EXHIBIT 2.2
EMPLOYMENT AGREEMENT
Employment Agreement ("Agreement"), between Pangea
Petroleum Corporation, a Colorado corporation authorized to
do business in the State of Texas ( "Pangea"), Mass Energy,
Inc., a Texas corporation and wholly-owned subsidiary of the
Pangea (the "Employer"), and Xxxxxxx X. Xxxxxx (the
"Employee").
1. For good consideration, the Employer employs the
Employee on the following terms and conditions.
2. Term of Employment: Subject to the provisions of
termination set forth below this agreement will begin on
September 15, 2000 and end on September 14, 2002 unless
sooner terminated as provided in this Agreement.
3. Salary/Benefits: The Employer shall pay the Employee
compensation as provided in this Paragraph 3. In addition
to salary as provided in Paragraph 3(a), as additional
employment compensation, Pangea will grant the Employee
options with respect to its common capital stock ("Pangea
Stock") as provided in this Agreement. All such options
shall be fully vested and fully exercisable upon issuance,
and the Pangea common shares issued pursuant to such options
shall be registered under The Securities Act of 1933 and
issued under an employee stock option plan filed with the
United States Securities and Exchange Commission in a
currently effective S-8 Registration Statement.
(a) Subject to any salary increase approved by the
Employer's Board of Directors, the Employer shall pay
Employee a salary of $5,000 per month, payable at regular
payroll periods.
(b) Pangea shall grant the Employee options to
purchase 50,000 shares of Pangea Stock on the execution of
this Agreement. Thereafter, Pangea shall grant the Employee
options to purchase 25,000 shares of Pangea Stock per month.
The options issued under this Paragraph 3(b) will have an
exercise price of $1.00 per share, may be exercised in whole
or in part until expiration, and unexercised options shall
expire on the third anniversary of issuance. If employment
is terminated under this Agreement before the expiration of
the two year term described in Paragraph 2 above, the
Employee shall retain all options theretofore granted and in
addition shall be granted, upon termination, options for a
number of shares of Pangea common capital stock, pro rated
to the date of employment termination.
(c) Pangea shall pay the Employee, within 30
business days of receipt by Pangea, its subsidiary or
affiliate, one percent of the net proceeds received upon the
successful completion by Pangea or any of its subsidiaries
or affiliates of the sale (or series of related sales) of
any major asset (major asset is defined as an asset whose
aggregate sale price, whether realized from one sale or a
series of related sales, is $500,000 or more). If sale
proceeds for a major asset are received in installments, the
Employee will be paid one percent of each such installment
within 30 business days of receipt thereof by Pangea, its
subsidiary or affiliate.
(d) The Employer will convey to the Employee a two
percent (of 8/8) overriding royalty interest in leases owned
or acquired by the Employer for exploration of oil, gas and
other minerals in the SouthWest El Toro prospect in Xxxxxxx
County, Texas. Within 30 business days after the leases are
acquired by the Employer, the Employer will deliver to the
Employee a duly executed and notarized recordable assignment
sufficient in form and substance to grant the overriding
royalty interest described in this Paragraph 3(d).
(e) In addition to the foregoing, the Pangea shall
grant the Employee options to purchase shares of Pangea
Stock, with an exercise price of five cents per share and an
expiration date on the fifth anniversary of issuance, for
net total proven reserves (as hereafter defined) resulting
from energy projects undertaken by the Employer, as follows:
(1) Pangea shall grant the Employee options to purchase
1,000,000 shares of Pangea Stock for the first five billion
cubic feet ("BCF") equivalent of net total proven reserves,
(2) Pangea shall grant the Employee options to purchase
additional 1,000,000 shares of Pangea Stock for the second
ten BCF equivalent of net total proven reserves, and (3)
thereafter, Pangea shall grant the Employee options to
purchase 1,000,000 shares of Pangea Stock for each
additional 25 BCF equivalent of net total proven reserves.
For purposes of this Agreement, net total proven reserves
shall be determined by an independent third party
engineering reserve report from Netherland, Xxxxxx &
Associates, or such other reputable third party engineering
service as Pangea and the Employee may jointly approve in
writing; and Pangea shall, at its sole cost and expense,
provide the Employee with such a report not less than once
each six months until all prospects initiated or
contemplated during the employment period shall have been
fully completed and reported as herein provided. For
purposes of preparation of the net proven reserves report,
the conversion factor shall be six thousand cubic feet of
gas to one barrel of oil. Options shall continue to be
granted to the Employee under this Paragraph 3(e) following
the termination of employment for net proven reserves
discovered and reported thereafter until all projects or
prospects begun or contemplated prior to employment
termination have been fully completed and reported.
(f) The Employer will provide medical benefits to
the Employee and his immediate family having coverage and
other terms at least equal to those in effect for employees
of the Employer on the date of this Agreement. The Employer
will not make any change in medical benefits coverage which
would require medical examination or underwriter
qualification for the Employee or any member of his
immediate family.
4. Duties: In addition to all other obligations under this
Agreement, the parties will perform the duties described in
this Paragraph 4.
(a) Duties of Employee: The Employee will serve as
President of the Employer. The Employee's duties may be
reasonably modified at the Employer's direction from time to
time; however, no such modification shall require the
Employee to move his place of residence from Houston, Texas;
and no such modification shall be effective if it reduces
the responsibility, authority or status of the Employee
relative to other employees of the Employer or Pangea unless
agreed to in writing by the Employee. Until his
resignation, removal or replacement by new election, the
Employee agrees also to serve as a director of the Employer
and as Executive Vice President and Director of Pangea.
(b) Duties of Employer: In addition to payment of the
compensation provided for in this Agreement, the Employer
will provide the Employee with sufficient office facilities,
equipment and staff for the efficient performance of his
duties.
(c) Duties of Pangea: In addition to granting the
options provided for in Paragraph 3 above, Pangea will use
its best efforts to cause the Employer to fulfill its
obligations under this Agreement. In addition, Pangea will
use its best efforts to provide the Employer, either through
intercompany loans or additional equity contributions, with:
(1) cash sufficient to pay the Employer's accounts payable
on the date of this Agreement, including, without
limitation, accounting and legal fees incurred by the
Employer in the Employee's sale to Pangea of all the
Employer's issued and outstanding common capital stock , and
(2) a minimum of $5,000,000 for each consecutive twelve
months of the employment period for exploration and
production of oil and gas, such minimum contribution to be
in addition to the Employer's cash flow from operations
during the same period. If Pangea is unable to provide the
minimum $5,000,000 per year in exploration and production
funding in addition to cash flow, the Employee shall have
the option to purchase all of the Employer's common capital
stock from Pangea at the current value of its oil and gas
assets, determined by the third party last engaged to
provide a net total proven reserve report under Paragraph
3(e). The Employee's option to purchase the Employer's
stock shall expire if not exercised in writing within 30
days after Pangea has failed to meet its funding goal, and
the closing of the option shall be at the offices of the
Employer within 90 days following Pangea's receipt of an
exercise notice. The purchase price for exercise of the
share option shall be payable in cash.
5. Employee to Devote Full Time to Employer: The Employee
will devote full time, attention, and energies to the
business of the Employer and during this employment, will
not engage in any other business activity, regardless of
whether such activity is pursued for profit, gain, or other
pecuniary advantage, unless approved by the Employer.
Employee is not prohibited from making personal investments
in any businesses, including, without limitation, oil and
gas investments owned on the date of this Agreement or which
are not suitable for the Employer or which have been
declined by the Employer, provided those investments
acquired after the date of this Agreement do not require
active involvement in the operation of said companies.
6. Noncompetition; Confidentiality of Proprietary
Information:
6.1 During the term of this Agreement and for a period
of two years after termination of his employment with the
Employer for any reason whatsoever, the Employee shall not
directly or indirectly induce or attempt to influence and
employee of Pangea or the Employer to terminate such
employment. For a period of one year after the end of
employment, the Employee shall not control, consult with or
be employed on any oil and gas exploration or production
project identified by the Employer during the employment
period as an active or potential business opportunity or
within one mile from the lease boundary for any such
project. This clause is not meant to prohibit the Employee
from working in and or gaining compensation from the energy
industry, but rather is meant only to prohibit him from
competing with the Employer on projects that were business
targets during the employment period. It is specifically
understood and agreed that the Employee shall have the
unrestricted right to engage in projects rejected or
abandoned by the Employer.
6.2 During the term of this Agreement and at all times
thereafter, the Employee shall not use for his personal
benefit, or disclose, communicate or divulge to, or use for
the direct or indirect benefit of any person, firm,
association or company other than the Employer, any
confidential material or information regarding the business
methods, business policies, procedures or techniques,
research or development, projects or results, trade secrets,
or other knowledge or processes used or developed by the
Employer or any names or addresses of customers, or any data
relating to past, present or prospective customers or any
other confidential information relating to or dealing the
with business of the Employer made known to the Employee or
learned or acquired by the Employee while employed by the
Employer under the terms of this Agreement. This Paragraph
6.2 shall not prevent the Employee from using knowledge,
information and skills possessed by the Employee prior to
entering into this Agreement.
6.3 The Employee acknowledges that the restrictions
contained in the foregoing subparagraphs, in view of the
nature of the business in which the Employer is engaged, are
reasonable and necessary in order to protect the legitimate
interests of the Employer, and that any violation hereof
would result in irreparable injuries to the Employer. The
Employee therefore acknowledges that, in the event of his
violation of any of these restrictions, the Employer shall
be entitled to obtain from any court of competent
jurisdiction preliminary and permanent injunctive relief as
well as damages and an equitable accounting of all earnings,
profits, and other benefits arising from such violation,
which rights shall be cumulative and in addition to any
other rights or remedies to which the Employer may be
entitled.
6.4 If the period of time or the area specified above
shall be adjudged unreasonable in any proceeding, then the
period of time shall be reduced by such number of months or
the area shall be reduced by the elimination of such portion
thereof or both so that such restrictions may be enforced in
such area and for such time as if adjudged to be reasonable.
If the Employee violates any of the restrictions contained
in the foregoing subparagraph, the restrictive period shall
not run in favor of the Employee from the time of the
commencement of any such violation until such time as such
violation shall be cured by the Employee to the satisfaction
of the Employer.
7. Reimbursement of Expenses: The Employee may incur
reasonable expenses for furthering the Employer's business,
including expenses for entertainment, travel, and similar
items. The Employer shall reimburse the Employee for all
business expenses after the Employee presents an itemized
account of expenditures, pursuant to the Employer's policy.
8. Vacation: The Employee shall be entitled to a yearly
vacation of four weeks at full pay beginning at the date of
employment, with the full vacation period for the first
employment year vesting and being available to the Employee
from the first day of employment.
9.Disability: If Employee cannot perform the duties because
of illness or incapacity for a period of more than ten (10)
business days in succession, the salary payment otherwise
due under Paragraph 3(a) during said illness or incapacity
will be reduced by Seventy-five (75%) percent. The
Employee's full salary compensation will be reinstated upon
return to work. Disability shall not affect the Employee's
rights to options for shares of Pangea stock unless
employment is terminated because of the disability, in which
case the options due the Employee under Paragraph 3(b) shall
terminate as therein provided, but options to be granted
under Paragraph 3(e) shall continue as therein provided.
10.Termination of Agreement: With cause, the Employer may
terminate the employment relationship arising under this
agreement at any time upon 30 days' written notice to the
Employee. If the Employer requests, the Employee will
continue to perform his duties and shall in any case be paid
his regular compensation, including Pangea share options, up
to the date of termination. In addition, the Employer will
pay the Employee on the date of termination a severance
allowance of three months salary and Pangea share options,
less taxes and social security required to be withheld.
Without cause, the Employee may terminate employment upon 30
days' written notice to the Employer. Employee may be
required to perform his duties and will be paid the regular
salary and monthly Pangea share option compensation to date
of termination but shall not receive a severance package
allowance. Notwithstanding anything to the contrary
contained in this agreement, upon payment of the severance
package allowance described in this Paragraph 10 for
termination by the Employer, the Employer may terminate the
Employee's employment upon 30 days' notice to the Employee
should any of the following events occur:
a. The sale of substantially all of the Employer's
assets to a single purchaser or group of associated
purchasers or;
b. The sale, exchange, or other disposition, in one
transaction of the majority of the Employer's outstanding
corporate shares or;
c. The Employer's decision to terminate its
business and liquidate its assets;
d. The merger or consolidation of the Employer with
another company; or
e. Bankruptcy or Chapter 11 Reorganization.
11. Death Benefit: Should Employee die during the term of
employment; the Employer shall pay to Employee's estate any
compensation due through the end of the month in which death
occurred.
12. Assistance in Litigation: For a period of two years
after termination of the employment relationship arising
under this Agreement, the Employee shall upon reasonable
notice, furnish such information and proper assistance to
the Employer as it may reasonably require in connection with
any litigation in which it is, or may become, a party either
during or after employment. The Employer shall pay the
Employee for time devoted to such litigation support
activity at the rate of compensation, both salary and Pangea
share options, in effect at the date of the termination of
the employment relationship.
13. Arbitration: Any claim or controversy that arises out
of or relates to this agreement, or the breach of it, shall
be settled by arbitration in accordance with the rules of
the American Arbitration Association. The arbitration
proceedings shall take place in Houston, Texas, and the
arbitrators shall apply Texas law in making their
determination. Judgment upon the award rendered may be
entered in any court with jurisdiction.
14. Limited Effect of Waiver. Should either party waive
breach of any provision of this agreement by the other
party, that waiver will not operate of be construed as a
waiver of further breach by the breaching party.
15. Severability: If, for any reason, any provision of this
agreement is held invalid, all other provisions of this
agreement shall remain in effect.
16. Assumption of Agreement by Employer's Successors and
Assignees: The Employer's rights and obligations under this
agreement will inure to the benefit and be binding upon the
Employer's successors and assignees.
17. Oral Modifications Not Binding: This instrument is the
entire agreement of the Employer, Pangea and the Employee
with respect to the employment relationship. Oral changes
shall have no effect. If may be altered only by a written
agreement signed by the party against whom enforcement of
any waiver, change, modification, extension, or discharge is
sought.
18. Governing Law and Place of Performance: This Agreement
shall be interpreted under the laws of the State of Texas,
and all payments of compensation hereunder shall be payable
in Xxxxxx County, Texas.
19. Purchase of Mass Energy Name: If the Employer ceases to
engage actively in the business of exploration for and
production of oil, gas and other minerals, the Employee
shall have the right to purchase from the Employer, for the
sum of $1,000 cash, the trade name "Mass Energy," and upon
such purchase, the Employer and Pangea shall cease to use
the purchased name and shall immediately change its
corporate name to a name which is not similar in any way to
the trade name.
20. Preferential Purchase Right: During the period of
employment hereunder and for a period of five years
thereafter, if Pangea, either through the Employer or any
other Pangea affiliate, receives and desires to accept an
offer ("Offer") for the purchase or other transfer of all,
or of any substantial portion, of the oil and gas properties
owned by Pangea and/or its affiliates ("Mineral
Properties"), Pangea shall promptly give the Employee
written notice ("Sale Notice") of the Offer, including the
name and address of the prospective transferee (who must be
ready, willing and able to purchase), identification of the
particular Mineral Properties involved, the proposed
purchase price, and all other terms of the Offer. Subject
to the limitation in the last sentence of this Paragraph,
the Employee shall have an option in preference to the
proposed transferee to purchase for his own account
("Option") the Mineral Properties subject to the Offer, at
the price and otherwise on the terms described in the Sale
Notice. The Employee's Option shall expire if he has not
given Pangea written notice within ten days of his receipt
of the Sale Notice stating his intent to exercise the
Option. If the Employee gives notice of his intention to
exercise the Option within the time allowed, the exercise of
the Option shall be closed at the offices of Pangea, or at
such other location as Pangea and the Employee may mutually
agree, on or before the close of business on the 90th day
following the Employee's receipt of the Sale Notice.
However, notwithstanding any other provision in this
Paragraph, the Employee shall have no purchase option in the
case of: (a) transfer of Mineral Properties to another
affiliate of Pangea, (b) transfer of Mineral Properties as
mortgage collateral, or (c) transfer of mortgaged Mineral
Properties in lieu of or pursuant to a mortgage foreclosure.
Signed this 5th day of October, 2000.
Mass Energy, Inc.
By:/s/ Xxxxxxx X. Xxxxxxx /s/Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxx
Authorized Agent
Pangea Petroleum Corporation
By:/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx,
Chief Executive Officer
