EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") entered into effective as of
June 1, 2000, by and between Xxxxxx X. Texas (the "Employee"), and Carpatsky
Petroleum, Inc., a Delaware corporation having its principal place of business
at 0000 Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000-0000 (the "Company");
W I T N E S S E T H:
WHEREAS, the Company wishes to employ the Employee to perform services for
the Company, and the Employee wishes to be so employed by the Company, all upon
the terms and conditions hereinafter set forth:
NOW THEREFORE, in consideration of the premises and mutual covenants and
obligations herein set forth and for other good and valuable consideration, the
receipt, sufficiency and adequacy of which is hereby acknowledged, accepted and
agreed to, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Employment and Term. The term of this Agreement (the "Term of this
Agreement") shall be effective as of the 1st day of June, 2000 and shall
terminate twelve (12) months from the date hereof (the "Termination Date"),
unless earlier terminated by either party hereto in accordance with the
provisions of Section 5 hereof. During the term of this Agreement, the terms of
employment shall be as set forth herein unless modified by the Employee and the
Company in accordance with the provisions of Section 11 hereof. The Employee
hereby agrees to accept such employment and to perform the services specified
herein, all upon the terms and conditions hereinafter set forth.
2. Position and Responsibilities. The Employee shall report to, and be
subject to the general direction and control of the Chairman of the Board of the
Company. The Employee's duties shall include, but not be limited to, the
securing of oil and gas industry investment opportunities in the former Soviet
Union ("Investment Opportunities") for Company and its affiliates. The Employee
shall maintain an office at the Company's principal offices located in the
greater Houston, Texas metropolitan area and at the offices currently occupied
by the Employee located in Kiev, Ukraine.
3. Extent of Service. The Employee shall devote substantially all of his
time and attention during normal business hours to the business of the Company.
4. Compensation.
(a) In consideration of the services to be rendered by the
Employee to the Company, the Company will pay the Employee a salary
("Salary") of $10,000 per month during the Term of this Agreement. Such
Salary will be payable in conformity with the Company's prevailing
practice for Employees' compensation as such practice shall be
established or modified from time to time. Salary payments shall be
subject to all applicable federal and state withholding, payroll and
other taxes.
(b) In the event Company elects, in writing within ten (10)
business days after Employee has submitted an Investment Opportunity to
the Company in writing, to pursue in good faith such Investment
Opportunity ("CPI Submission"), Company shall pay Employee at closing
of the Investment Opportunity, an incentive fee equal to a minimum of
two percent (2%) and a maximum of five percent (5%) net profits
interest in the Investment Opportunity based on the net purchase price
and/or the fair market value of such Investment Opportunity at closing
("CPI Incentive Fee"). In the event the Investment Opportunity does not
close for any reason, no fee shall be due by Company to Employee.
Employee may elect, by giving Company written notice within ten (10)
business days prior to the closing of an Investment Opportunity, to
receive its CPI Incentive Fee as follows: (i) fifty percent (50%) as a
net profits interest in the Investment Opportunity and (ii) fifty
percent (50%) in cash. The amount of any CPI Incentive Fee shall be
agreed to in writing between the Chairman of the Board of the Company
and the Employee within five (5) business days subsequent to the CPI
Submission. Such CPI Incentive Fee shall be based on the estimated
value of the Investment Opportunity, the estimated development costs
and capital expenditures, and the risk associated therewith as well as
the value added by Employee. In the event Company elects in writing not
to pursue the Investment Opportunity or does not respond within ten
(10) business days of the CPI Submission, Employee shall then present
the Investment Opportunity to Torch Energy Advisors Incorporated and
its clients ("Torch"). In the event Torch elects, in writing within
five (5) business days after Employee has submitted an Investment
Opportunity to Torch in writing, to pursue in good faith such
Investment Opportunity ("Torch Submission"), Torch shall pay Employee
at closing of the Investment Opportunity, an incentive fee equal to a
minimum of two percent (2%) and a maximum of five percent (5%) net
profits interest in the Investment Opportunity based on the net
purchase price and/or the fair market value of such Investment
Opportunity at closing ("Torch Incentive Fee"). In the event the
Investment Opportunity does not close for any reason, no fee shall be
due by Torch to Employee. Employee may elect, by giving Torch written
notice within ten (10) business days prior to the closing of an
Investment Opportunity, to receive its Torch Incentive Fee as follows:
(i) fifty percent (50%) as a net profits interest in the Investment
Opportunity and (ii) fifty percent (50%) in cash. The amount of any
Incentive Fee shall be agreed to in writing between the Chairman of the
Board of Torch and the Employee within five (5) business days
subsequent to the Torch Submission. Such Torch Incentive Fee shall be
based on the estimated value of the Investment Opportunity, the
estimated development costs and capital expenditures, and the risk
associated therewith as well as the value added by Employee. The Torch
Incentive Fee, if any, shall be divided equally between Company and
Employee. If Torch does not respond in writing within such time period,
Employee shall be free to broker the Investment Opportunity to a third
party. In the event neither Company nor Torch elects to pursue the
Investment Opportunity, then Employee will have the right to broker the
Investment Opportunity to a third party and, if successful, the
Incentive Fee will be divided seventy-five percent (75%) to Employee
and twenty-five percent (25%) to Company.
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(c) During the term of this Agreement, the Company shall pay
or reimburse the Employee for all reasonable out-of-pocket expenses for
travel, meals, hotel accommodations, entertainment and the like
incurred by him in connection with the business of the Company upon
submission by him of an appropriate statement documenting such expenses
as required by the Internal Revenue Code of 1986, as amended (the
"Code").
(d) The Employee shall be entitled to three (3) weeks of paid
vacation during each calendar year during the term of this Agreement.
Vacation shall accrue on the first day of each calendar year. The
Company shall pay the Employee for any accrued but unused portion of
vacation and any such unused portion of vacation shall not be carried
forward to the next year.
(e) During the term of this Agreement, the Employee shall pay
and the Company shall reimburse Employee for the reasonable costs
associated with premium payments for his medical and dental plan.
5. Termination.
(a) Termination by Company; Discharge for Cause. The Company
shall be entitled to terminate this Agreement and the Employee's
employment with the Company at any time and for whatever reason; or at
any time for "Cause" (as defined below) by written notice to the
Employee. Termination of the Employee's employment by the Company shall
constitute a termination for "Cause" if such termination is for one or
more of the following reasons: (i) the willful failure or refusal of
the Employee to render services to the Company in accordance with his
obligations under this Agreement, including, without limitation, the
failure or refusal of the Employee to comply with the work rules,
policies, procedures, and directives as established by the Board of
Directors and consistent with this Agreement; such failure or refusal
to be uncured and continuing for a period of not less than fifteen (15)
days after notice outlining the situation is given by the Company to
the Employee; (ii) the commission by the Employee of an act of fraud or
embezzlement; (iii) the commission by the Employee of any other action
with the intent to injure the Company; (iv) the Employee having been
convicted of a felony or a crime involving moral turpitude; (v) the
Employee having misappropriate the property of the Company; (vi) the
Employee having engaged in personal misconduct which materially injures
the Company; or (vii) the Employee having willfully violated any law or
regulation relating to the business of the company which results in
material injury to the Company. In the event of the Employee's
termination by the Company for Cause hereunder, the Employee shall be
entitled to no severance or other termination benefits except for any
unpaid Salary accrued through the date of termination. A termination of
this Agreement by the Company without Cause pursuant to this Section
5(a) shall entitle the Employee to the Severance Payment and other
benefits specified in Section 5(e) hereof.
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(b) Death. If the Employee dies during the term of this
Agreement and while in the employ of the Company, this Agreement shall
automatically terminate and the Company shall have no further
obligation to the Employee or his estate except that the Company shall
pay to the Employee's estate that portion of his Salary and benefits
accrued through the date of death. All such payments to the Employee's
estate shall be made in the same manner and at the same time as the
Employee's Salary.
(c) Disability. If during the term of this Agreement, the
Employee shall be prevented from performing his duties hereunder for a
period of 60 days by reason of disability, then the Company, on 30
days' prior notice to the Employee, may terminate this Agreement. For
purposes of this Agreement, the Employee shall be deemed to have become
disabled when the Board of Directors of the Company, upon verification
by a physician designated by the Company, shall have determined that
the Employee has become physically or mentally unable (excluding
infrequent and temporary absences due to ordinary illness) to perform
the essential functions of his duties under this Agreement with
reasonable accommodation. In the event of a termination pursuant to
this paragraph (c), the Company shall be relieved of all its
obligations under this Agreement, except that the Company shall pay to
the Employee or his estate in the event of his subsequent death, that
portion of the Employee's Salary and benefits accrued through the date
of such termination. All such payments to the Employee or his estate
shall be made in the same manner and at the same time as his Salary and
would have been paid to him had he not become disabled.
(d) Voluntary Termination. Notwithstanding anything to the
contrary herein, the Employee shall be entitled to voluntarily
terminate this Agreement and his employment with the Company at his
pleasure upon thirty (30) days written notice to such effect. In such
event, the Employee shall not be entitled to any further compensation
other than any unpaid Salary and benefits accrued through the date of
termination. At the Company's option, the Company may pay to the
Employee the salary and benefits that the Employee would have received
during such thirty (30) day period in lieu of requiring the Employee to
remain in the employment of the Company for such thirty (30) day
period.
(e) Termination Benefits Upon Involuntary Termination. In the
event that the Company terminates this Agreement and the Employee's
employment with the Company for any reason other than for Cause (as
defined in Section 5(a) hereof) or the death or disability (as defined
in Section 5(b) and 5(c) hereof) of the Employee, then the Company
shall pay the Employee, within thirty (30) days after the date of
termination, an amount (the "Severance Payment") equal to the balance
of Employee's Salary for the Term of this Agreement, minus applicable
withholding and authorized salary reductions (the "Severance Payment").
In addition, following other such termination, the Employee shall be
entitled to the following benefits (collectively, the "Additional
Benefits"):
(i) continued coverage, at the Employee's cost, under
the Company's group health plan for the applicable coverage
period under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended ("COBRA") but only if Employee elects
such COBRA continuation in accordance with the time limits and
in the applicable COBRA regulations; and
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(ii) an amount, in cash, equal to the sum of (A) any
unreimbursed expenses incurred by the Employee in the
performance of his duties hereunder through the date of
termination, plus (B) any accrued and unused vacation time or
other unpaid benefits as of the date of termination.
The parties agree that, because there can be no exact measure of the
damages which would occur to the Employee as a result of termination of
employment, such payments contemplated in this Section 5(e) shall be
deemed to constitute liquidated damages and not a penalty and the
Company agrees that the Employee shall not be required to mitigate his
damages. The termination compensation in this Section 5(e) shall be
paid only if the Employee executes a termination agreement releasing
all legally waivable claims arising from the Employee's employment.
(f) Survival. Notwithstanding the termination of this
Agreement under this Section 5, the provisions of Sections 7 and 8 of
this Agreement, and all other provisions hereof which by their terms
are to be performed following the termination hereof shall survive such
termination and be continuing obligations.
6. Consent and Waiver by Third Parties. The Employee hereby represents
and warrants that he has obtained all necessary waivers and/or consents from
third parties as to enable him to accept employment with the Company on the
terms and conditions set forth herein and to execute and perform this Agreement
without being in conflict with any other agreement, obligations or understanding
with any such third party.
7. Confidential Information. The Employee acknowledges that in the
course of his employment with the Company, he has received and will receive
access to confidential information of a special and unique value concerning the
Company and its business, including, without limitation, trade secrets,
know-how, lists of customers, employee records, books and records relating to
operations, costs or providing service and equipment, operating an maintenance
costs, pricing criteria and other confidential information and knowledge
concerning the business of the Company and its affiliates (hereinafter
collectively referred to as "information") which the Company desires to protect.
The Employee acknowledges that such information is confidential and the
protection of such confidential information against unauthorized use or
disclosure is of critical importance to the Company. The Employee agrees that he
will not reveal such information to any one outside the Company. The Employee
further agrees that during the term of this Agreement and thereafter he will not
use or disclose such information. Upon termination of his employment hereunder,
the Employee shall surrender to the Company all papers, documents, writings and
other property produced by him or coming into his possession by or through his
employment hereunder and relating to the information referred to in this Section
7, and the Employee agrees that all such materials will at all times remain the
property of the Company. The obligation of confidentiality, non-use and
non-disclosure of know-how set forth in this Section 7 shall not extend to
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know-how (i) which was in the public domain prior to disclosure by the
disclosing party, (ii) which comes into the public domain other than through a
breach of this Agreement, (iii) which is disclosed to the Employee after the
termination of this Agreement by a third party having legitimate possession
thereof and the unrestricted right to make such disclosure, or (iv) which is
necessarily disclosed in the course of the Employee's performance of his duties
to the Company as contemplated in this Agreement. The agreements in this Section
7 shall survive the termination of this Agreement.
8. No Solicitation. To support the agreements contained in Section 7
hereof, from the date hereof and for a period twelve (12) months after the
Employee's employment with the Company is terminated for any reason, the
Employee shall not, either directly or indirectly, through any person, firm,
association or corporation with which the Employee is now or may hereafter
become associated, (i) use in any competition, solicitation or marketing effort
any information as to which the Employee has a duty of confidential treatment
under paragraph 7 above, or (ii) hire, employ, solicit or engage any then
current employee of the Company or its affiliates.
9. Notices. All notices, requests, consents and other communications
under this Agreement shall be in writing and shall be deemed to have been
delivered on the date personally delivered or on the date mailed, postage
prepaid, by certified mail, return receipt requested, or telegraphed and
confirmed if addressed to the respective parties as follows:
If to the Employee: Xxxxxx X. Texas
0000 Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
If to the Company: Carpatsky Petroleum, Inc.
0000 Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Manner
Either party hereto may designate a different address by providing written
notice of such new address to the other party hereto.
10. Specific Performance. The Employee acknowledges that a remedy at
law for any breach or attempted breach of Section 7 or 8 of this Agreement will
be inadequate, agrees that the Company shall be entitled to specific performance
and injunctive and other equitable relief in case of any such a breach or
attempted breach, and further agrees to waive any requirement of the securing or
posting of any bond in connection with the obtaining of any such injunctive or
any other equitable relief.
12. Waivers and Modifications. This Agreement may be modified, and the
rights and remedies of any provision hereof may be waived, only in accordance
with this Section 12. No modification or waiver by the Company shall be
effective without the consent of at least a majority of the Compensation
Committee of the Board of Directors then in office at the time of such
modification or waiver. No waiver by either party of any breach by the other or
any provision hereof shall be deemed to be a waiver of any later or other breach
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thereof or as a waiver of any other provision of this Agreement. This Agreement
sets forth all the terms of the understandings between the parties with
reference to the subject matter set forth herein and may not be waived, changed,
discharged or terminated orally or by any course of dealing between the parties,
but only by an instrument in writing signed by the party against whom any
waiver, change, discharge or termination is sought.
13. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Texas.
14. Severability. In case of one or more of the provisions contained in
this Agreement for any reason shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provisions had never
contained herein.
15. Arbitration. In the event that a dispute or controversy should
arise between the Employee and the Company as to the meaning or application of
any provision, term or condition of this Agreement, such dispute or controversy
shall be settled only by binding arbitration in Houston, Texas and for said
purpose each of the parties hereto hereby expressly consents to such arbitration
in such place. Such arbitration shall be conducted in accordance with the
existing rules and regulations of the American Arbitration Association governing
commercial transactions. The expense of the arbitrator shall be shared equally
by the Company and Employee.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date and year first above written.
COMPANY:
CARPATSKY PETROLEUM, INC.
By: /s/
-------------------------------------
Name:
-----------------------------------
Title:
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EMPLOYEE:
/s/
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Xxxxxx X. Texas
