EMPLOYMENT AGREEMENT THIS AGREEMENT made as of the 1st day of January 2004
THIS AGREEMENT made as of the 1st day of January 2004
BETWEEN:
| US Geothermal Inc., a body corporate having an ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇,▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Company") |
AND:
| ▇▇▇▇▇▇ ▇▇▇▇ of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Employee") |
WHEREAS:
| (A) | the Company is in the business of developing the Raft River geothermal property; |
| (B) | the Company wishes to engage the Employee as President and Chief Executive Officer; and |
| (C) | the parties hereto wish to enter into this Agreement
for the purpose of fixing the compensation and terms applicable to the
employment of the Employee during the period hereinafter set out. |
NOW THEREFORE THIS AGREEMENT WITNESSES that the parties hereto, in consideration of the respective covenants and agreements on the part of each of them herein contained, do hereby covenant and agree as follows:
1. Employment
The Company hereby engages the Employee as President and Chief Executive Officer of the Company, and the Employee hereby accepts such employment, upon the terms and conditions hereinafter set out.
2. Term
This Agreement will be effective from 1st January 2004 and will remain in full force and effect until terminated as hereinafter provided.
3. Responsibility
The Employee will devote appropriate working time to his Employment hereunder, and while engaged in his employment will have the authority and duty to perform and
- 2 -
carry out such duties and responsibilities as are customarily carried out by persons holding similar positions in other development companies comparable in size to the Company and such additional and related duties as may from time to time be assigned, delegated, limited or determined by the Board of Directors.
4. Other Business Activities
It is agreed that the Employee's employment hereunder shall constitute no less than eighty (80) hours per month which shall be devoted exclusively for the benefit of the Company, and therefore: The Employee may be required to provide additional time to perform his duties and responsibilities and will be remunerated for such incremental time in accordance with Paragraph 5 (b).
| (a) | the Employee may engage
in any other business activities, so long as such activities will not
interfere with, or impede, in any significant manner the performance of
his duties as President and Chief Executive Officer of the Company provided,
however, that: |
||
| (i) | other than the business activities already disclosed
to the Board of Directors , before the Employee can engage in any such
other business activity which involves the Employee owning or acquiring
any interest, directly or indirectly, in any geothermal property or the
rendering of any advice or service to another person, partnership or other
legal entity or a joint venture engaged in the business of exploring for
and/or developing geothermal resources the Employee must disclose full
particulars thereof in writing to the Board of Directors, and within 15
days after the date of such disclosure, the Employee must receive from
the President a decision that such activities by the Employee will not,
in the opinion of the Board of Directors, interfere or be in conflict
with the Employee's performance of his duties to the Company hereunder;
|
||
| (ii) | Before engaging in any such other business activity
other than an investment or acquisition of the kind described in sub-paragraph
(a)(i) of this Section 4, the Employee shall have disclosed same in writing
to the Board of Directors; and, |
||
| (iii) | an investment or acquisition of the kind described
in sub-paragraph (a)(i) of this Section 4 does not include investment
in publicly traded development or other resource companies, where such
investment does not constitute 10%, either directly or after exercise
of any share acquisition rights, of the issued capital of the company
in question, nor a control position, nor part of a control block. |
||
- 3 -
| (b) | the Employee shall refer to the Board of Directors
any and all matters and transactions in respect of which an actual or
potential conflict of interest between the Employee and the Company has
arisen or may arise, however remote the possibility, and the Employee
shall not proceed with any such matter or transaction until the Board
of Director’s approval therefore is obtained. Such approval shall
not be denied unless it is evident that it will impact the Company’s
competitive position. For purposes of clarification, this provision is
not intended to limit in any way the Employee's other fiduciary obligations
to the Company, which may arise in law or in equity. |
5. Compensation
In consideration of the performance by the Employee of his responsibilities and duties as President and Chief Executive Officer hereunder:
| (a) | the Company will pay the Employee the sum of US$50,000
per annum, payable in monthly installments of $4,166.67 no later than
the last working day of the month. The Employee may elect to have any
compensation payable hereunder paid into any jurisdiction of his choice,
but the Company may decline to pay such compensation to the Employee at
the place specified if the Company determines that such payment in such
jurisdiction would violate the laws of the jurisdiction of the place of
payment specified by the Employee or the laws of any other country or
if the Company otherwise determines that payment to the Employee or for
his account in such place would be prejudicial to the Company; |
|
| (b) | Where on a monthly basis the Employee has provided
in excess of eighty (80) hours, up to a maximum of $10,000, the incremental
will be remunerated in the form of common shares of the Company to be
issued in accordance with the rules and regulations of the TSX Venture
Exchange. Such increment will be earned at the rate of $55.00 per hour.
|
|
| (c) | the Company will grant the Employee incentive
stock options in such amount and on such conditions as the Board of Directors
of the Company may determine from time to time; and |
|
| (d) | the Company will provide the Employee and his immediate
family (consisting of spouse and children) with medical, dental and related
coverage as are available to the other employees of the Company. The Company
will also provide reasonable life insurance and accidental death coverage
with proceeds payable to the Employee's estate or specified family member.
|
|
| (e) | in recognition of the Employee’s work and effort
from January 1, 2003 to December 31, 2003, specifically in respect of
the reorganization which closed on December 19, 2003; the Employee shall
receive a one-time consideration of |
- 4 -
$38,000. This consideration shall be paid with $5,000
in cash and a $33,000 stipend to be applied against the exercise of the
Company’s stock options. In addition for services rendered prior
to January 1, 2003 Employee shall be paid a stipend in the amount of the
invoices already submitted by Employee for 2001 and 2002. The cash stipend
shall be applied against the exercise of the Company’s stock options.
Payment of the cash portion shall be made no later than January 15th
2004 whereas the exercise of options shall be made within 10 working days
of the stock option grant. |
6. Expenses
The Company will reimburse the Employee for any and all reasonable and documented expenses actually and necessarily incurred by the Employee in connection with the performance of his duties under this Agreement. The Employee will furnish the Company with an itemized account of his expenses in such form or forms as may reasonably be required by the Company and at such times or intervals as may be required by the Company.
7. Review of Agreement Upon Financial Close
Whereas the purpose of the organization of the Company is to commercially develop the Raft River, Idaho geothermal resource, it is mutually acknowledged that the working time commitment and compensation of the Employee may materially change upon procurement of a Power Purchase Agreement and the closing of a financial package to construct and commission an electrical generation facility. The Company shall request that the Executive Committee of the Board of Directors, within fifteen (15) working days of said close to review and if deemed appropriate replace this Employment Agreement with a new employment agreement. Such an undertaking shall not be construed as a contractual obligation on the part of the Company to provide an increase in compensation.
8. Change of Control
Cognizant that the Company is a publicly owned entity, should a Change of Control occur, the Employee, at his option shall elect to receive compensation of $75,000 no later than five (5) working days after the effective date that the Change of Control has occurred. This compensation is payable by the Company or its Successor regardless of whether or not the Employee continues under employment pursuant to this Employment Agreement or is replaced with a new agreement.
9. Termination
This Agreement and the Employee's employment may be terminated by the
- 5 -
Company summarily and without notice, payment in lieu of notice, severance payments, benefits, damages or any sums whatsoever, on the occurrence of any one or more of the following events:
| (a) | The Employee’s failure to carry out his duties
hereunder in a competent and professional manner; |
|
| (b) | The Employee’s appropriation of corporate opportunities
for the Employee’s direct or indirect benefit or his failure to disclose
any material conflict of interest; |
|
| (c) | The Employee’s plea of guilty to, or conviction
of, an indictable offence once all appeals (if any) have been completed
without such conviction having been reversed; |
|
| (d) | The existence of cause for termination of the Employee
at common law including but not limited to cause related to fraud, dishonesty,
illegality, breach of statute or regulation, or gross incompetence; |
|
| (e) | Failure on the part of the Employee to disclose
material facts concerning his business interests or employment outside
of his employment by the Company, provided such facts relate to the Employee’s
duties hereunder; |
|
| (f) | Refusal on the part of the Employee to follow the reasonable and lawful directions of the Company; | |
| (g) | Breach of fiduciary duty to the Company on the part of the Employee; | |
| (h) | Material breach of this Agreement or gross negligence
on the part of the Employee in carrying out his duties under this Agreement;
or |
|
| (i) | A declaration of bankruptcy on the part of the Employee by a court of competent jurisdiction. |
9.1 In the event of the early termination of the Agreement for any reason set out in Section 9 above, the Employee shall only be entitled to such compensation as would otherwise be payable to the Employee hereunder up to and including such date of termination, as the case may be.
9.2 This Agreement and the Employee's employment may be terminated on notice by the Company to the Employee for any reason other than for the reasons set out in Section 9 above of this Agreement upon one month notice to the Employee. In such event, the Employee will be entitled to payment of salary and expenses until the date one month after which notice was given.
- 6 -
9.3 This Agreement and the Employee's employment may be terminated on notice by the Employee to the Company for any reason upon one month notice to the Company. In such event, the Employee will be entitled to payment of salary and expenses until the date one month after which notice was given.
10. Confidential Information
The Employee agrees to keep the affairs and Confidential Information (as defined below) of the Company strictly confidential and shall not disclose the same to any person, company or firm, directly or indirectly, during or after his employment by the Company except as authorized in writing by the Board. "Confidential Information" includes, without limitation, the following types of information or material, both existing and contemplated, regarding the Company or its parent, affiliated or subsidiary companies: corporate information, including contractual licensing arrangements, plans, strategies, tactics, policies, resolutions, patent, trademark and trade name applications; any litigation or negotiations; information concerning suppliers; marketing information, including sales, investment and product plans, customer lists, strategies, methods, customers, prospects and market research data; financial information, including cost and performance data, debt arrangements, equity structure, investors and holdings; operational and scientific information, including trade secrets; technical information, including technical drawings and designs; any information relating to any mineral projects in which the Company has an actual or potential interest; and personnel information, including personnel lists, resumes, personnel data, organizational structure and performance evaluations. The Employee agrees not to use such information, directly or indirectly, for his own interests, or any interests other than those of the Company, whether or not those interests conflict with the interests of the Company during or after his employment by the Company. The Employee expressly acknowledges and agrees that all information relating to the Company, whether financial, technical or otherwise shall, upon execution of this Agreement and thereafter, as the case may be, be the sole property of the Company, whether arising before or after the execution of this Agreement. The Employee expressly agrees not to divulge any of the foregoing information to any person, partnership, Company or other legal entity or to assist in the disclosure or divulging of any such information, directly or indirectly, except as required by law or as otherwise authorized in writing by the Board. The provisions of this Section 10 and Section 10.1 below shall survive the termination of this Agreement.
10.1 The Employee agrees that all documents of any nature pertaining to the activities of the Company or its related corporate entities, including Confidential Information, in the Employee's possession now or at any time during the Employee's period of employment, are and shall be the property of the Company and that all such documents and copies of them shall be surrendered to the Company when requested by the Company.
11. Non-Competition
During the Non-Competition Period (as defined below), the Employee shall not,
- 7 -
either individually or in partnership or jointly or in conjunction with any other person, entity or organization, as principal, agent, consultant, lender, contractor, employer, employee, investor, shareholder or in any other manner, directly or indirectly, advise, manage, carry on, establish, control, engage in, invest in, offer financial assistance or services to, or permit the Employee's name or any part thereof to be used by, any business in geothermal resources that competes with the business of the Company, its parent, affiliated or subsidiary companies, or any business in which the Company, its parent, affiliated or subsidiary companies is engaged. Competition, for purposes of this paragraph is defined as a 100-mile radius around any and all geothermal properties acquired by the Company up to and inclusive of the date of termination. For purposes of this Agreement, “Non-Competition Period” means a period ending twelve (12) months after the end of the termination of this Agreement.
12. Acknowledgement
The Employee acknowledges that damages would be an insufficient remedy for a breach by him of this Agreement and agrees that the Company may apply for and obtain any relief available to it in a court of law or equity, including injunctive relief, to restrain breach or threat of breach of this Agreement by the Employee or to enforce the covenants contained therein and, in particular, the covenants contained in Sections 10 and 11, in addition to rights the Company may have to damages arising from said breach or threat of breach. The Company, in turn, acknowledges that in seeking remedy in a court of law or equity, it is not attempting to deny the Employee, if in good faith he is seeking to improve his financial well being.
13. Representations and Warranties
The Employee represents and warrants to the Company that the execution and performance of this Agreement will not result in or constitute a default, breach, or violation, or an event that, with notice or lapse of time or both, would be a default, breach, or violation, of any understanding, agreement or commitment, written or oral, express or implied, to which the Employee is currently a party or by which the Employee or Employee's property is currently bound.
14. Governing Law
This Agreement shall be construed and enforced in accordance with the laws of the State of Idaho, USA.
15. Entire Agreement
This Agreement constitutes the entire agreement between the parties hereto with respect to the relationship between the Company and the Employee and supersedes all prior arrangements and agreements, whether oral or in writing between the parties hereto with respect to the subject matter hereof.
- 8 -
16. Amendments
No amendment to or variation of the terms of this Agreement will be effective or binding upon the parties hereto unless made in writing and signed by both of the parties hereto.
17. Assignment
This Agreement is not assignable by the Employee. This Agreement is assignable by the Company to any other company, which controls, is controlled by, or is under common control with the Company. This Agreement shall enure to the benefit of and be binding upon the Company and its successors and permitted assigns and the Employee and his heirs, executors and administrators.
18. Severability
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of the prohibition or unenforceability and shall be severed from the balance of this Agreement, all without affecting the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
19. Headings
The division of this Agreement into Sections and the insertion of headings are for convenience or reference only and shall not affect the construction or interpretation of this Agreement.
20. Time of Essence
Time shall be of the essence in all respects of this Agreement.
21. Independent Legal Advice
The Employee agrees that he has had, or has had the opportunity to obtain, independent legal advice in connection with the execution of this Agreement and has read this Agreement in its entirety, understands its contents and is signing this Agreement freely and voluntarily, without duress or undue influence from any party.
22. Notice
Any notice required or permitted to be made or given under this Agreement to either party shall be in writing and shall be sufficiently given if delivered personally, by electronic transmission, or if sent by prepaid registered mail to the intended recipient of such notice at their respective addresses set forth below or to such other address as may, from time to time, be designated by notice given in the manner provided in this Section:
- 9 -
In the case of Company:
US Geothermal Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Fax No.: ▇▇▇ ▇▇▇ ▇▇▇▇
In the case of Employee:
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No.: ▇▇▇ ▇▇▇ ▇▇▇▇
21.1 Any notice delivered to the party to whom it is addressed shall be deemed to have been given and received on the day it is so delivered or, if such day is not a business day, then on the next business day following any such day. Any notice mailed shall be deemed to have been given and received on the 10th business day following the date of mailing. In the case of facsimile transmission, notice is deemed to have been given or served on the party to whom it was sent at the time of dispatch if, following transmission, the sender receives a transmission confirmation report or, if the sender’s facsimile machine is not equipped to issue a transmission confirmation report, the recipient confirms in writing that the notice has been received.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written.
| By: | ||
| Authorized Signatory |
SIGNED by the Employee in the presence of:
| Witness | ▇▇▇▇▇▇ ▇▇▇▇ |
- 10 -
| Printed Name of Witness |