EMPLOYMENT AGREEMENT
EXHIBIT 10.1
This Employment Agreement (the “Agreement”) is entered into as of this 29th day of June, 2006,
by and between American Oil & Gas, Inc., a Nevada corporation (the “Company”), and Xxxxxx
X. Xxxxxx (“Employee”) to be effective as of June 29, 2006 (the “Effective Date”).
Employee and Company are sometimes referred to individually as a “Party” and collectively
as the “Parties.”
In consideration of the mutual covenants, promises and agreements herein contained, the
Company and Employee hereby covenant, promise and agree to and with each other as follows:
1. Employment. The Company shall employ Employee and Employee shall perform services
for and on behalf of the Company upon the terms and conditions set forth in this Agreement.
2. Positions and Duties of Employment. Employee shall be required to devote his full
energy, skill and best efforts as required to the furtherance of his duties with the Company as the
Company’s Chief Financial Officer.
Employee understands that his employment by the Company involves a high degree of trust and
confidence, that he is employed for the purpose of furthering the Company’s reputation and
improving the Company’s operations and profitability, and that in executing this Agreement he
undertakes the obligations set forth herein to accomplish such objectives. Employee agrees that he
shall serve the Company fully, diligently, competently and to the best of his ability. Employee
fully understands his right to discuss this Agreement with his attorney, that he has availed
himself of this right to the extent that he desires, that he has carefully read and fully
understands this entire Agreement, and that he is voluntarily entering into this Agreement.
3. Duties.
3.1 Employee shall serve as Chief Financial Officer of the Company and in that capacity shall
work with the Company to pursue the Company’s plans as directed by the Board. Employee shall have
the responsibilities, duties, obligations, rights, benefits and requisite authority as is customary
for the position of Chief Financial Officer and as may be determined by the Board.
3.2 During the term of this Agreement, Employee shall devote substantially all of Employee’s
business time, attention, knowledge and skills solely to the business and interests of the Company
and to the performance of Employee’s duties under this Agreement. Without limiting the foregoing,
Employee shall perform services on behalf of the Company for 40 hours per week, and Employee shall
be available at the reasonable request of the Company at other times, including weekends and
holidays, to meet the financing and financial reporting requirements of the Company. The
foregoing notwithstanding, Employee will be vacationing with his wife on an unpaid leave of absence
from Saturday, August 20, 2006 through Sunday, September 24, 2006.
3.3 During the term of this Agreement, Employee shall office in Denver, Colorado or upon
authorization from the Board, a suburb of Denver.
4. Term. Unless terminated earlier as provided for in this Agreement, the term of
this Agreement shall commence on the Effective Date and end on the fifth anniversary of the
Effective Date (the “Term”). If the employment relationship is terminated by either Party,
Employee agrees to cooperate with the Company and with the Company’s new management with respect to
the transition of the new management in the operations previously performed by Employee. Upon
Employee’s termination, Employee agrees to return to the Company all non-public Company documents
(and all copies thereof), any other Company property in Employee’s possession or control, and any
materials of any kind that contain or embody any proprietary or confidential material of the
Company. The foregoing notwithstanding, the Employee may retain personal copies of his employment,
performance and benefit records, such as this Agreement.
5. Compensation. Employee shall receive the following as compensation:
(a) A salary at the annual rate of $144,000, subject to possible increases from time to time
in the discretion of the Board, or a committee selected by the Board, payable in accordance with
the Company’s customary payroll practices.
(b) At the discretion of the Board, or a committee selected by the Board, performance-based
bonus(es).
(c) Employee shall be entitled to participate in the Company’s 2004 Stock Option Plan, and
hereby is awarded the right and option to purchase 250,000 shares of Common Stock thereunder (the
“Options”). Each of the Options shall be exercisable at the price equal to the price per share of
the last sale transaction recorded on the American Stock Exchange on the Effective Date of this
Agreement. 50,000 of the Options shall be immediately exercisable, and 40,000 of the Options shall
become exercisable on June 29, of each of 2007, 2008, 2009, 2010, and 2011. The terms and
conditions of the Options shall be documented by, and are subject to, a Stock Option Agreement
between the Company and the Employee to be executed at the time of execution of this Agreement.
(d) Company shall include Employee, if otherwise eligible, in any profit sharing plan,
executive stock option plan, pension plan, retirement plan and (except for medical, dental and/or
hospitalization plans) any and all other benefit plans, which may be placed in effect by the
Company for the benefit of the Company’s employees during the Term. The Employee has represented
that he will not require medical, dental and/or hospitalization plan coverage for he and his family
until September 1, 2007. Effective September 1, 2007, the Company shall provide Employee with all
or at least a portion of Employee’s family medical, dental and hospitalization insurance, which
shall not be less than that afforded to the Company’s other employees, nothing in this Agreement
shall limit (i) Company’s ability to exercise the discretion provided to it under any such benefit
plan, or (ii) the Company’s discretion to adopt, not adopt, amend or terminate any such benefit
plan at any time.
(e) The Company shall provide Employee with three weeks vacation leave per each year of
Employee’s employment and with sick leave consistent with Company plans and policies in effect for
Employees from time to time.
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(f) Any payments which the Company shall make to Employee pursuant to this Agreement shall be
reduced by standard withholding and other applicable payroll deductions, including but not limited
to federal, state or local income or other taxes, Social Security and Medicare Taxes, State
Unemployment Insurance, State Disability Insurance, and the like.
(g) During the term of his employment, Employee shall be reimbursed for reasonable expenses
that are authorized by the Company and that are incurred by Employee for the benefit of the Company
in accordance with the standard reimbursement practices of the Company. Reasonable expenses
authorized by the Company include, but are not limited to, the renewal of employee’s CPA license
and his dues as a member of the American Institute of Certified Public Accountants, the Colorado
Society of CPAs, and XXXXX — Colorado. Any direct payment or reimbursement of expenses shall be
made only upon presentation of an itemized accounting conforming in form and content to standards
prescribed by the Internal Revenue Service relative to the substantiation of the deductibility of
business expenses.
6. Confidentiality. Employee hereby warrants, covenants and agrees that, Employee may
disclose confidential information, including but not limited to (a) information, memoranda, plans
or other documents concerning Company’s business or development plans, customers or suppliers, (b)
Company’s development, or sales and marketing methods or techniques, or (c) Company’s trade secrets
and other “know-how” or information not of a public nature, regardless of how such information came
to the custody of Employee, only when Employee believes such disclosure to be in the best interest
of the Company and never contrary to the specific written instruction of the Board. For purposes
of this Agreement, such information shall include, but not be limited to, information, including a
formula, pattern, compilation, program, device, method, technique or process, that (i) derives
independent economic value, present or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic value from its
disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances
to maintain its secrecy. The warranty, covenant and agreement set forth in this paragraph shall
not expire, shall survive this Agreement, and shall be binding upon Employee without regard to the
passage of time or other events.
7. Non-Compete.
(a) Employee acknowledges and recognizes the highly competitive nature of the Company’s
business and that Employee’s duties hereunder justify restricting Employee’s further employment.
The Employee agrees that so long as the Employee is employed by the Company, Employee, except when
acting at the request of the Company on behalf of or for the benefit of the Company, (i) will not
induce customers, agents or other sources of distribution of the Company’s business under contract,
doing business with the Company, or in negotiations to do business with the Company to terminate,
reduce, alter or divert business with or from the Company, (ii) will not, directly or indirectly,
solicit or induce, or enter into any discussions that would have the effect of soliciting or
inducing, any individual that was, within ninety days prior to the termination of this Agreement,
an employee of Company or any of Company’s affiliates to leave the Company or such affiliate of the
Company, (iii) will not, directly or indirectly, employ any individual that was, within ninety days
prior to the termination of this Agreement, an employee of either the Company or an affiliate of
the Company, and (iv) shall not, directly or
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indirectly, either as a principal, agent, employee, employer, consultant, partner, member or
manager of a limited liability company, shareholder of a company that does not have securities
registered under the Securities Exchange Act of 1934, as amended (the “1934 Act”), or
shareholder in excess of one percent of a company that has securities registered under the 1934
Act, corporate officer or director, or in any other individual or representative capacity, engage
or otherwise participate in any manner or fashion in any business that is in competition in any
manner whatsoever with the business activities of Company. Employee further covenants and agrees
that the restrictive covenant set forth in this paragraph is reasonable as to duration, terms, and
geographical area and that the same protects the legitimate interests of Company, imposes no undue
hardship on Employee, and is not injurious to the public. Ownership by Employee, for investment
purposes only, of less than one percent of any class of securities of a corporation if said
securities are listed on a national securities exchange or registered under the 1934 Act shall not
constitute a breach of the covenant set forth under (iv) above. Occasional consulting (with
regards to Tipperary Corporation) by Employee, as the former CFO of Tipperary Corporation, when
provided to Tipperary Corporation or its affiliates shall not constitute a breach of the covenant
set forth under (iv) above. It is the desire and intent of the Parties that the provisions of this
paragraph be enforced to the fullest extent permissible under the laws and public policies applied
in each jurisdiction in which enforcement is sought. Accordingly, if any particular portion of
this paragraph shall be adjudicated to be invalid or unenforceable, this paragraph shall be deemed
amended to apply in the broadest allowable manner and to delete therefrom the portion adjudicated
to be invalid or unenforceable, such amendment and deletion to apply only with respect to the
operation of paragraph in the particular jurisdiction in which that adjudication is made.
(b) In the event that Employee’s employment with Company is terminated pursuant to Section
8(a) below, the provisions in Section 7(a) above shall continue to apply for a period of 12 months
following the date of termination, however, such provisions will be limited geographically to any
areas that Company is currently developing, or any areas that Company has, during the 12 month
period prior to the date of termination, analyzed to determine if development and exploration is
feasible in such area. Company shall, no later than thirty days after the termination of
Employee’s employment pursuant to Section 8(a) below, provide Employee with a list of areas to
which Section 7(a) is limited.
8. Termination.
(a) In the event that Employee’s employment with the Company is terminated for Cause, by
reason of Employee’s death or disability, or due to Employee’s resignation or voluntary
termination, then all compensation and benefits will cease as of the effective date of such
termination, and Employee shall receive no severance benefits, or any other compensation; provided
that Employee, or his estate, shall be entitled to receive all compensation earned and all benefits
and reimbursements due through the effective date of termination.
(i) For purposes of this Agreement, “Cause” shall mean that the Board, acting in good faith
based upon the information then known to the Company, determines that Employee has engaged in or
committed any of the following: willful misconduct, gross negligence, theft, fraud, or other
illegal conduct; refusal or unwillingness to perform Employee’s
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duties; performance by Employee of Employee’s duties determined by the Board to be inadequate
in a material respect; breach of any applicable non-competition, confidentiality or other
proprietary information or inventions agreement between Employee and the Company; inappropriate
conflict of interest; insubordination; failure to follow the directions of the Board or any
committee thereof; or any other material breach of this Agreement. Indictment or conviction of any
felony, or any entry of a plea of nolo contendre in a felony proceeding, under the laws of the
United States or any State shall also be considered “Cause” hereunder.
(b) In the event that the Board determines, in its sole discretion, that it is in the best
interests of the Company to terminate the Employee’s employment with the Company, and the Board
does not desire to base such termination on the provisions of Section 8(a) regardless of whether it
is unable or does not desire to do so, then all compensation and benefits will cease as of three
months after the effective date of such termination, and Employee shall receive no severance
benefits, or any other compensation; provided that Employee shall be entitled to receive all
compensation earned and all benefits and reimbursements due through the date which is three months
after the effective date of termination.
(c) Employee agrees that the payments contemplated by this Agreement shall constitute the
exclusive and sole remedy for any termination of employment, and Employee covenants not to assert
or pursue any other remedies, at law or in equity, with respect to any termination of employment.
(d) Any party terminating this Agreement shall give prompt written notice (“Notice of
Termination”) to the other party hereto advising such other party of the termination of this
Agreement stating in reasonable detail the basis for such termination.
9. Remedies. If there is a breach or threatened breach of any provision of Section 6
or Section 7 of this Agreement, the Company will suffer irreparable harm and shall be entitled to
an injunction restraining Employee from such breach. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies for such breach or threatened breach.
10. Severability. It is the clear intention of the Parties to this Agreement that no
term, provision or clause of this Agreement shall be deemed to be invalid, illegal or unenforceable
in any respect, unless such term, provision or clause cannot be otherwise construed, interpreted,
or modified to give effect to the intent of the Parties and to be valid, legal or enforceable. The
Parties specifically charge the trier of fact to give effect to the intent of the Parties, even if
in doing so, information of a specific provision of this Agreement is required consistent with the
foregoing stated intent. In the event that such a term, provision, or clause cannot be so
construed, interpreted or modified, the validity, legality and enforceability of the remaining
provisions contained herein and other application(s) thereof shall not in any way be affected or
impaired thereby and shall remain in full force and effect.
11. Waiver of Breach. The waiver by the Company or Employee of the breach of any
provision of this Agreement by the other Party shall not operate or be construed as a waiver of any
subsequent breach by that Party.
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12. Entire Agreement. This document contains the entire agreement between the Parties
and supersedes all prior oral or written agreements, if any, concerning the subject matter hereof
or otherwise concerning Employee’s employment by the Company. This Agreement may not be changed
orally, but only by agreement in writing signed by the Parties.
13. Governing Law. This Agreement, its validity, interpretation and enforcement,
shall be governed by the laws of the State of Colorado, excluding conflict of laws principles.
Employee hereby expressly consents to personal jurisdiction in the state and federal courts located
in Denver County, Colorado for any lawsuit filed there against him by the Company arising from or
relating to this Agreement.
14. Notices. Any notice pursuant to this Agreement shall be validly given or served
if that notice is made in writing and delivered personally or sent by certified mail or registered,
return receipt requested, postage prepaid, to the following addresses:
If to Company:
|
American Oil & Gas, Inc. | |
| 0000 00xx Xxxxxx, Xxxxx 0000 | ||
| Xxxxxx, XX 00000 | ||
| Attention: Xxxx Xxxxxxxx | ||
If to Employee:
|
To the address for Employee set forth below his signature. |
All notices so given shall be deemed effective upon personal delivery or, if sent by certified
or registered mail, five business days after date of mailing. Either party, by notice so given,
may change the address to which his or its future notices shall be sent.
15. Assignment and Binding Effect. This Agreement shall be binding upon Employee and
the Company and shall benefit the Company and its successors and assigns. This Agreement shall not
be assignable by Employee.
16. Headings. The headings in this Agreement are for convenience only; they form no
part of this Agreement and shall not affect its interpretation.
17. Construction. Employee represents he has (a) read and completely understands this
Agreement and (b) had an opportunity to consult with any legal and other advisers as he has desired
in connection with this Agreement. This Agreement shall not be construed against any one of the
Parties.
* * * * * *
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IN WITNESS WHEREOF, the parties have executed this Agreement to be effective on the day and
year first above written.
EMPLOYEE
|
AMERICAN OIL & GAS, INC. | |
/s/ Xxxxxx X. Xxxxxx
|
/s/ Xxxxxx X. Xxxxxxxx | |
Xxxxxx X. Xxxxxx, Individually
|
Name: Xxxxxx X. Xxxxxxxx | |
0000 X. 000 Xxxxx
|
Title: President and Director | |
Xxxxxxxxxxx, XX 00000 |
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