CHANGE IN CONTROL /
SEVERANCE / RETENTION AGREEMENT
This Agreement,
dated as of October 1, 2008 (“ Effective Date
”), is entered into between Foothills Resources, Inc., a
corporation organized under the laws of the State of Nevada
(“ Foothills ”), and James H. Drennan (the
“ Employee ”).
WHEREAS, the Board
of Directors of the Company (the “ Board ”)
recognizes that the possibility of a Change in Control (as
hereinafter defined) exists and that the threat or the occurrence
of a Change in Control can result in significant distractions to
its key management personnel because of the uncertainties inherent
in such a situation;
WHEREAS, the Board
has determined that it is essential and in the best interest of the
Company and its stockholders to retain the services of the Employee
in the event of a threat or occurrence of a Change in Control and
to ensure the Employee’s continued dedication and efforts in
such event without undue concern for the Employee’s personal,
financial and employment security; and
WHEREAS, in order
to induce the Employee to remain in the employ of the Company in
the event of a threat or the occurrence of a Change in Control, the
Company desires to enter into this Agreement with the Employee to
provide the Employee with certain benefits.
NOW, THEREFORE, in
consideration of the respective agreements of the parties contained
herein, it is agreed as follows:
1. TERM
OF AGREEMENT . This Agreement shall commence as of the
Effective Date and shall continue in existence until June 30,
2009 (the “ Term ”).
2.1.
Accrued Compensation . For purposes of this Agreement,
“Accrued Compensation” shall mean an amount which shall
include all amounts earned or accrued through the date of
Termination, but not paid as of the date of Termination, including
(i) base salary, (ii) reimbursement for reasonable and
necessary expenses incurred by the Employee on behalf of the
Company during the period ending on the date of Termination, and
(iii) vacation pay.
2.2.
Base Amount . For purposes of this Agreement, “Base
Amount” shall mean the Employee’s annual base salary at
the rate in effect on October 1, 2008.
2.3.
Cause . For purposes of this Agreement, the Employee’s
Termination from the Company for “Cause” shall mean a
Termination by the Company as a result of:
(a) the
willful and continued failure of the Employee to perform
substantially his duties and responsibilities for the Company
(other than any such failure resulting from a Disability) after a
written demand for substantial performance is delivered to the
Employee by the Company, which specifically identifies the manner
in which the Company
believes that
the Employee has not substantially performed his duties and
responsibilities, which willful and continued failure is not cured
by the Employee within five (5) 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.
2.4.
Change in Control . For purposes of this Agreement, a
“Change in Control” shall mean any of the following
events:
(a) any
Person (as defined below) becomes a “beneficial owner”
as such term is used in Rule 13d-3 promulgated under the Securities
Exchange Act of 1934 (the “ Exchange Act ”),
either directly or indirectly, of fifty percent (50%) or more (as
determined by the Board) of the Company’s stock entitled to
vote in the election of directors. For purposes of this Agreement,
the term “Person” is used as such term is used in
Sections 13(d) and 14(d) of the Exchange Act; provided, however
that, unless the Board determines to the contrary, the term shall
not include the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of Company, or any
corporation owned, directly or indirectly, by the stockholders of
Company in substantially the same proportions as their ownership of
stock of Company;
(b) stockholders
of the Company adopt a plan of complete or substantial liquidation
or an agreement providing for the distribution of all or
substantially all of its assets;
(c) the
Company is party to a merger, consolidation, tender offer, other
form of business combination, unless the business of the Company is
continued following any such transaction by a resulting entity
(which may be, but need not be, the Company) and the stockholders
of the Company immediately prior to such transaction (the “
Prior Shareholders ”) hold, directly or indirectly, at
least fifty percent (50%) of the voting power of the resulting
entity (there being excluded from the voting power held by the
Prior Shareholders, but not from the total voting power of the
resulting entity, any voting power received by Affiliates of a
party to the transaction (other than the Company) in their
capacities as stockholders of the Company); or
(d) the
Company sells or otherwise disposes of, in one or more
transactions, assets comprising more than fifty percent (50%) of
the fair market value of all of the Company’s
assets.
2.5.
Company . For purposes of this Agreement, the
“Company” shall mean Foothills and its subsidiaries and
shall include Foothills’ “Successors and Assigns”
(as hereinafter defined).
2.6.
Disability . For purposes of this Agreement, an
Employee’s Termination for “Disability” shall
mean a Termination by the Company as a result of a physical or
mental
disability
that, in the Company’s discretion, based upon the medical
opinions of two (2) qualified physicians specializing in the
area or areas of the Employee’s affliction, one of whom shall
be chosen by the Company and one of whom shall be chosen by the
Employee, prevents the performance by the Employee, with or without
reasonable accommodation, of his duties and responsibilities
hereunder for a continuous period of not less than three
(3) consecutive months.
2.7.
Notice of Termination . For purposes of this Agreement,
“Notice of Termination” shall mean a written notice of
Termination of the Employee’s employment from the Company,
which notice indicates the specific Termination provision in this
Agreement relied upon and which sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for Termination
of the Employee’s employment under the provision so
indicated.
2.8.
Successors and Assigns . For purposes of this Agreement,
“Successors and Assigns” shall mean a corporation or
other entity to which Foothills transfers all or substantially all
of its assets or any entity which is a successor to Foothills by
reorganization, incorporation, merger, or any other similar
business combination or transaction.
2.9.
Termination . For purposes of this Agreement,
“Termination” shall mean either a Termination for
Cause, Termination for Disability, Termination for Other Reason, or
a Voluntary Termination, as applicable. A Termination is
effective:
(a) in
the case of the Employee’s death, the Employee’s date
of death;
(b) in
the case of Employee’s Termination for Cause or Disability,
thirty (30) days from the date the Notice of Termination is
given to the Employee, provided that, in the case of Disability,
the Employee shall not have returned to the full-time performance
of the Employee’s duties during such period of thirty
(30) days; and
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