Exhibit 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into as of October 1, 2007, by and
between Exterra Energy, Inc., a Nevada corporation (the "Company"), and Xxx X.
Xxxxxxx.
WITNESS:
WHEREAS, the Company desires to employ the Employee and the Employee
desires to be employed by the Company, in accordance with the provisions
contained in this Employment Agreement (the "Agreement");
NOW THEREFORE, in consideration of the premise and the respective covenants
and agreements of the Company and the Employee contained in this Agreement, the
Company and the Employee agrees as follows:
ARTICLE 1.
EMPLOYMENT
The Company employs the Employee, and the Employee accepts such employment.
Subject to the direction of the Board of Directors of the Company, the Employee
will serve as the Chief Executive Officer of the Company. The Employee has such
responsibilities, must perform such duties and exercise such power and authority
as is inherent in, or incident to, the offices of Chief Executive Officer. The
employee must devote the majority of his business time and attention and his
best efforts to the performance of his duties as an employee of the Company.
Employee agrees that he must not delegate any or all of his duties or
obligations under this agreement to any other person or entity.
ARTICLE 2.
TERM
Subject to the provisions of Article 5 below, the term of this Agreement is
for the period commencing on October 1, 2007, and terminating on September 30,
2011.
ARTICLE 3.
SALARY
3.1. Salary. In full payment for the obligations to be performed by the
Employee, during the period commencing on October 1, 2007, and terminating on
September 30, 2008, the Company must pay to the Employee a salary at the annual
rate of $150,000.00. Beginning on October 1, 2008, and terminating on September
30, 2008, the Company must pay to the Employee a salary at the annual rate of
$220,000.00.
3.2. Adjustment of Salary. After the conclusion of each anniversary of
employment with the Company subsequent to those specifically set forth in
paragraph 3.1, the Board of Directors will determine any increase in the salary
from the previous year. Any decrease in the salary from the previous year must
be with the consent of the Employee.
3.3. Payment of Salary. Payments of salary will be made to the Employee in
installments from time to time on the same dates that payment of salary are
generally made to all employees of the Company.
3.4 Additional Compensation. As additional consideration, during the
initial three years of this contract term the Company shall issue to the
Employee 400,000 shares of stock per year with certain restrictions on its sale
as proscribed by the Board of Directors.
ARTICLE 4.
PERFORMANCE BONUS
As additional compensation, the Employee may receive a performance bonus
for each fiscal year in such amounts and payable at such time, as may from time
to time be declared by the Board of Directors of the Company; provided, however,
that nothing contained in this Article 4 will be construed to obligate the
Company to pay any amount to the Employee as a performance bonus.
ARTICLE 5.
CERTAIN FRINGE BENEFITS
5.1. Generally. The Employee is entitled to receive such benefits and to
participate in such benefit plans as are generally provided from time to time by
the Company to its senior management employees; provided, however, that nothing
contained in this Section 5.1 will be construed to obligate the Company to
provide any specific benefits to the Employee.
5.2. Vacations. The Employee is entitled to vacation time on an annual
basis in accordance with such policies as are from time to time adopted by the
Company's Board of Directors with respect to its senior management employees.
5.3. Automobile. The employer shall provide the employee with an automobile
with such optional equipment as he may select. The employee shall be provided
with a replacement automobile. The type of automobile shall be selected by the
Board of Directors. The employer shall also obtain and pay the premiums on the
insurance for such automobile
5.4. Stock Options. The Employee is entitled to participate in the
Company's Incentive Stock Option Plan and to receive such incentive stock
options as may from time to time be granted to him; provided, however, that
nothing contained in this Section 5.4 will be construed to obligate the Company,
its Board of Directors or any committee of its Board of Directors to grant any
incentive stock option whatsoever to the Employee under the Company's Incentive
Stock Option Plan.
5.5 Directors and Officers Liability Insurance: The Company shall use its
best efforts to acquire Directors and Officers (D&O) Liability Insurance for all
directors and officers of the Company.
ARTICLE 6.
TERMINATION OF EMPLOYMENT
6.1. Certain Definitions. The following terms have the respective meanings
when utilized in this Article 6:
a. "Bonus" means, as of a given date, the most recent annual bonus paid by
the Company to the Employee.
b. "Cause" means any action by the Employee or an inaction by the Employee
that is reasonably believed by the Company to constitute:
(i). fraud, embezzlement, misappropriation, dishonesty or breach of trust;
(ii). a felony or crime of moral turpitude;
(iii). material breach or violation of any or all of the covenants,
agreements, and obligations of the Employee set forth in this Agreement, other
than as the result of the Employee's death or disability (as hereinafter
defined);
(iv). a willful or knowing failure or refusal by the Employee to perform
any or all of his material duties and responsibilities as an officer of the
Company, other than as the result of the Employee's death or disability; or
(v). gross negligence by the Employee in the performance of any or all of
his material duties and responsibilities as an officer of the Company, other
than as the result of the Employee's death or disability; provided, however,
that in the event that the basis for any termination of the Employee's
employment by the Company as set forth in the Termination Notice, (as
hereinafter defined) delivered by the Company to the Employee. The definition of
Cause set forth in Section 6.1(b)(iii), Section 6.1(b)(iv) or Section 6.2(b)(v)
of this Agreement, then, in such event, allows the Employee 15 days from and
after the date of his receipt of the Termination Notice to cure the action or
inaction specified therein to the reasonable satisfaction of the Company.
c. "Compensation" means the amount of the Employee's Salary (as hereinafter
defined) and Bonus.
d. "Disability" means any mental or physical illness, condition, disability
or incapacity which prevents the Employee from reasonably discharging his duties
and responsibilities as an officer of the Company. In the event that any
disagreement or dispute arises between the Company and the Employee as to
whether the Employee suffers from any Disability, then, the Employee must submit
to the physical or mental examination of a physician licensed under the laws of
the State of Texas, who will be mutually selected by the Company and the
Employee, and such physician will make the determination whether the Employee
suffers from any disability. In the absence of fraud or bad faith, the
determination of such physician will be final and binding on the Company and the
Employee. The entire cost of any examination will be borne solely by the
Company.
e. "Good Reason" means:
(i). The assignment by the Board of Directors of the Company to the
Employee, without his express written consent of duties and responsibilities
which results in the Employee having less significant duties and
responsibilities or exercising less significant power and authority that is not
comparable to the level and nature which he had, immediately prior to any
assignment;
(ii). The removal of the Employee from, or a failure to reappoint the
Employee to, his current position with the Company or its subsidiaries or
affiliates, except (A) with the Employee's express written consent or (B) in
connection with any termination of the Employee's employment by the Company as
the result of the Employee's Protracted Disability (as hereinafter defined) or
for Cause;
(iii). The Company's failure to timely perform its obligations under this
Agreement (including without limitation its obligations to make payments to the
Employee pursuant to the provisions of Articles 3 and 4 above);
(iv). The Company's requiring of the Employee, without his express written
consent, to travel on Company business to an extent substantially greater than
the Employee's business travel obligations immediately prior thereto;
(v). The Company's requiring of the Employee, without his express written
consent, to change his place of permanent residency to a place outside of
Xxxxxxxxxx County or Xxxxxx County, Texas; or
(vi). The failure of the Company to obtain the express written assumption
and agreement to timely perform the Company's obligations under this Agreement
by any successor to the Company as required by Article 9 of this Agreement.
f. "Protracted Disability" means any disability that prevents the Employee
from reasonably discharging his duties and responsibilities as an officer of the
Company for a period of six-consecutive months.
g. "Salary" means, as of a given date, the Employee's current annual
salary.
h. "Termination Date" means a specific date not less than 45, nor more than
90 days, from and after the date of any Termination Notice on which the
Employee's employment by the Company will be terminated in accordance with the
provisions of this Agreement.
i. "Termination Notice" means a written notice which (i) sets forth the
specific provision of this Agreement relied on to terminate the Employee's
employment by the Company, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide the basis for the termination of the Employee's
employment by the Company pursuant to the specific provision of this Agreement
relied on and (iii) sets forth a Termination Date.
6.2. Termination of Employment.
a. Notwithstanding the provisions of Article 2 above, this Agreement (i)
will be automatically terminated on the death of the Employee pursuant to the
provisions of Section 6.3 below, and (ii) may be terminated at any time by the
Company pursuant to the provisions of Section 6.4 or 6.5 below, and (ii) may be
terminated at any time by the Employee pursuant to the provisions of Section 6.6
below.
b. In the event that either the Company or Employee desires to terminate
the Employee's employment by the Company pursuant to any of the provisions of
Sections 6.4, 6.5 or 6.6 below, then the party causing any such termination must
give to the other party a Termination Notice.
c. In the event this agreement is terminated pursuant to any of the
provisions of this Article 6, the Company will be discharged from all of its
obligations to the Employee on its payment to the Employee of the required
amount set forth in the section of this Article 6 pursuant to which the
termination occurs. The Employee's sole and exclusive remedy for the termination
of this Agreement prior to September 30, 2011, regardless of whether the
termination is initiated by the Company or by the Employee, and regardless
whether the termination is with cause, will be the payment by the Company to him
of the amount set forth in the section of this Article 6 pursuant to which such
termination occurs.
6.3. Death of Employee. In the event that at any time during the term of
this Agreement the Employee dies, then the employment of the Employee by the
Company automatically terminates on the date of the Employee's death. In such
event, not more than 90 days from and after the date of the Employee's death,
the Company will pay to the Employee's estate or heirs, as the case may be, an
amount in cash equal to the Employee's Compensation (subject to any applicable
payroll and/or other taxes required by law to be withheld) determined as of the
date of the Employee's death. The Employee's estate, heirs or beneficiaries, as
the case may be, will also be entitled to receive any benefits which may be
payable under any life insurance policy provided by the Company.
6.4. Disability of Employee.
a. In the event that at any time during the term of this Agreement the
Employee suffers any disability, then the Company is obligated to continue to
pay in the ordinary and normal course of its business to the Employee or his
legal representatives, as the case may be, the Employee's Compensation (subject
to any applicable payroll and/or other taxes required by law to be withheld)
from the date that the Employee first suffers any disability to the date that
the Employee's employment by the Company is terminated pursuant to any of the
provisions of this Agreement.
b. In the event that the Employee suffers any protracted disability during
the term of this Agreement, then the Company may terminate this Agreement. In
such event, in addition to any other benefits, which may have been provided by
the Company to the Employee or his legal representatives, pursuant to the
provisions of Section 6.4 (a) above, not later than the Termination Date
specified in the Termination Notice, the Company must pay to the Employee or his
legal representatives, an amount in cash equal to the Employee's Compensation
(subject to any applicable payroll and/or other taxes required by law to be
withheld) determined as of the date of the Termination Notice. Subsequent to the
Termination Date, the Employee or his legal representatives, as the case may be,
will also be entitled to receive any benefits that may be payable under any
disability insurance policy or disability plan provided by the Company.
6.5. Termination of Employment by Company.
a. The Company may terminate this Agreement at any time with Cause. In such
event, the Company is obligated to continue to pay in the ordinary and normal
course of its business to the Employee only his Salary (subject to any
applicable payroll and/or other taxes required by law to be withheld) from the
date of the Employee's receipt of the Termination Notice given by the Company to
him to the Termination Date set forth in the Termination Notice.
6.6. Termination of Employment by Employee.
a. The Employee may terminate this Agreement at any time for Good Reason.
In such event, (i) not later than the Termination Date specified in the
Termination Notice given by the Employee to the Company, as the case may be, the
Company must pay to the Employee an amount in cash equal to the Employee's
Compensation (subject to any applicable payroll and/or other taxes required by
law to be withheld) determined as of the date of the Termination Notice, and
(ii) the restrictions set forth in Section 8.1 (b) below do not apply to the
Employee.
b. The Employee may terminate this Agreement at any time without Good
Reason upon 90 days written Termination Notice. In such event, the Company is
obligated to continue to pay in the ordinary and normal course of its business
to the Employee only his Salary (subject to any applicable payroll and/or other
taxes required by law to be withheld) from the date of the Company's receipt of
the Termination Notice given by the Employee to it to the Termination Date set
forth in the Termination Notice.
ARTICLE 7.
TERMINATION OF EMPLOYMENT SUBSEQUENT TO BUSINESS COMBINATION
7.1. Business Combination Defined. For purposes of this Article 7, the term
"Business Combination" has the meaning given to it in Article Eleven of the
Company's Certificate of Incorporation as in effect on the date of this
Agreement.
7.2. Termination of Employment. Notwithstanding the provisions of Articles
2 and 6 above, in the event that there is a Business Combination, and at any
time subsequent to the date of any such Business Combination, either the Company
terminates the employment of the Employee by the Company for any reason, other
than as the result of the death of the Employee or the Protracted Disability of
the Employee, or the Employee terminates his employment by the Company for any
reason whatsoever, then, in that event, and not later than the Termination Date
specified in the Termination Notice delivered by the Company to the Employee, or
by the Employee to the Company, as the case may be, the Company must pay to the
Employee an amount in cash equal to the Employee's Compensation determined as of
the date of the Termination Notice, multiplied by three (subject to any
applicable payroll and/or other taxes required by law to be withheld).
ARTICLE 8.
CERTAIN RESTRICTION ON EMPLOYEE
8.1. Certain Restrictions. The Employee covenants and agrees with the
Company as follows:
a. He may not at any time directly or indirectly, for himself or for any
other person, firm, corporation, partnership association or other entity,
attempt to employ, or enter into any contractual arrangement for employment with
any employee or former employee of the Company or any of its subsidiaries or
affiliates.
b. He may not, during the term of this Agreement, and for a period of one
year from and after the date of termination of this Agreement, directly or
indirectly, without the express written consent of the Board of Directors: (i)
acquire or own in any manner any interest in, or loan any amount to, any person,
firm, partnership, corporation, association or other entity which competes in
any manner with the Company or any of its subsidiaries or affiliates in the
United States (collectively, the "Territory"), (ii) be employed by or serve as
an employee, agent, officer, director of, or as a consultant to, any person,
firm, partnership, corporation, association or other entity, other than the
Company and its subsidiaries, and affiliates, which competes in any manner with
any of the Company or its subsidiaries or affiliates in the Territory, (iii)
compete in any manner with the Company or its subsidiaries or affiliates in the
Territory, or (iv) solicit, attempt to solicit, provide goods or services to, or
attempt to provide goods or services to, any present or future customer of the
Company or any of its subsidiaries or affiliates. The foregoing provisions of
this Section 8.1 (b) will not prevent the Employee from acquiring or owing
equity securities of any entity whose securities are listed for trading on a
national securities exchange or are regularly traded in the over-the-counter
securities market.
c. He may not at any time disclose, directly or indirectly, to any person,
firm, corporation, partnership, or association the financial condition, assets,
personnel, procedures, techniques, customers, sources of leads and methods of
obtaining new business or the methods generally of doing and operating the
respective businesses of the Company and its subsidiaries and affiliates, except
to the extent that such information is a matter of public knowledge or is
required to be disclosed by law or judicial or administrative process.
8.2. Injunction. It is recognized and acknowledged by the Company and the
Employee that a breach or violation by the Employee of any or all of his
covenants and agreements contained in Section 8.1 of this Agreement will cause
irreparable harm and damage to the Company and its subsidiaries and affiliates
in a monetary amount which would be virtually impossible to ascertain. As a
result, the Employee recognizes and acknowledges that the Company and its
subsidiaries and affiliates will be entitled to a temporary restraining order
and/or injunction from any court of competent jurisdiction enjoining and
restraining any breach or violation by the Employee and/or his affiliates,
employees, associates, partners, or agents, either directly or indirectly, of
any or all of the Employee's covenants and agreements contained in Section 8.1
of this Agreement. Such right to a temporary restraining order and/or injunction
will be cumulative and in addition to whatever other rights or remedies the
Company and its subsidiaries and affiliates may possess, at law or in equity.
Nothing contained in this Agreement will be construed to prevent the Company and
its subsidiaries and affiliates from seeking and recovering from the damages
suffered by any or all of the employees as a result of any breach or violation
by the Employee and/or his affiliates, employees, associates, partners, or
agents of the Employee's covenants and agreements contained in this Agreement.
8.3. Reduction in Scope. In the event that any of the covenants and
agreements of the Employee contained in Section 8.1 of this Agreement are held
invalid or unenforceable by a court of competent jurisdiction because of their
duration or geographic area, then, in any event, the covenants or agreements
must be reduced by such court in duration or geographical areas, or both, to
such extent as to make it valid and enforceable in the jurisdiction where such
court is located, and in all other respects it will remain in full force and
effect.
ARTICLE 9.
SUCCESSOR TO COMPANY
The Company requires any successor, whether direct or indirect, whether by
purchase, merger, consolidation or otherwise, to succeed to all or most of the
business or properties and assets of the Company. The successor will execute and
deliver to the Employee a written instrument in form and in substance reasonably
satisfactory to the Employee and his legal counsel pursuant to which any
successor agrees to assume and to timely perform or to cause to be timely
performed all of the Company's covenants, agreements and obligations set forth
in this Agreement (a "Successor Agreement"). The failure of the Company to cause
any successor to execute and deliver a Successor Agreement to the Employee (a)
constitutes a breach of the provisions of this Agreement by the Company, and (b)
is deemed to constitute a termination by the Employee of his employment by the
Company (as of the date that any successor succeeds to all or most of the
business or properties and assets of the Company) for Good Reason.
ARTICLE 10.
ATTORNEY'S FEES
In the event that any litigation arises between the Company and the
Employee, based, in whole or in part, on this Agreement or any or all of the
provisions contained here, the prevailing party in the litigation is entitled to
recover from the losing party, and will be awarded by a court of competent
jurisdiction, any and all fees and disbursements of trial and appellate counsel
paid, incurred or suffered by the prevailing party as the result of, arising
from, or in connection with, the litigation.
ARTICLE 11.
MISCELLANEOUS
11.1. Governing Law. This Agreement is governed by, and will be construed
and interpreted in accordance with, the laws of the State of Texas.
11.2. Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Employee with respect to the subject matter and
supersedes all prior negotiations, agreements, understandings and arrangements,
both oral and written, between the Company and the Employee with respect to
subject matter. This Agreement may not be modified in any way, except by a
written instrument executed by the Company and the Employee.
11.3. Notices. Any and all notices required or permitted to be given under
this Agreement must be in writing and will be deemed to have been duly given
when delivered by hand or when deposited in the U.S. mail, by registered or
certified mail, return receipt requested, postage prepaid, as follows:
If to the Company: Exterra Energy, Inc.
X.X. Xxx 0000, Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxx XxXxxxxxx, President
If to the Employee: Xxx X. Xxxxxxx
X.X. Xxx 0000, Xxxx Xxxxx, Xxxxx 00000
or to such other address as either party may give written notice of from time to
time.
11.4. Benefits; Binding Effect. This Agreement is for the benefit of, and
is binding on, the Company and the Employee and their respective heirs, personal
representatives, legal representatives, successors and assigns.
11.5. Severability. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement does not
affect the enforceability of the remaining portions of this Agreement or any
part hereof, all of which are inserted conditionally on their being valid in
law. Except as is otherwise provided in Section 8.3 above, in the event that any
one or more of the words, phrases, sentences, clauses or sections contained in
this Agreement is declared invalid by a court of competent jurisdiction, then,
this Agreement will be construed as if the invalid word or words, phrase or
phrases, sentence or sentences, clause or clauses, or section or sections had
not been inserted.
11.6. Waivers. The waiver by either party of a breach or violation of any
term or provision of this Agreement by the other party does not operate and will
not be construed as a waiver of any subsequent breach or violation of any
provision of this Agreement nor of any other right or remedy.
11.7. Section Headings. The section headings contained in this agreement
are for reference purposes only and do not affect in any way the meaning or
interpretation of any or all of the provisions of this Agreement.
11.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original and all of which
when taken together constitute but one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed and delivered this
Agreement as of the date first above written.
Employee: Company:
Exterra Energy, Inc.
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Xxx X. Xxxxxxx Xxxx XxXxxxxxx, President
