CONFIDENTIALITY, NON-SOLICITATION AND NON-COMPETITION AGREEMENT
Exhibit
99.5
CONFIDENTIALITY,
NON-SOLICITATION
AND
NON-COMPETITION AGREEMENT
This
Confidentiality, Non-Solicitation and Non-Competition Agreement (this
“Agreement”),
is
made and entered into as of June 23, 0000, xxxxxxx Xxxxx Xxxxx Oil Company,
a
Nevada corporation (the “Company”),
and
Xxxxx Xxxxxxx (“Xxxxxxx”).
WHEREAS,
Company
desires to employ Xxxxxxx and Xxxxxxx wishes to be employed by
Company;
WHEREAS,
concurrently with their entering into this Agreement, Company and Xxxxxxx are
entering into an Employment Agreement of even date herewith (the “Employment
Agreement”),
setting forth the terms of Xxxxxxx’x employment by Company;
WHEREAS,
Company
and Xxxxxxx desire that this Agreement take effect only if the Employment
Agreement has not been, in accordance with the procedures set forth in Article
XII of Company’s By-Laws, duly approved by the Board of Directors of Company and
duly ratified by the required vote of Company’s stockholders prior to the close
of business on the ninetieth (90th) day after the date hereof (the “Ninetieth
Day”);
WHEREAS,
as a
material inducement to Company to enter into the Employment Agreement and in
order to protect the value and goodwill of Company’s business, Xxxxxxx has
agreed to enter into this Agreement, which is a material condition of Company’s
entry into, and a required delivery under, the Employment
Agreement;
WHEREAS,
in the
course of his employment by Company and/or other Affiliate Companies (as defined
below), Xxxxxxx will have access to, and Xxxxxxx will become familiar with,
acquire knowledge of, and develop or maintain, Company’s Confidential
Information (as defined below) and business relationships, whether currently
existing or to be developed in the future, which Xxxxxxx recognizes permits
Company to enjoy a competitive advantage, and disclosure and/or use thereof
by
competitors, potential competitors and/or any third-party would cause
irreparable harm to Company.
NOW
THEREFORE,
in
consideration of Xxxxxxx’x employment with Company and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged
by
the parties, the parties hereto agree as follows:
1. EFFECTIVE
DATE.
This
Agreement shall become effective, if at all, at the close of business on the
Ninetieth Day; provided
that,
this
Agreement shall not become effective and shall be void ab initio and neither
Company nor Xxxxxxx shall have any obligations hereunder, if, in accordance
with
the procedures set forth in Article XII of the Company’s By-Laws, the Employment
Agreement is ratified by the required vote of the Company’s stockholders on or
prior to the Ninetieth Day, as provided therein.
Xxxxxxx
Non-Comp Agreement
June
2008
2. CONFIDENTIAL
INFORMATION.
(a) Xxxxxxx
acknowledges that during his employment with Company, Xxxxxxx will have access
to and possession of trade secret, confidential information, and proprietary
information (collectively, as defined more extensively below, “Confidential
Information”)
of
Company, its parents, subsidiaries and affiliates and their respective
customers, suppliers and other third party that do business with them. Xxxxxxx
recognizes and acknowledges that this Confidential Information is valuable,
special and unique to Company’s business, is owned solely by and is the
exclusive property of Company, is to be used only for Company’s benefit, and
that access to and knowledge thereof are essential to the performance of
Xxxxxxx’x duties to Company. During his employment with Company and thereafter,
Xxxxxxx shall keep secret and shall not use or disclose, reveal, transfer,
reproduce, sell, capitalize upon or take advantage of such Confidential
Information relating to Company, its subsidiaries, affiliates, customers,
suppliers or other third party that do business with it except at the request
of
Company, and in addition, Xxxxxxx shall exercise all reasonable efforts and
precautions to prevent such disclosure, breach of confidentiality, or other
conduct or action inconsistent herewith; provided,
however,
that
Confidential Information may be disclosed to the extent (i) required by law
or
court order or (ii) generally available to the public other than by unauthorized
disclosure.
(b) The
term
“Confidential
Information,”
means
information in whatever form be it written, digital, graphic, electronically
stored, orally transmitted or memorized concerning:
(i) Company’s
business or operations plans, strategies, portfolio, prospects or
objectives;
(ii) Company’s
structure, products, product development, technology, distribution, sales,
services, support and marketing plans, practices, and operations;
(iii) the
prices, costs, and details of Company’s services;
(iv) research
and development, new products, licenses, operations or plans;
(v) trade
secrets, proprietary information, trade and service marks, inventions, mask
works, ideas, processes, formulas, source and object codes, data, programs,
other works of authorship, know-how, discoveries, developments, designs,
schematics, manuals, drawings, computer disks and programs, techniques, Xxxxxxx
suggestions, development tools, computer printouts and improvements (hereinafter
referred to as “Inventions”);
(vi) customers
and customer lists, including (A) present customers, customer files and records,
(B) potential customers, and (C) present and potential prospects or targets
(including without limitation, the identities of customers, names, addresses,
contact, persons and the customers’ business status or needs) that the Company
has identified as potential customers, prospects or targets prior to the
termination of Xxxxxxx’x employment with Company;
(vii) information
regarding the skills, compensation and benefits of other employees of
Company;
Xxxxxxx
Non-Comp Agreement
June
2008
2
(viii) non-publicly
reported financial matters, financial records, unpublished financial statements,
financial condition, results of Company’s operations and related information
about Company;
(ix) any
other
financial, commercial, business or technical information related to any of
the
products or services made, developed or sold by Company or its
customers.
(c)
Xxxxxxx does not have an obligation to treat any information as Confidential
Information that is: (A) in the public domain through no act, omission or fault
of Xxxxxxx; (B) within the legitimate possession of Xxxxxxx prior to the date
hereof, with no confidentiality obligations to a third party; (C) lawfully
received from a third party having rights in the information without
restriction, and without notice of any restriction against its further
disclosure or use; (D) independently developed by Xxxxxxx without breaching
this
Agreement; or (E) disclosed or used by Xxxxxxx with the prior written consent
of
the Company. If Confidential Information is required or requested to be produced
by law,
court
order, governmental authority or other third party, Xxxxxxx
shall immediately notify the Company of that requirement or request and shall
assist the Company in obtaining a protective order or other appropriate relief
to prevent such production. The
burden of establishing the existence of these exceptions shall be
Xxxxxxx’x.
(d)
Xxxxxxx further recognizes that Company has received and in the future may
receive from third parties confidential or proprietary information
(“Third Party
Information”)
subject to a duty on Company’s part to maintain the confidentiality of such
information and to use it only for certain limited purposes, and Xxxxxxx shall
disclose all such Third Party Information to Company. During his employment
with
Company and thereafter, Xxxxxxx shall hold Third Party Information in the
strictest confidence and shall not disclose to anyone (other than Company
personnel who need to know such information in connection with their work for
Company) or use, except in connection with work for Company, Third Party
Information unless expressly authorized by Company in writing.
(e)
Xxxxxxx further agrees to store and maintain all Confidential Information and
Third Party Information in a secure place. On the termination of his employment
with Company, Xxxxxxx agrees to deliver all records, data, information, and
other documents produced or acquired during his employment with Company, and
all
copies thereof, to Company. Such material at all times shall remain the
exclusive property of Company, unless otherwise agreed to in writing by Company.
Upon termination of the employment, Xxxxxxx agrees to make no further use of
any
Confidential Information on his or her own behalf or on behalf of any other
person or entity other than Company.
(f)
During his employment with Company and thereafter, Xxxxxxx shall not improperly
use or disclose any confidential information or trade secrets, if any, of any
former employer or any other person to whom Xxxxxxx has an obligation of
confidentiality, and shall not bring onto the premises of Company any
unpublished documents or any property belonging to any former employer or any
other person to whom Xxxxxxx has an obligation of confidentiality unless
consented to in writing by that former employer or person.
(g)
In
the event that Xxxxxxx is required to disclose any Confidential Information
pursuant to an order, regulation, ruling, governmental request, summons or
subpoena, Xxxxxxx shall promptly notify Company of such pending disclosure
and
assist Company (at Company’s expense) in seeking a protective order or in
objecting to such request, summons or subpoena with regard to the Confidential
Information.
Xxxxxxx
Non-Comp Agreement
June
2008
3
(h)
Xxxxxxx agrees to cooperate with Company, whether during Xxxxxxx’x employment
with Company or thereafter, in the prosecution or defense of all threatened
claims or actual litigation in which Company or any other Affiliate Companies
or
other of its affiliates is or may become a party, whether now pending or
hereafter brought, in which Xxxxxxx has knowledge of relevant facts or issues.
Xxxxxxx shall be promptly reimbursed reasonable out-of-pocket expenses
(including legal fees) incurred by him due to his cooperating with the
prosecution or defense of any litigation for the Company any other Affiliate
Companies or other of its affiliates provided that he provides Company Affiliate
Companies or other of its affiliates, as applicable, with reasonable
documentation of such expenses.
3. NON-COMPETE
AND NON-SOLICITATION.
(a) Non-Competition.
Xxxxxxx
will, as a result of his employment with Company, be involved with and exposed
to substantial business resources and assets of Company and certain other
Affiliate Companies and will develop additional contacts and relationships
with
numerous individuals and companies, which are also involved in the business
of
Company or businesses related thereto. Such individuals and organizations will
have business and contractual relationships with Company and/or certain other
Affiliate Companies and other of its affiliates that will be a valuable asset
thereof. Xxxxxxx also recognizes and agrees with Company that the services
which
Xxxxxxx will render during the term of employment are unique, special and of
extraordinary character, that Company will be substantially dependent upon
such
services to develop and market its products and to earn a profit, and that
the
application of Xxxxxxx’x knowledge and services to any competitive business
would be substantially detrimental to Company. Accordingly, in consideration
for
employment by Company and compensation and other benefits, including any
compensation Xxxxxxx may receive pursuant to this Agreement after his employment
is terminated, Xxxxxxx shall not, directly or indirectly (whether as an
employee, officer, executive, director, manager, stockholder, member, lender,
consultant or any other capacity), during the period of his employment with
Company or during the Non-Comp Period, engage in any business or activity or
otherwise compete anywhere in the United States, with any business or activity
that is competitive with any business or activity engaged in by Company or
any
other Affiliate Companies or other of its affiliates or contemplated to be
engaged in (as of the time of the termination of employment) by Company or
any
such other Affiliate Company or affiliate. In addition, for the period of his
employment by Company and for the Non-Comp Period, Xxxxxxx shall not induce
or
attempt to induce any person or entity that is engaged in any business activity
or relationship with Company or any other Affiliate Companies or other of its
affiliates to terminate that activity or relationship to reduce such activity
or
relationship.
The
provisions of this Section
3
shall
not prevent Xxxxxxx from investing any assets in securities of any
publicly-traded corporation, provided that such investments do not, directly
or
indirectly, result in Xxxxxxx, his spouse or his children collectively (i)
owning beneficially at any time five percent (5%) or more of the equity
securities of any corporation engaged in a business competitive with Company,
or
(ii) otherwise being able to control or actively participate in the business
decisions of such corporation.
For
purposes of this Agreement, (i) the term “compete”
means
to engage, directly or indirectly, either as a proprietor, partner, Xxxxxxx,
commissioned salesperson, agent, consultant, director, officer, stockholder
or
in any other capacity or manner whatsoever; and (ii) the “Non-Comp
Period”
means
the period of six (6) months beginning on the date of termination of Xxxxxxx’x
employment with the Company for any reason whatsoever.
Xxxxxxx
Non-Comp Agreement
June
2008
4
(b) Non-Solicitation.
For the
period of his employment by Company and for the Non-Comp Period, Xxxxxxx shall
not (i) induce, solicit or seek to influence, either directly or indirectly,
any
employee of, or any person under written contract with, Company or any other
Affiliate Company, to leave the employ of Company, any other Affiliate Company
or any division of either, or to enter into any employment agreement,
independent contractor arrangement, or any other arrangement whereby such
individual would perform services for compensation, either directly or
indirectly, for any person, firm, corporation or other entity engaged in
business in competition with Company or any other Affiliate Company, or (ii)
solicit any third party with whom the Company or any of its subsidiaries has
a
mineral rights contract, a joint operating agreement or a partnership interest,
or solicit any such third party that has been identified by the Company as
a
prospect for a mineral rights contract or a joint operating agreement or a
partnership interest, or to which a marketing proposal or presentation was
made
during the twelve-12-month period immediately preceding termination of Xxxxxxx’x
employment with Company (other than on behalf of Company) for any business
of
the type conducted by Company.
4. ACKNOWLEDGEMENTS.
Xxxxxxx
acknowledges that in the course of his employment with Company and, if
applicable, Subsidiaries, his services will be of special, unique and
extraordinary value to Company and Subsidiaries, as applicable. Therefore,
Xxxxxxx agrees and acknowledges that: (i) the Subsidiaries are and will be
engaged in the Business throughout the United States; (ii) Xxxxxxx is one of
a
limited number of persons who participates in developing the Subsidiaries’
Business; (iii) Xxxxxxx will occupy a position of trust and confidence with
the
Subsidiaries and will become familiar with the Subsidiaries’ trade secrets and
with other proprietary and confidential information concerning the Subsidiaries
and the Business; (iv) the agreements and covenants contained in Sections
2
and
3
are
essential to protect the Subsidiaries and the goodwill of the Business; and
(v)
Xxxxxxx has means to support himself and his dependents other than by engaging
in the Business, or a business similar to the Business, and the provisions
of
Sections
2
and
3
will not
impair such ability. Xxxxxxx acknowledges that the provisions of Sections
2
and
3
are in
consideration of: (a) employment with Company and/or Subsidiaries, (b) the
compensation to Xxxxxxx pursuant to Section
5,
and (c)
additional good and valuable consideration as set forth in this Agreement.
Xxxxxxx acknowledges and agrees that Company entered into this Agreement in
reliance on the provisions of Sections
2
and
3,
and the
enforcement of this Agreement is necessary to ensure the preservation,
protection and continuity of the Business and other Confidential Information
and
goodwill of the Subsidiaries to the extent and for the periods of time expressly
agreed to herein. Xxxxxxx acknowledges that he has carefully read this Agreement
and has given careful consideration to the restraints imposed upon him by this
Agreement, and is in full accord as to their necessity for the reasonable and
proper protection of confidential and proprietary information of the
Subsidiaries now existing or to be developed in the future. Xxxxxxx expressly
acknowledges and agrees that each and every restraint imposed by this Agreement
is reasonable with respect to subject matter, time period and geographical
area.
For purposes of this Agreement, “Subsidiaries”
means
STO Operating Company, Southern Texas Oil Company, STO Properties LLC and STO
Drilling Company and all of Company’s present and future direct and indirect
subsidiaries; and “Business”
means
any line of business in which Company or any of its direct or indirect
subsidiaries from time to time engaged during the term of Xxxxxxx’x employment
with Company or any line of business in which from time to time, to Xxxxxxx’x
knowledge, Company or any of its direct or indirect subsidiaries actively
prepared to enter during the term of Xxxxxxx’x employment with
Company.
Xxxxxxx
Non-Comp Agreement
June
2008
5
5. NON-COMPETITION
PAYMENT.
(a) Payments.
Subject
to the provisions of Section
5(b),
in the
event that Xxxxxxx’x employment with Company is terminated for any reason
whatsoever (and Xxxxxxx is no longer employed by any Subsidiary), then in
consideration of Xxxxxxx performing his obligations hereunder for the duration
of the Non-Comp Period, including his obligations under Sections
2
and
3,
Company
shall pay to Xxxxxxx an amount of money equal to a pro-rata portion of Xxxxxxx’x
“Base Salary” (as defined in the Employment Agreement) for the Non-Comp Period,
payable ratably following the employment termination date in installments in
accordance with the general payroll practices of the Company, and shall continue
to provide group medical and dental insurance at Company’s expense, as in effect
on the employment termination date, to Xxxxxxx and to Xxxxxxx’x immediate family
for the Non-Comp Period, and thereafter, the Company shall have no further
obligation to Xxxxxxx under this Agreement. During the Non-Comp Period, Xxxxxxx
shall not be considered an employee of any Affiliate Company and will not earn
or accrue any bonus, vacation pay, sick pay, pension or retirement credit,
and
will not be entitled to receive health, disability, life insurance, or any
other
benefits, except as expressly provided in this Section
5(a)
or as
required by applicable law.
(b) Limitations
on Company’s Obligation to Make Payments.
Xxxxxxx’x
right to receive any payments and benefits hereunder shall terminate if Xxxxxxx
violates any contractual or common law obligation owed to any Subsidiary,
including without limitation Xxxxxxx’x obligations under Sections
2 and
3
and
any
other obligation owed to Company under this Agreement. or under the Employment
Agreement.
6. SEVERABILITY
AND JUDICIAL MODIFICATION.
If any
clause, term or provision of this Agreement or the application thereof to any
person or circumstance shall to any extent be held invalid or unenforceable,
the
remainder of this Agreement and the application of such clause, term or
provision to persons or circumstances other than those to which it is invalid
and unenforceable, shall not be affected thereby, and each clause, term and
provision of this Agreement shall be valid and be enforced to the fullest extent
permitted by law. If any court of competent jurisdiction refuses to enforce
any
clause, term, or provision of this Agreement as written, the other clauses,
terms, and provisions shall stand, and the court shall modify the clause, term,
or provision at issue to the minimum extent necessary to make it enforceable
under applicable law, and shall enforce it as so modified.
7. GENERAL.
(a) Notices. Any
notices, requests, demands or other communications required or permitted under
this Agreement shall be in writing and shall be deemed to have been given when
delivered personally or three (3) days after being mailed by certified mail,
return receipt requested, addressed to the party being notified at the address
of such party set forth herein, or at such other address as such party may
hereafter have designated by notice; provided, however, that any notice of
change of address shall not be effective until its receipt by the party to
be
charged therewith.
Xxxxxxx
Non-Comp Agreement
June
2008
6
(b) Waivers.
No delay
or omission by either party hereto in exercising any right, power or privilege
hereunder shall impair such right, power or privilege, nor shall any single
or
partial exercise of any such right, power or privilege preclude any further
exercise thereof or the exercise of any other right, power or
privilege.
(c) Counterparts;
Delivery by Facsimile.
This
Agreement and any amendments hereto may be executed and delivered in one or
more
counterparts, and by the different parties hereto in separate counterparts,
each
of which when executed shall be deemed to be an original, but all of which
taken
together shall constitute one and the same agreement, and shall become effective
when counterparts have been signed by each party hereto and delivered to the
other parties hereto, it being understood that all parties need not sign the
same counterpart. In the event that any signature to this Agreement or any
amendment hereto is delivered by facsimile transmission or by e-mail delivery
of
a “.pdf” format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof. At the request of any party each other
party shall promptly re-execute an original form of this Agreement or any
amendment hereto and deliver the same to the other party. No party hereto shall
raise the use of a facsimile machine or e-mail delivery of a “.pdf” format data
file to deliver a signature to this Agreement or any amendment hereto or the
fact that such signature was transmitted or communicated through the use of
a
facsimile machine or e-mail delivery of a “.pdf” format data file as a defense
to the formation or enforceability of a contract, and each party hereto forever
waives any such defense.
(d) Assigns.
This
Agreement shall be binding upon, and inure to the benefit of, and be enforceable
by, Company’s successors and assigns.
(e) Entire
Agreement; Amendment.
This
Agreement and the Employment Agreement contain the entire understanding of
the
parties relating to the subject matter hereof, and this Agreement supersedes
all
prior and/or contemporaneous understandings and agreements (and to the extent
inconsistent, the Employment Agreement) of any kind and nature (whether written
or oral) among the parties with respect to such subject matter, all of which
are
merged herein. This
Agreement may not be modified, amended, altered or supplemented, except by
a
written agreement executed by each of the parties hereto.
(f) Return
of Company Property.
When
Xxxxxxx leaves the employ of Company, Xxxxxxx shall deliver to Company (and
shall not keep in his possession, recreate or deliver to anyone else) any and
all devices, records, recordings, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
computer materials, equipment, other documents or property, together with all
copies thereof (in whatever medium recorded), belonging to Company, its
successors or assigns. Xxxxxxx further agrees that any property situated on
Company’s premises and owned by Company, including computer disks and other
digital, analog or hard copy storage media, filing cabinets or other work areas,
is subject to inspection by Company personnel at any time with or without
notice. Prior to leaving, Xxxxxxx shall cooperate with Company in completing
and
signing Company’s termination statement for management personnel.
(g) Notification
of New Employer.
In
the
event that Xxxxxxx leaves the employ of Company, Xxxxxxx hereby agrees to notify
his new employer of those of Xxxxxxx’x obligations which are continuing under
this Agreement or the Employment Agreement after the termination of his
employment with Company.
Xxxxxxx
Non-Comp Agreement
June
2008
7
(h) Public
Statements.
Xxxxxxx
agrees that he shall not make any speeches, publish articles, appear as a guest
or a commentator on any television or radio show or issue statements to the
press regarding that in anyway pertain to Company or to Xxxxxxx’x employment
with same without Company’s prior approval unless pursuant to Xxxxxxx’x duties
to Company.
(i) Governing
Law.
All
construction and interpretation of this Agreement shall be governed by and
construed in accord with the internal laws of the State of Texas, without giving
effect to that State’s principles of conflicts of law.
(j) Waiver
of Jury Trial.
Each of
the parties hereto hereby irrevocably waives any and all right to trial by
jury
of any claim or cause of action in any legal proceeding arising out of or
related to this Agreement or the transactions or events contemplated hereby
or
any course of conduct, course of dealing, statements (whether verbal or written)
or actions of any party hereto. The parties hereto each agree that any and
all
such claims and causes of action shall be tried by the court without a jury.
Each of the parties hereto further waives any right to seek to consolidate
any
such legal proceeding in which a jury trial has been waived with any other
legal
proceeding in which a jury trial cannot or has not been waived.
(k) No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen by
Xxxxxxx and Company to express their mutual intent, and no rule of strict
construction will be applied against Xxxxxxx or Company.
(l) Legal
Fees.
In the
event that either party commences an action in law or equity to enforce its
rights under any provision of this Agreement, the non-prevailing party in such
dispute shall pay the reasonable attorneys’ fees and costs incurred by the
prevailing party in connection with such action.
(m) Headings.
The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
[Remainder
of page intentionally left blank.
Signature
page to follow.]
Xxxxxxx
Non-Comp Agreement
June
2008
8
IN
WITNESS WHEREOF, and
intending to be legally bound hereby, the parties hereto have caused this
Agreement to be duly executed as of the date and year first above
written.
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SOUTH
TEXAS OIL COMPANY
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By:
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Name:
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Its:
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Xxxxx
Xxxxxxx
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Address:
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South
Texas Oil Company
Xxxxxxx
Non-Comp Agreement
June
2008
9
