EMPLOYMENT AGREEMENT
THIS AGREEMENT, is effective as of November 2, 2000, by and between Xxxxx
Oil and Gas Company, a Nevada corporation ("Corporation"), and Xxxxxxx X. Xxxxxx
("Employee"). This Agreement is intended to replace the Employment Agreement
dated effective December 27, 1994 as confirmed and modified by a letter
agreement dated January 11, 1999, which shall be deemed to be canceled upon the
effective date of this Agreement.
The Corporation desires to employ the Employee and the Employee desires to
be employed by the Corporation upon the terms and conditions set forth in this
Agreement.
The Parties hereby enter into this Agreement (i) setting forth their mutual
promises and understandings and (ii) Mutually acknowledging the receipt and
sufficiency of consideration to enter into this Agreement and the mutual
promises, conditions and understandings set forth below.
I ARTICLE
EMPLOYMENT DUTIES AND RESPONSIBILITIES
Section 1.1. Employment. The Corporation hereby employs the Employee as the
President and Treasurer of the Corporation. The Employee accepts the employment
and shall be subject to the Corporation~s Articles of Incorporation, Bylaws and
direction from the Board of Directors of the Corporation.
Section 1.2. Duties and Responsibilities. The Employee shall be the principal
executive officer of the Corporation responsible for the business and affairs of
the Corporation and for implementing decisions of the Board of Directors.
Section 1.3. Working Facilities. The Employee shall be based in the Grand
Junction, Colorado metropolitan area where the Corporation shall provide
reasonable office facilities. The Employee agrees to travel to the extent
necessary to perform his duties hereunder, including travel to the various
properties and field offices of the Corporation. The Corporation shall provide
reasonable transportation to perform these duties.
Section 1.4. Vacations. The Employee shall be entitled to vacations totaling at
least three weeks per year. Any vacation for longer than 10 consecutive business
days shall approved by the Board of Directors or an appropriate committee
thereof. If the business of the Corporation precludes the Employee from taking
all vacation earned during a year, then, with the consent of the Board of
Directors, the vacation shall be accrued and available to be taken by the
Employee in subsequent years. If the Board of Directors does not consent to such
accrual of vacation time, the Corporation shall pay the Employee an amount equal
to the number of days of unused vacation times the Employee's equivalent daily
compensation. Employee may accrue a maximum of 20 unused vacation days per year.
Section 1.5. Expenses.
A. Employee Reimbursed for Expenses. During the period of employment pursuant
to this Agreement, the Employee will be reimbursed for reasonable expenses
incurred for the benefit of the Corporation in accordance with the general
policy of the Corporation as adopted from time to time by the Corporation's
Board of Directors, and any other expenses specifically approved beforehand
by the Board of Directors. Those reimbursable expenses shall include, but
shall not be limited to, entertainment and promotional expenses,
transportation expenses, and the expenses of membership in certain civic
groups and business organizations. Any other reimbursable expenses shall be
as set forth on Exhibit A.
B. Employee Shall Account for Expenses to Corporation. With respect to any
expenses which are to be reimbursed by the Corporation to the Employee, the
Employee agrees to make an itemized accounting to the Corporation (i) for
proper accounting by the Corporation and (ii) in detail sufficient to
entitle the Corporation to an income tax deduction for paid items if
deductible.
II ARTICLE
COMPENSATION
Section 2.1. Salary. The Corporation shall pay an initial base salary to the
Employee at an annual rate of Ninety-Seven Thousand Five Hundred Dollars
($97,500), payable bi-weekly, in arrears. The Board of Directors shall review
the salary of Employee at least annually and may increase the salary if the
Board of Directors determines that an increase would be appropriate. In
addition, on the later of the date (i) that this Agreement is signed by the
Corporation, or (ii) the date on which all shareholders of the Corporation~s
Series B 5% PIK Convertible Preferred Stock have formally agreed to exchanged
for other securities of the Corporation or surrendered for cancellation, the
Corporation shall pay to the Employee a cash bonus of $50,000.
Section 2.2. Death During Employment. In the event of the Employee's death
during the term of this Agreement the Corporation shall pay to the Employee's
surviving souse or, if there is no surviving spouse, to Employee's children on a
pro-rata basis to each child, bi-weekly, the compensation which otherwise would
be payable to the Employee for a six month period following the Employee's death
at the rate of compensation then being paid to Employee.
Section 2.3. Benefits. In addition to all other compensation, the Employee shall
be entitled to participate in any pension plans, profit sharing plans, medical
or dental reimbursement plans, group term or other life insurance plans, medical
or hospitalization insurance plans and any other group employee benefit plan
which may be established by the Corporation. Such participation shall be in
accordance with the terms of any such plan. The Corporation shall pay premiums
for and shall include the Employee, his spouse, and dependents in any major
medical or hospitalization insurance program established or utilized by the
Corporation on behalf of its executive officers if requested to do so by
Employee.
Section 2.4. Life and Disability Insurance. The Corporation may obtain for its
own benefit such amounts of key executive term life insurance on the life of the
Employee as it may deem necessary or advisable. The proceeds of this may be used
to pay Corporation obligations under Sections 2.2 and 3.6 of this contract; but
the Corporation's obligations thereunder shall be absolute.
Section 2.5. Automobile Allowance. The Corporation shall pay, or reimburse
Employee for, an automobile allowance equal to $1,000 per month. Alternatively,
with the approval of the Board of Directors, the Corporation may purchase or
lease an automobile for the exclusive use of the Employee at a cost not to
exceed $12,000 annually.
Section 2.6. Stock Based Compensation. On the later of the date by which (i)
that this Agreement is signed by the Corporation, or (ii) the date on which all
shareholders of the Corporation~s Series B 5% PIK Convertible Preferred Stock
have formally agreed to exchanged for other securities of the Corporation or
surrendered for cancellation, the Corporation shall issue and deliver to the
Employee the following securities.
A. 150,000 shares of the Corporation~s common stock, par value $0.10 per
share. The shares shall, at the election of the Corporation, be subject to
forfeiture and shall be returned to the Corporation for cancellation if the
Employee terminates the employment for reasons other than set forth in
Sections 3.2, 3.5, 3.6 or 3.7 below before one year from the date of this
Agreement.
B. The Corporation~s common stock purchase warrants entitling the Employee to
purchase up to a total of 600,000 shares of the Corporation~s common stock,
par value $0.10 per share at a purchase price of $0.50 per share, having
the terms, conditions, rights and preferences set forth on the warrants
which are attached hereto as Exhibits SP-1 and SP-2.
In the event that at the time the Warrants become exercisable in accordance
with their terms (and the Warrants are surrendered for exercise), the
Corporation then has insufficient authorized but unissued common stock to permit
the Warrant(s) to be exercised in full, the Corporation shall pay to the
Employee, upon surrender of the Warrant(s), an amount of cash equal to the
difference between (a) the exercise price of the Warrants and (b) the average
closing sales price of the Corporation~s common stock in the public market for
the five trading days before the date of surrender, multiplied by (c) the number
of shares represented by the Warrant(s) surrendered less the number of
authorized but unissued shares of common stock of the Corporation on the date of
surrender.
III ARTICLE
TERM OF EMPLOYMENT AND TERMINATION
Section 3.1. Term. This Agreement shall be in effect for a three year term
subject to termination in accordance with this Article III (the "Term").
Section 3.2. Termination by the Corporation Without Cause. The Board of
Directors, without cause, may terminate this Agreement at any time upon 30 days
written notice to the Employee. In such event, the Employee, if requested by the
Board of Directors, shall continue to render the services required under this
Agreement for 30 days. Within five business days after the last day of
Employment, the Corporation shall pay to Employee, a severance payment of
$150,000.
Section 3.3. Termination by the Employee Without Cause. The Employee, without
cause, may terminate this Agreement upon 90 days written notice to the
Corporation. In such event, the Employee shall, if requested by the Corporation,
continue to render the services required under this Agreement to the date
identified in the Employee's written notice. The Employee shall continue to be
paid compensation at the rate set forth in Exhibit B of this Agreement for at
least 30 days and thereafter through the earlier of (i) the date identified in
the Employee's written notice or (ii) the date through which the Employee
furnishes services at the request of the Corporation, and no further payments
shall be made by the Corporation unless agreed to by the Board of Directors.
Section 3.4. Termination by the Corporation With Cause. The Corporation may
terminate the Employee's employment for cause, which shall be limited to the
following: (a) the Employee's knowing and willful or reckless commission of an
act of gross misconduct which the Employee knows or reasonably should have known
at the time would be injurious to the Corporation, and did in fact materially
injure the Corporation; or (b) the Employee's refusal to devote substantially
all his time and efforts to his duties under this Agreement after the Board of
Directors has notified the Employee in writing of his noncompliance; or (c) the
Employee's continued refusal, after written notice from the Board of Directors
to follow the specific instructions of the Board of Directors, unless the
instructions would cause the Employee or the Corporation to be in violation of
the law or applicable regulations or would not be in the best interests of the
Corporation or its stockholders. Termination pursuant to this subsection shall
result in no further compensation being due or payable to the Employee hereunder
from and as of the date of such termination.
Section 3.5. Termination Upon Death of Employee. Subject to Section 2.2 of this
Agreement, this Agreement shall be terminated in the event of the Employee's
death.
Section 3.6. Termination Upon Disability of Employee. The Corporation may
terminate the Employee's employment if, during the Term, the Employee becomes
physically or mentally disabled, whether totally or partially, so that the
Employee is unable substantially to perform his services under this Agreement
(i) for a period of three consecutive months or (ii) for shorter periods
aggregating four months during any twelve month period, by written notice to the
Employee. Notwithstanding any such disability, the Corporation shall continue to
pay the Employee the greater of (a) his full salary up to and including the date
of such termination and for six months thereafter, or (b) any amounts payable to
Employee under any disability or similar insurance.
Section 3.7. Termination Upon Change of Control. Notwithstanding the provisions
of Section 3.2, if the Employee is terminated as a direct or indirect result of
either (i) actions taken by the Board of Directors following the replacement of
more than 50% of the members of the Board of Directors in any 15 month period
which were opposed by a majority of the directors before the replacement or (ii)
a shareholder or group of shareholders or a person acting on behalf of
shareholders increasing his, hers, their or its ownership of the Corporation's
outstanding stock by more than 20% within a 12 month period, or if Employee
voluntarily terminates his employment within six months following the time when
either (i) or (ii) above occur, then the Employee shall be paid a lump sum of
$150,000 as a severance payment as of the date of the termination. Upon such a
change of control, as defined in this Section 3.7, at Employee's option, the
Corporation shall immediately repurchase any outstanding shares of the
Corporation's stock which are held by Employee at the per share price equal to
the greater of (a) the price paid per share by Employee when Employee acquired
the shares, or (b) the fair market value of the stock repurchased at the date of
termination. If the Corporation does not pay the amount specified by this
Section 3.7 on a timely basis, the unpaid amount shall bear interest at the
greater of 10% per annum or the prime rate at Xxxxx Fargo Bank in Denver,
Colorado, on the date of such termination until paid and the Corporation shall
pay all costs and expenses, including attorney's fees, incurred by the Employee
in collecting all amounts owed under this Section 3.7. Any cash payment to
Employee under this Section 3.7 shall not be paid if the Corporation has made a
severance payment to Employee under Section 3.2 above.
IV ARTICLE
DISCLOSURE OF INFORMATION
Section 4.1. Definitions. As used herein, the term "proprietary information"
shall mean technical information and know-how concerning the Corporation's oil
and gas exploration, development, production and servicing business and its
related equipment, books, maps and records developed by or otherwise owned or
controlled by the Corporation.
4.0.2. As used herein, the term "trade secrets" shall mean any proprietary
information and any other non-public information used by the Corporation,
including such matters as geologic records, maps, surveys, documents
evidencing interests in real property, patented or unpatented technology,
supplier information, books, processes, concepts, methods, formulae or
technique know-how, customer or vendor lists or information or development
plans or strategy, owned or controlled by the Corporation or otherwise
subject to an obligation or intent of the Corporation to maintain the
confidentiality thereof which is of a proprietary or secret nature and
which is or may be applicable to, or related to the business, equipment or
services, present or future, of the Corporation or the oil and gas
exploration and development business of the Corporation, or the contractual
relationships of the Corporation with customers or clients.
4.0.3. As used herein, the term "document" shall mean any data, notes, drafts,
manuals, blueprints, maps, notebooks, reports, photographs, drawings,
sketches or other records, in any tangible form whatsoever, whether
originals, copies, reproductions, or excerpts, produced or obtained from
the Corporation by the Employee or any other representative of the
Corporation which relates to trade secrets of the Corporation.
4.0.4. As used herein, the term "Corporation invention" shall mean any
invention, discovery, improvement, or trade secret, whether patentable or not
and whether or not reduced to practice, conceived or learned by the Employee
either alone or Jointly with others, while employed by the Corporation, which
relates to or results from the actual or anticipated investigation, research,
development, or production of the Corporation, or which results to any extent
from use of the Corporation's facilities.
4.0.5. As used herein, the term "Corporation" shall mean not only the
Corporation as first defined above, but also the Corporation's subsidiaries
and all affiliates of the Corporation.
Section 4.2. Employee Shall Not Disclose Proprietary Information or Trade
Secrets. The Employee recognizes that the trade secrets of the Corporation, as
they may exist from time to time, are a valuable, special and unique asset of
the Corporation. The Employee will not, during or for a period of 24 months
after termination of the Employee's employment relationship under this
Agreement, disclose or confirm the Corporation's trade secrets or any part
thereof to any person, firm, corporation, association or other entity for any
reason or purpose whatsoever, without the prior written authorization to do so
from the Corporation.
Further, all documents shall be property of the Corporation and the
Employee shall not remove these documents upon termination of employment with
the Corporation except pursuant to a specific authorization in writing from the
Board of Directors of the Corporation. The Employee agrees that any document
produced or obtained by the Employee while employed by the Corporation shall be
the sole and exclusive property of the Corporation. The Employee agrees to
return any such document to the Corporation immediately upon termination of
employment with the Corporation, or upon request of the Corporation.
In no event shall the Employee copy or remove any documents of any person,
company or association with whom the Employee did not directly work while an
Employee of the Corporation.
The Employee recognizes and acknowledges that much of the information and
knowledge which he has received or will receive by virtue of his employment with
the Corporation is or will be proprietary information and trade secrets which
have unique, special value to the successful operation of the Corporation's
business. The Employee agrees not to disclose any proprietary information or
trade secrets to any other person for any purpose, for his own direct or
indirect benefit or the benefit of any other employer or affiliate during the
term of this Agreement or for a period of 24 months thereafter without the prior
written consent of the Corporation.
The aforesaid noncompetition covenant shall remain in any effect at all
times while the Employee is in the employ of the Corporation and for a period of
24 months after termination of the Employee's relationship with the Corporation
in any capacity whatsoever, regardless of the reason for termination or
cessation of the Employee's relationship. The aforesaid covenant is intended to
be a reasonable restriction on the Employee. If all, or any portion of the
covenant is held unreasonable or unenforceable by a court or agency having valid
Jurisdiction, the Employee expressly agrees to be bound by any lesser covenant
subsumed within the terms of such covenant that imposes the maximum duty
permitted by law, as if the resulting covenant were separately stated in and
made apart of this Article IV.
Section 4.3. Duty of Loyalty; Conflicts of Interest. The Employee agrees that he
will not, while employed by the Corporation and for a period of 12 months
thereafter, unless employment is terminated under any of Sections 3.2, 3.3 or
3.7 above, be an employee or consultant, or assist in any way, or work directly
or indirectly on behalf of, any person, corporation, firm or other entity
engaged in, or proposing to engage in, a line of business which would directly
compete or conflict with the Corporation's business, without the prior express
written consent of the Corporation. Notwithstanding the foregoing, however, the
Corporation and the Employee acknowledge that where the Board of Directors is
fully informed about and approves of the Employee's individual interest in a
business or an opportunity of the Corporation, it shall not be considered a
violation of this Section 4.3. The Employee agrees that he will not use any
assets of the Corporation for his own individual projects and that he will not
use any proprietary information to the disadvantage of the Corporation. The
Employee agrees that he will not interfere with the right of the Corporation to
do business with any person, corporation, firm or other entity.
Section 4.4. Enforcement. The Employee acknowledges that monetary damages would
not adequately or fairly compensate the Corporation for breach of any of the
obligations of the Employee under Article IV of this Agreement and agrees that
in the event of any breach or threatened breach the Corporation shall be
entitled to seek appropriate injunctive relief from a court of competent
jurisdiction, in addition to any other relief or damages which may be available.
V ARTICLE
MISCELLANEOUS
Section 5.1. Governing Law and Jurisdictions. It is the intention of the parties
hereto that this Agreement and its performance hereunder be construed in
accordance with and pursuant to the laws of the state of Colorado and that, in
any action, special proceedings, or other proceeding that may be brought arising
out of, in connection with, or by reason of this Agreement, the law of the state
of Colorado shall be applicable and shall govern to the exclusion of any forum,
without regard to the Jurisdiction in which any action or special proceeding may
be instituted. The courts and authorities of the state of Colorado shall have
sole jurisdiction and venue over all controversies which may arise with respect
to this Agreement.
Section 5.2. No Waiver. No provision of this Agreement may be waived except by
an agreement in writing signed by the waiving party. A waiver of any term or
provision shall not be construed as a waiver of any other term or provision.
Section 5.3. Amendment. This Agreement may be amended, altered or revoked at any
time, in whole or in part, by filing with this Agreement a written instrument
setting forth such changes, signed by all of the parties.
Section 5.4. Successors. This Agreement shall be binding upon and inure to the
benefit of the Corporation, its successors and assigns (including, without
limitation, any company into or with which the Corporation may merge or
consolidate). The Corporation agrees that it will not effect the sale or other
disposition of all or substantially all of its assets unless either (i) the
person or entity acquiring the assets or a substantial portion of the assets
shall expressly assumes by an instrument in writing all duties and obligations
of the Corporation under this Agreement or (ii) the Corporation shall provide,
through the establishment of a separate reserve for the payment in full of all
amounts which are or may reasonably be expected to become payable to Employee
under this Agreement.
Section 5.5. Construction. Throughout this Agreement the singular shall include
the plural, the plural shall include the singular, and the masculine and neuter
shall include the feminine, wherever the context so requires.
Section 5.6. Text to Control. The headings of articles and sections are included
solely for convenience or reference. If any conflicts between any headings and
the text of this Agreement exists, the text shall control.
Section 5.7. Severability. If any provision of this Agreement is declared by any
court of competent jurisdiction to be invalid for any reason, such invalidity
shall not affect the remaining provisions. On the contrary, such remaining
provisions shall be fully severable, and this Agreement shall be construed and
enforced as if such invalid provisions never had been inserted in the Agreement.
Section 5.8. Entire Agreement. This instrument contains the entire agreement
concerning the employment arrangement between the parties and shall, as of the
effective date hereof, supersedes all other employment agreements between the
parties; provided, however, that nothing in this Agreement shall prevent the
Corporation from granting additional or special compensation or benefits to
Employee after the date of execution of this Agreement. This Agreement may not
be amended except by an agreement in writing signed by both parties.
This Agreement is effective as of the date first above written.
EMPLOYEE APPROVED ON BEHALF OF
XXXXX OIL AND GAS COMPANY,
a Nevada corporation
By: /s/ Xxxxxxx X. Xxxxxx By the following Directors:
-------------------------
Xxxxxxx X. Xxxxxx
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxx
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxx
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
EXHIBIT A
ADDITIONAL REIMBURSABLE EXPENSES
1. 40 hours of continuing professional education per year
2. Professional Association dues (AICPA and CSCPA)
3. Bookcliff Country Club Monthly Dues
4. Other expenses as determined from time to time by the Board of Directors
