ex10_4.htm


    Employment
Agreement

     

    This
Employment Agreement (“Agreement”),
dated as of April 28, 2008 (the “Effective
Date”), is made between Rock Energy Resources, Inc., a Delaware
corporation (the “Company”),
and Mark G. Harrington (“Executive”).

     

    Recitals:

     

    A. The
Company is engaged in the business of drilling for, producing and selling
natural gas, natural gas liquids and crude oil (the “Business”).

     

    B. The
Company and Executive desire to enter into this Agreement to govern the
employment relationship between them.

     

    Now,
Therefore, in consideration of the foregoing Recitals, the agreements
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as
follows:

     

    ARTICLE
I

     

    EMPLOYMENT
AND ACCEPTANCE

     

    1.1 Employment by the
Company.  The Company hereby agrees to employ Executive from
the Effective Date through April 28, 2010 (including all renewal periods, if
any, the “Term”).
Such Term shall automatically renew for successive additional one-year terms
unless either party provides the other with written notice of its intent not to
renew this Agreement at least 90 days prior to the end of the Term (including
any renewal term, as applicable) unless terminated earlier pursuant to the
provisions of this Agreement. During the Term, Executive shall serve in the
capacity of Vice-Chairman of the Board of Directors of the Company (the “Board”).

     

    1.2 Duties and
Responsibilities.  Executive shall have the duties and
authority assigned to Executive by, and shall report to, the Board. In
particular, Executive shall be responsible for: assisting in capital formation
processes; formulation and implementation of business processes for the
organization; assistance in acquisition analysis; assistance in strategic
partner relations; and as an advisor to the Company’s audit and compensation
committees. During the Term, Executive shall devote his time and services to the
Company as he deems reasonably necessary to perform his duties, and shall carry
out the Company’s policies and directives in a manner which will promote and
develop the Company’s interests.

     

    1.3 Acceptance of Employment by
Executive.  Executive hereby accepts such employment and
represents and warrants that (i) Executive is not restricted in any manner from
providing services hereunder or from engaging in the Business, and (ii)
Executive is not aware of any situation creating a conflict of interest between
Executive and the Company.

     

    ARTICLE
II

     

    COMPENSATION
AND OTHER BENEFITS

     

    2.1 Base Salary.  The
Company shall pay Executive a salary at the rate of $180,000 per year of
employment hereunder (the “Base
Salary”). The Base Salary shall be payable in accordance with the payroll
policies of the Company as from time to time in effect (but no less often than
monthly), less such deductions as shall be required to be withheld by applicable
law and regulations. The Board shall review Executive’s performance each year
this Agreement is in effect and, in its sole discretion, may decide whether to
increase Executive’s Base Salary.

     

    2.2 Annual Bonus.  In
addition to the Base Salary, at the discretion of the Board, the Company may
award a bonus to Executive following the end of each fiscal year during the
Term.

     

    2.3 Signing
Bonus.  Concurrently with the execution of this Agreement, the
Company shall pay Executive a signing bonus of $30,000.

     

    2.4 Vacation
Policy.  Executive shall be entitled to paid time off on such
terms generally made available to Executive officers of the
Company.

     

    2.5 Participation in Employee Benefit
Plans.  At Executive’s option, the Company agrees to permit
Executive during the Term, if and to the extent eligible, to participate in any
group life, health care or group disability insurance plan, pension plan,
similar benefit plan or other so-called “fringe benefits” of the Company which
may be made generally available to other executives and employees of the Company
and on such terms as any such benefits are made generally available to such
executives and employees.

     

    2.6 Expenses.  The
Company shall pay or reimburse Executive for all business expenses reasonably
and necessarily incurred by Executive during the Term in the performance of
Executive’s services under this Agreement, in each case in accordance with
Company policy.

     

    2.7 Grant of Stock. Concurrently
with the execution of this Agreement, the Company shall grant Executive 500,000
shares (the “Grant
Shares”) of the Company’s common stock, free and clear of any liens or
encumbrances of any kind or nature (collectively, “Encumbrances”).  Such
shares shall be fully vested, not affected by any subsequent termination of this
Agreement, and not be subject to repurchase by the Company; provided,
however,
if Executive’s employment with the Company is terminated for Cause (as defined
below) or if Executive terminates his employment with the Company without Good
Reason (as defined below) within (i) six months of the Effective Date, then
Executive shall re-convey to the Company all 500,000 of the Grant Shares, or
(ii) 12 months of the Effective Date, then Executive shall re-convey to the
Company 250,000 of the Grant Shares, in either case, free and clear of any
Encumbrances.

     

    2.8 Option for Stock. Concurrently
with the execution of this Agreement, the Company shall grant Executive a stock
option covering 750,000 shares (the “Option
Shares”) of the Company’s common stock.  The exercise price of
such option shall be $3.00 per share, as adjusted for stock splits, stock
dividends, stock subdivisions or combinations and the like. The term of such
option shall be three years. Such option shall be fully vested and immediately
exercisable as of the Effective Date and not affected by any subsequent
termination of this Agreement, and any shares purchased by Executive shall not
be subject to repurchase by the Company; provided,
however,
if Executive’s employment with the Company is terminated for Cause or if
Executive terminates his employment with the Company without Good Reason within
(i) six months of the Effective Date, then the option shall terminate as to all
750,000 of the Option Shares, or (ii) 12 months of the Effective Date, then the
option shall terminate as to 375,000 of the Option Shares; provided,
further,
that if Executive has purchased any Option Shares in excess of the amount that
Executive would otherwise be entitled pursuant to this Section 2.8, then
Executive shall sell such excess Option Shares back to the Company, free and
clean of any Encumbrances, for an amount equal to the amount Executive paid for
such excess Option Shares.

     

    2.9 Office and Assistance. The
Company will provide Executive with an office and support staff as necessary to
perform Executive’s duties hereunder.

     

    2.10 Insurance/Indemnity. The
Company agrees to indemnify, pay for the defense of (with Executive’s choice of
counsel) and hold Executive harmless from any claims which arise against
Executive as a result of his employment with the Company to the maximum extent
permitted by law. The Company also agrees that it will acquire and maintain
Directors and Officers Liability insurance coverage in the amount of at least
$3,000,000 under which Executive is a covered insured, with a carrier approved
by the Board.

     

     

    
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    ARTICLE
III

     

    RESTRICTIONS

     

    3.1 Nondisclosure
of Confidential Information.

     

    (a) Recognition of Company
Rights; Nondisclosure.  For so long as Executive is employed by
the Company (whether during the term of this Agreement or after its expiration,
the “Employment”),
Executive will have access to Confidential Information (as defined in Section 3.1(b)),
including Confidential Information Executive has not accessed prior to the date
of this Agreement. Executive recognizes that the Company’s business interests
require the fullest practical protection and confidential treatment of the
Confidential Information. At all times during the Employment and thereafter,
Executive will hold in strictest confidence and will not disclose, use, provide
access to, or publish any Confidential Information, except as such disclosure,
use or publication may be required in connection with Executive’s services for
the Company.  Executive agrees that all Confidential Information,
whether prepared by Executive or otherwise coming into Executive’s possession,
shall remain the exclusive property of the Company during Executive’s employment
with the Company. Executive will obtain the Company’s written approval before
publishing or submitting for publication any material (written, oral, or
otherwise) that relates to any Confidential Information and/or any material that
incorporates any Confidential Information.  Executive hereby assigns
to the Company any rights Executive may have or acquire in such Confidential
Information and recognizes that all Confidential Information is the sole
property of the Company and its assigns.

     

    (b) Confidential
Information. “Confidential
Information” means all information, not generally known within the
relevant trade group or by the public, including all business plans, training
materials, software programs, promotional materials, illustrations, designs,
plans, data bases, sources of supply, customer lists, supplier lists, trade
secrets, and all other valuable or unique information and techniques acquired,
developed or used by the Company relating to its business, operations,
suppliers, information systems, employees and customers, regardless of whether
such information is in writing, on computer disk or disk drive or in any other
form. Executive expressly acknowledges and agrees that Confidential Information
constitutes trade secrets and/or confidential and proprietary business
information of the Company. Confidential Information shall not include
information which is or becomes generally available to the public other than
through disclosure by Executive or by any other person or entity under a duty or
obligation to maintain the confidentiality thereof.

     

    3.2 Covenant
Not to Compete.

     

    (a) Consideration.  Executive
acknowledges and agrees that in exchange for its agreement in Section 3.2(b), Executive
will receive substantial and valuable consideration from the Company including,
but not limited to (i) Confidential Information, (ii) compensation and other
benefits, and (iii) exposure to the Company customers and
prospects.

     

    (b) Scope of Noncompetition
Obligation.  During the TermExecutive shall not, directly or
indirectly, either acting alone, or as a stockholder, partner, associate,
creditor, consultant, adviser, franchiser, franchisee, director, officer, owner,
employee or agent of any other person or entity, or in any other capacity,
engage in or provide services to a company engaged in the Business in the United
States; provided,
however,
the restriction contained in this Section 3.2 shall not
prohibit Executive from (x) owning not more than 4.9% of the outstanding stock
of any class of any publicly traded corporation, so long as Executive does not
actively participate in the business of such corporation, or (y) providing
consulting services to, and serving on the Board of Directors of, Best Energy
Services, Inc.

     

    3.3 Reasonableness of
Restrictions.  Executive acknowledges and agrees that, given
the nature of the Business, and the Company’s proposed Business plans, the
restrictions imposed upon Executive by this Article III and
the purposes for such restrictions are reasonable and are designed to protect
the trade secrets, confidential and proprietary business information and the
future success of the Company without unduly restricting Executive. If, at the
time of enforcement of this Agreement, a court shall hold that any of the
duration, scope or geographic restrictions stated herein are unreasonable under
circumstances then existing, the parties agree (and shall stipulate, if
necessary, in an appropriate pleading) that the maximum duration, scope or
geographic area reasonable under such circumstances shall be substituted for the
stated duration, scope or geographic area.

     

    3.4 Return of the Company
Property.  When Executive’s employment is terminated for any
reason, Executive will promptly (within 3 business days) deliver to the Company
any and all Confidential Information then in Executive’s
possession.

     

    3.5 Equitable and Other
Relief.  Executive understands and agrees that, in the event
Executive breaches this Article III, the
Company will suffer immediate and irreparable harm that cannot be accurately
calculated in monetary damages. Consequently, Executive acknowledges and agrees
that the Company shall be entitled to immediate injunctive relief, either by
temporary or permanent injunction, to prevent such violation.

     

     

     

    
       

      
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    ARTICLE
IV

     

    TERMINATION

     

    4.1 Upon Death or
Disability.  This Agreement shall terminate upon Executive’s
death or Disability.  For purposes of this Agreement, “Disability”
shall mean the inability of Executive to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than six months. The determination of whether a
Disability has occurred will be made by the Board and Executive; provided,
that,
if the Board and Executive are not able to agree about whether Executive suffers
a “Disability,” then whether a Disability exists will be determined by a
mutually agreeable physician. If this Agreement terminates as a result of
Executive’s death or Disability, the Company shall pay Executive or Executive’s
estate: (i) (A) all accrued and unpaid Base Salary earned; (B) pay for all
accrued but unused vacation time, and (C) any other monies owed Executive by the
Company on the date of termination; all such amounts payable within 10 days of
the date of such termination; and (ii) any annual bonus referred to in Section 2.2 that would
otherwise be due for the fiscal year of termination, prorated to the number of
days in the fiscal year for which Executive was employed, and payable at the
same time as the bonus would have otherwise been due had Executive’s employment
not been so terminated.

     

    4.2 Termination for Cause or Voluntary
Termination.  If the Company terminates Executive at any time
for Cause or if Executive voluntarily terminates Executive’s employment without
Good Reason (as defined in Section 4.3) before
the end of the Term, the Company’s obligation to Executive shall be limited
solely to the payment of accrued and unpaid Base Salary.  As used in
this Agreement, the term “Cause”
shall mean any of the following: (i) failure of Executive to materially perform
Executive’s duties and responsibilities, which has not been corrected by
Executive within 30 days after Executive’s receipt of a written notice from the
Board specifying such failure in reasonable detail; (ii) any material breach by
Executive of the terms of this Agreement, which has not been corrected by
Executive within 30 days after Executive’s receipt of a written notice from the
Board specifying such breach in reasonable detail; (iii) commission of a
misdemeanor which causes material injury to the business, reputation or
financial condition of the Company; or (iv) commission of a
felony.  Executive shall be deemed to have been terminated for Cause
following delivery to Executive of a copy of a resolution duly adopted by at
least 75% of its members voting in good faith that “Cause”
exists, after having provided Executive and Executive’s counsel reasonable
notice and an opportunity to be heard before the Board regarding the allegations
which provide the basis of the allegation of “Cause”.

     

    4.3 Termination Without Cause or for Good
Reason.  If the Company terminates Executive at any time
without Cause or Executive resigns with Good Reason, the Company shall be
obligated to pay Executive: (i) (A) all accrued and unpaid Base Salary earned;
(B) pay for all accrued but unused vacation time, and (C) any other monies owed
Executive by the Company on the date of termination; all such amounts in this
Section 4.3(i)
payable within 10 days of the date of such termination; and (ii) (A) any annual
bonus referred to in Section 2.2 that would
otherwise be due for the fiscal year of termination, prorated to the number of
days in the fiscal year for which Executive was employed; and (B)  the
Base Salary through the end of the Term, but not to exceed $180,000 in the
aggregate; all such amounts in this Section 4.3(ii) to be
paid at such times as they would have otherwise been due and had Executive’s
employment not been so terminated; provided,
however,
if there is a Change in Control (as defined below) then the remaining Base
Salary and any such annual bonus shall be paid in a lump sum within five days of
the Change in Control.

     

    For
purposes of this Agreement, “Good
Reason” means that any of the following occur, without the Executive’s
prior written consent: (a) Executive is no longer the Vice-Chairman of the
Company or is assigned duties which are substantially inconsistent with the
duties of the Vice-Chairman of an operation that is at least similar in size and
complexity to that of the Company on the Effective Date; (b) the principal place
of employment is changed to a location more than 25 miles from its current
location in Houston, Texas; (c) the aggregate value of Executive’s
compensation and benefits as set forth in the entirety of Section 2 is
decreased by 3% or more (except Executive’s Base Salary which, as provided
herein, cannot be decreased); (d) the Company breaches any material provision of
this Agreement, and fails to correct the breach within 30 days of being given
written notice of such breach; or (e) a Change in Control occurs.

     

    For
purposes of this Agreement, “Change in
Control” means: (i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”)) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of either (A) then outstanding shares
of common stock of the Company or (B) then outstanding voting securities of
the Company entitled to vote generally in the election of directors that results
in such individual, entity or group owning 50% or more of the such outstanding
common stock of the Company or the such outstanding voting securities of the
Company; (ii) the consummation of a merger or consolidation of the Company with
any other entity, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or its parent) at least
50% of the total voting power represented by voting securities of the
Company or such surviving entity or its parent outstanding immediately after
such merger or consolidation; (iii) the consummation of the sale or disposition
by the Company of all or substantially all of the Company’s assets; (iv)
individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the
Board; provided,
however,
that any individual becoming a director subsequent to the date hereof whose
election or nomination for election by the Company’s shareholders, was approved
by a vote of at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of an
acquiring person other than the Board; or (v) approval by the shareholders of
the Company of a complete liquidation or dissolution of the
Company.

     

    
       

      
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    ARTICLE
V

     

    MISCELLANEOUS

     

    5.1 Notices.  All
notices, requests, demands and other communications given or made pursuant to
this Agreement shall be in writing and shall be deemed effectively
given:  (i) upon personal delivery to the party to be notified, (ii)
when sent by confirmed electronic mail or facsimile if sent during normal
business hours of the recipient, and if not so confirmed, then on the next
business day, (iii) five days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (iv) one day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
respective parties at their address as set forth below (or to such e-mail
address, facsimile number or address as subsequently modified by written notice
given in accordance with this Section
5.1):

     

    If
to the
Company:                                           Rock
Energy Resources, Inc.

    10375 Richmond

    Suite
2100

    Houston,
Texas 77042

    Attention:  President

    Telephone:  (713)
954-3600

    Fax No.: (713) ___-____

    Email:

    


    If
to
Executive:                                Mark
G. Harrington

    16 River Hollow Lane

    Houston,
Texas  77027

    Telephone:  (713)
840-1174

    Email: mgharrington1@comcast.net

     

    5.2 Entire
Agreement.  This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior discussions and agreements, written or oral, with respect
thereto.

     

    5.3 Waivers and
Amendments.  This Agreement may be amended, suspended,
cancelled, renewed or extended, and the terms and conditions hereof may be
waived, only by a written instrument signed by both parties or, in the case of a
waiver, by the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof. Nor shall any waiver on the part of any party of any such right, power
or privilege hereunder, nor any single or partial exercise of any right, power
or privilege hereunder, preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.

     

    5.4 Assignment.  This
Agreement shall inure to the benefit of and shall be binding upon Executive and
Executive’s executor, administrator, heirs, personal representative and assigns,
and the Company and its successors and assigns; provided,
however,
that Executive shall not be entitled to assign any of Executive’s rights or
delegate any of Executive’s duties under this Agreement.

     

    5.5 Severability:
Construction.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held by a count of
competent jurisdiction to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement. Use of the
word “including” shall not be limited by the terms following such word. All
references to singular or plural terms shall mean the other where
appropriate.

     

    5.6 Choice of Law.  This
Agreement (including any claim or controversy arising out of or relating to this
Agreement) shall be governed by the law of the State of Texas, without regard to
conflict of law principles that would result in the application of any law other
than the law of the State of Texas. Any action, suit or other legal proceeding
of any kind or nature (collectively, “Proceeding”)
arising out of or relating to this Agreement shall be brought in the courts of
the State of Texas, County of Harris, or, if it has or can acquire jurisdiction,
in the United States District Court for the Southern District of Texas – Houston
Division, and each of the parties irrevocably submits to the exclusive
jurisdiction of each such court in any such Proceeding, waives any objection it
may now or hereafter have to venue or to convenience of forum, agrees that all
claims in respect of the Proceeding shall be heard and determined only in any
such court and agrees not to bring any Proceeding arising out of or relating to
this Agreement in any other court.

     

    5.7 Headings.  The
section and subsection headings contained in this Agreement are for reference
purposes only and shall not effect in any way the meaning or interpretation of
this Agreement.

     

    5.8 Execution.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed to be an original, but all of which shall be one and the same document.
The exchange of copies of this Agreement and of signature pages by facsimile
transmission, PDF or other electronic file shall constitute effective execution
and delivery of this Agreement as to the parties and may be used in lieu of the
original Agreement for all purposes. Signatures of the parties transmitted by
facsimile, PDF or other electronic file shall be deemed to be their original
signatures for all purposes.

     

    [Signature
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          Employment
Agreement

        

      

      
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    In
Witness Whereof, the parties hereto have executed this Agreement on the date
first above written.

     

    


    Company:

     

    Rock
Energy Resources, Inc.

     

    


     

    


     

    __________________________________________

     

    Rock
V. Emery, President

     

    


     

    Executive:

     

    


     

    __________________________________________

     

    Mark
G. Harrington, individually

     

     

     

     

     

     

    


    



    
      
        
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          Employment
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