Exhibit 10.28
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT
(“ Agreement
”) is made by and between Petro Resources Corporation, a
Delaware corporation (“ Company ”), and
James W. Denny, III (“ Executive
”).
W I T N E S
S E T H:
WHEREAS , Executive is currently employed by Company or
a subsidiary of Company; and
WHEREAS , Company is desirous of continuing to employ
Executive in an executive capacity on the terms and conditions, and
for the consideration, hereinafter set forth and Executive is
desirous of continuing to be employed by Company on such terms and
conditions and for such consideration;
NOW, THEREFORE , for and in consideration of the mutual
promises, covenants, and obligations contained herein, Company and
Executive agree as follows:
DEFINITIONS AND
INTERPRETATIONS
(a)
“Annual Base Salary” shall mean
Executive’s annual base salary as of the date of his
Involuntary Termination, determined pursuant to Section
4.1.
(b)
“Board” shall mean the Board of Directors
of Company.
(c) “Business
Territories” shall mean all locations in which the
Company has post or present activities of any kind related to the
exploration, investigation, search, production, sale or other
efforts related to the oil and gas industry, including but not
limited to, any location as to which the Company has devoted any
efforts for production, analysis, joint venture consideration or
interest even if efforts for the actual exploration or production
of oil and gas have not yet commended and also specifically
includes all matters encompassed within Article VI, Paragraph 6.1
hereof.
(d)
“Cause” shall mean Executive (i) has engaged in
gross negligence, gross incompetence, or willful misconduct in the
performance of his duties, (ii) has refused, without proper reason,
to perform his duties, (iii) has materially breached any provision
of this Agreement or corporate policy or code of conduct
established by Company, (iv) has willfully engaged in conduct that
is materially injurious to Company or its subsidiaries (monetarily
or otherwise), (v) has committed an act of fraud, embezzlement, or
breach of a fiduciary duty to Company or an affiliate of Company
(including the unauthorized disclosure of confidential or
proprietary material information of Company or an affiliate), (vi)
has been convicted of (or pleaded no contest to) a crime involving
fraud, dishonesty, or moral turpitude or any felony, or (vii) has
been convicted for any violation of U.S. or foreign securities laws
or has entered into a cease and desist order with the Securities
and Exchange Commission alleging violation of U.S. or foreign
securities laws.
(e) “Change
of Control” shall mean a “Change in Control,”
as defined under the Incentive Plan as in effect on the Effective
Date.
(f) “Change
of Control Period” shall mean, with respect to a Change
of Control, the one-year period beginning on the date upon which
such Change of Control occurs.
(g)
“Code” shall mean the Internal Revenue Code of
1986, as amended.
(h)
“Compensation Committee” shall mean the
Compensation and Nominating Committee of the Board.
(i)
“Disability” shall mean that, as a result of
Executive’s incapacity due to physical or mental illness,
Executive shall have been absent from the full-time performance of
his duties for six consecutive months and shall not have returned
to full-time performance of his duties within 30 days after written
notice of termination is given to Executive by Company (provided,
however, that such notice may not be given prior to 30 days before
the expiration of such six-month period).
(j)
“Effective Date” shall mean March 1,
2008.
(k) “Good
Reason” shall mean the occurrence of any one or more of
the following:
(i) a material
diminution in Executive’s Annual Base Salary not in
accordance with Section 4.1;
(ii) a material
diminution in Executive’s authority, duties, or
responsibilities from those applicable to him as of the Effective
Date, including a material change in the reporting structure so
that Executive reports to someone other than the President or Chief
Executive Officer;
(iii) a material change
in the geographic location at which Executive must perform
services, which for purposes of this Agreement includes only
Company requiring Executive to involuntarily relocate the
geographic location of Executive’s principal place of
employment by more than 10 miles from Houston, Texas; or
(iv) a material breach
by Company of any provision of this Agreement (including, without
limitation, the requirements of paragraphs 2.2, 4.2, or 4.3 of this
Agreement) .
Notwithstanding
the foregoing provisions of this Section 1.1(j) or any other
provision in this Agreement to the contrary, any assertion by
Executive of a termination of employment for “Good
Reason” shall not be effective unless all of the following
conditions are satisfied: (1) the condition described in clauses
(i) through (iv) of this Section 1.1(j) giving rise to
Executive’s termination of employment must have arisen
without Executive’s consent; (2) Executive must provide
written notice to Company of such condition in accordance with
Section 9.3 within 30 days of the initial existence of the
condition; (3) the condition specified in such notice must remain
uncorrected for a period of 30 days following receipt of such
notice by Company; and (4) the date of Executive’s
termination of employment must occur within one year following the
initial existence of the condition specified in such
notice.
(l)
“Incentive Plan” shall mean the Petro Resources
2006 Stock Incentive Plan.
(m)
“Involuntary Termination” shall mean any
termination of Executive’s employment with Company
which:
(i) does not result
from a resignation by Executive (other than a resignation pursuant
to clause (ii) of this Section 1.1( l )); or
(ii) results from a
resignation by Executive for Good Reason;
provided,
however, the term “Involuntary Termination” shall not
include a termination for Cause or any termination as a result of
death or Disability.
(n) “Payment
Date” shall mean the later of (i) the date that is 30
days after Executive’s termination of employment with Company
or (ii) the date upon which the Release described in Section 5.6
becomes irrevocable by Executive.
1.2
Interpretations
. In this Agreement,
unless a clear contrary intention appears, (a) the words
“herein,” “hereof,”
“hereunder,” and other words of similar import refer to
this Agreement as a whole and not to any particular Article,
Section, or other subdivision, (b) reference to any Article or
Section means such Article or Section hereof, (c) the word
“including” (and with correlative meaning,
“include”) means including, without limiting the
generality of any description preceding such term, and (d) where
any provision of this Agreement refers to action to be taken by
either party, or which such party is prohibited from taking, such
provision shall be applicable whether such action is taken directly
or indirectly by such party.
EMPLOYMENT AND DUTIES
2.1
Employment
. Effective as of the
Effective Date and continuing for the period of time set forth in
Section 3.1 of this Agreement, Executive’s employment by
Company shall be subject to the terms and conditions of this
Agreement.
2.2
Positions . From and after the Effective Date,
Company shall employ Executive in the positions of Executive Vice
President and Chief Operating Officer of the Company or in such
other position or positions as the parties mutually may
agree.
2.3
Duties and Services
. Executive agrees to
serve in the positions referred to in Section 2.2 and to perform
diligently and to the best of his abilities the duties and services
appertaining to such offices, as well as such additional duties and
services appropriate to such offices which the parties mutually may
agree upon from time to time. Executive also agrees to
serve, if elected, as an officer or director of any subsidiary or
affiliate of Company so long as such service is commensurate with
Executive’s duties and responsibilities to
Company. Executive’s employment shall also be
subject to the policies maintained and established by Company that
are of general applicability to Company’s executive
employees, as such policies may be amended from time to
time.
2.4
Other Interests
. Executive agrees,
during the period of his employment by Company, to devote
substantially all of his business time, energy, and best efforts to
the business and affairs of Company and its affiliates and not to
engage, directly or indirectly, in any other business or
businesses, whether or not similar to that of Company, except with
the consent of the Board. The foregoing notwithstanding,
the parties recognize and agree that Executive may engage in
passive personal investment and charitable activities that do not
conflict with the business and affairs of Company or interfere with
Executive’s performance of his duties hereunder, which shall
be at the sole determination of the Board.
2.5
Duty of Loyalty
. Executive acknowledges
and agrees that Executive owes a fiduciary duty of loyalty to act
at all times in the best interests of Company. In
keeping with such duty, Executive shall make full disclosure to
Company of all business opportunities pertaining to Company’s
business and shall not appropriate for Executive’s own
benefit business opportunities concerning Company’s
business.
2.6
Place of Employment
. Executive’s
place of employment hereunder shall be at Company’s executive
offices in the greater Houston, Texas metropolitan area.
TERM AND
TERMINATION OF EMPLOYMENT
3.1
Term . Unless sooner terminated pursuant
to other provisions hereof, Company agrees to employ Executive for
the period beginning on the Effective Date and ending on the third
anniversary of the Effective Date.
3.2
Company’s Right to
Terminate . Notwithstanding the provisions of
Section 3.1, Company shall have the right to terminate
Executive’s employment under this Agreement at any time for
any of the following reasons:
(a) upon
Executive’s death;
(b) upon
Executive’s Disability;
(d) at any time, for
any other reason whatsoever, in the sole discretion of the
Board.
3.3
Executive’s Right to
Terminate . Notwithstanding the provisions of
Section 3.1, Executive shall have the right to terminate his
employment under this Agreement for any of the following
reasons:
(b) at any time for
any other reason whatsoever, in the sole discretion of
Executive.
3.4
Notice of Termination
. If Company desires to
terminate Executive’s employment hereunder at any time prior
to expiration of the term of employment as provided in Section 3.1,
it shall do so by giving written notice to Executive that it has
elected to terminate Executive’s employment hereunder and
stating the effective date and reason for such termination,
provided that no such action shall alter or amend any other
provisions hereof or rights arising hereunder. If
Executive desires to terminate his employment hereunder at any time
prior to expiration of the term of employment as provided in
Section 3.1, he shall do so by giving a 30-day written notice to
Company that he has elected to terminate his employment hereunder
and stating the effective date and reason for such termination,
provided that no such action shall alter or amend any other
provisions hereof or rights arising hereunder.
3.5
Deemed Resignations
. Unless otherwise
agreed to in writing by Company and Executive prior to the
termination of Executive’s employment, any termination of
Executive’s employment shall constitute an automatic
resignation of Executive as an officer of Company and each
affiliate of Company and an automatic resignation of Executive from
the Board (if applicable) and from the board of directors or
similar governing body of any affiliate of Company and from the
board of directors or similar governing body of any corporation,
limited liability entity, or other entity in which Company or any
affiliate holds an equity interest and with respect to which board
or similar governing body Executive serves as Company’s or
such affiliate’s designee or other representative.
3.6
Meaning of Termination of
Employment . For all purposes of this Agreement,
Executive shall be considered to have terminated employment with
Company when Executive incurs a “separation from
service” with Company within the meaning of Section
409A(a)(2)(A)(i) of the Code and applicable administrative guidance
issued thereunder.
COMPENSATION AND BENEFITS
4.1
Base Salary
. During the period of
this Agreement, Executive shall receive a minimum base salary of
$180,000 per annum. Executive’s base salary shall
be reviewed by the Compensation Committee on an annual basis, and,
in the sole discretion of the Compensation Committee, such base
salary may be increased, but not decreased (except with the prior
written consent of Executive), effective as of any date determined
by the Compensation Committee. Executive’s base
salary shall be paid in equal installments in accordance with
Company’s standard policy regarding payment of compensation
to executives but no less frequently than monthly.
4.2
Bonuses and Long-Term
Incentive .
(a) Annual
Bonus . Executive shall be eligible to participate
in Company’s annual bonus plan or plans applicable to
Executive as approved from time to time by the Board or by the
Compensation Committee in amounts to be determined by the
Compensation Committee based upon criteria established by the
Compensation Committee.
(b) Long-Term
Incentive Plan . Subject to the sole discretion of
the Board or the Compensation Committee, Executive shall also be
eligible for participation in the Incentive Plan or such other
long-term incentive arrangement of Company as may from time to time
be made available to other executive officers (and such other
executives as may be selected for participation by the Board or
Compensation Committee) of Company. Any awards made
under the Incentive Plan or such other arrangements shall be
governed by Section 5.9 herein.
4.3
Other Perquisites
. During his employment
hereunder, Executive shall be afforded the following benefits as
incidences of his employment:
(a) Business and
Entertainment Expenses - Subject to Company’s standard
policies and procedures with respect to expense reimbursement as
applied to its executive employees generally, Company shall
reimburse Executive for, or pay on behalf of Executive, reasonable
and appropriate expenses incurred by Executive for business-related
purposes, including dues and fees to industry and professional
organizations and costs of entertainment and business
development.
(b) Vacation -
During his employment hereunder, Executive shall be entitled to 4
weeks of paid vacation each calendar year (or a pro rata portion of
such four-week vacation period for any partial year) and to all
holidays provided to executives of Company generally.
(c) Other Company
Benefits - Executive and, to the extent applicable,
Executive’s spouse, dependents, and beneficiaries, shall be
allowed to participate in all benefits, plans, and programs,
including improvements or modifications of the same, which are now,
or may hereafter be, available to other executive employees of
Company. Such benefits, plans, and programs shall
include, without limitation, any profit sharing plan, thrift plan,
health insurance or health care plan, life insurance, disability
insurance, pension plan, supplemental retirement plan, vacation and
sick leave plan, and the like which may be maintained by Company.
Company shall not, however, by reason of this paragraph be
obligated to institute, maintain, or refrain from changing,
amending, or discontinuing, any such benefit plan or program, so
long as such changes are similarly applicable to executive
employees generally.
EFFECT OF
TERMINATION ON COMPENSATION; ADDITIONAL PAYMENTS
5.1
Termination Other Than an
Involuntary Termination . If Executive’s employment
hereunder shall terminate upon expiration of the term provided in
Section 3.1 hereof or if Executive’s employment hereunder
shall terminate for any other reason except those described in
Sections 5.2 and 5.3, then Company shall continue to provide all
compensation and benefits to Executive hereunder until the date of
such termination of employment, and such compensation and benefits
shall terminate contemporaneously with such termination of
employment.
5.2
Involuntary Termination Other
Than During a Change of Control Period . Subject to the provisions of
Sections 5.6 and 5.7 hereof, if Executive’s employment by
Company or any subsidiary thereof or successor thereto shall be
subject to an Involuntary Termination which occurs prior to the
date that Change of Control Period begins or after the expiration
of a Change of Control Period, then Company shall, as additional
compensation for services rendered to Company (including its
subsidiaries), pay to Executive the following amounts and take the
following actions:
(a) Pay Executive a
lump sum cash payment in an amount equal to Executive’s
Annual Base Salary on or before the Payment Date.
(b) During the
portion, if any, of the 12-month period commencing on the date of
such Involuntary Termination that Executive is eligible to elect
and elects to continue coverage for himself and his eligible
dependents under Company’s or a subsidiary’s group
health plans, as applicable, under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and/or Sections 601 through
608 of the Employee Retirement Income Security Act of 1974, as
amended, Company shall promptly reimburse Executive on a monthly
basis for the difference between the amount Executive pays to
effect and continue such coverage and the employee contribution
amount that active senior executive employees of Company pay for
the same or similar coverage under such group health plans;
provided, however, that such reimbursement shall cease to be
effective if and to the extent Executive becomes eligible to
receive medical and/or dental coverage from a subsequent employer
(and any such eligibility shall be promptly reported to Company by
Executive).
(c) If
Executive’s employment with Company is subject to a
termination due to Executive’s death or Disability, any and
all outstanding options to purchase common stock or stock grants of
Company held by Executive shall become fully vested and immediately
exercisable in full as of the Payment Date and shall cause any and
all restricted shares of the Company’s common stock held by
Executive to become immediately nonforfeitable as of the Payment
Date.
(d) Involuntary
Termination During a Change of Control Period
. Subject to the provisions of Sections 5.6 and 5.7, if
Executive’s employment by Company or any subsidiary thereof
or successor thereto shall be subject to an Involuntary Termination
during a Change of Control Period, then Company shall, as
additional compensation for services rendered to Company (including
its subsidiaries), pay to Executive the following amounts and take
the following actions:
(e) Pay
Executive a lump sum cash payment in an amount equal to
two times Executive’s Annual Base Salary on or
before the Payment Date.
(f) During the
portion, if any, of the 12-month period commencing on the date of
such Involuntary Termination that Executive is eligible to elect
and elects to continue coverage for himself and his eligible
dependents under Company’s or a subsidiary’s group
health plans, as applicable, under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and/or Sections 601 through
608 of the Employee Retirement Income Security Act of 1974, as
amended, Company shall promptly reimburse Executive on a monthly
basis for the difference between the amount Executive pays to
effect and continue such coverage and the employee contribution
amount that active senior executive employees of Company pay for
the same or similar coverage under such group health plans;
provided, however, that such reimbursement shall cease to be
effective if and to the extent Executive becomes eligible to
receive medical and/or dental coverage from a subsequent employer
(and any such eligibility shall be promptly reported to Company by
Executive).
(g) Cause any and all
outstanding options to purchase common stock of Company held by
Executive to be fully vested and to become immediately exercisable
in full as of the Payment Date and cause any and all restricted
shares of the Company’s common stock held by Executive to
become immediately nonforfeitable as of the Payment
Date.
5.3
Interest on Late
Payments . If
any payment provided for in Section 5.2 or 5.3 hereof is not made
when due (applying the deferred payment date provided for in
Section 5.7 as the due date, if applicable) then Company shall pay
to Executive interest on the amount payable from the date that such
payment should have been made under such Section until such payment
is made, which interest shall be
