FORTUNE OIL & GAS, INC. Employment Agreement
FORTUNE
OIL & GAS, INC.
This
Employment Agreement (“Agreement”) is made and effective the 1st day of January
2005 by and between Fortune Oil & Gas, Inc., a Nevada corporation (the
“Company”), and Xxxxx Xxxxxxxx (“Executive”).
RECITALS
WHEREAS,
Executive has the experience to provide services to the Company of an
extraordinary character which gives such services a unique value:
and
Whereas
the Company desires to retain the services of Executive, and Executive desires
to be employed by the Company for the term of this Agreement.
NOW
AND THEREFORE, the
Company and Executive, intending to be legally bound, herby agree as
follows:
1.
Employment.
The
Company hereby employs Executive as the Chief Executive Officer of the Company.
For the term of Executive’s employment, and upon the other conditions set forth
in this Agreement, Executive accepts such employment and agrees to perform
services for the Company, subject always to such resolutions as are established
from time to time by the Board of Directors of the Company.
2.
Term.
The
term
of Executive’s employment hereunder shall commence on the effective date of this
Agreement and continue through December 31,
2014
subject
to the termination provisions contained herein. The Agreement may be terminated
by the Company only for cause as set forth below, and shall not constitute
“at
will” employment.
3.
Position
and Duties.
3.1
Services
with the Company.
During
the term of this Agreement, Executive agrees to perform such duties and exercise
such powers related thereto as may from time to time be assigned to him by
the
Company’s Board of Directors (the “Board”). Executive shall duly and diligently
perform all duties assigned to him while in the employ if the Company. He
shall
be bound by and faithfully observe and abide by all rules and regulations
of the
Company which are brought to his notice or of which he should be reasonably
aware.
3.2
No
Conflicting Duties.
Executive
shall devote sufficient productive time, ability, and attention to the business
of the Company during the term of this Agreement in a manner that will serve
the
best interests of the Company. During the term hereof, Executive shall not
serve
as an officer, director, employee, consultant or advisor to any other business
without the prior written consent of the Company’s Board, which shall not be
unreasonably withheld. Executive hereby confirms he is under no contractual
commitments inconsistent with his obligations set forth in this Agreement.
This
Agreement shall not be interpreted to prohibit Executive from making passive
interfere with the services required under this Agreement.
4.
Compensation.
4.1
Annual
Salary.
As
compensation for all services to be rendered by Executive under this Agreement,
the Company shall pay to Executive an annual salary of three
hundred and sixty thousand dollars ($360,000.00)
(the
“Annual Salary”). Executive’s Annual Salary shall be paid on a regular basis in
accordance with the Company’s normal payroll procedures and policies. On or
before the yearly anniversary date of this Agreement, the Board of Directors
shall determine the increase to the Annual Salary, but in no event shall
it be
less than seven
percent
(7%).
The
adjusted Annual Salary shall become effective on or before the yearly
anniversary date. In addition, Executive shall be entitled to receive cash
and
or stock bonuses as may be awarded by the Board of Directors from time to
time.
1
4.2 Incentive
Stock Options.
The
Company shall issue incentive stock options to Executive pursuant to the
Company’s qualified Incentive Stock Option Plan. Upon the execution of this
Agreement, Executive will receive one million four hundred thousand (1,400,000)
incentive stock options at an exercise price equal to the fair market value
at
the date of grant, but in no event shall the total value exceed $100,000.
The
Incentive Stock Options shall vest immediately and shall the terminate ten
years
from the date of grant. Executive may exercise the incentive stock options,
at
his sole and absolute discretion, by providing the Company with written notice
accompanied by (1) cash or a cashier’s check an amount equal to the product of
the incentive stock options exercise price and the number of shares Executive
desires to purchase pursuant to this provision, or (2) by a cashless exercise
whereby Executive receives the net amount of shares after deducting the value
of
the exercise price.
4.3
Stock
and Option Registration Rights.
The
Company hereby agrees to use its best efforts to register any shares or any
securities in which the underlying shares are common stock with the Securities
and Exchange Commission on Form S-8 for which the securities were issued
as a
form of compensation.
4.4
Expenses.
The
Company shall reimburse Executive for all reasonable business or travel expenses
and office related expenses incurred by Executive in the performance of his
duties: including but not limited to: airfare, automobile rental, lodging,
meals, telephone, copy costs, and supplies.
4.5
Business
Travel.
The
Company and Executive recognize that it may periodically be necessary for
Executive to travel on behalf of the Company. The Company will pay for Executive
to travel in business class or better.
4.6
Annual
Vacation.
Executive
shall be entitled to forty
five (45) days
vacation time each year without loss of compensation. In the event that the
Executive is unable for any reason to take the total amount of vacation time
authorized herein during any year, any unused vacation time shall carry over
from year to year. Any earned but unused vacation time will be paid to Executive
based upon his annual rate of all compensation paid in the previous twelve
months upon termination or expiration of this Agreement.
4.7
Sick
Leave.
Executive
shall be entitled to forty
five (45)
days
sick leave each year without loss of compensation. Any earned but unused
sick
leave will be paid to Executive based upon his annual rate of all compensation
paid in the previous twelve months upon termination or expiration of this
Agreement.
4.8
Health
Insurance.
The
Company shall provide Executive and his immediate family members with extensive
health insurance that shall cover medical, dental and vision.
4.9
Payment
Upon Sale or Merger of Company.
In
the
event the Company shall merge, sell a controlling interest, or sell a majority
of its assets, the Company shall pay Executive three (3) times his annual
salary
then in effect. Further, as to any vested but unexercised options to purchase
shares in the Company which are held by Executive at the earlier of (1) the
Company’s execution of a Letter of Intent to (a) merge, (b) sell a controlling
interest, or (c) sell a majority of its assets, or (2) the date of any such
merger or sale is consummated, the Company shall pay Executive cash in the
amount equal to the difference between the consideration paid to the Company
on
a per share basis less the exercise price of the option, the value of which
is
multiplied to the number of options which Executive holds.
2
5.
Compensation
Upon the Termination of Executive’s Employment.
5.1
In
the
event this Agreement is terminated prior to its expiration for any reason,
Executive shall be entitled to receive Executive’s then current Base Salary, any
and all accrued, earned but unpaid bonuses or benefits described in Section
4 of
this Agreement. Further, Executive shall retain all rights to shares and
vested
stock options, and all other equity rights that may be granted to Executive
from
time to time. The benefits provided for in this provision are exclusive of
any
other rights or remedies which Executive would posses in the event the Company
terminates the Agreement without cause. The Company agrees that in the event
it
terminates Executive’s employment without cause, Executive retains all rights
and remedies available under the law and the Company will not urge or otherwise
argue or assert in any legal, including judicial or arbitration, proceeding
that
any provision of this Agreement as constitutes a waiver of rights by
Executive.
5.2
In
the
event that Executive’s employment is terminated pursuant to section 9.2,
Executive’s beneficiary or beneficiary designated by Executive in writing to the
Company, or in the absence of such beneficiary, Executive’s estate, shall be
entitles to receive Executive’s then current Base Salary for one
(1)
year
after
the date of his death.
6.
Proprietary
Matter.
Except
as
permitted or directed by the Company, Executive shall not during the term
of his
employment or at any time thereafter divulge, furnish, disclose, or make
accessible (other then in the ordinary course of the business of the Company)
to
anyone for use in any way confidential, secret, or proprietary knowledge
or
information of the Company (“Proprietary Matter”) which Executive has acquired
or become acquainted with or will acquire or become acquainted with, whether
developed by himself or by others, including, but not limited to, any trade
secrets, confidential or secret designs, processes, formulae, software or
computer programs, plans, devices or material (whether or not patented or
patentable, copyrighted or copyrightable) directly or indirectly useful in
any
aspect of the business of the Company, any confidential customer, distributor
or
supplier lists of the Company, any confidential or secret development or
research work of the Company, or any other confidential, secret or non- public
aspects of the business of the Company. Executive acknowledges that the
Proprietary Matter constitutes a unique and valuable asset of the Company
acquired at great time and expense by the Company, and that any disclosure
or
other use of the Proprietary Matter other than for the sole benefit of the
Company would be wrongful and would cause irreparable harm to the Company.
Both
during and after the term of this Agreement, Executive will refrain from
any
acts or omissions that would reduce the value of Proprietary Matter to the
Company. The foregoing obligations of confidentiality, however, shall not
apply
to any knowledge or information which is now published or which subsequently
becomes generally publicly known, other than as a direct or indirect result
of
the breach of this Agreement by Executive nor shall it apply to any knowledge
or
information Executive had prior to the execution of this Agreement.
7.
Ventures.
If,
during the term of this Agreement, Executive is engaged in or associated
with
the planning or implementing of any project, program, or venture involving
the
Company and a third party or parties, all rights in the project, program,
or
venture shall belong to the Company and shall constitute a corporate opportunity
belonging exclusively to the Company. Except as provided in Section 4.4 above,
Executive shall not be entitled to any interest in such project, program,
or
venture or to any commission, finder’s fee or other compensation in connection
therewith.
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8. Non
Solicitation of Employees.
During
Executive’s employment by the Company hereunder and for the one (1) year period
following the termination of such employment for any reason, Executive shall
not, either directly or indirectly, on his own behalf or in the service or
on
behalf of others solicit, divert or hire away, or attempt to solicit, divert
or
hire away any person then employed full time by the Company.
9.
Termination
Prior to Expiration of the Term
9.1
Disability
Executive’s employment shall terminate upon Executive becoming totally or
permanently disabled for a period of three years or more. For purposes of
this
Agreement, the term “totally or permanently disabled” or “total or permanent
disability” means Executive’s inability on account of sickness or accident,
whether or not job related, to engage in regularly or to perform adequately
his
assigned duties under this Agreement. Prior to terminating the Agreement
pursuant to this provision, the Company shall engage and consult one or more
physicians as may be reasonable.
9.2
Death
of Executive.
Executive’s employment shall terminate immediately upon the death of
Executive.
9.3
Termination
for Cause.
The
Company may only terminate Executive’s employment for “Cause” (as hereinafter
defined). Further, no termination for “Cause” may be invoked by Company without
first providing Executive with at least thirty (30) days written notice
and
one
hundred twenty (120) days
to
correct any breach, default or causation. Such written notice shall set forth
with reasonable specificity the Company’s basis for such notice of termination
and Executive shall have thirty (30) days to correct the condition set forth
in
the notice.
9.3.1.
Cause
Defined.
For the
purpose of this section, the termination of this Agreement by Company for
any of
the following reasons shall be considered termination for Cause:
| (i) |
Commission
of a criminal act involving fraud, embezzlement or breach of trust
or
other act which would prohibit Executive from holding his position
under
the rules of the Securities and Exchange
Commission.
|
| (ii) |
Willful,
knowing and malicious violation of written corporate policy or
rules of
the Company
|
| (iii) |
Willful,
knowing and malicious misuse, misappropriation, or disclosure of
any of
the Proprietary Matters.
|
| (iv) |
Misappropriation,
concealment, or conversion of any money or property of the
Company.
|
| (v) |
Being
under the habitual influence of intoxicating liquors or controlled
substances while in the course of
employment.
|
4
| (vi) |
Intentional
and non-trivial damage or destruction of property of the Company.
For
purposes of this provision non-trivial is defined to mean damage
occurring
in the course of a single act or occurrence in an amount exceeding
four
hundred dollars.
|
| (vii) |
Reckless
and wanton conduct which endangers the safety of other persons
or property
during the course of employment or while on premises leased or
owned by
the Company.
|
| (viii) |
The
performance of duties in a habitually unsatisfactory manner after
being
repeatedly advised in writing by the Company of such unsatisfactory
performance.
|
| (ix) |
Continued
incapacity on the part of Executive to perform his duties, unless
waived
by the Company
|
9.4
Surrender
of Records and Property.
Upon
termination of his employment with the Company, Executive shall deliver promptly
to the Company all records, electronic media, manuals, books, blank forms,
documents, letters, memoranda, notes, notebooks, reports, data, tables, and
calculations or copies thereof, which are the property of the Company and
which
relate in any way to the business, products, practices or techniques of the
Company, and all other property (keys, office equipment, computers, mobile
phones, credit cards, etc.) of the Company and Proprietary Matter, including
but
not limited to, all documents which in whole or in part contain any trade
secrets or confidential information of the Company, which in any of these
cases
are in his possession or under his control.
10.
Assignment.
This
Agreement shall not be assignable, in whole or in part, by either party without
the written consent of the other party, except that the Company may, without
the
consent of Executive, assign its rights and obligations under this Agreement
to
any corporation, firm or other business entity (i) with or into which the
Company may merge or consolidate, or (ii) to which the Company may sell or
transfer all or substantially all of its assets or of which fifty percent
(50%)
or more of the equity investment and of the voting control is owned, directly
or
indirectly, by, or is under common ownership with, the Company. Upon such
assignment by the Company, the Company shall obtain the assignees’ written
agreement enforceable by Executive to assume and perform, and after the date
of
such assignment, the terms, conditions, and provisions imposed by this Agreement
upon the Company. After any such assignment by the Company and such written
agreement by the assignee, the Company shall be discharged from all further
liability hereunder and such assignee shall thereafter be deemed to be the
Company for the purposes of all provisions of this Agreement including this
section.
11.
Indemnification.
The
Company shall indemnify Executive as provided in the Nevada General Corporations
Code, Company’s Charter or Bylaws in effect at the commencement of this
Agreement. The scope of indemnification to which Executive is entitled shall
not
be diminished, but may be expanded by the Company, by amendment of the Company’s
Bylaws, Articles of Incorporation or otherwise. Executive shall indemnify
and
hold the Company harmless from all liability for loss, damages or injury
resulting from the negligence or misconduct of Executive.
12.
Miscellaneous
12.1
Governing
Law.
This
Agreement is made under and shall be government by and construed in accordance
with the laws of the State of California.
5
12.2
Entire
Agreement.
This
Agreement contains the entire agreement of the parties relating to the subject
matter hereof and supersedes all prior agreements and understandings with
respect to such subject matter, and the parties hereto have made no agreements,
representations or warranties relating to the subject matter of this Agreement
which are not set forth herein.
12.3
Legal
Proceedings.
Should
any party institute or should the parties otherwise become a party to any
action
or proceeding to enforce or interpret this Agreement, the prevailing party
in
any such action or proceeding shall be entitled to receive from the
non-prevailing party all costs and expenses of prosecuting or defending the
action or proceeding. This Agreement and the rights of each party under this
Agreement shall be governed by, interpreted under, and construed and enforced
in
accordance with the laws of the State of California.
12.4
Withholding
Taxes.
The
Company may withhold from any benefits payable under this Agreement all federal,
state, city or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.
12.5
Amendments.
No
amendment or modification of this Agreement shall be deemed effective unless
made in writing signed by the parties hereto.
12.6
No
Waiver.
No term
or condition of this Agreement shall be deemed to have been waived nor shall
there be any estoppel to enforce any provisions of this Agreement, except
by a
statement in writing signed by the party against whom enforcement of the
waiver
or estoppel is sought. Any written waiver shall not be deemed a continuing
waiver unless specifically stated, shall operate only as to the specific
term or
condition waived and shall not constitute a waiver of such term or condition
for
the future or as to any act other than that specifically waived.
12.7
Severability.
To
the
extent any provision of this Agreement shall be invalid or unenforceable,
it
shall be considered deleted here from and the remainder of such provision
and of
this Agreement shall be unaffected and shall continue in full force and
effect.
12.8
Notices.
Any and
all notices, requests or other communications required or permitted in or
by any
provision of this Agreement shall be in writing and may be delivered personally
or by certified mail directed to the addressee at such person’s or entity’s last
known post office address, and if given by certified mail, shall be deemed
to
have been delivered when deposited in such, mail postage prepaid.
6
This
Agreement is executed on the date first written above at Los Angeles,
California.
| Company: | Executive: | ||
| Fortune Oil & Gas, Inc. | |||
| /s/ Xxxxx Xxxx | /s/ Xxxxx Xxxxxxxx | ||
|
Xxxxx Xxxx, President |
Xxxxx Xxxxxxxx |
||
| Approved and Ratified by Executive Board Member | |||
| /s/ Xxxxx Xxxx | |||
|
Xxxxx Xxxx |
