EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (this “Agreement”) is entered into on August 3, 2007,
by and between Xxxxxxx X. Xxxxxxxxxx, an individual resident of Littleton,
Colorado (the “Executive”), and Rancher Energy Corp., a Nevada corporation (the
“Company”).
R
E C I T
A L S:
A. The
Company desires to employ the Executive as its Chief Accounting Officer with
the
responsibilities and authority as set forth in this Agreement or as determined
by the Company’s CEO pursuant to this Agreement, and the Executive desires to be
employed by the Company as its Chief Accounting Officer, on the terms set forth
in this Agreement.
THE
PARTIES HERETO AGREE AS FOLLOWS:
1. Employment
and Duties.
During
the term of this Agreement, the Executive shall serve as the Company’s Chief
Accounting Officer, reporting to the Company’s CEO & CFO. Subject to the
control and direction of the Company’s CEO & CFO, the Executive shall
exercise general supervision and direction of the accounting functions of the
Company, as more fully set forth on Exhibit A
attached
hereto. The parties agree that the Executive’s service as Chief Accounting
Officer of the Company is a full-time position, and the Executive agrees to
devote substantially all of his business time and his best efforts to the
performance of his responsibilities under this Agreement. The Executive will
not
engage in any business or proposed business in the oil & gas industry, or
that he is or plans to be engaged in competition with the business activities
of
the Company. It is understood that the devotion of time to board or committee
service for non-profit corporate, civic and charitable organizations
unaffiliated with the Company and the devotion of limited amounts of time to
personal or family investments will not be deemed a breach of this Agreement
if
such activities do not interfere or conflict with the performance of the
Executive’s duties hereunder. The Executive shall duly, punctually, and
faithfully perform and observe any and all rules and regulations which the
Company may now or shall hereafter reasonably establish governing the conduct
of
its business or its employees. The Executive agrees to serve without additional
compensation if elected or appointed to any position or office, including as
a
director of the Company or any subsidiary or affiliate of the
Company.
2. Compensation.
(a) Base
Salary; Withholding.
The
Company shall pay the Executive a base salary of $175,000 per year during the
Term (as defined in Section 4), payable in arrears in accordance with the
Company’s standard payroll procedures as in effect from time to time. The Board
shall consider the Executive’s base salary no less frequently than annually and
may increase, but not decrease, the base salary. The parties shall comply with
all applicable withholding requirements in connection with all compensation
payable to the Executive hereunder.
(b) Discretionary
Bonus.
The
Executive shall also be eligible to receive a discretionary bonus for each
calendar year during the Term. For each calendar year during the Term, the
Executive shall be eligible for such bonus as the Company’s Board of Directors,
in its absolute discretion, may determine to be proper in light of the
Executive’s performance and the Company’s performance during such calendar year
and any other facts and circumstances that he may see fit to consider. The
Company’s Board of Directors may condition a discretionary bonus upon the
achievement of specific goals, objectives, and milestones during that calendar
year that have been determined and approved by the Company’s CEO and Board of
Directors. Whether any such goal, objective, or milestone has been achieved
shall be determined by the Company’s Board of Directors acting in its good faith
discretion. Unless otherwise provided in Section 5 below, that portion of the
annual incentive bonus allocated to the achievement of any specific goal,
objective, or milestone shall accrue only upon the actual achievement of that
goal, objective, or milestone provided that the Executive remains in the employ
of the Company (or an affiliate of the Company) on the date of
achievement.
(c) Stock
Options.
The
Executive will be granted an option pursuant to the Company’s 2006 Stock
Incentive Plan, effective upon the approval of the option and exercise price
by
the Company’s Board of Directors. The option will grant the Executive the right
to purchase up to 450,000 shares of the Company’s common stock at a price equal
to the fair market value of the Company’s common stock on the date of grant. The
option will vest ratably over a three-year period from the date of grant, and
will be exercisable for a term of five years, subject to early termination
of
the Executive’s employment with the Company. The Company’s CEO may recommend to
the Company’s Board of Directors other option grants to the Executive based on
performance goals or Company milestones as determined by the Company’s CEO.
(d) Vacation.
The
Executive shall be entitled to such annual vacation time with full pay as the
Company may provide in its standard policies and practices for its senior
management; provided, however, that in any event the Executive shall be entitled
to a minimum of three (3) weeks annual paid vacation time.
(e) Car
Allowance and Parking.
The
Executive shall receive a car allowance of $400 per month, payable in arrears
at
the end of each month. In addition, the Company shall pay the fee for one
parking space for the Executive’s parking at the Company’s principal place of
business.
(f) Other
Benefits.
The
Executive shall be able to participate in and have the benefits of all present
and future health insurance, life insurance, 401(k) and profit-sharing plans,
and all other plans and benefits that the Company now or in the future from
time
to time makes available to all of its senior management.
3. Business
Expenses.
The
Company shall promptly reimburse the Executive for all appropriately documented,
reasonable business expenses incurred by the Executive in accordance with the
Company’s policies for its senior management.
4. Term.
This
Agreement shall commence on August 27, 2007 and, if not terminated earlier
as
herein provided, shall expire on December 31, 2009 the (“Term”). Notwithstanding
any expiration of this Agreement: (i) the Company’s severance and benefit
obligations set forth in Sections 5, 7, 8 and 10 with respect to any termination
of the Executive’s employment occurring prior to such expiration shall continue
in full force and effect until such obligations are paid or provided in full
as
provided in those Sections, and (ii) the Company’s indemnification obligations
under Section 11 shall continue indefinitely.
5. Termination
by the Company Without Cause.
The
Company may, by delivering written notice to the Executive, terminate this
Agreement and the Executive’s employment at any time and for any reason without
Cause (as “Cause” is defined in Section 6 below), or for no reason, by paying to
the Executive:
(i) the
Executive’s base salary accrued through the date of termination payable upon
termination,
(ii) any
and
all accrued vacation pay, and accrued benefits through the date of termination
payable upon termination,
(iii) the
Executive’s base salary at the rate in effect on the date of notice of
termination for a period of six months thereafter. Payments to the Executive
pursuant to this Section 5(iii) and payments to the Executive pursuant to
Sections 10(a) and 10(b) shall be conditioned upon the Company receiving a
release from the Executive (or his representative) of any and all claims that
the Executive and his representative may have against the Company and its
agents, including its officers, directors, employees, and attorneys, in a form
provided by the Company. During any period in which the Executive is receiving
payments from the Company pursuant to this Agreement, the Executive shall not
engage in, directly or indirectly, any business in any territory in which the
Company conducts business that is competitive with the Company’s business
operations, nor shall the Executive solicit any employee or customer of the
Company to terminate their relationship with the Company.
6. Termination
by the Company for Cause.
The
Company may terminate this Agreement and the Executive’s employment at any time
if such termination is for “Cause”, as defined below, by delivering to the
Executive written notice of termination supported by a reasonably detailed
statement of the relevant facts and reason for termination and such termination
shall be effective immediately upon delivery of such notice to the Executive.
In
the event of such termination, the Company shall pay the Executive, no later
than ten (10) days following the date of termination, a lump sum equal to the
Executive’s accrued base salary through the date of termination, and any and all
accrued vacation pay, and accrued benefits through the date of termination,
but
no accrued bonus under Section 2(b) or 2(c) above. For purposes of this
Agreement, “Cause” shall exist if (i) the Executive has committed an act of
embezzlement, fraud, or theft with respect to the property of the Company,
(ii)
disregarded the rules of the Company so as to cause material loss, damage,
or
injury to, or otherwise to materially endanger, the Company’s property, business
,or employees, (iii) the Executive has abused alcohol or drugs on the job or
in
a manner affecting his job performance, (iv) the Executive has been found guilty
of or has plead nolo
contendere
to the
commission of a felony offense or a misdemeanor offense involving moral
turpitude, (v) the Executive has breached this Agreement or has failed to
perform the Executive’s duties under this Agreement, including by reason of the
Executive’s failure to execute the directives of the Company’s CEO, or (vi) the
Executive’s actions or inactions have caused or are reasonably likely to cause
material loss, injury, or damage to, the Company’s property, business, or
employees. Notwithstanding the foregoing sentence, in the event that a failure
occurs under clause (v) or (vi) of the foregoing sentence, “Cause” shall not
exist if the failure is the result of the Executive’s unwillingness to execute
any act that would constitute a violation of existing law, regulation, or rule
applicable to Company or the Executive, or if the failure is the result of
an
act of a party or an intervening event outside of the Executive’s authority or
control.
7. Termination
for Good Reason.
(a)
Definition
of “Good Reason”. “Good Reason” shall mean any of the following conditions or
events:
(i) The
consistent assignment of the Executive for a period greater than one month
to
duties inconsistent with the duties or responsibilities set forth herein;
(ii) A
reduction by the Company in the Executive’s base salary;
(iii) Any
failure by the Company to continue in effect for the Executive any material
benefit available to the Executive pursuant to this Agreement without providing
a substitute benefit; or
(iv) Any
material breach by the Company of this Agreement that is not cured within thirty
(30) days of notice thereof by the Executive to the Company.
(b) Consequences
of Termination for Good Reason.
The
Executive may terminate this Agreement and the Executive’s employment for Good
Reason at any time upon providing written notice of termination to the Company,
and such termination shall be effective immediately upon such notice. In the
event of termination by the Executive of this Agreement for Good Reason, the
Executive shall be entitled to receive those payments and benefits provided
under Section 5 of this Agreement.
8. Voluntary
Termination by the Executive.
In the
absence of Good Reason, the Executive may terminate this Agreement and the
Executive’s employment at any time for any reason or no reason upon delivering
ninety (90) days’ prior written notice to the Company, and no later than the
date of termination, the Company shall pay the Executive a lump sum equal to
his
accrued base salary through the date of termination, and any and all accrued
vacation pay, accrued bonuses and accrued benefits through the date of
termination, but no accrued bonus under Section 2(b) or 2(c) above.
9. No
Termination by Merger; Transfer of Assets, or Dissolution.
This
Agreement shall not be terminated by any voluntary or involuntary dissolution
of
the Company or the transfer of all or substantially all the assets of the
Company or the merger of the Company with or into another entity.
10. Termination
by Death or Disability.
(a) Death.
This
Agreement shall terminate immediately in the event of the death of the Executive
during the term hereof, and the Company, within ten (10) days of receiving
notice of such death, shall pay the Executive’s estate all salary due or accrued
as of the date of his death, and any and all accrued vacation pay and accrued
benefits as of the date of death. Any bonus to be paid to the Executive will
be
prorated to reflect the time during the year that the Executive was employed
with the Company. All bonuses, whether annual or otherwise, that would have
been
payable during the year of the Executive’s death shall be paid the following
year as promptly as the amount of such prorated bonus can be determined.
(b) Disability.
In the
event of mental or physical Disability (as defined below) of the Executive
during the term hereof, the Company may terminate this Agreement and the
Executive’s employment immediately upon written notice to the Executive, and the
Company, within ten (10) days following the notice of termination for
Disability, shall pay the Executive all salary due or accrued as of the date
of
such termination, and any and all accrued vacation pay and accrued benefits
as
of the date of termination. Any bonus to be paid to the Executive will be
prorated to reflect the time during the year that the Executive was employed
with the Company. All bonuses, whether annual or otherwise, that would have
been
payable for the year of termination shall be paid the following year as promptly
as the amount of such prorated bonus can be determined. For purposes of this
Agreement, “Disability” shall mean a physical or mental condition, verified by a
Colorado-licensed physician designated by the Company, which prevents the
Executive from carrying out one or more of the material aspects of his assigned
duties for at least ninety (90) consecutive days.
11. Indemnification.
As an
employee, officer, and agent of the Company, the Executive shall be fully
indemnified by the Company to the fullest extent permitted by applicable
law.
12. Confidential
Information.
The
Executive hereby agrees to comply with any and all of the Company’s policies and
procedures for the protection of Confidential Information (defined below) and,
except as required by the nature of the Executive’s duties for the Company or
with the prior written approval of the Board, the Executive will not, during
the
Term or thereafter, reveal, divulge or otherwise disclose, directly or
indirectly in any manner or through any form of ownership, any Confidential
Information of the Company. Without in any way limiting the foregoing, the
Executive hereby agrees not to disclose Confidential Information to the public
through any electronic or quasi-electronic means, including, without limitation,
through web page postings, chat rooms or other venues related to the Internet
environment. Notwithstanding the foregoing, the prohibition contained in this
Section 12 shall not apply to any disclosure of Confidential Information made
by
the Executive pursuant to a valid order or subpoena issued by a court or
administrative agency of competent jurisdiction, provided the Executive has
given the Company reasonable notice of such order or subpoena in order to
provide the Company with the opportunity to protect its interests.
The
term
“Confidential Information” shall mean any and all information of a proprietary
nature relating to the business of the Company or any of its affiliates,
regardless of whether such information would otherwise be regarded or legally
considered “confidential” and without regard to whether such information
constitutes a trade secret under applicable law or is separately protectable
at
law or in equity as a trade secret. Notwithstanding the foregoing, “Confidential
Information” shall include all of the following: all data bases, sales and
marketing information; the names, addresses, telephone numbers, contact persons
and other identifying information related to any business, client, or account
of
the Company; all compilations and lists of clients or accounts; any information
with respect to products and services provided by the Company to any clients
or
accounts; terms and provisions of any contract or other agreement to which
the
Company is a party or by which it is bound; any rates or other pricing
information related to the products and services provided by the Company to
any
client or account; any and all information related to any supplier of the
Company, including the terms and provisions of any contract or other agreement
with any such supplier; all business records and personal data relating to
the
employees of the Company, including compensation arrangements with such
employees; any information contained in any confidential documents prepared
by
or on behalf of the Company; any and all financial information related to the
Company or any of its businesses not yet publicly available; the existence,
specifications, components, methodologies or elements of any and all inventions,
discoveries, improvements, creations, formulae, processes, methods, recipes,
works or ideas, whether or not the same are patentable or copyrightable, that
any employee of the Company has conceived or made or may conceive or make during
any period of employment with the Company and that are in any way directly
connected with Company or its business; any trade secrets, know-how or
confidential information used, disclosed, learned, or obtained by the Executive
during the course of his employment with the Company; and any information
related to any business system, program, or report (whether or not computerized)
used or developed by the Company. Notwithstanding the foregoing, “Confidential
Information” shall not include any information that (A) is or becomes generally
known to the public through no fault of the Executive, (B) is supplied to the
Executive by a third party under no restriction as to disclosure, or (C) is
developed by the Executive after termination of this Agreement without the
use
of any Confidential Information.
13. Creations.
(a) The
Executive hereby agrees that (i) all Creations (defined below) and other works
created by the Executive or under the Company’s direction in connection with its
business, whether or not the same are patentable or copyrightable, are “works
made for hire” and shall be the sole and exclusive property of the Company; (ii)
any and all copyrights, trademarks or patents to such Creations or other works
shall belong to the Company; and (iii) the Executive shall execute all documents
that may be necessary in order to convey or to assign to the Company any rights
he may have in such Creations or other works. To the extent such Creations
or
other works are not deemed to be “works made for hire”, the Executive hereby
assigns all proprietary rights, including copyright, in such Creations or other
works to the Company without further compensation.
(b) The
Executive further agrees (i) to disclose promptly to the Company all such
Creations that the Executive has made or may make solely, jointly or commonly
with others; (ii) to assign all such Creations to the Company; and (iii) to
execute and to deliver to the Company any and all applications, assignments,
or
other instruments that the Company may deem necessary in order to enable it
to
apply for, to prosecute and to obtain copyrights, patents or other proprietary
rights with respect to such Creations or in order to transfer to the Company
any
and all right, title, and interest in such Creations.
(c) “Creations”
means and includes any and all inventions, discoveries, improvements, creations,
formulae, processes, methods, recipes, works or ideas, whether or not the same
are patentable or copyrightable, that any employee of the Company has conceived
or made or may conceive or make during any period of employment with the Company
and that are in any way directly connected with Company or its
business.
14. Ownership
and Return of Company Documents and Equipment.
All
equipment, materials, files, customer lists, catalogs, price lists, management
reports, property reports and plans, memoranda, research, forms, financial
data,
reports and tapes, and all other written or recorded data and/or information
in
whatever form (collectively, “Materials”) that may be used by, or made available
to, the Executive during his employment hereunder are and shall remain the
sole
property of the Company. Promptly upon the termination of this Agreement or
the
Executive’s employment with the Company, the Executive agrees to deliver
promptly to the Company all Materials of or relating to the Company (including
all copies of the foregoing) that are in his possession or control.
15. Assignment.
The
rights and obligations of the parties under this Agreement shall be binding
upon
and inure to the benefit of their respective successors, assigns, executors,
administrators, and heirs; provided, however, that the Executive may not
delegate any of the Executive’s duties under this Agreement.
16. Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall
constitute an original, and all of which together shall constitute one and
the
same agreement.
17. The
Executive’s Prior Employment.
The
Executive represents to the Company that the Executive is not bound by the
terms
of any non-competition, non-solicitation, or confidentiality agreement, and
that
he can perform his assigned duties for the Company without reference to any
such
agreement.
18. Miscellaneous.
(a) Complete
Agreement.
This
Agreement constitutes the entire agreement between the parties and cancels
and
supersedes all other prior or contemporaneous agreements between the parties
which relate to the subject matter contained in this Agreement.
(b) Modification;
Amendment; Waiver.
No
modification or amendment of any provisions of this Agreement shall be effective
unless approved in writing by both parties. The failure at any time to enforce
any of the provisions of this Agreement shall in no way be construed as a waiver
of such provisions and shall not affect the right of either party thereafter
to
enforce each and every provision hereof in accordance with its
terms.
(c) Governing
Law.
This
Agreement shall be construed in accordance with the laws of the State of
Colorado without regard to any such laws relating to choice or conflict of
laws.
(d) Severability.
Whenever possible, each provision of this Agreement shall be interpreted in
such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be held to be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
(e) Mediation;
Waiver of Jury Trial.
Any
dispute arising out of or relating to this Agreement that cannot be settled
by
good faith negotiation between the parties will be submitted to a mediator
for
non-binding mediation in Denver, Colorado. If complete agreement cannot be
reached within 30 days of submission to mediation, either party may commence
litigation in any court of competent jurisdiction, state or federal, located
in
Denver, Colorado. THE PARTIES HERETO WAIVE A JURY TRIAL IN ANY LITIGATION WITH
RESPECT TO THIS AGREEMENT.
(f) Notices.
All
notices and other communications under this Agreement shall be in writing and
shall be given in person or by first class mail, certified or registered with
return receipt requested, and shall be deemed to have been duly given when
delivered personally or three days after mailing, as the case may be, to the
respective persons named below:
If
to the
Company:
Rancher
Energy Corp.
000
00xx
Xxxxxx,
Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
Attention:
CEO
If
to the
Executive: Xxxxxxx
X. Xxxxxxxxxx
00
Xxxx
Xxxxxxx Xxxx
Xxxxxxxxx,
Xxxxxxxx 00000
[Remainder
of Page Intentionally Left Blank]
IN
WITNESS WHEREOF, the parties have executed this Employment Agreement as of
the
day and year first above written.
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THE
COMPANY:
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a
Nevada corporation
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| |
|
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| By: |
/s/
Xxxx Works
|
|
|
Xxxx
Works
President
& CEO
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||
| |
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THE
EXECUTIVE: By:
|
By: |
/s/
Xxxxxxx X. Xxxxxxxxxx
|
|
Xxxxxxx
X. Xxxxxxxxxx
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||
Exhibit
A
Duties
of the Executive
Chief
Accounting Officer
SUMMARY
Organizational
responsibility for the Accounting Department reporting to the CEO including
accounting, payroll, and procurement, managing the daily operational activities
of the Accounting Department, periodic internal and external financial
management reporting, management of the Company’s audit processes, and
compliance with Xxxxxxxx-Xxxxx.
ESSENTIAL
DUTIES AND RESPONSIBILITIES to include the following:
| · |
Establish
policies, procedures, and controls for the financial reporting process.
|
| · |
Ensure
that financials are accurate and in accordance with SEC and accounting
treatment according to GAAP, and other governmental
regulations.
|
| · |
Responsible
for ongoing compliance with Sections 302 and 404 of the Xxxxxxxx-Xxxxx
Act
of 2002 and SEC financial
reporting.
|
| · |
Responsible
for internal financial reporting to management and external financial
reporting to shareholders and the
SEC.
|
| · |
Working
with the CFO and the COO, oversee third-party relationships including
Xxxxxxxx-Xxxxx consultants, independent auditors, and tax
consultants.
|
| · |
Advise
management on accounting treatment, desirable operational adjustments,
and
treasury and cash management.
|
| · |
Develop
regular weekly, monthly, quarterly, and annual operating financial
reports
for management.
|
| · |
Manage
joint interest xxxxxxxx, revenue accounting, tertiary recovery operations
accounting, and other accounting issues directly related to oil & gas
operations.
|
| · |
Develop
a budgeting system to be integrated into the management reporting
system.
|
| · |
Provide
regular financial updates and presentations to the President & CEO,
Audit Committee, and other management
staff.
|
| · |
Ensure
the accounting systems remain functionally efficient and market
competitive.
|
| · |
Review
daily, weekly, and monthly financial reports to verify
accuracy.
|
| · |
Review
departmental reports; addressing potential conflicts and/or
misinformation
|
| · |
Held
accountable, to a very high degree, for the accuracy and thoroughness
of
departmental performance
|
| · |
Familiarity
with mid level accounting software systems
required,
|
SUPERVISORY
RESPONSIBILITIES
CAO
carries out supervisory responsibilities in accordance with the Company’s
policies and applicable laws. Responsibilities include planning, assigning,
and
directing work; appraising performance; and communicating and administering
policies and procedures for areas within the Company. Direct reports include
staff accountants and accounting clerks and some administrative
personnel.
