Legend Oil & Gas, Ltd. 8-K [ex10-4.htm]

Exhibit 10.4

 

 

October 1st, 2016

 

Legend Oil and Gas, Ltd.

555 North Point Center E.

Suite 400

Alpharetta, GA 30022

 

Gentlemen:

 

This letter agreement (the “Agreement”) amends the prior letter Agreement dated
September 2015, and sets forth the understanding between Andrew Reckles (or his
designee) and Legend Oil & Gas, Ltd. and its affiliated entities (collectively,
the “Company”) for the engagement of Andrew Reckles, Managing Partner of
Northpoint Energy Partners, to serve as Chairman of the Board and Chief
Executive Officer of the Company (“Mr. Reckles” or the “CEO”) during the term
hereof. This Agreement shall be effective on the date that it is executed by you
in the space provided for your signature below.

 

I. APPOINTMENT OF CHIEF EXECUTIVE OFFICER

 

Mr. Reckles will continue as CEO of the Company subject to the terms and
conditions of this amended Agreement

 

II. TERM

 

The term of Mr. Reckles appointment shall be effective on this date and shall be
twenty-four (24) months from and after the date hereof (the “Employment Term”)
unless sooner terminated as more fully provided in Section V hereof. Each
twelve-month period of the Employment Term beginning on the date hereof shall be
hereinafter referred to as an “Employment Year”.

 

III. SCOPE AND LOCATION OF SERVICES

 

Mr. Reckles’ ordinary course duties as CEO will involve managing the Company’s
day to day business affairs and he shall have such duties, authority and
responsibility as shall be determined and are assigned to him by the Board of
Directors of the Company (the “Board”), which duties, authority and
responsibility are consistent with the position of CEO. During the Employment
Term, Mr. Reckles shall also serve as Chairman of the Board. During the
Employment Term, Mr. Reckles shall devote such time as is necessary to perform
such duties and responsibilities but shall be free to engage in any other
business, profession or occupation for compensation or otherwise so long as same
will not conflict or interfere with the performance of such duties and
responsibilities. The CEO shall perform his duties and responsibilities
hereunder either at the offices of the Company or Northpoint or such other place
as is convenient to the CEO.

 

IV. FEES AND EXPENSES

 

A.Amended Base Compensation

 

As base compensation (“Base Compensation”) for the CEO’s services, the Company
shall pay the CEO a non-refundable fee of $25,000 per month payable in advance
on the date hereof and each successive monthly anniversary date of this
Agreement.

 

 

B.Additional Compensation.

 

In addition to the Base Compensation the CEO will receive additional
compensation (the “Additional Compensation”) as follows:

 

(1) reimbursement, on a monthly basis, of his out-of-pocket costs and expenses
to obtain health insurance policy coverage for himself and his wife that is
satisfactory to Mr. Reckles payable monthly by the Company provided, however,
that the maximum amount payable by the Company to Mr. Reckles in connection
therewith shall not exceed $1000 per month; OR should Mr. Reckles choose to
participate in the Company benefit plan, he may do so and coverage shall be
provided for he and his wife.

 

(2) Starting in calendar year 2016, an annual bonus (“annual bonus”) payable
either in common stock of the Company or cash or a combination thereof, at the
option of the BOD in the amount of or having a value equal to up to 50% of your
Base Compensation at the time; annual bonuses shall be based on performance
criteria to be determined by the Board; any annual bonus shall be accrued and
earned monthly throughout the Calendar year, but will be payable quarterly
during the year in which they are earned. The annual bonus is subject to the
“Termination” section below.

 

(3) for the term of this agreement, the Company shall provide a Company vehicle
to Northpoint for Mr. Reckles’ use.

 

(4) beginning October 1st, 2015, and continuing for the term of this agreement,
the Company shall provide a two week annual paid vacation to Mr. Reckles. The
vacation shall be paid for by the company up to a total of $20,000.

 

 

 

 

 

(5 “Change in Control” bonus. In the event of a change in control as defined
below, Mr. Reckles is entitled to receive a one time bonus, in cash, equal to
150% of his Base Compensation PLUS his to date accrued and unearned annual bonus
through the contractual period.

 

(6) EBITDA bonus. Should the Company achieve EBITDA in any quarter of $350,000
or greater, the CEO shall be entitled to a cash bonus equal to $25,000.00.

 

(7) Acquisition bonus: Should the Company make a Material Acquisition, it is
understood that the CEO and the BOD will work together to amend the “Base
Compensation” section of this document in order to properly compensate the CEO
for the expansion of the duties that such an acquisition would entail.

 

C.Out-Of-Pocket Expenses

 

The Company shall pay directly or reimburse the CEO, upon receipt of periodic
billings, for all reasonable out-of-pocket expenses incurred in connection with
this Agreement and the engagement hereunder, including, but not limited to,
travel, lodging, postage, computer and research charges, attorneys’ fees,
messenger services, telephone and facsimile services and other charges
customarily recoverable as out-of-pocket expenses. In addition, the Company
shall pay to Northpoint or Mr. Reckles its or his reasonable legal fees incurred
in negotiating and drafting this Agreement.

 

V. Termination

 

A.Termination of Employment.

 

The Employment Term and the CEO’s employment hereunder may be terminated by
Company and the CEO at any time upon mutual agreement of the Company and the CEO
or by the CEO or the Company as provided in this Section V. Except as
hereinafter provided in this Section V, upon termination of the CEO’s employment
during the Employment Term, the CEO shall be entitled to the compensation and
benefits described in Section IV hereof through the Termination Date.

 

B.Expiration of the Term for Cause or Without Good Reason.

 

The CEO’s employment hereunder may be terminated by the Company for “Cause”, as
such term is hereinafter defined, or by the CEO without “Good Reason”, as such
term is hereinafter defined. If the CEO’s employment is terminated by the
Company for Cause or by the CEO without Good Reason, the CEO shall be entitled
to receive: (i) any accrued but unpaid Base Compensation which shall be paid on
the “Termination Date”, as hereinafter defined, within one (1) week following
the Termination Date; (ii) any earned but unpaid Annual Bonus with respect to
any completed calendar/fiscal year immediately preceding the Termination Date,
which shall be paid on the otherwise applicable payment provided; and (iii)
reimbursement for unreimbursed business expenses properly incurred by the CEO
including, without limitation, health insurance costs as provided in Section IV
hereof. For purposes of this Agreement, “Cause” shall mean:

 

(1)the CEO’s willful failure to perform his duties and responsibilities (other
than any such failure resulting from incapacity due to physical or mental
illness);

(2)the CEO’s willful failure to comply with any valid and legal directive of the
Board;

(3)the CEO willful engagement in dishonesty, illegal conduct or gross
misconduct, which is, in each case, materially injurious to the Company;

(4)the CEO’s embezzlement, misappropriation or fraud related to the CEO’s
employment with the Company;

(5)the CEO’s conviction of or plea of guilty or nolo contendere to a crime that
constitutes a felony (or state law equivalent) or a crime that constitutes a
misdemeanor involving moral turpitude[, if such felony or other crime is
work-related, materially impairs the CEO’s ability to perform services for the
Company or results in material/reputational or financial harm to the Company; or

(6)the CEO’s willful unauthorized disclosure of “Confidential Information”, as
hereinafter defined.

 

For purposes of this provision, no act or failure to act on the part of the CEO
shall be considered “willful” unless it is done, or omitted to be done, by the
CEO in bad faith or without reasonable belief that the CEO’s action or omission
was in the best interests of the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or upon the
advice of counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the CEO in good faith and in the best interests of the
Company. For purposes of this Agreement, “Good Reason” shall mean the occurrence
of any of the following, in each case during the Employment Term without the CEO
‘s written consent: (i) any material breach by the Company of any material
provision of this Agreement including, without limitation, failure to pay the
CEO any of the Base Compensation or Additional Compensation provided for herein
within five (5) business days of the due date thereof and a material, adverse
change in the CEO’s authority, duties or responsibilities (other than
temporarily while the CEO is physically or mentally incapacitated or as required
by applicable law and (ii) any Change in Control. For purposes of this
Agreement, “Change in Control” shall mean the occurrence of any of the
following: (x) one person (or more than one person acting as a group) acquires
ownership of stock of the Company that, together with the stock held by such
person or group, constitutes more 50% of the voting power of the stock of the
Company; (y) the sale of all or substantially all of the Company’s assets; or
(z) the merger or consolidation of the Company with another person, firm or
entity that is not currently an affiliate of the Company.

 

C.Without Cause or for Good Reason.

 

 

 

 

 

The Employment Term and the CEO’s employment hereunder may be terminated by the
CEO for Good Reason or by the Company without Cause. In the event of such
termination, the CEO shall be entitled to receive payments that equal the
balance of the term of this agreement for all “base compensation”, as well as
all “annual bonuses” as well as ANY other bonuses and benefits that would be
payable under Section IV, B “additional compensation of this agreement.

 

D.Death or Disability.

 

The CEO’s employment hereunder shall terminate automatically upon the CEO’s
death during the Employment Term, and the Company may terminate the CEO s
employment on account of the CEO’s Disability. If the CEO’s employment is
terminated during the Employment Term on account of the CEO’s death or
Disability, the CEO (or the CEO’s estate and/or beneficiaries, as the case may
be) shall be entitled to receive all of the Base Compensation and Additional
Compensation that would have accrued and be payable to the CEO for the
Employment Year in which his death or disability occurred. For purposes of
clarification, any Annual Bonus for the Employment Year in which the CEO’s death
or disability may occur shall be prorated to the date of death or disability.
For purposes of this Agreement, “Disability” shall mean the CEO’s inability, due
to physical or mental incapacity, to substantially perform his duties and
responsibilities under this Agreement for one hundred eighty (180) days out of
any three hundred sixty-five (365) day. Any question as to the existence of the
CEO’s Disability as to which the CEO and the Company cannot agree shall be
determined in writing by a qualified independent physician mutually acceptable
to the CEO and the Company. If the CEO and the Company cannot agree as to a
qualified independent physician, each shall appoint such a physician and those
two physicians shall select a third who shall make such determination in
writing. The determination of Disability made in writing to the Company and the
CEO shall be final and conclusive for all purposes of this Agreement.

 

E.Notice of Termination.

 

Any termination of the CEO’s employment hereunder by the Company or by the CEO
during the Employment Term (other than termination pursuant to Section IV.D. on
account of the CEO’s death) shall be communicated by written notice of
termination (“Notice of Termination”) to the other party hereto in accordance
with Section X.J. hereof. The Notice of Termination shall specify: (i) the
termination provision of this Agreement relied upon; (ii) to the extent
applicable, the facts and circumstances claimed to provide a basis for
termination of the CEO’s employment under the provision so indicated; and (iii)
the applicable Termination Date.

 

VI. CONFIDENTIALITY

 

The CEO agrees to keep confidential all information obtained from the Company,
and the CEO will not disclose to any other person or entity, or use for any
purpose other than specified herein, any information pertaining to the Company
or any affiliate thereof, which is either non-public, confidential or
proprietary in nature (“Information”) that he obtains or is given access to
during the performance of his duties and responsibilities hereunder. The
foregoing is not intended to nor shall it be construed as prohibiting the CEO
from disclosure pursuant to valid subpoena, order or other legal compulsion, but
the CEO shall not encourage, suggest, invite or request, or assist in securing,
any such subpoena, court order, or other legal compulsion, and the CEO shall
immediately give notice of any such subpoena, court order, or legal compulsion
to the Company. Furthermore, the CEO may make reasonable disclosure of
Information to third parties to the extent necessary in connection with his
performance of the his duties and responsibilities hereunder. In addition, the
CEO shall have the right to disclose to others in the normal course of business
his involvement with the Company.

 

Information includes data, plans, reports, schedules, drawings, accounts,
records, calculations, specifications, flow sheets, computer programs, source or
object codes, results, models or any work product relating to the business of
the Company, its subsidiaries, distributors, affiliates, vendors, customers,
employees, contractors and consultants.

 

VII. INDEMNIFICATION, ADVANCEMENT AND EXCULPATION

 

The Company agrees to indemnify, provide advancement to, and hold harmless
Northpoint and the CEO and each of their respective partners, employees and
agents (the “Indemnified Persons”), to the fullest extent lawful, from and
against any claims, liabilities, losses, damages and expenses (or any action,
claim, suit or proceeding (an “Action”) in respect thereof), as incurred,
related to or arising out of or in connection with the CEO’s services (whether
occurring before, at or after the date hereof) under the Agreement or any
Indemnified Person’s role in connection therewith, whether or not resulting from
an Indemnified Person’s negligence (“Losses”), provided, however, that the
Company shall not be responsible for any Losses that arise out of or are based
on any action of or failure to act by the CEO to the extent such Losses are
determined, by a final, non-appealable judgment by a court or arbitral tribunal,
to have resulted solely from the CEO’s gross negligence or willful misconduct.

 

The Company agrees to reimburse and provide advancement to the Indemnified
Persons for all expenses (including, without limitation, fees and expenses of
counsel), including all costs and expenses (including expenses of counsel)
incurred by an Indemnified Person to enforce the Indemnified Person’s rights
hereunder, as they are incurred in connection with investigating, preparing,
defending or settling any Action for which indemnification, advancement or
contribution has or is reasonably likely to be sought by the Indemnified Person,
whether or not in connection with litigation in which any Indemnified Person is
a named party; provided that if any such reimbursement is determined by a final,
non-appealable judgment by a court or arbitral tribunal, to have resulted solely
from the CEO’s gross negligence or willful misconduct, such Indemnified Person
shall promptly repay such amount to the Company. The Company agrees that the CEO
shall not have any personal liability to the Company for monetary damages for
breach of fiduciary duty, provided that this limitation shall not eliminate or
limit the liability of the CEO: (i) for any breach of the CEO’s duty of loyalty
to the Company, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, or (iii) for any
transaction from which the CEO received an improper personal benefit.
Notwithstanding the provisions hereof, the aggregate contribution of all
Indemnified Persons to all Losses shall not exceed the amount of Base
Compensation actually received by the CEO with respect to the services rendered
pursuant to the Agreement.

 

 

 

 

 

In addition to the foregoing indemnification, advancement, and contribution
rights, the Company agrees that the CEO will be entitled to the benefit of the
most favorable indemnities provided by the Company to its other officers and
directors, whether under the Company’s by-laws, certificates of incorporation,
by contract or otherwise. The Company further agrees that it will include and
cover the CEO under the Company’s policy for directors’ and officers’ (“D&O”)
insurance. The Company agrees to maintain D&O insurance coverage for the CEO for
a period of not less than three (3) years following the date of termination of
the CEO’s service under this Agreement. In the event that the Company is unable
to include the CEO under the Company’s D&O insurance policies or if the
Company’s D&O policies do not have first dollar coverage in effect for at least
the first $3,000,000, it is agreed that the CEO is permitted to purchase a
separate policy for D&O insurance that covers only the CEO and invoice the
Company for the costs associated with such policy as an out-of-pocket expense
reimbursement under this Agreement. If the CEO is unable to purchase such
coverage, then the CEO shall have the right to terminate this Agreement upon
notice to the Company.

 

The Company agrees that it will not settle or compromise or consent to the entry
of any judgment in, or otherwise seek to terminate any pending or threatened
Action in respect of which indemnification, advancement, or contribution may be
sought hereunder (whether or not any Indemnified Person is a party to such
Action) unless the CEO has given his prior written consent, or the settlement,
compromise, consent or termination (i) includes an express unconditional release
of such Indemnified Person from all Losses arising out of such Action and (ii)
does not include any admission or assumption of fault on the part of any
Indemnified Person.

 

Notwithstanding anything in Section V of this Agreement to the contrary or
inconsistent herewith, the provisions of this Section VII shall survive
termination of this Agreement for whatever reason and regardless of which party
terminates this Agreement.

 

VIII. DISCLOSURES

 

The CEO is not aware of any business relationship he has that creates a
potential or actual conflict of interest with respect to the Company. Although
the CEO is not aware of any relationships that connect him to any party in
interest, because the CEO serves clients on a national basis, it is possible
that the CEO may have or will render services to or have business associates
with other entities which had or have relationships with the Company.

 

IX. REPRESENTATIONS

 

A.By the Company.

 

The Company represents and warrants to the CEO that it has taken all necessary
corporate and other action necessary for it to enter in to this Agreement and to
enable the CEO to perform his duties and responsibilities hereunder. Further,
the Company represents and warrants to the CEO that this Agreement, when
executed by you and the undersigned is a valid and binding agreement on the part
of the Company enforceable in accordance with its terms.

 

B.By the CEO

 

The CEO represents and warrants to the Company that his acceptance of employment
with the Company and the performance of his duties and responsibilities
hereunder will not conflict with or result in a violation of, a breach of, or a
default under any contract, agreement or understanding to which he is a party or
is otherwise bound.

 

X. GENERAL

A.Complete Agreement

 

This Agreement constitutes the entire agreement of the parties with respect to
the subject matter hereof and supersedes any other prior communications,
understandings and agreements (both written and oral) between the parties with
respect to the subject matter hereof.

 

B.Amendments

 

This Agreement may be modified, amended or supplemented only by a written
agreement between the parties hereto. The CEO will not be responsible for
performing any services not specifically described in this Agreement or in a
subsequent writing signed by the parties.

 

C.Governing Law

 

This Agreement and all controversies arising from or related to the performance
hereunder shall be governed by, and construed in accordance with, the laws of
the State of Colorado, without giving effect to such State’s conflicts of law
principles.

 

D.Severability

 

If any portion of this Agreement shall be determined to be invalid or
unenforceable, the parties agree that the remainder shall be valid and
enforceable to the maximum extent possible.

 

 

 

 

 

E.Sole Benefit

 

This Agreement has been and is made solely for the benefit of the Company,
Northpoint and the CEO and their respective successors and assigns, and no other
person or entity shall acquire or have any right under or by virtue of this
Agreement.

 

F.Assignment

 

Neither party may assign or transfer its rights or obligations under this
Agreement without the prior written consent of the other party.

 

G.No Waivers

 

Each party agrees that no failure or delay by the other party in exercising any
right, power or privilege hereunder will operate as a waiver thereof, nor will
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any right, power or privilege hereunder.

 

H.Captions.

 

Captions and headings of the sections and paragraphs of this Agreement are
intended solely for convenience and no provision of this Agreement is to be
construed by reference to the caption or heading of any section or paragraph.

 

I.Counterparts.

 

This Agreement may be executed in separate counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.

 

J.Notices

 

All notices required or permitted to be delivered under this Agreement shall be
sent, if to the CEO, to the attention of the CEO, and if to the Company, to the
attention of Warren Binderman. All notices under this Agreement shall be
sufficient if delivered by facsimile, electronic mail, or overnight courier. Any
notice shall be deemed to have been given only upon actual receipt. Mailed
notices shall be addressed as set forth below, or to such other name or address
as may be given in writing to the other party.

 

  To the CEO: Andrew Reckles       Facsimile:       Email:
andy@andy@midconoil.com             To the Company Legend Oil and Gas, Ltd.    
  555 North Point Center East, Ste. 401       Alpharetta, GA 30022       Attn:
Warren Binderman       Facsimile:(678) 608-2565       Email:
wbinderman@bindermanllc.com  

 

Please confirm the foregoing is in accordance with your understanding by signing
and returning a copy of this Agreement.

 

  Sincerely,       Andrew Reckles       By:   

Name:

Title:

Andrew Reckles
CEO

 

AGREED AND ACKNOWLEDGED:       Legend Oil and Gas, Ltd.           By:   Name:
Warren S. Binderman   Title: President       Dated: