a NASDAQ National Market, American Stock
Exchange, or equivalent listing for its common stock or (b) December 31, 2001,
(iv) require Executive to relocate in violation of subsection 1.7, or (v) within
thirty (30) days of the Effective Date, fail to elect Executive to its Board of
Directors, or at any time thereafter remove him from same, this Agreement shall
terminate, at Executive's option, subject to provisions for payment of
compensation as specified under Section 5.5 of this Agreement.
4.5 At the option of Executive, upon 90 days written notice by
Executive to the Company.
4.6 If as a result of Executive's incapacity due to physical or mental
illness, Executive shall have been absent from his duties hereunder on a
full-time basis for the entire period of three consecutive months, and within 30
days after written notice of termination is given (which may occur before or
after the end of such three-month period) shall not have returned to the
performance of his duties hereunder on a full-time basis, the Company may
terminate Executive's employment hereunder.
4.7 Upon the expiration of the Term of this Agreement, or any
extension or renewal thereof.
4.8 Upon a Change of Control as defined in subsection 5.5.4 below.
5. CURRENT COMPENSATION
5.1 Annual Salary. For all services rendered by Executive under this
Agreement, the Company shall pay or cause to be paid to Executive, and Executive
shall accept the Annual Salary and Incentive Compensation, if any, all in
accordance with the subject to the terms of this Agreement. For purposes of this
Agreement, the term "Compensation" shall mean the Annual Salary and Bonus
Compensation, if any. Executive shall be entitled to receive as current
compensation an Annual Salary in an amount of not less than $120,000.
(Hereinafter referred to as the "Salary"). References in this Agreement to
"annual" or "per annum" or "Annual" and similar phrases shall mean the
twelve-month period commencing on June 1 of each year during the Term of this
Agreement unless otherwise indicated.
5.1.1 Additional Salary. For each day that Executive works in
excess of ten days per month, Executive shall be entitled to
receive additional compensation of $2,000.
5.2 Bonus Compensation. Executive shall also be entitled to annual
incentive compensation ("Bonus Compensation") equal to 0.5% of the sum of the
Company's net after-tax earnings as reported in the Company's audited year-end
financial statements plus interest expense, deferred taxes, depletion expenses,
depreciation expenses, amortization expenses, and exploration expenses (which
sum is hereinafter referred to as "cash flow"). The parties agree that
exploration expenses would be deducted from net after-tax earning only if the
Company has elected the "successful-efforts" accounting method; if the Company
has elected the "full-cost" accounting method, exploration expenses would
already be deducted in the computation of the Company's net after-tax earnings,
subject to the additional provisions forth in Sections 5.2.1 and 5.2.2 below.
5.2.1 The parties agree that Bonus Compensation payments are
intended to be based on cash flow from undrilled Company-owned properties as of
the date of this Agreement and undrilled properties acquired by the Company
subsequent to the date of this Agreement. Should the Company acquire
proven-producing properties with existing cash flows, net income less the
hypothetical income tax due thereon plus interest expense, deferred taxes,
depletion expenses, depreciation expenses, amortization expenses, and
exploration expenses (which exploration expenses would only be added if the
Company has elected the "successful-efforts" accounting method) attributable to
the acquired, proven-producing properties shall be deducted from the base amount
upon which the cash flow is derived.
5.2.2 Should the Company acquire proven-producing properties
with existing cash flows, the parties agree to negotiate in good faith with
respect to the development of a schedule of the declining production profile of
such properties. The parties agree that the amount derived by multiplying the
proven-production stream, as set forth in the schedule, by the corresponding
sales price, less corresponding production costs shall be subtracted from the
cash flow upon which Bonus Compensation is based.
5.2.3 Bonus Compensation payments due hereunder shall be made
within 15 days after the Company has received the signed audit report covering
the year-end financial statements.
5.3 Royalty Trust. Executive shall participate in the Pannonian
Employee Royalty Trust Agreement dated March 25th, 2001 (attached as
Exhibit C) according to the terms contained therein.
5.4 Payments of Current Compensation. The payment of Executive's Annual
Salary and additional salary (pursuant to subsection 5.1.1 above) shall be made
in monthly installments on the then prevailing paydays of the Company. Any
payment for Incentive Compensation will be made in accordance with the Executive
Incentive Compensation Plan, and payment will be made in one lump sum
concurrently with payments made to others in senior management. All payments are
subject to the customary withholding tax and other employment taxes as required
with respect to compensation paid to an employee.
5.5 Payment of Compensation on Termination.
5.5.1 Upon termination of Executive's employment prior to the
expiration of this Agreement, if such termination is pursuant to Section 4.1,
4.2, 4.5, 4.6, or 4.7 hereof, Executive shall be entitled to any Annual Salary,
Bonus Compensation, and vacation accrued but unpaid through the date of
termination of employment, payable on the date of termination. Executive shall
also be entitled to exercise any vested options for a period of One (1) Year
following the termination of his employment hereunder.
5.5.2 Upon termination of Executive's employment prior to the
expiration of this Agreement, if such termination is pursuant to Section 4.4
hereof, Executive shall be entitled to any Annual Salary, Bonus Compensation,
and vacation accrued but unpaid through the date of termination of employment,
payable on the date of termination. Executive shall also be entitled to
compensation in an amount equal to the greater of (i) Executive's Annual Salary
for one year and (ii) Executive's Annual Salary for the period from the date of
termination through the remaining Term of this Agreement. Executive shall also
be entitled to exercise any vested options for a period of one year following
the termination of his employment hereunder. The provisions of this Section
5.5.2 shall apply throughout the Term of this Agreement, including any period of
extension in accordance with the provisions of Section 2 above.
5.5.3 In the event that Executive is not serving as the Chief
Financial Officer during the term of this Agreement or is terminated as a result
of a Change of Control (as hereafter defined), Executive shall be entitled to
any Annual Salary, Bonus Compensation, and vacation accrued but unpaid through
the date of termination of employment, payable on the date of termination. Upon
termination as a result of a Change of Control, Executive shall also be entitled
to receive the payment set forth in Section 5.5.2. Executive shall be entitled
to exercise all granted stock options for a period of one year following the
termination of his employment hereunder.
5.5.4 For all purposes of this Agreement, a "change of
control" shall mean and shall be deemed to have occurred if: (i) there shall be
consummated (X) any consolidation or merger of the Company with another
corporation or entity and as a result of such consolidation or merger less than
50% of the outstanding voting securities of the surviving or resulting
corporation or entity shall be owned, directly or indirectly, in the aggregate
by the stockholders of the Company, other than "affiliates," as defined in the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), of any party
to such consolidation or merger, as the same shall have existed immediately
prior to such consolidation or merger, or (Y) any sale, lease, exchange or other
transfer (or in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company; (ii) the stockholders of the
Company shall have approved any plan or proposal for the liquidation or
dissolution of the Company; (iii) any "person" (as such term is used in the
Section 13(d) and 14(d) (2) of the Exchange Act) shall have become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
50% or more of the Company's outstanding common stock, without the prior
approval of the Board; (iv) during any period of two consecutive years,
individuals who at the beginning of such period constituted the entire Board of
Directors shall have ceased for any reason to constitute a majority thereof
unless the election, or the nomination for election by the Company's
stockholders, of each new Director was approved by vote of at least two-thirds
of the Directors then still in office who were Directors at the beginning of the
period; (v) a change of control of a nature that would be required to be
reported in response to item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Exchange Act shall have occurred; or (vi) any consolidation or merger
of the Company with another corporation or entity and as a result of such
consolidation or merger Executive is not retained by the Board of Directors as
the Chief Financial Officer of the Company (a "Change of Control").
6. DETERMINATION OF DISABILITY; PAYMENT OF DISABILITY INSURANCE PREMIUMS
6.1 In the event Executive's disability, as defined in Section 4.6, is
in question, and after written request by the Company, Executive refuses to be
examined by his regularly attending physician or if the regularly attending
physician fails to submit a report within 30 days after the examination has been
requested by the Company, the determination of disability shall be made by the
Company.
6.2 Executive shall be entitled to the disability benefits available to
all executive employees of the Company. It is the intent of the Company to
establish a disability insurance program as soon as practicable.
7. MISCELLANEOUS BENEFITS
7.1 Medical Insurance. Executive and his family shall be entitled to
participate in any medical, dental, vision, life, long-term disability, other
insurance or employee benefit program instituted or maintained by the Company
for the benefit of its executive employees. It is the intent of the Company to
establish a medical and dental insurance program as soon as practicable. Company
will pay 50% of the premiums. Executive is required to pay his portion of the
premiums in accordance with health insurance contract.
7.2 401(k) plan. Executive shall be entitled to participate in the
Company's 401(k) or other similar retirement benefit plan. The Company agrees to
implement a 401(k) or other similar retirement benefit plan as soon as it is
reasonably feasible, based on the size of the Company and its financial
condition.
7.3 Payment of Benefits on Termination of Employment. If Executive's
employment with the Company is terminated, Executive shall be entitled to
maintain his employee benefits in accordance with his maximum COBRA rights.
7.4 Business Expenses. Executive shall be reimbursed for all reasonable
expenses incurred by Executive in connection with Executive's attendance of
business meetings and promotion of Company business, including the cost of
travel to and from the Company's offices, upon presentation by Executive to the
Company of an expense report and adequate records or other documentation
substantiating the expenditures, not less frequently than monthly. Any such
amounts disallowed, as a business expense for federal or state income tax
purposes, shall be deemed additional salary to Executive. The fact that the
Company may not reimburse Executive for an expense is not an indication that the
Company determined that the expense was not incurred on its behalf or in
connection with the Company's business. In addition, upon presentation of an
invoice by Executive to the Company, an unaccountable expense of $1,200 per
month for automobile and office expense is to be paid each month during the Term
of this Agreement.
7.5 Additional Benefits. Executive shall be entitled to participate in
all programs, rights and benefits for which executive is otherwise entitled to
any bonus plan, incentive plan, participation plan or extra compensation plan,
pension plan, overriding royalty plan in proportion to his Annual Salary base,
profit sharing plan, life, medical, dental, disability or other insurance plan
or policy or other plan or benefit the Company may provide for senior executives
or for employees of the Company generally from time to time in effect during the
term of this Agreement. For the avoidance of doubt, the rights granted or
afforded to Executive under any such plans shall be not less than the most
favorable rights and highest amounts granted to employees of similar or lower
position with the Company and on terms at least as favorable.
8. VACATION
During each calendar year of the Term of this Agreement, Executive
shall be entitled three (3) weeks of paid vacation. Executive shall be entitled
to receive payment for accrued vacation not taken during each calendar year
during the Term of this Agreement or may accrue such vacation for use in a
subsequent calendar year; however Executive shall be subject to a maximum of
three weeks of accrued vacation.
9. RESTRICTIVE COVENANTS
9.1 Confidential Information. Executive acknowledges that in his
employment hereunder he occupies a position of trust and confidence. During the
Term, and thereafter in accordance with the provisions of this Agreement,
Executive shall not, except as may be required to perform his duties hereunder
as required by applicable law, and except for information which is or becomes
publicly available other than as a result of a breach by Executive of the
provisions hereof, disclose to others or use, whether directly or indirectly,
any Confidential Information. "Confidential Information" shall mean information
about the Company, its subsidiaries and affiliates, and their respective
suppliers, clients and customers that is not disclosed by the Company for
financial reporting purposes and that was learned by Executive in the course of
his employment hereunder, including (without limitation) proprietary knowledge,
trade secrets, market research, data, formulae, information and supplier, client
and customer lists and all papers, resumes, and records (including computer
records) of the documents containing such Confidential Information. Executive
agrees to deliver or return to the Company, at the Company's request at any time
or upon termination or expiration of his employment, or as soon thereafter as
possible, all documents, computer tapes and disks, records, lists, data,
drawings, prints, notes and written information (and all copies thereof)
furnished by the Company or any of its subsidiaries affiliates or prepared by
Executive during the Term of his employment by the Company. The obligations
hereof shall not apply to any information that is or becomes public or in the
public domain by action of the Company or through no fault of Executive.
9.2 Business Diversion. During the Term and for 12 months thereafter,
Executive shall not, directly or indirectly, influence or attempt to influence
customers or suppliers of the Company or any of its subsidiaries or affiliates
to divert their business to any competitor of the Company, to the exclusion of
the Company. However, Executive may contract with the same customers and
suppliers after the Term hereof so long as it is not to the exclusion of the
Company's relationships with such customers and suppliers.
9.3 Non-Solicitation. Executive recognizes that he will possess
confidential information about other employees of the Company and its
subsidiaries and affiliates relating to, among other things, their education,
experience, skills, abilities, compensation and benefits, and interpersonal
relationships with suppliers and customers of the Company. Executive recognizes
that the information he will possess about these other employees is not
generally known, is of substantial value to the Company, and will be acquired by
him because of his business position with the Company. Executive agrees that,
during the Term and for 12 months thereafter, he will not, directly or
indirectly, solicit or recruit any employee of the Company, its subsidiaries or
affiliates for the purpose of being employed by him or by any other person on
whose behalf he is acting as an agent, representative or employee and that he
will not convey any such confidential information or trade secrets about other
employees of the Company, including its subsidiaries or affiliates, to any other
person. However, if Executive's employment is terminated in accordance with the
provisions of Section 4.4, nothing herein shall prevent Executive from
soliciting or recruiting, directly or indirectly, any employee of the Company
recruited to the Company by Executive.
9.4 If Executive breaches, or threatens to commit a breach of, any of
the provisions of Section 9 (the "Restrictive Covenants"), the Company and its
subsidiaries shall have the right to seek the following:
9.4.1 Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to the Company or its
subsidiaries and that money damages may not provide an adequate remedy to the
Company or its subsidiaries.
9.4.2 Accounting. The right and remedy to require Executive to
account for and pay over to the Company or its subsidiaries, as the case may be,
all compensation, profits, monies, accruals, increments or other benefits
derived or received by Executive as a result of any transaction constituting a
breach of the Restrictive Covenants.
9.4.3 Severability of Restrictive Covenants. Executive
acknowledges and agrees that the Restrictive Covenants are reasonable and valid
in geographic and temporal scope and in all other respects. If any court
determines at any of the Restrictive Covenants, or any part thereof, is invalid
or unenforceable, the remainder of the Restrictive Covenants shall not thereby
be affected and shall be given full effect without regard to the invalid
provisions.
9.4.4 Blue Penciling. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographic scope or such provision, such court shall have the power
to reduce the duration or scope of such provision, as the case may be, and, in
its reduced form, such provision shall not be enforceable.
9.4.5 Enforceability of Jurisdictions. The obligations in this
Section 9 shall survive the termination of Executive's employment or expiration
of this Agreement and shall be fully enforceable thereafter. Executive intends
to and hereby confers jurisdiction to enforce the Restrictive Covenants upon the
courts of any jurisdiction within the geographic scope of such Restrictive
Covenants. If the courts of any one or more of such jurisdictions hold the
Restrictive Covenants unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of Executive that such determination not bar or
in any way affect the right of the Company or its subsidiaries to the relief
provided above in the courts of any other jurisdiction within the geographic
scope of such Restrictive Covenants, as to breaches of such Restrictive
Covenants in such other respective jurisdictions, such Restrictive Covenants as
they relate to each jurisdiction being, for this purpose, severable into diverse
and independent Restrictive Covenants.
10. PARTICIPATION IN STOCK AND OPTION EXECUTIVE COMPENSATION PLAN
10.1 Initial Option Grant. Executive shall be granted 300,000 options
to purchase 300,000 shares of Common Stock of the Company pursuant to the terms
and conditions contained in the Company's Stock and Option and Incentive Award
Plan, (the "Plan") at an exercise price equal to $3.00 per share as to 200,000
options and $3.15 per share as to the remaining 100,000 options. The vesting of
these options shall be as follows: (1) 100,000 of the $3.00 options vest upon
execution of this Agreement and (2) the remaining 200,000 options vest quarterly
in eight (8) equal amounts.
10.1.1 Company represents that as of the Effective Date there
are 26,405,000 shares issued and outstanding and that there are 3,300,000
options and warrants issued so that Executive's fully diluted equity ownership
in the Company is 1.0099% (300,000/29,705,000 x 100%). If at any time it is
determined that as of the Effective Date that the total of shares, options and
warrants was greater than 29,705,000 then the Company shall immediately issue
Executive additional options on the same terms as those issued in 10.1 above so
that Executive's fully diluted equity ownership is restored to 1.0099%.
10.1.2 No shares, options, or warrants issued subsequent to
the Effective Date (except for any options issued pursuant to 10.1.1 above)
shall be used to recalculate Executive's fully diluted equity ownership.
10.1.3 Upon consummation of the FECC merger transaction as
substantially described in the Agreement and Plan of Reorganization between
First Xxxx.xxx, Inc. and Gasco Energy, Inc. dated June15, 2001) the options
granted in 10.1.1 shall be cancelled. Concurrent with consummation of the
merger, Executive shall be granted 682,800 options to purchase 682,800 shares of
common stock of the surviving company at a price of $1.25 per share. Half
(341,400) of the options shall vest immediately and the remaining options shall
vest at the rate of 85,350 (25%) per quarter of the succeeding year.
10.1.4 If any conditions contained herein contradict the Plan
then the terms of this Agreement shall supersede those of the Plan.
10.2 Executive shall be considered for additional grants of options,
stock appreciation rights, phantom stock rights, and any similar option or
securities or equity compensation when and as such grants are considered for
other executives or employees of the Company.
10.3 In the event of termination of Executive's employment pursuant to
a Change of Control, Executive shall be entitled to exercise all vested options,
and any additional options that have been granted. In the event of termination
of Executive's employment pursuant to Section 4.4, any additional options that
have been granted but have not yet vested in accordance with their terms shall
immediately vest.
10.4 Anti-Dilution Upon the completion of any subsequent transaction
involving the issuance of Common Stock, or issuance of any security which is
convertible, by its terms into Common Stock of the Company (a "Financing"),
Company shall grant Executive additional options to purchase shares of the
Company's Common Stock at the same price as Financing. The number of options
granted to Executive shall be sufficient to maintain Executive's ownership
interest in the Company (the ratio of a) the sum of the number of Executive's
unexercised options (both vested and unvested) plus the number of shares owned
by Executive as result of exercising options to b) the total number of shares of
Company's Common Stock plus the number of shares represented by all unexercised
options) at the level that existed immediately prior to such Financing.
11. DISPUTE RESOLUTION
The parties agree that any dispute that may arise in connection with,
arising out of or relating to this Agreement, or any dispute that relates in any
way, in whole or in part, to Executive's employment with the Company, the
termination of that employment, or any other dispute by and among the parties or
their successors, assigns or affiliates, shall be submitted to binding
arbitration in Arapahoe County, Colorado according to the Employment Dispute
Resolution Rules and Procedures of the American Arbitration Association. This
arbitration obligation extends to any and all claims that may arise by and
between the parties or their successors, assigns or affiliates, and expressly
extends to, without limitation, claims or cause of action for wrongful
termination, impairment of ability to compete in the open labor market, breach
or an express or implied contract, breach of the covenant of good faith and fair
dealing, breach of fiduciary duty, fraud, misrepresentation, defamation,
slander, infliction of emotional distress, disability, loss of future earnings,
and claims under the applicable state constitution, the United States
Constitution, and applicable state fair employment laws, federal equal
employment opportunity laws, and federal and state labor statutes and
regulations, including, but not limited to, the Civil Rights Act of 1964, as
amended, the Labor-Management Relations Act, as amended, the Worker Retraining
and Notification Act of 1988, the Americans With Disabilities Act of 1990, the
Rehabilitation Act of 1973, as amended, the Employee Retirement Income Security
Act of 1974, as amended, the Age Discrimination in Employment Act of 1967, as
amended, and the California Fair Employment and Housing Act, as amended.
12. ASSIGNMENT
This Agreement is a personal contract, and the rights, interests and
obligations of Executive hereunder may not be sold, transferred, assigned,
pledged or hypothecated except as otherwise expressly permitted by the
provisions of this Agreement. Executive may, with the prior written consent of
the Company (which shall not unreasonably be withheld), assign this Agreement to
an entity (corporation, partnership or limited liability company) that is
controlled by Executive. Executive shall not under any circumstances have any
option or right to require payment hereunder otherwise than in accordance with
the terms hereof. Except as otherwise expressly provided herein, Executive shall
not have any power of anticipation, alienation or assignment of payments
contemplated hereunder, and all rights and benefits of Executive shall be for
the sole personal benefit of Executive, and no other person shall acquire any
right, title or interest hereunder by reason of any sale, assignment, transfer,
claim or judgment or bankruptcy proceedings against Executive; provided,
however, that in the event of Executive's death, Executive's estate, legal
representatives or beneficiaries (as the case may be) shall have the right to
receive all of the benefits that accrued to Executive pursuant to, and in
accordance with, the terms of this Agreement.
13. SUCCESSOR
This Agreement may be assigned by the Company to any successor interest
to its business. This Agreement shall bind and inure to the benefit of the
Company's successors and assigns as well.
14. NOTICES
All notices, requests and demands hereunder shall be in writing and
delivered by hand, by mail, or by telegram, and shall be deemed given if by hand
delivery, upon such delivery, and if by mail, 48 hours after deposit in the
United States mail, first class, registered or certified mail, postage prepaid
and properly addressed to the party at the address set forth at the beginning of
this Agreement. Any party may change its address for purposes of this paragraph
by giving the other party written notice of the new address in the manner set
forth above.
15. INVALID PROVISIONS
Invalidity or unenforceability of any particular provision of this
Agreement shall not affect the other provisions hereof, and this Agreement shall
be construed in all respects as if such invalid or unenforceable provision were
omitted.
16. AMENDMENT, MODIFICATION OR REVOCATION
This Agreement may be amended, modified or revoked in whole or in part,
but only by a written instrument which specifically refers to this Agreement and
expressly states that it constitutes an amendment, modification or revocation
hereof, as the case may be, and only if such written instrument has been signed
by each of the parties to this Agreement.
17. HEADINGS
The headings in this Agreement are inserted for convenience only and
are not to be considered in construction of the provisions hereof.
18. ENTIRE AGREEMENT
This Agreement contains the entire understanding among the parties and
supersedes any prior written or verbal agreements between them respecting the
subject matter hereof, including, without limitation, any prior verbal or
written employment agreement between Executive and the Company. Upon the
effectiveness hereof, any such prior verbal or written agreements shall
terminate.
No representations or warranties of any kind or nature relating to the
Company or its affiliates or their respective businesses, assets, liabilities,
operations, future plans or prospects have been made by or on behalf of the
Company to Executive; nor have any representations or warranties of any kind or
nature been made by Executive to the Company, except as expressly set forth in
this Agreement.
19. ATTORNEYS' FEES
If any legal action is necessary to enforce the terms and conditions of
this Agreement, the prevailing party in such action shall be entitled to recover
all costs of suit and reasonable attorneys' fees as determined by the
arbitrator.
20. FURTHER ASSURANCES
The parties shall execute such documents and take such other action as
is necessary or appropriate to effectuate the provisions of this Agreement.
21. CONTROLLING LAW
This Agreement shall be governed by the laws of the State of Colorado.
22. WAIVER
A waiver by either party of any of the terms and conditions hereof
shall not be construed as a general waiver by such party, and such party shall
be free to reinstate such part or clause, with or without notice to the other
party.
23. INDEMNIFICATION
To the fullest extent permitted by law and the Company's Certificate of
Incorporation and Bylaws, the Company shall indemnify, defend, and hold harmless
the Executive for all amounts (including, without limitation, judgments, fines,
settlement payments, losses, damages, costs and expenses, including reasonable
attorneys fees, incurred or paid by Executive in connection with any action,
proceeding, suit or investigation arising out of or relating to the performance
by Executive of services for, or acting as, an officer or employee of the
Company or any subsidiary thereof. The Company agrees to use its best efforts to
maintain directors' and officers' liability insurance, but the failure of the
Company to maintain such insurance or any portion thereof shall not negate nor
diminish Company's obligations as set forth in this paragraph.
24. PERIODIC REVIEWS
During January of each year during the term hereof, the Board of
Directors of the Company shall review Executive's Annual Salary, bonus, stock
options, and additional benefits then being provided to Executive. Following
each such review, the Company may in its discretion increase the Annual Salary,
bonus, stock options, and benefits; however, the Company shall not decrease such
items during the period Executive serves as an employee of the Company. Prior to
November 30th of each year during the term hereof, the Board of Directors of the
Company shall communicate in writing the results of such review to Executive.
IN WITNESS WHEREOF, the parties have entered into this Agreement on
_____________, 2001.
THE COMPANY: EXECUTIVE:
GASCO ENERGY, INC.
By:
--------------------------------- ----------------------------------
Xxxx X. Xxxxxxxx, President X. Xxxx Grant, III
Exhibit A
Exhibit B
Oil & Gas Holdings
_____ share of common stock of Key Energy Services
Exhibit C
