exv10w1






Exhibit 10.1




EMPLOYMENT AGREEMENT



THIS
EMPLOYMENT AGREEMENT (this “Agreement”)
is made and entered into as of this 22nd day of December
2010, by and between Sun River Energy, Inc., a Colorado Corporation (the “Company”), and Jay
Leaver, a Colorado resident (“Employee”).




RECITALS:



The Company desires to employ Employee, and Employee desires to be employed by the Company, on the
terms and conditions hereinafter provided.




AGREEMENT:



NOW, THEREFORE, in consideration of the foregoing, of the mutual promises herein contained, and of
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:




Section 1. Term of Employment.



This Agreement will remain in effect from the date hereof until the earlier of (i) three (3) years
(the “Initial Term”), (ii) the time when this Agreement is terminated in accordance with its terms,
or (iii) the sale of the Company or substantially all of its assets, or a Company Sale.



Provided that this Agreement has not been terminated prior to the expiration of the
Initial Term in accordance with the terms contained herein, subsequent to such time, Employee’s
employment hereunder shall be automatically continued for successive additional terms of one
(1) year each unless written notice of non-renewal is given by either party no less than 30 days
prior to the end of the Initial Term or any additional term, as applicable.




Section 2. Responsibilities of Employee.





	 	(a)	 	During the Employment Period, Employee shall serve as Senior Geologist. Employee shall
report to the COO and as otherwise required by the CEO at his sole discretion. Employee
shall perform the following duties:






	 	a.	 	participate in the development and analysis of potential acquisitions
and/or divestitures;
	 
	 	b.	 	participation in implementation and oversight of exploration and/or
development drilling activities including, but not limited to engineering and
geological matters;
	 
	 	c.	 	participate in production, maintenance and operation of Company oil and
gas assets including, but not limited to, development and maintenance of reserves
information on all oil and gas assets; and




Page 1 of 18









 






	 	d.	 	all other such duties as may be assigned from time to time by the CEO.






	 	(b)	 	Further, it is contemplated that upon acceptance of this offer, Management will
recommend to the Board of Directors that Employee be appointed as Vice President. Upon
approval by the Board of Directors, Employee shall undertake and assume the responsibility
of performing for and on behalf of the Company any and all duties of the Vice President and
shall have the duties, functions, responsibilities and authority commensurate with such
office as are from time to time delegated to Employee by the Management of the Company.
	 
	 	(c)	 	Except for activities permitted in connection with the investments and activities set
forth on Schedule 7(b) and those projects excluded by paragraph 7(b)(i), during the
Employment Period, Employee shall devote his full time, skill, and attention and his best
efforts during normal business hours to the business and affairs of the Company to the
extent necessary to discharge faithfully and efficiently the duties and responsibilities
delegated and assigned to Employee herein or pursuant hereto, except for usual, ordinary,
and customary periods of vacation and absence due to illness or other disability, and shall
not be engaged (whether or not during normal business hours) in any other business or
professional activity, whether or not such activity is pursued for gain, profit, or other
pecuniary_advantage; provided, however, that Employee may (i) serve or continue to
serve in any capacity with any not-for-profit business or professional organization,
association, or entity, and (ii) deliver lectures, fulfill speaking engagements, or teach
at educational institutions, so long as all activities conducted by Employee pursuant to
clauses (i) and (ii) of this proviso do not unreasonably interfere with the performance and
fulfillment of Employee’s duties and responsibilities as an Employee of the Company in
accordance with this Agreement and are not in violation of the non-competition provisions
of Section 7 of this Agreement. In the case of the activities described in clause (ii) of
this proviso, Employee will give the Board at least ten (10) days prior notice of his
intention to engage in any such activity, such notice to describe briefly the activities in
which Employee proposes to be engaged.
	 
	 	(d)	 	All services that Employee may render to the Company or any of its subsidiaries or Affiliates in any capacity during the Employment Period shall be deemed to be
services required by this Agreement and consideration for the compensation provided for
herein.




Section 3. Compensation.



As compensation for the services to be rendered by Employee for the Company under this Agreement,
the Company shall pay Employee during the Employment Period an annual salary of






Page 2 of 18









 







$160,000.00, which amount may be adjusted upward by the Board, in its sole discretion, from time to
time. Such annual salary shall be payable as follows:





	 	(a)	 	Base Compensation. Employee cash compensation in an amount determined by the
Board, in its sole discretion (“Cash Compensation”); provided that such amount shall not be
less than One Hundred Sixty Thousand Dollars ($160,000.00), (less required withholdings).
Cash Compensation shall be earned and payable periodically in equal installments in
accordance with the Company’s normal payroll practices. Cash Compensation will be subject
to annual review pursuant to the Company’s normal review policy for other similarly
situated Employees of the Company and any changes in Cash Compensation will be communicated
in writing to Employee.






	 	i.	 	With respect to common stock, the Company shall, pursuant to the terms
of the 2010 Sun River Energy, Inc. Stock Incentive Plan, issue to Employee in
escrow, on the Effective Date Forty Thousand (40,000) shares of its Common Stock
(“Common Stock”), which shall become earned and vest, in terms of ownership and
voting rights, 1/12th per month thereafter (each a “Vesting Date”)
during the Term and shall be subject to the right of first refusal and repurchase
(“Right of First Refusal”) contained in Exhibit B.
	 
	 	ii.	 	With respect to stock options, the Company shall issue to Employee
Stock Options (“Stock Options”) exercisable into One Hundred Twenty Thousand
(120,000) shares of Common Stock of the Company pursuant to the terms of the 2010
Sun River Energy, Inc. Stock Incentive Plan, as amended (the “Stock Plan"). The
Stock Options shall be issued to Employee on the Effective Date and shall be earned
and vest 1/36th each month thereafter (each a “Vesting Date”) during the
Term. The exercise price of the Stock Options shall equal the average fair market
value of a share of the Company’s common stock on the Effective Date.






	 	(b)	 	Other Benefits. Employee is entitled to participate during the Term in any
group health insurance plan, equity or cash incentive compensation plan, 401(k) plan, and
any other benefit or welfare program or policy that is made available, from time to time,
to other Employees of the Company, on a basis consistent with such participation and
subject to the terms of the plan documents, as such plans may be modified, amended,
terminated, or replaced from time to time.
	 
	 	(c)	 	Fringe Benefits. During his employment pursuant to this Agreement, and except
as otherwise provided in this Agreement, Employee shall be entitled to participate on
substantially the same terms and conditions in the Company sponsored fringe benefits
generally provided to similarly situated personnel, such as vacation, sick pay, and any
equity incentive plan, including stock awards and/or bonuses.
	 
	 	(d)	 	Withholding. As a condition of the receipt of any payment or benefit
hereunder, the Company shall be entitled to withhold any federal, state or local taxes, in
the reasonable judgment of Company, required by law to be withheld.




Page 3 of 18









 










(Section 4 is Omitted)




Section 5. Vacation and Other Benefits.





	 	(a)	 	During the Employment Period, Employee shall be entitled to three (3) weeks of paid
vacation during each twelve-month period commencing on the date of this Agreement.
Employee shall also be entitled to all paid holidays given by the Company to its employees.
Employee agrees to utilize his vacation at such time or times as are (i) consistent with
the proper performance of his duties and responsibilities under this Agreement, and (ii)
mutually convenient for the Company and Employee.
	 
	 	(b)	 	During the Employment Period, Employee shall be entitled to participate in all employee
welfare benefit plans, programs, and arrangements provided by the Company from time to time
to its employees generally, subject to and on a basis consistent with the terms,
conditions, and overall administration (including eligibility and vesting requirements) of
such plans, programs, and arrangements.





Section 6. Business Opportunities and Intellectual Property.





	 	(a)	 	During the Employment Period, Employee shall promptly disclose to the Company all
Business Opportunities and Intellectual Property (each as defined herein).
	 
	 	(b)	 	Employee hereby assigns and agrees to assign to the Company, its successors, assigns or
designees, all of Employee’s right, title and interest in and to all Business Opportunities
and Intellectual Property, and further acknowledges and agrees that all Business
Opportunities and Intellectual Property constitute the exclusive property of the Company.
	 
	 	(c)	 	For purposes hereof, “Business Opportunities” shall mean all business ideas, prospects,
proposals or other opportunities pertaining to the E&P Business (as defined herein),
including the lease, acquisition, exploration, production, gathering, transporting, storing
or marketing of hydrocarbons and other mineral and related products (including becoming
financially interested in any of the above) and the exploration potential of geographical
areas on which hydrocarbon exploration prospects are located (other than those interests
described on Schedule 7(b) and except for activities permitted pursuant to Section 7(b)),
which are:






	 	i.	 	developed by Employee (A) during the Employment Period, or (B) before
the Employment Period, but only to the extent that it is not contained in existing
projects listed by employee in Schedule 7(b) attached. It is agreed and understood
between the parties that Employee has certain projects whose State and County shall
be disclosed in which the Employee is entitled compensation should the projects be
developed. Employee intends to lend guidance and expertise to these projects so
long as it does not interfere with employment or Sun River interests. All projects
will be disclosed to Employer prior to any additional efforts of Employee. All
projects listed in Schedule 7(b) attached, Employer expressly waives any interest
or ownership in those business opportunities.




Page 4 of 18









 






	 	ii.	 	originated by any third party and brought to the attention of Employee
(A) during the Employment Period, or (B) before the Employment Period, but only to
the extent (x) of Employee’s rights thereto, (y) it would not breach any duty or
obligation of Employee to a third party during such period, and (z) it pertains to
the E&P Business plays, prospects or areas of interest identified on Schedule 6(c)
attached hereto; together, with information relating thereto, including, without
limitation, any Business Records (as defined herein).






	 	(d)	 	For purposes hereof “Intellectual Property” shall mean all ideas, inventions,
discoveries, processes, designs, methods, substances, articles, computer programs and
improvements relating to the E&P Business (including, without limitation, enhancements to
or further interpretation or processing of such information, but excluding any of the same
that result from activities permitted pursuant to Section 7(b)), whether or not patentable
or copyrightable, which do not fall within the definition of Business Opportunities, which
are discovered, conceived, invented, created or developed by Employee, alone or with others
(i) during the Employment Period if such discovery, conception, invention, creation, or
development (x) occurs in the course of Employee’s employment with the Company, or (y)
occurs with the use of any of the Company’s time, materials, facilities or other assets, or
(z) in the opinion of the Board, relates or pertains in any way to the Company’s purposes,
activities or affairs, or (ii) before the Employment Period, but only to the extent (x) of
Employee’s rights thereto and (y) it would not breach any duty or obligation of Employee to
a third party during such period and (z) it pertains to the E&P Business plays, prospects
or areas of interest identified on Schedule 6(c) attached hereto.





Section 7. Restrictive Covenants.





	 	(a)	 	Non-Disclosure. Employee acknowledges that the services he is to render in the course
of his employment by the Company are of a special and unusual character with unique value
to the Company. Employee further acknowledges that during the Employment Period, the
Company has agreed to provide him as one of its Employees special training and knowledge,
Business Opportunities, Intellectual Property and Confidential Information (as defined
herein). Employee further acknowledges that the Company has agreed to provide him access
to and simultaneous to the execution of this Agreement he shall receive from the Company
certain Confidential Information (as defined herein). Employee covenants and agrees that he
will not at any time, either during or subsequent to his employment, disclose to any third
party or directly or indirectly make use of, except for business of the Company, any
special training and knowledge, Business Opportunities, Intellectual Property or
Confidential Information received from the Company or any of its subsidiaries. Ancillary to
and in an effort to enforce Employee’s agreement to protect and not to disclose the
Company’s or its subsidiaries’ information as set forth in this Section 7, Employee
covenants and agrees to the restrictions and obligations set forth in this Section 7.
	 
	 	(b)	 	Non-Competition During Employment




Page 5 of 18









 












	 	i.	 	Employee is a Prospect Generator and as such will provide Employer in
writing with the right of first refusal on all prospects generated. Should Employer
pass in writing on a project Employee shall be free to pursue outside business
activities on his own time, and receive financial gain from these efforts without
claim by Employer. To the extent Employee receives any compensation of any nature
from these efforts, such compensation shall immediately be split equally with
Employer.
	 
	 	ii.	 	Except for services related to the activities and interests described
above in subparagraph 7(b)(i) above and on Schedule 7(b), during the Employment
Period, Employee shall not directly or indirectly be employed by or render
advisory, consulting or other services in connection with any business enterprise
or person, other than the Company, that is engaged in leasing, acquiring,
exploring, producing, gathering, transporting, storing or marketing hydrocarbons
and related products (the “E&P Business”)without express written consent of
the Board of Directors.
	 
	 	iii.	 	Except for services related to the activities and interests described
above in subparagraph 7(b)(i) above and on Schedule 7(b), Employee shall not,
directly or indirectly, in any capacity (including, without limitation, as a
proprietor, investor, director or officer or in any other individual or
representative capacity), be financially interested in or engage in the E&P
Business other than through the Company.
	 
	 	iv.	 	Except for services related to the activities and interests described
above in subparagraph 7(b)(i) above and on Schedule 7(b), all investments made by
Employee (whether in his own name or in the name of any Family Member or made by
any of Employee’s Affiliates), which relate to the E&P Business shall be made
solely through the Company; and Employee will not (directly or indirectly through
any Family Member) in any capacity (including alone, as a member, partner, joint
venture, equity holder, lender or in any other capacity), and will not permit any
of his Affiliates to, (i) invest or otherwise participate alongside the Company in
any Business Opportunities, or (ii) invest or otherwise participate in any business
or activity relating to a Business Opportunity, regardless of whether the Company
ultimately participates in such business or activity.






	 	(c)	 	Non-Competition After Employment. Except for services related to the activities and
interests described above in subparagraph 7(b)(i) above and on Schedule 7(b), upon
termination of Employee’s employment by the Company pursuant to Sections 8(b) or 8(c), or
by Employee without Good Reason, Employee agrees that for a period commencing upon the date
of termination of Employee’s employment hereunder (the “Termination Date”) and ending upon
the later to occur of (i) the first anniversary of the Termination Date, or (ii) the third
anniversary of the date hereof, Employee shall not, directly or indirectly (including,
without limitation, as a proprietor, investor, director or officer or in any other
individual or representative capacity) (x) own, acquire, or solicit the acquisition of, or
assist any other person to own, acquire or solicit the acquisition of,






Page 6 of 18












 






	 	 	any Oil and Gas Interests (as defined herein), or any option or other right
to acquire any Oil and Gas Interests, in any case pertaining to or covering, in whole or
in part, the Lands (as defined herein); or (y) engage in or assist any other person to
engage in the E&P Business on or with respect to the Lands.




As used in this Section 7, the term:





	 	i.	 	“Oil and Gas Interests” means all: (1) oil and gas leases, mineral
interests, oil, gas and mineral leasehold interests, fee interests, royalty
interests (including, without limitation, landowner royalty interests,
nonparticipating royalty interests and overriding royalty interests), production
payments, net profits interests, subleases, mineral servitudes, licenses,
easements, pooling orders and other interests in oil, gas and other hydrocarbons,
(2) contract rights, joint operating agreements, farm out agreements, pooling
agreements, seismic agreements, cost sharing arrangements and other agreements
relating to the interests under the foregoing clause (1) or the E&P Business, (3)
wells, equipment, associated personal property, pipelines, fixtures and other
assets related to the foregoing, and (4) other operations, rights, titles and
interests relating directly or indirectly to the drilling, exploration,
development, operation, marketing, sale or other disposal of the foregoing assets
and interests.
	 
	 	ii.	 	“Lands” means any and all lands lying upon or within three (3) miles
of: (1) the boundary of any drilling or spacing unit within which a producing well
lies in which the Company has or had an interest on or prior to the Termination
Date; (2) the boundary of any other Oil and Gas Interest in which the Company has
or had an interest on or prior to the Termination Date; or (3) the boundary of any
Prospect (as defined herein).
	 
	 	iii.	 	“Prospect” means an area encompassing territory generally considered
unproven or semi-proven in nature in accordance with generally accepted standards
and practices in the oil and gas industry which (A) the Board has or had
designated, on or prior to the Termination Date, (x) as being prospective for the
discovery of oil, gas, or other hydrocarbons, or (y) for the significant extension
of a pool or deposit of oil, gas, or other hydrocarbons theretofore discovered, and
(B) the Company has acquired or generated proprietary geological and geophysical
information in respect of such territory or has the right to review geological and
geophysical information of a third party in respect of such territory.






	 	(d)	 	During the Employment Period and thereafter until the date upon which the sale of the
Company or substantially all of its assets is consummated, Employee will not disclose to
any third party directly or indirectly or indirectly make use of, except for the business
of the Company, any Confidential Information. For purposes of this Section 7, it is agreed
that Confidential Information means any and all trade secrets and confidential or
proprietary information pertaining to the Company (the “Confidential Information”). For
purposes of this Section 7, it is agreed that Confidential Information includes, without
limitation, any information heretofore acquired or acquired during the term hereof,




Page 7 of 18









 






	 	 	 	developed or used by the Company relating to Business Opportunities or Intellectual Property
or other geological, geophysical, economic, financial or management aspects of the business,
operations, properties or prospects of the Company whether oral or in written form in a
Business Record (as defined in Section 7(g) below). Notwithstanding the foregoing, no
information of the Company will be deemed confidential for the purposes of this Section 7(d)
if such information is or becomes public knowledge through no wrongful act of Employee or
was previously known by Employee prior to entering into this Agreement and has not been
utilized by the Company.
	 	(e)	 	Non Solicitation. Except in the event of the termination of Employee’s employment by
Employee for Good Reason or as provided in the next sentence, during the period commencing
upon the Termination Date and ending upon the later to occur of (i) the first anniversary
of the Termination Date, or (ii) the third anniversary of the date hereof, Employee may not
(x) solicit, raid, entice or induce, directly or indirectly, any employee (or person who
was previously an employee within six months of the Termination Date) of the Company (other
than secretarial or similarly-positioned personnel) or any other person who is under
contract with or rendering services to the Company in an employee-like capacity, to (A)
terminate his employment by, or contractual relationship with, the Company, (B) refrain
from extending or renewing the same (upon the same or new terms), (C) refrain from
rendering services to or for the Company, (D) become employed by or to enter into
contractual relations with any persons other than the Company, or (E) enter into a
relationship with a competitor of the Company or (y) divert or attempt to divert, any
person, concern or entity from doing business with the Company, or attempt to induce any
such person, concern or entity to cease being a customer or supplier of the Company.
Notwithstanding any other provision of this Agreement, none of the restrictions set forth
in this Section 7(e) shall apply from or after the date of the consummation of the sale of
the Company or substantially all of its assets, or a Company Sale.
	 
	 	(f)	 	Injunctive Relief. Employee acknowledges and agrees that the services to be rendered by
him to the Company as one of its Employees are of a special, unique and extraordinary
character and, in connection with such services, he will have access to Business
Opportunities, Intellectual Property and Confidential Information vital to the Company’s
businesses. By reason of this, Employee consents and agrees that if he violates any of the
provisions of this Section 7, the Company would sustain irreparable harm and, therefore, in
addition to any other remedies which the Company may have under this Agreement or
otherwise, the Company shall be entitled to an injunction restraining Employee from
committing or continuing any such violation of this Agreement. Such right to an injunction
shall be cumulative and in addition to, and not in lieu of, any other remedies to which the
Company may show itself justly entitled.
	 
	 	(g)	 	Return of Business Records. Employee agrees to promptly deliver to the Company, upon
the expiration of the Employment Period, or at any other time when the Company so requests,
all material relating to the business of the Company, including, without limitation: all
geological and geophysical reports and related data such as maps, charts, logs,
seismographs, seismic records and other reports and related data, calculations,




Page 8 of 18









 






	 	 	 	summaries, memoranda and opinions relating to the foregoing, production records, electric
logs, core data, pressure data, lease files, well files and records, land files, abstracts,
title opinions, title or curative matters, contract files, notes, records, drawings,
manuals, correspondence, financial and accounting information, customer lists, statistical
data and compilations, patents, copyrights, trademarks, trade names, inventions, formulae,
methods, processes, agreements, contracts, manuals or any other materials relating to the
business of the Company (in this Section 7, collectively called the “Business Records”), and
all copies thereof and therefrom, provided that the Employee shall not be required to
deliver to the Company any Business Records relating to the interests and activities
described on Schedule 7(b). Employee confirms that all of the Business Records (and all
copies thereof and therefrom) that are required to be delivered to the Company pursuant to
this Section 7 constitute the property of the Company. The obligation of confidentiality set
forth in this Section 7 shall continue notwithstanding Employee’s delivery of any such
documents to the Company.
	 	(h)	 	Employee represents and covenants that the execution, delivery and performance by
Employee of this Agreement and the services he is to render to the Company as contemplated
by this Agreement will not (a) be in contravention of or result in any breach or constitute
a default under any applicable law, rule, regulation, judgment, license, permit or order or
any material loan, note or other agreement or instrument to which Employee is a party or by
which he or any of his properties are bound, (b) result in the Employee disclosing or
utilizing any trade secret or proprietary information or documentation of any Person, or
(c) violate any confidential relationship which Employee may have had with any Person.
	 
	 	(i)	 	The existence of any claim or cause of action of Employee against the Company or any
officer, manager, or member of the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of the
covenants of Employee contained in this Section 7. In addition, the provisions of this
Section 7 shall continue to be binding upon Employee in accordance with their terms,
notwithstanding the termination of Employee’s employment hereunder for any reason.
	 
	 	(j)	 	The parties to this Agreement agree that the limitations contained in this Section 7
with respect to time, geographical area, and scope of activity are reasonable. However, if
any court should determine that the time, geographical area, or scope of activity of any
restriction contained in this Section 7 is unenforceable, it is the intention of the
parties that such restrictive covenants set forth herein shall not thereby be terminated
but shall be deemed amended to the extent required to render it valid and enforceable.
	 
	 	(k)	 	Nothing contained in this Section 7 shall be construed to prohibit Employee from
investing in stock or other securities listed on a national securities exchange or actively
traded in the over-the-counter market of any corporation or other entity engaged in a
business or activity competitive with the business of the Company or any of its
subsidiaries, provided that Employee, his Family Members and each of their respective
Affiliates shall not, directly or indirectly, hold more than a total of three percent (3%)
of all such shares of stock or other securities issued and outstanding, and provided
further




Page 9 of 18









 






	 	 	 	that Employee shall not perform any services on behalf of, or in the operation of the
affairs of, such corporation or other entity.
	 	(l)	 	During any period in which Employee is in breach of any of the covenants set forth in
this Section 7, the time period with respect to such covenant shall be extended for an
amount of time that Employee is in breach thereof.





Section 8. Termination of Employment.





	 	(a)	 	Employee’s employment hereunder shall terminate automatically upon his death.
	 
	 	(b)	 	If the Company determines in good faith that the Disability (as defined herein) of
Employee has occurred during the Employment Period, the Company may notify Employee of the
Company’s intention to terminate Employee’s employment hereunder for Disability. In such
event, Employee’s employment hereunder shall terminate effective on the fifth day following
the date such notice of termination is given to Employee. For purposes of this Agreement,
the “Disability” of Employee shall be deemed to have occurred if Employee shall have been
unable to perform his essential duties hereunder for a period consisting of 90 continuous
days within any given period of 365 consecutive days, (excluding any leaves of absence
approved by the Board and the number of days of accrued vacation of Employee) as a result
of his physical or mental incapacity; provided that, if Employee has a physical or mental
impairment that substantially limits one or more major life activities, as defined under
the Americans with Disabilities Act, the Company may extend the 90-day period to reasonably
accommodate Employee’s impairment.
	 
	 	(c)	 	The Company may terminate Employee’s employment hereunder at any time for Cause. For
purposes of this Agreement, “Cause” shall mean any of the following: (i) the breach by
Employee of his duties as an employee of the Company, which breach is materially
detrimental to the Company, monetarily or otherwise, (ii) the failure of Employee to comply
in any material respect with any written or oral direction of the Board which reasonably
relates to the performance of his duties that he is physically able to perform and which
would not require him to perform an illegal act or breach any agreement to which the
Company is a party, (iii) the failure of Employee to substantially perform his duties as an
employee after demand for substantial performance is delivered by the Company to Employee
that specifically identifies the manner in which the Company believes that Employee has not
substantially performed his duties, (iv) the commission by Employee of any criminal act
that constitutes a felony or involves fraud, dishonesty, or moral turpitude, (v) Employee’s
failure to render the services to the Company as contemplated under this Agreement as a
result of alcohol or drug use, (vi) the taking by Employee of any action, knowing or with
reckless disregard that it is adverse in a material respect to the interests of the
Company, its members, or its assets, (vii) the willful, material violation by Employee of
any employer policies of the Company or its Affiliates, and (viii) the material breach by
Employee of any of his material covenants and agreements contained in this Agreement. With
respect to clauses (i), (ii), (iii) and (v),




Page 10 of 18









 






	 	 	 	Cause shall only exist if Employee fails to cure such matter within ten (10) days after
receiving written notice from the Company.
	 	(d)	 	The Company may terminate Employee’s employment hereunder at any time without Cause
upon thirty (30) days notice to Employee.
	 
	 	(e)	 	Employee may terminate his employment hereunder at any time for Good Reason or without
Good Reason upon thirty (30) days advance notice to the Company. For purposes of this
Agreement, “Good Reason” means (i) the Company’s failure to timely pay any amount due to
Employee under this Agreement, (ii) a reduction in Employee’s compensation without
Employee’s written consent, or (iii) notwithstanding anything herein to the contrary, Good
Reason shall exist only if the Company fails to cure the matter described in clauses
(i)-(iii) of this Section 8(e) within 30 days after written notice from Employee.
	 
	 	(f)	 	In the event of the termination of Employee’s employment hereunder (for any reason
other than the death of Employee), Employee agrees that if at such time he is a manager or
officer of the Company or any of its subsidiaries, he will promptly deliver to the Company
his written resignation from all such positions, such resignation to be effective as of the
date of termination.





Section 9. Obligations of Company Upon Termination of Employment.





	 	(a)	 	If Employee’s employment hereunder is terminated pursuant to Sections 8(a), 8(b) or
8(c), or if Employee terminates his employment without Good Reason, the Company shall pay
to Employee, or his estate, trust or similar Person if applicable, on the sixth (6th) day
following the Termination Date or the next regularly scheduled pay day of the Company
following the Termination Date, (i) any accrued but unpaid base salary provided for in
Section 3 hereof for services rendered through the Termination Date, (ii) any accrued but
unpaid expenses required to be reimbursed under Section 3 and (iii) any vacation accrued to
the Termination Date.
	 
	 	(b)	 	If Employee’s employment hereunder is terminated by the Company for any reason (other
than for death or Disability or pursuant to Section 8(c)) or by Employee for Good Reason,
the Company shall pay to Employee (i) on the sixth (6th) day following the Termination Date
or the next regularly scheduled pay day of the Company following the Termination Date,
respectively, (A) any accrued but unpaid base salary provided for in Section 3 hereof for
services rendered through the Termination Date, (B) any accrued but unpaid expenses
required to be reimbursed under Section 3, and (C) any vacation accrued to the Termination
Date, and (ii) severance pay in an amount equal to Employee’s base salary pursuant to
Section 3 for a period beginning on the Termination Date and ending upon the later to occur
of (x) the first anniversary of the Termination Date or (y) the third anniversary of the
date hereof, payable in equal monthly installments beginning on the last day of the first
month following the Termination Date; provided, however, that none of the benefits payable
under Section 9(b)(ii) will be payable unless, and the obligation to pay any severance
pursuant to Section 9(b)(ii) shall not accrue until, the Employee has




Page 11 of 18









 






	 	 	 	signed and delivered an executed general release, which has become irrevocable, satisfactory
to the Company in its reasonable discretion, releasing the Company and its Affiliates and
their respective officers, directors, managers, members, partners and employees from any and
all claims or potential claims arising from or related to the Employee’s employment or
termination of employment. For the avoidance of doubt, if Employee is terminated without
Cause or Employee terminates his employment for Good Reason, and thereafter Employee engages
in the activities that are within the scope of the restrictions described in Section 7,
Employee shall not be entitled to the severance payment described in clause (ii) of this
Section 9(b).





Section 10. Withholding Taxes.



The Company shall withhold from any payments to be made to Employee hereunder such amounts
(including social security contributions and federal income taxes) as shall be required by federal,
state, and local withholding tax laws.



Section 11. Attorneys’ Fees and Costs.



In the event there is any litigation between the parties hereto with respect to this Agreement, the
prevailing party in such litigation shall be entitled to recover all attorneys’ fees and costs
incurred by such party in connection with such litigation.




Section 12. Notices.



All notices, requests, or consents provided for or permitted to be given under this Agreement must
be in writing and must be given either by depositing that writing in the United States mail,
addressed to the recipient, postage paid, and registered or certified with return receipt requested
or by delivering that writing to the recipient in person, by courier, by electronic transmission,
or by facsimile transmission; and a notice, request, or consent given under this Agreement is
effective on receipt by the person to receive it.



Section 13. Governing Law.



It is understood and agreed that the construction and interpretation of this Agreement shall at all
times and in all respects be governed by the laws of the State of Texas.




Section 14. Assistance in Litigation.



During the Employment Period and for a period of four (4) years thereafter, Employee shall, upon
reasonable notice, furnish such information and proper assistance to the Company as may reasonably
be required by the Company in connection with any litigation in which the Company, or any of its
subsidiaries or Affiliates is, or may become, a party. The Company shall reimburse Employee for (i)
all reasonable, documented out-of-pocket expenses incurred by Employee in rendering such assistance
subject to the Company’s reasonable policies regarding the reimbursement of expenses and (ii)
reasonable compensation for Employee’s time in rendering such assistance if such assistance occurs
after the Employment Period.






Page 12 of 18









 








Section 15. Severability.



The invalidity or unenforceability of any one provision or more of the provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect to the fullest extent permissible by law. Should any one or
more of the provisions of this Agreement be held to be excessive, unreasonable, or otherwise
unenforceable, then that provision shall be construed by limiting and reducing it so as to be
reasonable and enforceable to the fullest extent compatible with applicable law.




Section 16. Survival.



Neither the expiration nor the termination of the term of Employee’s employment hereunder shall
impair the rights or obligations of either party hereto which shall have accrued hereunder prior to
such expiration or termination. The provisions of Sections 6, 7, 9, and 14 and the rights and
obligations of the parties thereunder, shall survive the expiration or termination of the term of
Employee’s employment hereunder.




Section 17. Entire Agreement.



This Agreement, including the schedules attached hereto, contains the entire agreement and
understanding by and between the Company and Employee with respect to the employment of Employee,
and no representations, promises, agreements, or understandings, written or oral, not contained
herein shall be of any force or effect. No waiver of any provision of this Agreement shall be valid
unless it is in writing and signed by the party against whom the waiver is sought to be enforced.
No valid waiver of any provision of this Agreement at any time shall be deemed a waiver of any
other provision of this Agreement at such time or any other time.




Section 18. Modification.



No amendment, alteration or modification to any of the provisions of this Agreement shall be valid
unless made in writing and signed by both parties.




Section 19. Binding Effect; Assignment; No Third Party Benefit.



This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors, and assigns; provided, however, that the
duties and responsibilities of Employee hereunder may not be assumed by, or delegated to, any other
person. Nothing in this Agreement, express or implied, is intended to or shall confer upon any
person other than the parties hereto, and their respective heirs, legal representatives,
successors,
and permitted assigns, any rights, benefits, or remedies of any nature whatsoever under or by
reason of this Agreement.





Page 13 of 18











 





Section 20. Counterparts.



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



Section 21. Voluntary Agreement.



Each party to this Agreement has read and fully understands the terms and provisions hereof, has
had an opportunity to review this Agreement with legal counsel, has executed this Agreement based
upon such party’s own judgment and advice of counsel (if any), and knowingly, voluntarily, and
without duress, agrees to all of the terms set forth in this Agreement. The parties have
participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question
of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the
parties and no presumption or burden of proof will arise favoring or disfavoring any party because
of authorship of any provision of this Agreement.



Section 22. Directly or Indirectly.



Where any provision of this Agreement refers to action to be taken by any person, or which such
person is prohibited from taking, such provision shall be applicable whether such action is taken
directly or indirectly by such person, including actions taken by or on behalf of any Affiliate of
such person.




Section 23. State Law.



It is intended that this Agreement be valid and enforceable under the laws of the state of Texas,
and that the laws of this state shall govern the agreement’s interpretation.




SIGNATURE PAGE —LEAVER EMPLOYMENT AGREEMENT



IN WITNESS WHEREOF, the Company and Employee have executed this Agreement on the day and year first
above written.




	 	 	 	 	 
	 	COMPANY:





Sun River Energy, Inc.

 	 
	 	By:  	/s/ Donal R. Schmidt, Jr.
 	 
	 	 	Donal R. Schmidt, Jr. Chief Executive Officer  	 
	 	 	 	 
	 
	 	EMPLOYEE:

 	 
	 	By:  	/s/ Jay Leaver
 	 
	 	 	Jay Leaver 	 
	 	 	 	 
	 




 Page 14 of 18









 





Schedule 6(c) — 1

SCHEDULE 6(c)

Schedule 7(b) — 1

SCHEDULE 7(b)



Employee is currently engaged in the following oil and gas activities and has ownership
interests in the following Oil and Gas Interests:







 Page 15 of 18









 








EXHIBIT B




TERMS OF RIGHT OF FIRST REFUSAL AND REPURCHASE ON SALE OF COMMON

STOCK SHARES (“RIGHTS OF FIRST REFUSAL”)


1. First Refusal on Sale of Shares. If the Employee or a transferee or assignee of
Employee (the “Selling Shareholder”) proposes to sell all or part of his shares of common stock,
the following provisions shall apply:





     (a) Notice: The Selling Shareholder shall first give written notice
(the “Option Notice”) to the Company, which notice shall identify the prospective purchaser
and shall set forth in reasonable detail the terms and conditions upon which such sale is
proposed to be made, and shall be accompanied by copies of the bona fide offer and any other
information furnished to or by the prospective purchaser(s). Such notice shall
automatically grant to the Company an option to purchase that portion of the Shares of the
Selling Shareholder proposed to be assigned or sold upon the same terms and conditions as
contained in the bona fide offer.




     (b) Shares Covered by Option: The option granted herein to the Company
must be exercised by the Company as to the entire interest being offered (the “Offered
Shares”), unless the Selling Shareholder consents to a sale or transfer of less than the
entire interest.




     (c) Exercise of Option: The Company, at its sole discretion, may,
within thirty (30) days after receipt of the Option Notice (the “Option Period”), give
written notice to the Selling Shareholder (the “Acceptance Notice”), signed by the Company,
that the Company elects to exercise such option, evidencing its agreement to purchase the
Offered Shares.




     (d) Closing of Sale: Closing on the sale of the Offered Shares to the
Company shall take place at the principal place of business of the Company ten (10) days
after the expiration of the Option Period or at such other place and time as agreed to by
the Selling Shareholder and the Company.



 Page 16 of 18









 






     (e) Failure to Exercise Option: If the option is not exercised within
the Option Period as to the Offered Shares, the Selling Shareholder may sell or transfer the
Offered Shares within sixty (60) days thereafter to the prospective purchaser named in the
Option Notice at a price and on terms no more favorable than described in the Option Notice.




     (f) Subsequent Transfers: The Selling Shareholder shall not otherwise
sell or transfer the Offered Shares to any person after the termination of said sixty (60)
day period without again complying with this Section.




     (g) No Pledges: The Employee and each transferee or assignee of the
Employee further agrees and covenants not to pledge, lend, hypothecate or otherwise grant
any interest in the shares of the common stock, without the prior written consent of the
Company, in its sole discretion. The Company shall be entitled to redeem the shares of
common stock at the purchase price thereof in the event of any breach of this section.


2. Repurchase Rights. The Shares owned by the Employee are subject to forfeiture
and restrictions on transfer in accordance with the terms and conditions of this Agreement.
Subject to the terms of this Agreement, on each month anniversary of the date of this Agreement
during the Term, one thirty-sixth (1/36th) of the Shares shall no longer be subject to
the repurchase right set forth herein.




     Other than as expressly reserved or restricted by this Agreement, the Employee shall have all
the rights of a stockholder with respect to the Shares unless and until the Company exercises its
repurchase rights. The Shareholders may not sell, transfer, alienate pledge or otherwise encumber
(i) any Share or fraction thereof, or any interest in a Share or (ii) any other interest in this
Agreement, until such Shares are no longer subject to the Company’s repurchase rights as set forth
herein. Dividends paid with respect to Shares in cash or property other than shares or rights to
acquire shares will be paid to the Employee at the time such dividends are paid to other
stockholders. Dividends with respect to Shares paid in shares or rights to acquire shares will be
added to and become a part of the Shares.



 Page 17 of 18









 






     (a) If the Employee’s employment hereunder, is terminated the Company will have the
right (the “Repurchase Right”), but not the obligation, to purchase from the Employee (or
any person to whom Employee shall have transferred any such Shares) all or any portion of
the Shares as to which the Company’s repurchase right has not expired as set forth above
(the “Repurchased Stock”). But, in the event Employee is terminated without Cause or he
terminates his employment for Good Reason in accordance with Section 4(c) of the Employment
Agreement, then the Company shall have no rights under Exhibit B whatsoever.




     (b) If the Company intends to exercise its Repurchase Right with respect to such
Repurchased Stock, the Company must give Shareholder written notice (the “Repurchase
Notice”) within 60 days after the applicable Severance Date, that the Company is exercising
its Repurchase Right with respect to the Repurchased Stock, which Repurchase Notice will
constitute exercise of the Repurchase Right. The Company may exercise each Repurchase Right
with respect to all or any portion, of the Repurchased Stock subject to such Repurchase
Right. Such Repurchase Right will expire with respect to the Repurchased Stock subject to
such Repurchase Right to the extent not exercised by the Company within 60 days after the
Severance Date. The price per share for the Repurchased Stock will be $0.001 per share (the
“Repurchase Price”).




     (c) If the Company exercises a Repurchase Right with respect to any Repurchased Stock,
within 30 days after the date of a Repurchase Notice the Company shall deliver to Employee
the Repurchase Price for the Shares of Repurchased Stock being purchased and Employee shall
deliver to the Company certificates, if any, previously delivered to Employee representing
such Repurchased Stock, duly endorsed for transfer to the Company, or such certificates and
a duly executed stock power transferring such shares of Repurchased Stock to the Company.




 Page 18 of 18











 





SCHEDULE 6(b)



Business ideas not covered by specific prospect areas





	 	1)	 	A program written in QBASIC to automatically calculate an extrapolated decline
curve from an oil or gas well’s historical production records.
	 
	 	2)	 	An Excel spreadsheet that automatically calculates closure on a metes & bounds
 — style survey.
	 
	 	3)	 	An Excel spreadsheet that calculates economic parameters for single-well and
multiple-well drilling programs.
	 
	 	4)	 	A program written in QBASIC that calculates coherency and other attributes from
seismic data.
	 
	 	5)	 	A program written in QBASIC to create a SEG-Y format vector file from a color
scan of a seismic line.
	 
	 	6)	 	A QBASIC utility to facilitate importing waypoint coordinates into a Garmin
GPSmap handheld.
	 
	 	7)	 	A QBASIC utility to facilitate importing well location and production
information into MapInfo.
	 
	 	8)	 	A QBASIC utility to facilitate importing seismic navigation data into MapInfo.



















 





SCHEDULE 7(b)



Employee is currently engaged in oil and gas or mineral activities and has ownership interests
in the




	 	 	 	 	 
	Country	 	State /Territory	 	County
	USA

	 	CO
	 	Archuleta, Chaffee, Crowley, Custer, Fremont, Gunnison, Logan,
Otero, Rio Grande, Saguache, Weld
	USA

	 	IA
	 	Adair, Audubon, Carroll, Cass, Guthrie, Shelby
	USA

	 	ID
	 	Ada, Canyon, Gem, Payette
	USA

	 	IL
	 	Clinton, Sangamon, Washington
	USA

	 	MI
	 	Allegan, Barry, Calhoun, Eaton, Hillsdale, Jackson, Kalamazoo
	USA

	 	MN
	 	Dakota, Faribault, Freeborn, Le Seur, Rice, Scott, Steele, Waseca
	USA

	 	ND
	 	Billings, Bottineau, Dunn, Grant, Hettinger, McKenzie, Renville,
Stark, Ward
	USA

	 	NE
	 	Arthur, Cheyenne, Garden, Grant, Morrill, Sheridan
	USA

	 	NM
	 	Catron, DeBaca, Guadalupe, Lincoln, Mora, Otero, Quay, San Miguel,
Socorro
	USA

	 	NV
	 	Elko, Eureka, Nye, White Pine
	USA

	 	NY
	 	Cayuga, Chemung, Onondaga, Oswego, Schuyler, Seneca, Steuben, Wayne
	USA

	 	OH
	 	Ashland, Delaware, Erie, Franklin, Huron, Lorain, Madison, Marion,
Morrow, Pickaway
	USA

	 	OR
	 	Malheur
	USA

	 	UT
	 	Carbon, Duchesne, Grand, Juab, Millard, San Juan, Uintah, Wasatch
	USA

	 	WY
	 	Converse, Goshen, Niobrara, Platte
	France

	 	All	 	 
	Australia	 	Northern Territory