EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made effective the 11th day
of January 1999 by and between CHAPARRAL RESOURCES, INC., a Colorado corporation
(the "Employer"), and XX. XXXX X. XXXX, an individual resident in the State of
Colorado (the "Executive").
RECITALS:
WHEREAS, Employer desires to employ Executive and to have the benefit of
his expertise, skills and services; and
WHEREAS, Executive desires to be employed by Employer.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements herein after contained, the parties agree as follows:
ARTICLE 1
DEFINITIONS
For the purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article 1:
"Agreement"--this Employment Agreement, as may be amended from time to
time.
"Affiliate"--means any entity that, directly or indirectly, through one or
more intermediaries, Controls or is Controlled by, or is under common Control
with the Employer.
"Benefits"--as defined in Section 3.1(d).
"Board of Directors"--the board of directors of the Employer.
"Bonus"--as defined in Section 3.1(b).
"Compensation"--means Salary, Bonus, Benefits, and stock awards.
"Confidential Information"--any and all (i) trade secrets concerning the
business and affairs of the Employer, product specifications, data, know-how,
formulae, compositions, processes, designs, sketches, photographs, graphs,
drawings, samples, inventions and ideas, past, current, and planned research and
development, current and planned manufacturing or distribution methods and
processes, customer lists, price lists, market studies, business plans, computer
software and programs (including object code and source code), computer software
and database technologies, systems, structures, and architectures (and related
formulae, compositions, processes, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information), and any other
information, however documented, that is a trade secret under the laws of the
State of Colorado and other applicable laws, (ii) information concerning the
business and affairs of the Employer (which includes historical financial
statements, financial projections and budgets, historical and projected sales,
capital spending budgets and plans, the names and backgrounds of key personnel,
personnel training and techniques and materials, and related information),
however documented, and (iii) notes, analysis, compilations, studies, summaries,
and other material prepared by or for the Employer containing or based, in whole
or in part, on any information included in the foregoing. This Confidential
Information excludes information previously known or held by Executive or
information in the public domain.
"Control" or "Controlled"--means ownership of fifty percent (50%) or
greater of the voting stock of an entity.
"Disability"--as defined in Section 6.2.
"Effective Date--means January 11, 1999.
"Employment Period"--the term of the Executive's employment under this
Agreement.
"Fiscal Year"--the Employer's fiscal year, as it exists on the Effective
Date or as may be changed from time to time.
"For cause"--as defined in Section 6.3.
"Person"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or governmental body.
"Plan"--means Employer's 1998 Incentive and Non Statutory Stock Option
Plan.
"Proprietary Items"--as defined in Section 7.2(a)(iv).
"Salary"--as defined in Section 3.1(a).
"USD" - means lawful currency of the United States of America.
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ARTICLE 2
EMPLOYMENT TERMS AND DUTIES
2.1 Employment. The Employer hereby employs the Executive, and the Executive
hereby accepts employment by the Employer, upon the terms and conditions set
forth in this Agreement.
2.2 Term. Subject to the provisions of Article 6, the term of the Executive's
employment under this Agreement will be three (3) years, commencing on the
Effective Date and ending on the same date in the year 2002; provided, however,
this Agreement will be automatically extended for successive one (1) year terms
thereafter, unless either the Employer or the Executive elects not to
automatically extend the term of this Agreement by giving written notice to the
other party at least sixty (60) days prior to the expiration of the then current
term. Any extension of this Agreement shall be under the same terms and
conditions hereof, unless otherwise agreed to in writing by the Employer and the
Executive.
2.3 Duties. The Executive will have such duties as are assigned or delegated to
the Executive by the Board of Directors, and will initially serve as the
President and Chief Operating Officer of the Employer. The Executive will devote
his entire business time, attention, skill, and energy to the business of the
Employer, will use his best faith efforts to promote the success of the
Employer's business, and will cooperate fully with the Board of Directors in the
advancement of the best interests of the Employer. The Executive will make
regular oral and written reports to the Board of Directors regarding activities,
as requested by the Board of Directors. The Executive will not be prohibited
from engaging in additional activities in connection with personal investments,
community affairs, or being a member of a board of directors of another company
or companies that are not inconsistent or in conflict with the Executive's
duties under this Agreement. If the Executive is elected as a director of the
Employer or as a director or officer of any of its Affiliates, the Executive
will fulfill his duties as such director or officer without additional
compensation, unless otherwise agreed to by the parties.
ARTICLE 3
COMPENSATION
3.1 Compensation. The Executive's Compensation shall be as follows:
(a) Salary. The Executive will be paid an annual salary of USD$250,000.00
(the "Salary"), which will be payable in equal periodic installments
according to the Employer's customary payroll practices, but no less
frequently than monthly.
(b) Bonus. An annual bonus may be awarded at the sole discretion of the
Board of Directors.
(c) Stock awards. The Employer hereby grants to Executive stock awards for
200,000 shares of stock for each year of Executive's service under
this Agreement for a period of five years, in accordance with the
terms and conditions set forth herein. The first stock award is
granted on January 15, 1999; the date of approval by the Board of
Directors of the stock awards. The remaining stock awards are hereby
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granted and vest 200,000 shares per year on the anniversary date of
the grant of such awards being January 15. The Executive shall be
entitled to all the rights, benefits and privileges consistent with
the company including but not limited to the right of registration of
the stock awarded herein. If this Agreement is terminated for any
reason, the stock award shall be prorated for each month of
Executive's service for the applicable year. The stock awards granted
hereunder are outside the scope of the Plan.
(d) Benefits. The Executive will, during the Employment Period, be
permitted to participate in such life insurance, hospitalization,
major medical, disability and other employee benefit plans of the
Employer that may be in effect from time to time, to the extent the
Executive is eligible under the terms of those plans (collectively,
the "Benefits").
ARTICLE 4
EXPENSES
4.1 Reimbursement. Employer will reimburse Executive's necessary and reasonable
expenses incurred in the conduct of Employer's business upon Executive's monthly
presentation of an itemized account of such expenses with proof that such
expenses were incurred.
ARTICLE 5
PERFORMANCE EVALUATIONS
Evaluations. Performance evaluations of the Executive may occur or may be given
from time to time by the Employer. Employer may conduct both a written and oral
performance evaluation yearly. Performance criteria will include, in the sole
discretion of the Employer, the following:
(a) financial success of Employer; and
(b) fulfillment of the terms of this Employment Agreement.
ARTICLE 6
TERMINATION
6.1 Events of Termination. The Employment Period, the Executive's Compensation
and any and all other rights of the Executive under this Agreement or otherwise
as an employee of the Employer will terminate (unless provided otherwise in this
Article 6):
(a) upon the death of the Executive;
(b) upon the Disability of the Executive (as defined in Section 6.2)
immediately upon notice from either party to the other; or
(c) For cause (as defined in Section 6.3), immediately upon notice from
the Employer to the Executive, or at such later time as such notice
may specify.
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6.2 Definition of Disability. For purposes of Section 6.1, the Executive will be
deemed to have a "Disability" if, for physical or mental reasons, the Executive
is unable to perform the essential functions of the Executive's duties under
this Agreement for one hundred eighty (180) consecutive days, as determined in
accordance with this Section 6.2. The Disability of the Executive will be
determined by a medical doctor selected by written agreement of the Employer and
the Executive upon the request of either party by notice to the other. If the
Employer and the Executive cannot agree on the selection of a medical doctor,
each of them will select a medical doctor and the two medical doctors will
select a third medical doctor who will determine whether the Executive has a
Disability. The determination of the medical doctor selected under this Section
6.2 will be binding on both parties. The Executive must submit to a reasonable
number of examinations by the medical doctor making the determination of
Disability under this Section 6.2, and the Executive hereby authorizes the
disclosure and release to the Employer of such determination and all supporting
medical records. If the Executive is not legally competent, the Executive's
legal guardian or duly authorized attorney-in-fact will act in the Executive's
stead, under this Section 6.2, for the purposes of submitting the Executive to
the examinations, and providing the authorization of disclosure, required under
this Section 6.2. This provision shall not conflict with or be required to be
consistent with, and should be separate from, any and all issues related to
requirements for disability insurance coverage or statutory benefits.
6.3 Definition of "For Cause". For purposes of Section 6.1, the phrase "For
Cause" means:
(a) the Executive's material breach of this Agreement;
(b) the misappropriation or attempted misappropriation of funds or
property of Employer;
(c) any act or action taken by Executive to usurp, or attempt to usurp, a
corporate advantage or opportunity to or for Executive's benefit,
either directly or indirectly, without the prior written consent of
Employer and then only after full disclosure;
(d) disclosure of confidential, secret, or proprietary information in any
form (including but not limited to patents or trade secrets) to third
parties whether competitors of Employer or not unless required for the
conduct of business and only after confidentiality agreements are
completed to protect the interest of Employer;
(e) the conviction of a felony;
(f) any participation in activities which are prejudicial to the best
interests of Employer which may or may not result in a felony or
misdemeanor conviction.
6.4 Accrual of Benefits. The Executive's accrual of, or participation in plans
providing for, the Benefits will cease at the effective date of the termination
of this Agreement, and the Executive will be entitled to accrued Benefits
pursuant to such plans only as provided in such plans.
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6.5 Disability Pay. In the event that Executive is unable, for physical or
mental reasons, to perform the essential functions of Executive's duties under
this Agreement Executive shall be paid all Compensation under this Agreement
until such time as Employer's short-term disability policy becomes effective. If
Employer does not have a short term disability policy, then Employer shall pay
Executive's Compensation for a period of one hundred eighty (180) consecutive
days beginning on the first day of the event described in the first sentence of
this Section 6.5. Thereafter, Employer will not be obligated to pay Executive's
Compensation for that period beginning after Employer's short-term disability
policy becomes effective or the conclusion of the one hundred eighty (180) days
through that period whereby Executive is either terminated in accordance with
Section 6.1(b) or returns to active employment.
ARTICLE 7
NON-DISCLOSURE COVENANT; EMPLOYEE INVENTIONS
7.1 Acknowledgments by the Executive. The Executive acknowledges the following:
(a) during the Employment Period and as a part of his employment, the
Executive will be afforded access to Confidential Information;
(b) public disclosure of such Confidential Information could have an
adverse effect on the Employer and its business; and
(c) the provisions of this Article 7 are reasonable and necessary to
prevent the improper use or disclosure of Confidential Information.
7.2 Agreements of the Executive. In consideration of the compensation and
benefits to be paid or provided to the Executive by the Employer under this
Agreement, the Executive covenants as follows:
(i) During and following the Employment Period, the Executive will
hold in confidence the Confidential Information and will not
disclose it to any Person except with the specific prior written
consent of the Employer or except as otherwise expressly
permitted by the terms of this Agreement.
(ii) Any trade secrets of the Employer will be entitled to all of the
protections and benefits of the laws of the State of Colorado and
any other applicable law. If any information that the Employer
deems to be a trade secret is found by a court of competent
jurisdiction not to be a trade secret for purposes of this
Agreement, such information will, nevertheless, be considered
Confidential Information for purposes of this Agreement. The
Executive hereby waives any requirement that the Employer submit
proof of the economic value of any trade secret or post a bond or
other security.
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(iii)None of the foregoing obligations and restrictions applies to
any part of the Confidential Information that the Executive
demonstrates was or became generally available to the public
other than as a result of a disclosure by the Executive.
(iv) The Executive will not remove from the Employer's premises
(except to the extent such removal is for purposes of the
performance of the Executive's duties at home or while traveling,
or except as otherwise specifically authorized by the Employer)
any document, record, notebook, plan, model, component, device,
or computer software or code, whether embodied in a disk or in
any other form (collectively, the "Proprietary Items"). The
Executive recognizes that, as between the Employer and the
Executive, all of the Proprietary Items, whether or not developed
by the Executive, are the exclusive property of the Employer.
Upon termination of this Agreement by either party the Executive
will return to the Employer all of the Proprietary Items in the
Executive's possession or subject to the Executive's control, and
the Executive shall not retain any copies, abstracts, sketches,
or other physical embodiment of any of the Proprietary Items.
7.3 Disputes or Controversies. The Executive recognizes that should a dispute or
controversy arising from or relating to this Agreement be submitted for
adjudication to any court, arbitration panel, or other third party, the
preservation of the secrecy of Confidential Information may be jeopardized. All
pleadings, documents, testimony, and records relating to any such adjudication
will be maintained in secrecy and will be available for inspection by the
Employer, the Executive, and their respective attorneys and experts, who will
agree, in advance and in writing, to receive and maintain all such information
in secrecy, except as may be limited by them in writing.
ARTICLE 8
GENERAL PROVISIONS
8.1 Injunctive Relief and Additional Remedy. The Executive acknowledges that the
injury that would be suffered by the Employer as a result of a breach of the
provisions of this Agreement (including any provision of Articles 7 and 8) would
be irreparable and that an award of monetary damages to the Employer for such a
breach would be an inadequate remedy. Consequently, the Employer will have the
right, in addition to any other rights it may have, to obtain injunctive relief
to restrain any breach or threatened breach or otherwise to specifically enforce
any provision of this Agreement, and the Employer will not be obligated to post
bond or other security in seeking such relief.
8.2 Covenants of Article 8 are Essential and Independent Covenants. The
covenants by the Executive in Article 7 are essential elements of this
Agreement, and without the Executive's agreement to comply with such covenants
the Employer would not have entered into this Agreement or employed or continued
the employment of the Executive. The Employer and the Executive have
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independently consulted their respective counsel and have been advised in all
respects concerning the reasonableness and propriety of such covenants, with
specific regard to the nature of the business conducted by the Employer. The
Executive's covenants in Articles 7 are independent covenants and the existence
of any claim by the Executive against the Employer under this Agreement, or
otherwise, will not excuse the Executive's breach of any covenant in Article 7.
If the Executive's employment hereunder expires or is terminated, this Agreement
will continue in full force and effect as is necessary or appropriate to enforce
the covenants and agreement of the Executive in Article 7.
8.3 Representations and Warranties by the Executive. The Executive represents
and warrants to the Employer that the execution and delivery by the Executive of
this Agreement do not, and the performance by the Executive of the Executive's
obligations hereunder will not, with or without the giving of notice or the
passage of time, or both (a) violate any judgment, writ, injunction, or order of
any court, arbitrator, or governmental agency applicable to the Executive or (b)
conflict with, result in the breach of any provisions of or the termination of,
or constitute a default under, any agreement to which the Executive is a party
or by which the Executive is or may be bound.
8.4 Waiver. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by either
party in exercising any right, power, or privilege under this Agreement will
operate as a waiver of such right, power, or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the exercise of any other
right, power, or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party, (b) no waiver that may be given by
a party will be applicable except in the specific instance for which it is
given, and (c) no notice to or demand on one party will be deemed to be a waiver
of any obligation of such party or of the right of the party giving such notice
or demand to take further action without notice or demand as provided in this
Agreement.
8.5 Binding Effect; Delegation of Duties Prohibited. This Agreement shall inure
to the benefit of, and shall be binding upon, the parties hereto and their
respective successors, assigns, heirs, and legal representatives, including any
entity with which the Employer may merge or consolidate or to which all or
substantially all of its assets may be transferred. The duties and covenants of
the Executive under this Agreement, being personal, may not be delegated.
8.6 Notices. All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by facsimile
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and fax numbers
set forth below (or to such other addresses and fax numbers as a party may
designate by notice to the other parties):
If to Employer: If to Executive:
Attn: Mr. Xxxx XxXxxxxxx Attn: Xx. Xxxx X. Xxxx
Attn: XxxxXxxx Xxxxx, Esq.
Fax No.: 000-000-0000 Fax No.: 000-000-0000
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8.7 Entire Agreement; Amendments. This Agreement, contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral or written, between the parties hereto
with respect to the subject matter hereof. This Agreement may not be amended
orally, but only by an agreement in writing signed by the parties hereto.
8.8 Governing Law. This Agreement will be governed by the laws of the State of
Colorado without regard to conflicts of laws principles.
8.9 Arbitration. Any dispute arising out of or relating to this Agreement,
including without limitation, any dispute between Employer and Executive shall
be submitted to final and binding arbitration in Denver, Colorado, in accordance
with the rules of the American Arbitration Association then in effect. Any
arbitration award may be fully enforced pursuant to applicable law.
8.10 Section Headings; Construction. The headings of Articles and Sections in
this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Article," "Articles,"
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement unless otherwise specified. All words used in this Agreement will be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms.
8.11 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
8.12 Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
CHAPARRAL RESOURCES, INC.
By: /s/ Xxxx X. XxXxxxxxx
Name:Xxxx X. XxXxxxxxx
Title: Chairman & Chief Executive Officer
XX. XXXX X. XXXX
/s/ Xx. Xxxx X. Xxxx
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