Contract
10.1
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Employment Agreement
CHIEF
EXECUTIVE EMPLOYMENT AGREEMENT
THIS
AGREEMENT is made and entered into this 14th
day of
August, 2006, by and between HYPERDYNAMICS CORPORATION, a Delaware corporation
(the "Company"), and XXXX X. XXXXX ("Executive").
W
I T N E
S S E T H:
WHEREAS,
Executive and the Company deem it to be in their respective best interests
to
enter into an agreement providing for the Company's employment of Executive
pursuant to the terms herein stated;
NOW,
THEREFORE, in consideration of the premises and the mutual promises and
agreements contained herein, it is hereby agreed as follows:
1.
Effective
Date. This Agreement shall be effective as of the 1st
day of
July, 2006, which date shall be referred to herein as the "Effective
Date".
2.
Position
and
Duties.
(a)
Heretofore, Executive has served since 1997 as the Company’s Chairman of the
Board of Directors, President and Chief Executive Officer. In February of
2006,
the board of directors elected Executive as its President and Chief Executive
Officer (also referred to as the “Chief Executive”) once again. The Executive
has been employed under a prior agreement up until the effective date of
this
Agreement. Henceforth, the Company hereby employs Executive as its President
and
Chief Executive Officer pursuant to the terms of this Agreement commencing
as of
the Effective Date for the "Term of Employment" (as herein defined below).
In
this capacity, Executive shall devote his best efforts and his full business
time and attention to the performance of the services customarily incident
to
such offices and position and to such other services of a senior executive
nature as may be reasonably requested by the Board of Directors (the "Board")
of
the Company which may include services for one or more subsidiaries or
affiliates of the Company. Executive shall in his capacity as an employee
and
officer of the Company be responsible to and obey the reasonable and lawful
directives of the Board.
(b)
Executive shall devote his full time (as defined below) and attention to
such
duties, except for sick leave, periodic personal trips and vacations as
determined not to conflict with the material operations of the Company, and
excused leaves of absences otherwise. Executive shall use his best efforts
during the Term of Employment to protect, encourage, and promote the interests
of the Company. Full time with respect to this agreement is understood to
credit
the Executive for his on-call status with regard to managing employees located
around the world and recognizing that the Executive’s hours of specific work for
the company are not limited to any specific range of time during a work day
but
can be accomplished around the clock and on weekends and/or holidays if deemed
necessary by the Executive, and may be done at any physical location including
Executive’s home which Company agrees to establish full computer, system and
access communications capabilities for Executive as deemed necessary by
Executive and at the cost of the Company through either direct equipment
and
service purchases or reimbursement to Executive for such purchases.
(c)
Notwithstanding paragraph 2(b), and with Company consent, Executive shall
be
entitled to sit as a director on other boards of directors so long as doing
so
presents no conflict of interest with Executive's performance of his duties
or
his positions at the Company. Specifically, it is known and understood by
the
Company that Executive is the founder of the non-profit organization, American
Friends of Guinea, which is a non-profit with an exempt purpose to provide
medical infrastructure and aide to the people of the Republic of Guinea.
This
activity is explicitly and implicitly understood not to be a conflict of
interest.
3. Compensation.
(a)
Base
Salary. The Company shall pay to Executive during the Term of Employment
a
minimum salary at the rate of Two Hundred Fifty Thousand dollars ($250,000.00)
per year and agrees that such salary shall be reviewed at least semi-annually
by
the independent compensation committee to insure that the Executive’s
compensation package remains reasonably competitive to the market top executives
in similar companies.
Such
salary shall be payable Bi-Weekly, Semi-monthly, or monthly in accordance
with
the Company's normal payroll procedures. (Executive's annual salary, as set
forth above or as it may be increased from time to time as set forth herein,
shall be referred to hereinafter as "Base Salary"). At no time during the
Term
of Employment shall Executive's Base Salary be decreased from the amount
of Base
Salary then in effect.
(b)
Performance Bonus. In addition to the compensation otherwise payable to
Executive pursuant to this Agreement, Executive shall be eligible to receive
an
annual bonus equal to 1% of the Company’s net income before interest, taxes, and
Executives Performance Bonus, as determined by generally accepted accounting
principles (GAAP). If there is no net income, the Performance Bonus is zero
(0).
(c)
Long
Term Incentive/Stock Options. Upon execution of this Agreement which was
approved by the Compensation Committee and recommended to the board of directors
and then approved by the board of directors, the board of directors will
take
action to grant Executive 40,000 S8 registered stock options to purchase
the
common stock of the Company, every quarter during the term of this Agreement,
beginning the date that this Agreement is signed, and then on the first day
of
every quarter thereafter. Thus, the total options to be granted to Executive
under this Agreement shall be 480,000 (12 quarters x 40,000). These options
are
subject to the Company’s Employee Stock and Stock Option plan and shall be three
(3) year options with a strike price equal to the greater of $2 or the closing
last trade price on the date of each grant by the board of directors. All
quarterly grants are limited in quantity to insure that the covenant of the
Company with Cornell Capital, not to issue more than 300,000 shares of equity
securities in any one quarter. The number of options not granted for any
one
quarter pursuant to this limitation will be carried forward and granted the
next
quarter if the limitation is not exceeded including such carried forward
shares.
Any of these 480,000 options not granted by the beginning of the 12th
quarter
or the end of this agreement shall be granted in future quarters to the extent
such grants do not exceed the Cornell limitation.
4. Benefits
During the Term of Employment:
(a)
Executive shall be eligible to participate in any life, health and long-term
disability insurance programs, pension and retirement programs, stock option
and
other incentive compensation programs, and other fringe benefit programs
made
available to senior executive employees of the Company from time to time,
and
Executive shall be entitled to receive such other fringe benefits as may
be
granted to him from time to time by the Company's Board of Directors including
but not necessarily limited to a corporate lease vehicle of Executive’s choosing
and a membership in a country club of the Executives Choosing to be used
for
entertainment of potential investors, partners, and customers.
(b)
Executive shall be allowed four (4) weeks of vacation with pay and leaves
of
absence with pay on the same basis as other senior executive employees of
the
Company. Executive shall devote his full time and attention to such duties,
except for sick leave, periodic personal trips and vacations as determined
not
to conflict with the material operations of the Company, and excused leaves
of
absences otherwise.
(c)
The
Company shall reimburse Executive for reasonable business expenses incurred
in
performing Executive's duties and promoting the business of the Company,
including, but not limited to, reasonable entertainment expenses, travel
and
lodging expenses, following presentation of documentation in accordance with
the
Company's business expense reimbursement policies. Executive shall use his
best
efforts during the Term of Employment to protect, encourage, and promote
the
interests of the Company. Full time with respect to this agreement is understood
to credit the Executive for his on-call status with regard to managing employees
located around the world and recognizing that the Executive’s hours of specific
work for the company are not limited to any specific range of time during
a work
day but can be accomplished around the clock and on weekends and/or holidays
if
deemed necessary by the Executive, and may be done at any physical location
including Executive’s home which Company agrees to establish full computer,
system and access communications capabilities for Executive as deemed necessary
by Executive and at the cost of the Company through either direct equipment
and
service purchases or reimbursement to Executive for such purchases.
(d)
Executive shall be added as an additional named insured under all liability
insurance policies now in force or hereafter obtained covering any officer
or
director of the Company in his or her capacity as an officer or director.
Company shall indemnify Executive in his capacity as an officer or director
and
hold him harmless from any cost, expense or liability arising out of or relating
to any acts or decisions made by him on behalf of or in the course of performing
services for the Company.
5. Term;
Termination of Employment. As used herein, the phrase "Term of Employment"
shall
mean the period commencing on the Effective Date and ending on the same date
three (3) years later; provided, however, that as of the expiration date
of each
of (i) the initial Term of Employment and (ii) if applicable, any Renewal
Period
(as defined below), the Term of Employment shall automatically be extended
for a
two (2) year period (each a "Renewal Period") unless either the Company or
Executive provides Two (2) months' notice to the contrary. Notwithstanding
the
foregoing, the Term of Employment shall expire on the first to occur of the
following:
(a)
Termination by the Company. Notwithstanding anything to the contrary in this
Agreement, whether express or implied, the Company may, at any time, terminate
Executive's employment for any reason other than Cause, Death or Disability
by
giving Executive at least 60 days' prior written notice of the effective
date of
termination. Company may terminate Employee's employment for Cause, Death
or
Disability without prior notice, except that Executive may not be terminated
for
substantial and willful failure to perform specific and lawful directives
of the
Board, unless and until the Board has given him reasonable written notice
of its
intended actions and specifically describing the alleged events, activities
or
omissions giving rise thereto and with respect to those events, activities
or
omissions for which a cure is possible, a reasonable opportunity to cure
such
breach; and provided further, however, that for purposes of determining whether
Cause is present, no act or failure to act by Executive shall be considered
"willful" if done or omitted to be done by Executive in good faith and in
the
reasonable belief that such act or omission was in the best interest of the
Company and/or required by applicable law. The terms "Cause" and "Disability"
shall have the meaning given them under the Separation and Severance
Agreement.
(b)
Termination by Executive. In the event that Executive's employment with the
Company is voluntarily terminated by Executive, the Company shall have no
further obligation hereunder from and after the effective date of termination
except as may be provided in the Separation and Severance Agreement and the
Company shall have all other rights and remedies available under this Agreement
or any other agreement and at law or in equity. Executive shall give the
Company
at least 30 days' advance written notice of his intention to terminate his
employment hereunder.
(c)
Salary, Benefits, and Severance Pay Upon Termination. In the event of
termination of employment, Executive shall receive all regular Base Salary
due
up to the date of termination, and if it has not previously been paid to
Executive, Executive shall be paid any Bonus to which Executive had become
entitled under the Bonus Plan prior to the effective date of such termination
and the Company shall have no further obligation hereunder from and after
the
effective date of termination except as may be provided in the Separation
and
Severance Agreement and the Company shall have all other rights and remedies
available under this Agreement or any other agreement and at law or in equity.
Executive's stock options with respect to the Company's stock shall be subject
to the terms of the Hyperdynamics’ Employee Stock and Stock Option Plan or any
successor plan, which is a separate agreement. In the event of termination,
Executive's rights to benefits other than severance shall be governed by
the
terms of the Company's retirement, insurance and other benefit plans and
programs then in effect in accordance with the terms of such plans. Executive's
right to severance benefits, if any, shall be governed by the terms of the
Separation and Severance Agreement attached hereto as Exhibit A (the "Severance
Agreement"); provided, however, the Executive, as the Chief Executive, shall
be
entitled to de novo review of any material violation of this Severance
Agreement, or denial of any claim, or eligibility for any claim thereunder
exclusively as provided in the Resolution of Dispute provisions of section
12 of
this Employment Agreement. The Severance Agreement is incorporated in this
Agreement by reference and is hereby made a part of this Agreement as if
fully
set forth herein.
6. Confidential
Information, Non-Solicitation and Non-Competition.
(a)
During the Term of Employment and at all times thereafter, Executive shall
not,
except as may be required to perform his duties hereunder or as required
by
applicable law, disclose to others or use, whether directly or indirectly,
any
Confidential Information regarding the Company. "Confidential Information"
shall
mean information about the Company, its subsidiaries and affiliates, and
their
respective clients and customers that is not available to the general public.
7.
Return
of
Company Documents: In the event Executive leaves the employment of Company
for
whatever reason, Executive agrees to deliver to Company any and all property
situated on Company's premises and owned by Company including disks and other
storage media, filing cabinets or other work areas, is subject to inspection
by
Company personnel at any time, with or without notice, for the purpose of
protecting Company's rights and interests in its intellectual
property.
8.
Taxes.
All
payments to be made to Executive under this Agreement will be subject to
any
applicable withholding of federal, state and local income and employment
taxes.
Any withholding regarding exercise of stock options will be determined by
including an opinion of a third party tax attorney paid by the company as
pertaining to any withholding that may be required or not required.
9.
Miscellaneous. This Agreement shall also be subject to the following
miscellaneous considerations:
(a)
Executive and the Company each represent and warrant to the other that he
or it
has the authorization, power and right to deliver, execute, and fully perform
his or its obligations under this Agreement in accordance with its
terms.
(b)
This
Agreement (including attached Exhibit A) contains a complete statement of
all
the arrangements between the parties with respect to Executive's employment
by
the Company, this Agreement supersedes all prior and existing negotiations
and
agreements between the parties concerning Executive's employment, and this
Agreement can only be changed or modified pursuant to a written instrument
duly
executed by each of the parties hereto.
(c)
If
any provision of this Agreement or any portion thereof is declared invalid,
illegal, or incapable of being enforced by any court of competent jurisdiction,
the remainder of such provisions and all of the remaining provisions of this
Agreement shall continue in full force and effect.
(d)
This
Agreement shall be governed by and construed in accordance with the internal,
domestic laws of the State of Texas.
(e)
Any
rights of Executive hereunder shall be in addition to any rights Executive
may
otherwise have under benefit plans, agreements, or arrangements of the Company
to which he is a party or in which he is a participant, including, but not
limited to, any Company-sponsored employee benefit plans. Provisions of this
Agreement shall not in any way abrogate Executive's rights under such other
plans, agreements, or arrangements.
(f)
For
the purpose of this Agreement, notices and all other communications provided
for
in this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed to the named Executive
at
the address set forth below under his signature; provided that all notices
to
the Company shall be directed to the attention of the Board with a copy to
the
Secretary of the Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice
of
change of address shall be effective only upon receipt.
(g)
Section headings in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any
other
purpose.
(h)
Failure to insist upon strict compliance with any of the terms, covenants,
or
conditions hereof shall not be deemed a waiver of such term, covenant, or
condition, nor shall any waiver or relinquishment of, or failure to insist
upon
strict compliance with, any right or power hereunder at any one or more times
be
deemed a waiver or relinquishment of such right or power at any other time
or
times.
(i)
This
Agreement may be executed in several counterparts, each of which shall be
deemed
to be an original but all of which together will constitute one and the same
instrument.
10. Survival
of
Provisions: The executory provisions of this Agreement will survive the
termination of this Agreement.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
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EXECUTIVE
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COMPANY
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HYPERDYNAMICS
CORPORATION
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BY:
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BY:
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XXXX
X. XXXXX
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XXXXX
X. XXXXXX
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TITLE:
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TITLE:
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CHIEF
EXECUTIVE OFFICER
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EXECUTIVE
VICE PRESIDENT
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ADDRESS:
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ADDRESS:
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0000
Xxxx Xxxxxx Xxxxx
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Xxx
Xxxxx Xxxxx Xxxxxx Xxxxxxxxx
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Xxxxx
000
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Xxxxxxxx,
Xxxxx 00000
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Xxxxx
Xxxx, Xxxxx 00000
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