Exhibit 10.2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "AGREEMENT") made this
10th day of December, 2008 (the "EFFECTIVE DATE"), between Foothills Resources,
Inc., a Delaware corporation with its principal place of business located at
4540 California Avenue, Suite 550, Bakersfield, California 93309, its
affiliates, subsidiaries, successors and assigns (the "COMPANY"), and Dennis B.
Tower, an individual residing at 13743 Monks Hood Road, P.O. Box 8217, Black
Butte Ranch, Oregon 97759 (the "EXECUTIVE").
WHEREAS, the Company employs the Executive (collectively, the "PARTIES") as
its Chief Executive Officer pursuant to the terms of an employment agreement
dated April 6, 2006 between the Parties (the "ORIGINAL AGREEMENT"); and
WHEREAS, the Company recognizes that it is in the best interests of the
Company and its shareholders to retain capable and experienced executive
officers such as the Executive; and
WHEREAS, the Executive is willing to continue serving the Company in the
capacity set forth above; and
WHEREAS, the Company and the Executive desire to amend and restate the
Original Agreement to comply with certain required changes under Section 409A of
the Internal Revenue Code of 1986, as amended (the "CODE").
NOW, THEREFORE, in consideration of the covenants and promises contained
herein, and pursuant to the transition rules provided in the final regulations
interpreting Code Section 409A and in IRS Notice 2007-86, the Parties agree as
follows:
1. EMPLOYMENT PERIOD. The Company shall continue to employ the Executive,
and the Executive agrees to continue to serve the Company in the
position of Chief Executive Officer in accordance with the terms and
subject to the conditions of this Agreement continuing until such
employment is terminated in accordance with the provisions of
paragraph 11, in which case the provisions of paragraph 11 shall
control (the "TERM").
The Executive affirms that no obligation exists between the Executive and
any other entity which would prevent or impede the Executive's immediate and
full performance of every obligation of this Agreement.
2. POSITION AND DUTIES. During the Term, the Executive shall serve in,
and assume duties and responsibilities consistent with, the position
of Chief Executive Officer, unless and until otherwise instructed by
the Company. During the Term, the Executive agrees to devote his
working time, as set forth in paragraph 4 hereof, using his skill,
energy and best business efforts on behalf of the Company. During the
Term, Executive shall not engage in any other employment, consulting
or other business activity without the prior written consent of the
Company, which consent shall not be unreasonably withheld.
3. NO CONFLICTS. The Executive covenants and agrees that for so long as
he is employed by the Company, he shall inform the Company of each and
every business opportunity related to the business of the Company of
which he becomes aware, and that he will not, directly
or indirectly, exploit any such opportunity for his own account, nor
will he render any services to any other person or business, acquire
any interest of any type in any other business or engage in any
activities that conflict with the Company's best interests or which is
in competition with the Company.
4. DAYS/HOURS OF WORK AND WORK WEEK. The Executive shall normally work 5
days per week and his hours of work shall be appropriate with the
nature of the Executive's duties and responsibilities with the
Company, it being recognized that such duties and responsibilities
require flexibility in the Executive's work schedule.
5. LOCATION. The locus of the Executive's employment with the Company
shall be the Company's corporate headquarters located in Bakersfield,
California.
6. COMPENSATION.
(a) BASE SALARY. During the Term, the Company shall pay, and the
Executive agrees to accept, in consideration for the Executive's
services hereunder, pro rata semi-monthly payments of the annual
salary of One Hundred Ninety Thousand Dollars ($190,000.00), less
all applicable taxes and other appropriate deductions. In
addition, the Board shall review the Executive's base salary
annually and shall determine whether upward adjustment is
appropriate given the Company's operating performance over the
relevant Term.
(b) ANNUAL BONUS. During the Term of this Agreement, the Executive
shall be eligible to receive an annual bonus in an amount to be
determined by the Board for each calendar year (or pro-rata
portion thereof in the case of a period of less than twelve (12)
months) to be awarded and paid in the Board's sole discretion
based on its review of the operating performance of the Company
during the fiscal year to which the bonus pertains. Such review
by the Board shall be based on an evaluation of the Company's
results of operations relative to the Company's achievement of
certain milestones established for the Company's operational
performance, and milestones established for the Executive's
performance, that shall be agreed to by the Executive and the
Board from time to time. Each annual bonus shall be paid by the
Company to the Executive promptly after the first meeting of the
Board following the previous calendar year, but in no case later
than March 30th of each year.
7. EXPENSES. During the Term, the Executive shall be entitled to payment
for or reimbursement of any and all reasonable expenses paid or
incurred by the Executive in connection with and related to the
performance of his duties and responsibilities for the Company. All
requests by the Executive for payment for or reimbursement of such
expenses shall be supported by appropriate invoices, vouchers,
receipts or such other supporting documentation in such form and
containing such information as the Company may from time to time
reasonably require, evidencing that the Executive, in fact, incurred
or paid such expenses.
8. VACATION. During the Term of this Agreement, the Executive shall be
entitled to accrue twenty five (25) vacation days per year.
-2-
9. STOCK OPTIONS.
(a) GRANT OF OPTIONS. The Company shall issue to the Executive an
option to acquire three hundred thousand (300,000) shares of the
Company's common stock (the "COMMON STOCK"), pursuant to the
Company's then current stock option plan (the "PLAN"). The
exercise price of the option to be granted pursuant to this
paragraph 9(a) shall be equal to the fair market value per share
of the Common Stock on the date of grant.
(b) VESTING AND EXERCISE OF OPTIONS. The option to be granted
pursuant to paragraph 9(a) shall vest as follows: 25% of the
shares of Common Stock underlying such option will vest on the
date of grant, and the remaining 75% of the shares of Common
Stock underlying the option will vest in equal annual on the
first, second and third anniversaries of the date of grant.
10. OTHER BENEFITS.
(a) During the Term, the Company shall purchase term life insurance,
the beneficiary of which shall be the Executive's estate, with a
benefit amount equal to or greater than One Million Dollars
($1,000,000.00), subject to the insurability of the Executive
over the Term.
(b) During the Term, the Executive shall be eligible to participate
in Company-sponsored benefit plans (collectively, the "BENEFIT
PLANS") all in accordance with the Company's policies as in
effect from time to time and in substantially the same manner and
at substantially the same levels as the Company makes such
opportunities available to the Company's employees.
11. TERMINATION OF EMPLOYMENT.
(a) DEATH. In the event that during the Term, the Executive dies,
this Agreement and the Executive's employment with the Company
shall automatically terminate and the Company shall have no
further obligations to the Executive or his heirs, administrators
or executors with respect to compensation and benefits accruing
thereafter, except for the obligation to pay to the Executive's
heirs, administrators or executors any earned but unpaid base
salary and vacation pay, and reimbursement of any and all
reasonable expenses paid or incurred by the Executive in
connection with and related to the performance of his duties and
responsibilities for the Company during the period ending on the
termination date. The Company shall deduct, from all payments
made hereunder, all applicable taxes, including income tax, FICA
and FUTA, and other appropriate deductions.
(b) DISABILITY. In the event that, during the Term, the Executive
shall be prevented from performing his duties and
responsibilities hereunder to the full extent required by the
Company by reason of a Disability (as defined below), this
Agreement and the Executive's employment with the Company shall
automatically terminate and the Company shall have no further
obligations to the Executive or his heirs, administrators or
executors with respect to compensation and benefits accruing
thereafter, except for the obligation to pay the Executive's
heirs, administrators or executors any earned but unpaid base
salary and vacation pay, and reimbursement of any and all
reasonable expenses paid or incurred by the Executive in
-3-
connection with and related to the performance of his duties and
responsibilities for the Company during the period ending on the
termination date. The Company shall deduct, from all payments
made hereunder, all applicable taxes, including income tax, FICA
and FUTA. For purposes of this Agreement, "DISABILITY" shall mean
a physical or mental disability that, in the Board's discretion,
based upon the medical opinions of two qualified physicians
specializing in the area or areas of the Executive's affliction,
one of whom shall be chosen by the Board and one of whom shall be
chosen by the Executive, prevents the performance by the
Executive, with or without reasonable accommodation, of his
duties and responsibilities hereunder for a continuous period of
not less than six consecutive months.
(c) CAUSE.
(i) At any time during the Term, the Company may terminate this
Agreement and the Executive's employment hereunder for
Cause. For purposes of this Agreement, "CAUSE" shall mean:
(a) the willful and continued failure of the Executive to
perform substantially his duties and responsibilities for
the Company (other than any such failure resulting from a
Disability) after a written demand by the Board for
substantial performance is delivered to the Executive by the
Company, which specifically identifies the manner in which
the Board believes that the Executive has not substantially
performed his duties and responsibilities, which willful and
continued failure is not cured by the Executive within
thirty (30) days of his receipt of such written demand; (b)
the conviction of, or plea of guilty or nolo contendere to a
felony, after the exhaustion of all available appeals; or
(c) fraud, dishonesty, competition with the Company,
unauthorized use of any of the Company's or any of its
subsidiary's trade secrets or confidential information, or
gross misconduct which is materially and demonstratively
injurious to the Company. Termination under paragraphs
11(c)(i)(b) and 11(c)(i)(c) above shall not be subject to
cure.
(ii) Termination of the Executive for Cause pursuant to paragraph
11(c)(i)(a) shall be made by delivery to the Executive of a
copy of the written demand referred to in paragraph
11(c)(i)(a), or pursuant to paragraphs 11(c)(i)(b) or (c) by
delivery to the Executive of a written notice from the
Board, either of which shall specify the basis of such
termination, the conduct justifying such termination, and
the particulars thereof and finding that in the reasonable
judgment of the Board, the conduct set forth in paragraph
11(c)(i)(a), 11(c)(i)(b) or 11(c)(i)(c), as applicable, has
occurred and that such occurrence warrants the Executive's
termination of employment. Upon receipt of such demand or
notice, the Executive, shall be entitled to appear before
the Board for the purpose of demonstrating that Cause for
termination does not exist or that the circumstances which
may have constituted Cause have been cured in accordance
with the provisions of paragraph 11(c)(i)(a). No termination
shall be final until the Board has reached a determination
regarding "Cause" following such appearance.
(iii) Upon termination of this Agreement for Cause, the Company
shall have no further obligations or liability to the
Executive or his heirs, administrators or executors with
respect to compensation and benefits thereafter, except for
the obligation to pay the Executive any earned but unpaid
base salary and vacation pay, and reimbursement of any and
all reasonable expenses paid or incurred by the Executive in
-4-
connection with and related to the performance of his duties
and responsibilities for the Company during the period
ending on the termination date. The Company shall deduct,
from all payments made hereunder, all applicable taxes,
including income tax, FICA and FUTA, and other appropriate
deductions.
(d) GOOD REASON.
(i) At any time during the Term, subject to the conditions set
forth in paragraph 11(d)(ii) below, the Executive may
terminate this Agreement and the Executive's employment with
the Company for Good Reason. For purposes of this Agreement,
for "GOOD REASON" shall mean the occurrence, without the
Executive's consent, of (i) a material diminishment of the
Executive's job assignment, duties, responsibilities or
reporting relationships which is inconsistent with his
initial position hereunder or any later agreed upon
amendment of that position; (ii) a material reduction in the
Executive's base compensation or total compensation package,
including benefit plans and programs; or (iii) a material
breach of the terms of this Agreement by the Company, or any
permitted successor or assignee.
(ii) The Executive shall be entitled to terminate this Agreement
and his employment with the Company for Good Reason at any
time, provided (A) that he has delivered written notice to
the Company of his intention to terminate this Agreement and
his employment with the Company for Good Reason within 5
business days after either (1) the date on which the
Executive receives written notice from the Company of the
occurrence of any event included within the meaning of Good
Reason under paragraph 11(d)(i) or (2) the date on which the
Executive obtains actual knowledge of the occurrence of any
event included within the meaning of Good Reason under
paragraph 11(d)(i), and (B) Executive's termination of
services to the Company occurs within two years following
the initial occurrence, without the Executive's consent, of
any event included within the meaning of Good Reason under
paragraph 11(d)(i). Such notice, if given by the Executive
pursuant to clause (b) of the preceding sentence, shall
specify in reasonable detail the circumstances claimed to
provide the basis for such termination for Good Reason.
Notwithstanding the foregoing, the Executive shall not be
entitled to terminate this Agreement and his employment with
the Company if the Company has eliminated the circumstances
constituting "Good Reason" within 30 days of its receipt
from the Executive of the written notice described in this
paragraph 11(d)(ii).
(iii) In the event that the Executive terminates this Agreement
and his employment with the Company for Good Reason, the
Company shall pay or provide to the Executive (or, following
his death, to the Executive's heirs, administrators or
executors): (a) any earned but unpaid base salary and
vacation pay, and reimbursement of any and all reasonable
expenses paid or incurred by the Executive in connection
with and related to the performance of his duties and
responsibilities for the Company during the period ending on
the termination date; (b) a severance payment in an amount
equal to 2 years of the Executive's base salary; (c) for 2
years, continuation on behalf of the Executive and the
Executive's dependents and beneficiaries of life insurance,
disability, medical, dental, hospitalization and long-term
care benefits, provided, however, that the
-5-
Company's obligation hereunder with respect to the foregoing
benefits shall be limited to the extent that the Executive
obtains any such benefits pursuant to a subsequent
employer's benefit plans, in which case the Company may
reduce the coverage of any benefits it is required to
provide the Executive hereunder as long as the aggregate
coverages and benefits of the combined benefits plans are no
less favorable to the Executive than the coverages and
benefits required to be provided hereunder; and (d) to the
extent the Executive holds any unvested portion of the
option granted to the Executive pursuant to paragraph 9(a),
the portion of the option so granted that would otherwise
vest following the date of termination of the Executive's
employment with the Company will as of the date of
termination become fully vested. The Company shall deduct,
from all payments made hereunder, all applicable taxes,
including income tax, FICA and FUTA, and other appropriate
deductions.
(iv) The amount described in clause (b) of paragraph 11(d)(iii)
shall be paid to the Executive in a lump sum within 45 days
of his Separation Date. For purposes of this Agreement,
"SEPARATION DATE" means the date of Executive's "termination
of employment" as defined in Treas. Reg. ss.
1.409A-1(h)(1)(ii).
(e) WITHOUT CAUSE.
(i) At any time during the Term, the Parties shall be entitled
to terminate this Agreement and the Executive's employment
with the Company without cause, by providing prior written
notice of at least 30 days to the other party. Upon the
Company's termination of this Agreement and the Executive's
employment with the Company pursuant to this paragraph
11(e)(i), the Company shall have no further obligations to
the Executive or his heirs, administrators or executors with
respect to compensation and benefits thereafter, except for
the obligation to pay or provide to the Executive (a) any
earned but unpaid base salary and vacation pay, and
reimbursement of any and all reasonable expenses paid or
incurred by the Executive in connection with and related to
the performance of his duties and responsibilities for the
Company during the period ending on the termination date,
(b) a severance payment in an amount equal to two years of
the Executive's base salary plus any bonus earned or accrued
through the date of such termination, (c) for 2 years,
continuation on behalf of the Executive and the Executive's
dependents and beneficiaries of life insurance, disability,
medical, dental, hospitalization and long-term care
benefits, provided, however, that the Company's obligation
hereunder with respect to the foregoing benefits shall be
limited to the extent that the Executive obtains any such
benefits pursuant to a subsequent employer's benefit plans,
in which case the Company may reduce the coverage of any
benefits it is required to provide the Executive hereunder
as long as the aggregate coverages and benefits of the
combined benefits plans are no less favorable to the
Executive than the coverages and benefits required to be
provided hereunder and (d) to the extent the Executive holds
any unvested portion of the option granted to the Executive
pursuant to paragraph 9(a), the portion of the option so
granted that would otherwise vest following the date of
termination of the Executive's employment with the Company
will as of the date of termination become fully vested. Upon
the Executive's termination of this Agreement and the
Executive's employment with the Company pursuant to this
paragraph 11(e)(i), the Company shall have no further
obligations to the Executive or his heirs,
-6-
administrators or executors with respect to compensation and
benefits thereafter, except for the obligation to pay to the
Executive (x) any earned but unpaid base salary and vacation
pay, and (y) reimbursement of any and all reasonable
expenses paid or incurred by the Executive in connection
with and related to the performance of his duties and
responsibilities for the Company during the period ending on
the termination date. The Company shall deduct, from all
payments made hereunder, all applicable taxes, including
income tax, FICA and FUTA, and other appropriate deductions.
(ii) The amounts described in paragraph 11(e)(b)(i) shall be paid
to the Executive in a lump sum within 45 days of his
Separation Date.
12. CONFIDENTIAL INFORMATION/OWNERSHIP AND ASSIGNMENT OF INVENTIONS. The
Executive expressly acknowledges that, in the performance of his
duties and responsibilities with the Company, (i) he has been exposed,
and will be exposed, to the trade secrets, business and/or financial
secrets and confidential and proprietary information of the Company,
its affiliates and/or its clients or customers ("CONFIDENTIAL
INFORMATION") and (ii) he and/or other employees of the Company
working with him, without him or under his supervision, may create,
conceive of, make, prepare, work on or contribute to the creation of,
or may be asked by the Company or its affiliates to create, conceive
of, make, prepare, work on or contribute to the creation of, without
limitation, lists, business diaries, business address books (except
for business addresses and business address books not related to the
Company), documentation, ideas, concepts, inventions, designs, works
of authorship, computer programs, audio/visual works, developments,
proposals, works for hire or other materials. Therefore, the Executive
agrees to execute and abide by the terms of the Assignment of
Invention and Non-Disclosure Agreement attached hereto as Exhibit A.
Additionally, the Executive affirms that he does not possess and will
not rely upon the protected trade secrets or confidential or
proprietary information of his prior employer(s) in providing services
to the Company.
13. NON-COMPETITION AND NON-SOLICITATION. The Executive agrees and
acknowledges that the Confidential Information that the Executive has
already received and will receive are valuable to the Company, its
affiliates and/or its clients or customers, and that its protection
and maintenance constitutes a legitimate business interest of Company,
its affiliates and/or its clients or customers to be protected by
non-competition restrictions. Therefore, the Executive agrees to
execute and abide by the terms of the Non-solicitation Agreement
attached hereto as Exhibit B and the Executive agrees and acknowledges
that the non-competition restrictions set forth therein are reasonable
and necessary and do not impose undue hardship or burdens on the
Executive.
14. INSIDER TRADING POLICY/PUBLIC DISCLOSURE. As a result of the potential
liability for both the Company and the Executive for "insider trading"
under the securities laws, the Board has adopted an Insider Trading
and Public Disclosure Policy attached hereto as Exhibit C. The
Executive agrees to bound by and comply with such policy and to
evidence such agreement by executing and delivering to the Company the
Insider Trading and Disclosure Policy Acknowledgement contained in
Exhibit C.
15. INDEMNIFICATION. The Company hereby covenants and agrees to indemnify
the Executive to the fullest extent permitted by law and the Company's
charter documents and to
-7-
hold the Executive harmless fully, completely, and absolutely against
and in any respects to any and all actions, suits, proceedings,
claims, demands, judgments, costs, expenses (including attorneys'
fees), losses, and damages resulting from the Executive's good faith
performance of his job duties pursuant to this Agreement. The Company
also hereby agrees to use its best efforts to purchase, maintain and
cover the Executive under a directors' and officers' liability
insurance policy.
16. DISPUTE RESOLUTION. The Parties agree that any dispute or claim,
whether based on contract, tort, discrimination, retaliation, or
otherwise, relating to, arising from, or connected in any manner with
this Agreement or the Executive's employment with the Company shall be
resolved exclusively through final and binding arbitration under the
auspices of the American Arbitration Association ("AAA"). The
arbitration shall be held in the State of New York. The arbitration
shall proceed in accordance with the National Rules for the Resolution
of Employment Disputes of the AAA in effect at the time the claim or
dispute arose, unless other rules are agreed upon by the parties. The
arbitration shall be conducted by one arbitrator who is a member of
the AAA, unless the parties mutually agree otherwise. The arbitrators
shall have jurisdiction to determine any claim, including the
arbitrability of any claim, submitted to them. The arbitrators may
grant any relief authorized by law for any properly established claim.
The interpretation and enforceability of this paragraph of this
Agreement shall be governed and construed in accordance with the
United States Federal Arbitration Act, 9. U.S.C. ss.1, ET SEQ. More
specifically, the parties agree to submit to binding arbitration any
claims for unpaid wages or benefits, or for alleged discrimination,
harassment, or retaliation, arising under Title VII of the Civil
Rights Act of 1964, the Equal Pay Act, the National Labor Relations
Act, the Age Discrimination in Employment Act, the Americans With
Disabilities Act, the Employee Retirement Income Security Act, the
Civil Rights Act of 1991, the Family and Medical Leave Act, the Fair
Labor Standards Act, Sections 1981 through 1988 of Title 42 of the
United States Code, COBRA, and any other federal, state, or local law,
regulation, or ordinance, and any common law claims, claims for breach
of contract, or claims for declaratory relief. The Executive
acknowledges that the purpose and effect of this paragraph is solely
to elect private arbitration in lieu of any judicial proceeding he
might otherwise have available to him in the event of an
employment-related dispute between him and the Company. Therefore, the
Executive hereby waives his right to have any such employment-related
dispute heard by a court or jury, as the case may be, and agrees that
his exclusive procedure to redress any employment-related claims will
be arbitration.
Notwithstanding this agreement to arbitrate, the Parties agree that any
violation of paragraphs 12, 13 or 14 of this Agreement and the Assignment of
Invention and Non-Disclosure Agreement attached hereto as Exhibit A, the
Non-solicitation Agreement attached hereto as Exhibit B and the Insider Trading
and Public Disclosure Policy attached hereto as Exhibit C may be restrained by
the issuance of an injunction or other equitable relief by a court of competent
jurisdiction, in addition to other remedies provided by law or this Agreement.
In the event of any legal action or other proceeding arising out of or
related to or for the enforcement of this Agreement, the prevailing party shall
be entitled to recover its reasonable attorneys' fees, costs and expenses
incurred in that action or proceeding, including attorneys' fees, costs and
expenses incurred on appeal, if any, in addition to any other relief to which
such party may be entitled, from the non-prevailing party.
-8-
The Company shall pay all legal fees and related expenses incurred by the
Executive as a result of (a) the Executive's termination of employment, or (b)
the Executive seeking to obtain or enforce any right or benefit provided by this
Agreement or by any other plan or arrangement maintained by the Company under
which the Executive is or may be entitled to receive benefits; provided,
however, that the circumstances set forth in clauses (a) and (b) occurred on or
after a Change in Control, and provided, however, that the Executive prevails in
any such dispute or proceeding.
17. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in this Agreement or contemplated hereby
shall be in writing and shall be deemed to have been duly given when
personally delivered, delivered by a nationally recognized overnight
delivery service or when mailed United States Certified or registered
mail, return receipt requested, postage prepaid, and addressed as
follows or at such other address provided in writing by the Executive
to the Company:
If to the Company:
Foothills Resources, Inc.
4540 California Avenue, Suite 550
Bakersfield, California 93309
Attn: Dennis B. Tower, Chief Executive Officer
Facsimile: (661) 716-1340
with a copy to:
Akin Gump Strauss Hauer & Feld LLP
2029 Century Park East
Los Angeles, California
Attn: C.N. Franklin Reddick III, Esq.
Facsimile: (310) 229-1001
and with a copy to:
W. Kirk Bosche
14619 Carols Way Drive
Houston, Texas 77070
Facsimile: (281) 376-9367
If to the Executive:
Dennis B. Tower
13743 Monks Hood
P.O. Box 8217
Black Butte Ranch, Oregon 97759
Facsimile: (541) 595-2484
-9-
18. COMPLIANCE WITH CODE SECTION 409A.
(a) CODE SECTION 409A IN GENERAL. This Agreement is intended to
comply with Code Section 409A and any noncompliant provision is
void or deemed amended to comply with Code Section 409A. This
Agreement will be administered and interpreted to maximize the
short-term deferral exemption to Code Section 409A, and the
Executive shall not, directly or indirectly, designate the
taxable year of a payment made under this Agreement. The portion
of any payment under this Agreement that is paid within the
short-term deferral period (within the meaning of Code Section
409A) will be treated as a short-term deferral and not aggregated
with other plans or payments. Any other portion of the payment
that does not meet the short-term deferral requirement will, to
the maximum extent possible, be deemed to satisfy the exception
from Code Section 409A for involuntary separation pay and will
not be aggregated with any other payment. Payment dates provided
for in this Agreement are deemed to incorporate "grace periods"
within the meaning of Code Section 409A. For purposes of Code
Section 409A, any right to a series of installment payments
pursuant to this Agreement will be treated as a right to a series
of separate payments. Any amount that is paid under this
Agreement as a short-term deferral within the meaning of Treas.
Reg. ss. 1.409A-1(b)(4), or within the separation pay limit under
Treas. Reg. ss. 1.409A-1(b)(9)(iii)(A) will be treated as a
separate payment.
(b) WELFARE BENEFITS. Notwithstanding anything in paragraph 11 to the
contrary, in no event will the amount of benefits to be provided
pursuant to clause (c) of paragraph 11(d)(iii) or 11(e)(i) that
are neither exempt from the definition of a "nonqualified
deferred compensation plan" pursuant to Treas. Reg. ss.
1.409A-1(a)(5) nor treated as not providing for the deferral of
compensation under Treas. Reg. ss. 1.409A-1(b)(9)(v) ("NON-EXEMPT
BENEFITS") that are paid or provided during any tax year of the
Executive affect the amount of Non-Exempt Benefits paid or
provided in any other tax year. Neither the Company nor the
Executive may liquidate the right to any Non-Exempt Benefit or
exchange such right for any other benefit.
(c) SEVERANCE PAYMENTS TO A SPECIFIED EMPLOYEE. Notwithstanding
anything in paragraph 11 to the contrary, if the Board (or its
delegate) determines in its discretion that the Executive is, as
of the Separation Date, a "specified employee" within the meaning
of Code Section 409A and the regulations issued thereunder, then
any payment due under paragraph 11(d) or 11(e) that the Board (or
its delegate) determines in its discretion to be "nonqualified
deferred compensation" subject to Code Section 409A, and any
Non-Exempt Benefit, will not be paid or provided before the date
that is six months after the Separation Date, or if earlier, the
date of the Executive's death. Any payments or benefits to which
the Executive would otherwise be entitled during such non-payment
period but for application of this paragraph 18(c) will be
accumulated and paid or otherwise provided to the Executive on
the first day of the seventh month following the Separation Date,
or if earlier, within 30 days of the Executive's death to his
surviving spouse (or to his estate if the Executive's spouse does
not survive him).
19. MISCELLANEOUS.
(a) Telephones, stationery, postage, e-mail, the internet and other
resources made available to the Executive by the Company, are
solely for the furtherance of the Company's business.
-10-
(b) All issues and disputes concerning, relating to or arising out of
this Agreement and from the Executive's employment by the
Company, including, without limitation, the construction and
interpretation of this Agreement, shall be governed by and
construed in accordance with the internal laws of the State of
New York, without giving effect to that State's principles of
conflicts of law.
(c) The Parties agree that any provision of this Agreement deemed
unenforceable or invalid may be reformed to permit enforcement of
the objectionable provision to the fullest permissible extent.
Any provision of this Agreement deemed unenforceable after
modification shall be deemed stricken from this Agreement, with
the remainder of the Agreement being given its full force and
effect.
(d) The Company shall be entitled to equitable relief, including
injunctive relief and specific performance as against the
Executive, for the Executive's threatened or actual breach of
paragraphs 12, 13 and 14 of this Agreement and the Assignment of
Invention and Non-Disclosure Agreement attached hereto as Exhibit
A, the Non-solicitation Agreement attached hereto as Exhibit B
and the Insider Trading and Public Disclosure Policy attached
hereto as Exhibit C, as money damages for a breach thereof would
be incapable of precise estimation, uncertain, and an
insufficient remedy for an actual or threatened breach of
paragraphs 12, 13 and 14 of this Agreement and the Assignment of
Invention and Non-Disclosure Agreement attached hereto as Exhibit
A, the Non-solicitation Agreement attached hereto as Exhibit B
and the Insider Trading and Public Disclosure Policy attached
hereto as Exhibit C. The Parties agree that any pursuit of
equitable relief in respect of paragraphs 12, 13 and 14 of this
Agreement and the Assignment of Invention and Non-Disclosure
Agreement attached hereto as Exhibit A, the Non-solicitation
Agreement attached hereto as Exhibit B and the Insider Trading
and Public Disclosure Policy attached hereto as Exhibit C shall
have no effect whatsoever regarding the continued viability and
enforceability of paragraph 16 of this Agreement.
(e) Any waiver or inaction by the Company or the Executive for any
breach of this Agreement shall not be deemed a waiver of any
subsequent breach of this Agreement.
(f) The Parties independently have made all inquiries regarding the
qualifications and business affairs of the other which either
party deems necessary. The Executive affirms that he fully
understands this Agreement's meaning and legally binding effect.
Each party has participated fully and equally in the negotiation
and drafting of this Agreement.
(g) The Executive's obligations under this Agreement are personal in
nature and may not be assigned by the Executive to any other
person or entity. This Agreement shall be enforceable by the
Company and its parents, affiliates, successors and assigns, and
the Company shall require any successors and assigns to expressly
assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform
it if no such succession or assignment had taken place.
(h) This instrument constitutes the entire Agreement between the
Parties regarding its subject matter. When signed by each of the
Parties, this Agreement supersedes and nullifies all prior or
contemporaneous conversations, negotiations, or agreements, oral
and written, regarding the subject matter of this Agreement. In
any future construction of this
-11-
Agreement, this Agreement should be given its plain meaning. This
Agreement may be amended only by a writing signed by the Parties.
(i) This Agreement may be executed in counterparts, a counterpart
transmitted via facsimile, and all executed counterparts, when
taken together, shall constitute sufficient proof of the parties'
entry into this Agreement. The Parties agree to execute any
further or future documents which may be necessary to allow the
full performance of this Agreement. This Agreement contains
headings for ease of reference. The headings have no independent
meaning.
THE EXECUTIVE STATES THAT HE HAS FREELY AND VOLUNTARILY ENTERED INTO THIS
AGREEMENT AND THAT HE HAS READ AND UNDERSTOOD EACH AND EVERY PROVISION THEREOF.
THIS AGREEMENT IS EFFECTIVE UPON THE EXECUTION OF THIS AGREEMENT BY BOTH
PARTIES. IT IS UNDERSTOOD, AGREED, AND ACCEPTED BY SUCH PERSONS WHOSE NAMES
APPEAR ON THE SIGNATURE PAGE HERETO.
IN WITNESS WHEREOF, the Executive and the Company have caused this Employment
Agreement to be executed as of the date first above written.
EXECUTIVE FOOTHILLS RESOURCES, INC.
/s/ Dennis B. Tower By: /s/ John L. Moran
- --------------------------- ---------------------------
Dennis B. Tower Name: John L. Moran
Title: President
-12-