Document:

cicn_ex1026.htm

Exhibit 10.26

 

AMENDMENT NO. 1

TO EMPLOYMENT AGREEMENT

DATED JANUARY 1, 2012

This Amended Employment Agreement (the “Agreement”) is made and entered into this _____day of November, 2012, by and between CICERO INC, a Delaware corporation (the “Company”), and John P. Broderick, a resident of the State of New Jersey (the “Employee”).

In consideration of the mutual covenants, promises and conditions set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

	
1.

	
Employment.  The Company hereby employs Employee and Employee hereby accepts such employment upon the terms and conditions set forth in this Agreement.

	
2.

	
Duties of Employee.  Employee will be based in New Jersey or North Carolina at the discretion of the Company.  Employee’s title will be Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Corporate Secretary and Employee will report directly to the Board of Directors of the Company.    Employee agrees to perform and discharge such other duties as may be assigned to Employee from time to time by the Company to the reasonable satisfaction of the Board of Directors , and such duties will be consistent with those duties regularly and customarily assigned by the Company to the position of Chief Executive Officer, Chief Financial Officer and Secretary.  Employee agrees to comply with all of the Company's policies, standards and regulations and to follow the instructions and directives as promulgated by the Board of Directors of the Company.  Employee will devote Employee's full professional and business-related time, skills and best efforts to such duties and will not, during the term of this Agreement, 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, without the prior written consent of the Board of Directors of the Company.  This Section will not be construed to prevent Employee from (a) investing personal assets in businesses which do not compete with the Company in such form or manner that will not require any services on the part of Employee in the operation or the affairs of the companies in which such investments are made and in which Employee's participation is solely that of an investor; (b) purchasing securities in any corporation whose securities are listed on a national securities exchange or regularly traded in the over-the-counter market, provided that Employee at no time owns, directly or indirectly, in excess of one percent (1%) of the outstanding stock of any class of any such corporation engaged in a business competitive with that of the Company; or (c) participating in conferences, preparing and publishing papers or books, teaching or joining or participating in any professional associations or trade group, so long as the Board of Directors of the Company approves such participation, preparation and publication or teaching prior to Employee’s engaging therein.

 

	
3.

	
Term.  The term of this Agreement will be at-will, and can be terminated by either party at any time, with or without cause, subject to the provisions of Section 4 of this Agreement. Subject to the provisions of Section4, this Agreement will cover the period January 1, 2012 through December 31, 2012 and thereafter successive annual periods unless a party provides the other with written notice of its intention to terminate this Agreement, which notice shall be delivered no later than thirty (30) days prior to the expiration of the initial term or any renewal term, as applicable.

	
4.

	
Termination.

	
  

	
(a)

	
Termination by Company for Cause.  The Company may terminate this Agreement and all of its obligations hereunder immediately, including the obligation to pay Employee severance, vacation pay or any further accrued benefits or remuneration, if any of the following events occur:

	
  

	
(i)

	
Employee improperly performs, or fails to perform, his duties and responsibilities or materially breaches any of the terms or conditions set forth in this Agreement, a Policy, or invention assignment, confidentiality, non-solicitation or non-competition agreement with or for the benefit of the Company, and fails to cure such breach within ten (10) days after Employee's receipt from the Company of written notice of such breach (notwithstanding the foregoing, no cure period shall be applicable to breaches by Employee of Sections 10 through 14 of this Agreement or of provisions of such Policies or agreements relating to any thereof);

	
  

	
(ii)

	
Employee commits any other act materially detrimental to the business or reputation of the Company;

	
  

	
(iii)

	
Employee engages in willful misconduct, including fraud or intentional               misrepresentation;

	
  

	
(iv)

	
Employee engages in dishonest activities or commits or is convicted of, or pleads guilty or nolo contendere to, any felony or a misdemeanor involving fraud, deceit, moral turpitude or unethical business conduct;

  

1

  

 

	
  

	
(v)

	
Employee engages in habitual alcohol or drug abuse that continues after written notice from the Company, which abuse has (a) had an adverse effect on Employee’s productivity or ability to carry out his duties under this Agreement, (b) jeopardized the safety of any other employee of the Company or any person having business relations with the Company, (c) damaged the reputation of the Company, or (d) endangered the Company’s ability to compete for business; or

 

	
  

	
(vi)

	
Employee dies or becomes mentally or physically incapacitated or disabled so as to be unable to perform Employee's duties under this Agreement even with a reasonable accommodation.  Without limiting the generality of the foregoing, Employee's inability adequately to perform services under this Agreement for a period of sixty (60) consecutive days will be conclusive evidence of such mental or physical incapacity or disability, unless such inability is pursuant to a mental or physical incapacity or disability covered by the Family Medical Leave Act, in which case such sixty (60) day period shall be extended to a one hundred and twenty (120) day period.

	
  

	
(b)

	
Termination by Company Without Cause.  The Company may terminate Employee's employment pursuant to this Agreement for reasons other than those stated in Section 4(a) upon at least thirty (30) days' prior written notice to Employee. In the event Employee's employment with the Company is terminated by the Company without cause, the Company shall be obligated to pay Employee a lump sum severance payment equal to twelve (12) months of Employee’s then base salary payable within thirty (30) days after the date of termination.  In addition, Employee will be entitled to payment of all unused vacation days at his current daily rate and any accrued but unpaid salary or earned bonuses. Any option grants or restricted stock awards made to employee will immediately vest. The payment to Employee for all deferred salaries and earned bonuses will be paid within 30 days by the Company. Other than the severance payments set forth in this Section 4(b), Employee will be entitled to receive no further remuneration and will not be entitled to participate in any Company benefit programs following his termination by the Company, whether such termination is with or without cause.

	
  

	
(c)

	
Termination by Employee for Cause.  In the event of a Change of Control (as defined below) of the Company that results in either a substantial reduction or change of title in the Employee’s job duties related to his position as CFO or CEO, or a decrease in or a failure to provide the compensation or vested benefits under this Agreement or the Company initiates a substantial reduction or change of title in the Employee’s job duties related to his position as CFO, Employee shall have the right to resign his employment and will be entitled to a lump sum severance payment equal to twelve (12) months of Employee’s then base salary payable within thirty (30) days after  the date of termination  In addition, Employee will be entitled to payment of all unused vacation days at his current daily rate and a lump sum equal to all deferred salaries and earned bonuses. In addition, all Employee’s then outstanding but unvested stock options shall vest one hundred percent (100%).  Employee shall have 12 months from the date written notice is given to Employee about the announcement and closing of a transaction resulting in a Change in Control of the Company that would result in a substantial change in the Employee’s job duties or decrease his compensation or vested benefits under this Agreement to resign or this Section 4(c) shall not apply.  In the event Employee resigns from the Company for any other reason, Employee will not be entitled to receive or accrue any further Company benefits or other remuneration under this Agreement, and Employee specifically agrees that he will not be entitled to receive any severance pay.

 

For purposes of this Section 4, a Change in Control shall be deemed to have occurred if any of the following occur:

 

	
  

	
(i)

	
the merger or consolidation of the Company with or into another unaffiliated entity, or the merger of another unaffiliated entity into the Company or another subsidiary thereof with the effect that immediately after such transaction the stockholders of the Company immediately prior to such transaction hold less than fifty percent (50%) of the total voting power of all securities generally entitled to vote in the election of directors, managers or trustees of the entity surviving such merger or consolidation.  This provision will not apply to any reorganization and reverse merger between the Company and any subsidiary (or any other similar entity established for a similar purpose);

	
  

	
(ii)

	
the sale or transfer of more than fifty-one percent (51%) of the Company’s then outstanding voting stock (other than a restructuring event which results in the continuation of the Company’s business by an affiliated entity) to unaffiliated person or group (as such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended); or

	
  

	
(iii)

	
the adoption by the stockholders of the Company of a plan relating to the liquidation or dissolution of the Company.

5.           Compensation and Benefits.

	
  

	
(a)

	
Annual Salary.  During the term of this Agreement and for all services rendered by Employee under this Agreement, the Company will pay Employee a base salary of One Hundred and Seventy-Five Thousand Dollars ($175,000.00) per annum in equal bi-monthly installments.  Employee will also be entitled to earn a short term incentive compensation as further outlined in Exhibit D.

	
  

	
(b)

	
Incentive Compensation.  Employee is eligible for an annual bonus upon the Company reaching certain pre tax income levels (after accounting for all bonuses)  as set forth in Exhibit C.  Said bonus will be payable after the annual accounts have been presented to the Compensation Committee. Exhibit C attached hereto provides the benchmarks associated with achieving the Incentive Compensation.

	
  

	
(c)

	
Equity Awards.  Employee is eligible for stock option grants and restricted stock awards as determined by the Compensation Committee, including but not limited to the issuance of 1,500,000 shares of common stock of the Company in the event of termination, with or without cause, or in the event of a Change of Control (Ownership) of the Company.

 

	
6.

	
Vacation.  Employee shall be eligible for four (4) weeks of paid vacation annually, provided that such vacation is scheduled at such times that do not interfere with the Company’s legitimate business needs.

	
7.

	
Other Benefits.  Employee will be entitled to such fringe benefits as may be provided from time-to-time by the Company to its employees, including, but not limited to, group health insurance, life and disability insurance, and any other fringe benefits now or hereafter provided by the Company to its employees, if and when Employee meets the eligibility requirements for any such benefit.  The Company reserves the right to change or discontinue any employee benefit plans or programs now being offered to its employees; provided, however, that all benefits provided for employees of the same position and status as Employee will be provided to Employee on an equal basis.

  

2

  

 

	
8.

	
Business Expenses.  Employee will be reimbursed for all reasonable expenses incurred in the discharge of Employee's duties under this Agreement pursuant to the Company's standard reimbursement policies.

 

 

	
9.

	
Withholding.  The Company will deduct and withhold from the payments made to Employee under this Agreement, state and federal income taxes, FICA and other amounts normally withheld from compensation due employees.

	
10.

	
Non-Disclosure of Proprietary Information.  Employee recognizes and acknowledges that the Trade Secrets (as defined below) and Confidential Information (as defined below) of the Company and its affiliates and all physical embodiments thereof (as they may exist from time-to-time, collectively, the “Proprietary Information”) are valuable, special and unique assets of the Company's and its affiliates' businesses. Employee further acknowledges that access to such Proprietary Information is essential to the performance of Employee's duties under this Agreement.  Therefore, in order to obtain access to such Proprietary Information, Employee agrees that, except with respect to those duties assigned to him by the Company, Employee  will hold in confidence all Proprietary Information and will not reproduce, use, distribute, disclose, publish or otherwise disseminate any Proprietary Information, in whole or in part, and will take no action causing, or fail to take any action necessary to prevent causing, any Proprietary Information to lose its character as Proprietary Information, nor will Employee make use of any such information for Employee's own purposes or for the benefit of any person, firm, corporation, association or other entity (except the Company) under any circumstances.

For purposes of this Agreement, the term “Trade Secrets” means information, including, but not limited to, any technical or nontechnical data, formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, financial plan, product plan, list of actual or potential customers or suppliers, or other information similar to any of the foregoing, which derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can derive economic value from its disclosure or use.  For purposes of this Agreement, the term “Trade Secrets” does not include information that Employee can show by competent proof (i) was known to Employee and reduced to writing prior to disclosure by the Company (but only if Employee promptly notifies the Company of Employee’s prior knowledge); (ii) was generally known to the public at the time the Company disclosed the information to Employee;  (iii) became generally known to the public after disclosure by the Company through no act or omission of Employee; or (iv) was disclosed to Employee by a third party having a bona fide right both to possess the information and to disclose the information to Employee.  The term “Confidential Information” means any data or information of the Company, other than trade secrets, which is valuable to the Company and not generally known to competitors of the Company.  The provisions of this Section 6 will apply to Trade Secrets for so long as such information remains a trade secret and to Confidential Information during Employee’s employment with the Company and for a period of two (2) years following any termination of Employee’s employment with the Company for whatever reason.

 

	
11.

	
Non-Solicitation Covenants.  Employee agrees that during Employee's employment by the Company and for a period of  two (2) year following the termination of Employee's employment for whatever reason, Employee will not, directly or indirectly, on Employee's own behalf or in the service of or on behalf of any other individual or entity, divert, solicit or attempt to divert or solicit any individual or entity (i) who is a client of the Company at any time during the six (6)-month period prior to Employee's termination of employment with the Company (“Client”), or was actively sought by the Company as a prospective client, and (ii) with whom Employee had material contact while employed by the Company to provide  similar services or products as such provided by Employee for the Company to such Clients or prospects.  Employee further agrees and represents that during Employee's employment by the Company and for a period of  two (2) year following any termination of Employee's employment for whatever reason, Employee will not, directly or indirectly, on Employee's own behalf or in the service of, or on behalf of any other individual or entity, divert, solicit or hire away, or attempt to divert, solicit or hire away, to or for any individual or entity which is engaged in providing similar services or products to that provided by the Company, any person employed by the Company for whom Employee had supervisory responsibility or with whom Employee had material contact while employed by the Company, whether or not such employee is a full-time employee or temporary employee of the Company, whether or not such employee is employed pursuant to written agreement and whether or not such employee is employed for a determined period or at-will.  For purposes of this Agreement, “material contact” exists between Employee and a Client or potential Client when (1) Employee established and/or nurtured the Client or potential Client; (2) the Client or potential Client and Employee interacted to further a business relationship or contract with the Company; (3) Employee had access to confidential information and/or marketing strategies or programs regarding the Client or potential Client; and/or (4) Employee learned of the Client or potential Client through the efforts of the Company providing Employee with confidential Client information, including but not limited to the Client’s identify, for purposes of furthering a business relationship.  

	
12.

	
Existing Restrictive Covenants.  Except as provided in Exhibit B, Employee has not entered into any agreement with any employer or former employer: (a) to keep in confidence any confidential information, or (b) to not compete with any former employer.  Employee represents and warrants that Employee's employment with the Company does not and will not breach any agreement which Employee has with any former employer to keep in confidence confidential information or not to compete with any such former employer.  Employee will not disclose to the Company or use on its behalf any confidential information of any other party required to be kept confidential by Employee.

	
13.

	
Return of Proprietary Information.  Employee acknowledges that as a result of Employee's employment with the Company, Employee may come into the possession and control of Proprietary Information, such as proprietary documents, drawings, specifications, manuals, notes, computer programs, or other proprietary material.  Employee acknowledges, warrants and agrees that Employee will return to the Company all such items and any copies or excerpts thereof, and any other properties, files or documents obtained as a result of Employee's employment with the Company, immediately upon the termination of Employee's employment with the Company.

 

 

  

3

  

 

	
14.

	
Proprietary Rights.  During the course of Employee's employment with the Company, Employee may make, develop or conceive of useful processes, machines, compositions of matter, computer software, algorithms, works of authorship expressing such algorithm, or any other discovery, idea, concept, document or improvement which relates to or is useful to the Company's Business (the “Inventions”), whether or not subject to copyright or patent protection, and which may or may not be considered Proprietary Information.  Employee acknowledges that all such Inventions will be “works made for hire” under United States copyright law and will remain the sole and exclusive property of the Company.  Employee also hereby assigns and agrees to assign to the Company, in perpetuity, all right, title and interest Employee may have in and to such Inventions, including without limitation, all copyrights, and the right to apply for any form of patent, utility model, industrial design or similar proprietary right recognized by any state, country or jurisdiction.  Employee further agrees, at the Company's request and expense, to do all things and sign all documents or instruments necessary, in the opinion of the Company, to eliminate any ambiguity as to the ownership of, and rights of the Company to, such Inventions, including filing copyright and patent registrations and defending and enforcing in litigation or otherwise all such rights.  

Employee will not be obligated to assign to the Company any Invention made by Employee while in the Company's employ which does not relate to any business or activity in which the Company is or may reasonably be expected to become engaged, except that Employee is so obligated if the same relates to or is based on Proprietary Information to which Employee will have had access during and by virtue of Employee's employment or which arises out of work assigned to Employee by the Company.  Employee will not be obligated to assign any Invention which may be wholly conceived by Employee after Employee leaves the employ of the Company, except that Employee is so obligated if such Invention involves the utilization of Proprietary Information obtained while in the employ of the Company.  Employee is not obligated to assign any Invention that relates to or would be useful in any business or activities in which the Company is engaged if such Invention was conceived and reduced to practice by Employee prior to Employee's employment with the Company.  Employee agrees that any such Invention is set forth on Exhibit “A” to this Agreement.

	
15.

	
Remedies.  Employee agrees and acknowledges that the violation of any of the covenants or agreements contained in Sections 10 through 14 of this Agreement would cause irreparable injury to the Company, that the remedy at law for any such violation or threatened violation thereof would be inadequate, and that the Company will be entitled, in addition to any other remedy, to temporary and permanent injunctive or other equitable relief without the necessity of proving actual damages or posting a bond.

	
16.

	
Severability.  In case one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, the parties agree that it is their intent that the same will not affect any other provision in this Agreement, and this Agreement will be construed as if such invalid or illegal or unenforceable provision had never been contained herein.  It is the intent of the parties that this Agreement be enforced to the maximum extent permitted by law.

	
17.

	
Entire Agreement.  This Agreement embodies the entire agreement of the parties relating to the subject matter of this Agreement and supersedes all prior agreements, oral or written, regarding the subject matter hereof.   No amendment or modification of this Agreement will be valid or binding upon the parties unless made in writing and signed by the parties.

	
18.

	
Governing Law.  This Agreement is entered into and will be interpreted and enforced pursuant to the laws of the State of New Jersey.  The parties hereto hereby agree that the appropriate forum and venue for any disputes between any of the parties hereto arising out of this Agreement shall be any federal court in the state where the Employee has his principal place of residence and each of the parties hereto hereby submits to the personal jurisdiction of any such court.  The foregoing shall not limit the rights of any party to obtain execution of judgment in any other jurisdiction.  The parties further agree, to the extent permitted by law, that a final and unappealable judgment against either of them in any action or proceeding contemplated above shall be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment, a certified exemplified copy of which shall be conclusive evidence of the fact and amount of such judgment.

 

	
19.

	
Surviving Terms.  Sections 4, 10, 11, 14, 15 and 18 of this Agreement shall survive termination of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

 

	COMPANY:	 	 	EMPLOYEE:	 
	 	 	 	 	 
	CICERO, INC.	 	 	 	 
	 	 	 	 	 
	By:	
/s/ Charles Porciello

	 	 	
/s/ John P. Broderick

	 
	
Name: Charles Porciello

	 	 	John P. Broderick	 
	
Title: Board of Directors - Compensation Committee

	 	 	 	 

 

  

4

  

 

EXHIBIT A

INVENTIONS

 

Employee represents that there are no Inventions.

_________________

Employee Initials

  

5

  

EXHIBIT B

EXISTING RESTRICTIVE COVENANTS

  

6

  

EXHIBIT C

VARIABLE COMPENSATION

For Fiscal 2012:

Annual Cash Bonus:

Employee is entitled to an annual cash bonus payable after the Company has reported its results for the year. This annual cash bonus is tied to Operating Net Income before taxes as per the chart below:

	  	
Operating Net Income  Range (before tax)

	  
	  	  	  	  
	  	
From

 

	
To

 

	
Variable Compensation

	  	
Less than Target Operating Net Income

 

	  	
None

	
Tier 1

	
Achieve Target Operating Net Income up to 120% of Target

 

	
 

	
43% of   43% of base compensation

	
Tier 2

	
 Achieve >120% of Target Net Operating Income ; < 150%

 

	  	
 86% of base compensation

	
Tier 3

	
 Achieve > 150% of Target Net

 Operating Income

	  	
 143% of base compensation

	  	  	  	  
	  	
Performance significantly in excess of Tier 3 may result in an additional

 reward at the discretion of the Compensation Committee

  

7

  

EXHIBIT D

SHORT TERM VARIABLE COMPENSATION

 

In order to reach a targeted compensation for 2012 the Employee will receive a Bonus of $25,000 upon closing and payment of the first contract valued at $300,000 or greater.

8cak_ex1038.htm

Exhibit 10.38

 

 

February 27, 2013

 

Mr. Earl W. McNiel

1606 Cambridge Oaks Circle

Houston, TX  77094

Re: Offer of Employment as Senior Vice President and Chief Financial Officer

Dear Mr. McNiel:

 

It is our pleasure to extend to you on behalf of CAMAC Energy Inc. (the “Company”), an offer of employment as the Company’s Senior Vice President and Chief Financial Officer commencing as of  February 27, 2013, in accordance with the terms and conditions contained in this letter agreement (the “Agreement”), the adequacy and sufficiency of which are hereby acknowledged:

 

1. DUTIES. The Company requires that you be available to perform the duties of Senior Vice President and Chief Financial Officer customarily related to these functions as may be determined and assigned by your supervisor and the Board of Directors of the Company (the “Board”) and as may be required by the Company’s constituent instruments, including its certificate or articles of incorporation, bylaws and its corporate governance, each as amended or modified from time to time, and by applicable law, including the Delaware General Corporation Law.  Subject to the terms of this Agreement, the Company shall have the right, to the extent the Company from time to time reasonably deems necessary or appropriate, to change your position or reporting relationship, and to expand or reduce your duties and responsibilities. You will report initially to the Chief Executive Officer and you agree to devote as much time as is necessary to discharge and perform completely the duties described in this Section 1, and perform such other duties as your supervisor and the Board may from time to time assign to you.  The initial location of your employment shall be the Company’s office in Houston, Texas.  However, the Company may, at the discretion of the Board, transfer your location of employment to the location of any stock exchange upon which the Company’s common stock may become listed.

 

2. TERM. The term of this Agreement shall commence on February 27, 2013, and shall continue until your employment is terminated by the Company or by you.

 

3. COMPENSATION. For all services to be rendered by you to the Company in any capacity hereunder, the Company agrees to pay you the following compensation:

 

	
a.  

	
During the term of your employment with the Company you will receive a base salary of US$290,000.00 per annum (the “Base Salary”), paid in arrears and in equal installments in accordance with the customary payroll practices of the Company.

 

	
b.  

	
The Board has approved for you to receive an option to purchase 800,000 shares of the Company’s common stock (the “Option”) under the Company’s 2009 Equity Incentive Plan (the “Plan”).  The Option will be evidenced by an Option Agreement as contemplated by the Plan, which will govern the Option, notwithstanding any other provision in this Agreement.  The exercise price of the Option will be the closing price of the Company’s common stock on your date of hire.  The Option will vest in 1/3 annual installments on the anniversary date of your date of hire subject to your continued service with the Company on such anniversary date, with the first 266,667 shares vesting on the first year anniversary of your date of hire and the final 266,667 shares vesting on the third anniversary of your date of hire.

 

1330 Post Oak Boulevard, Suite 2575, Houston, Texas 77056; Telephone (713) 797-2990

  

1

  

Mr. Earl W. McNiel

Page 2 of 8

 

	
c.  

	
The Board has approved for you to receive 175,000 restricted shares of the Company’s common stock (the “Stock”) under the Plan.  The Stock will be issued pursuant to a Restricted Stock Award Agreement as contemplated by the Plan, which will govern the Stock and your rights to the Stock, notwithstanding any other provision in this Agreement.  The Stock shall be restricted and subject to forfeiture to the Company if your rights to the restricted Stock do not vest under the award agreement.  Your rights to the Stock will vest with respect to 50% of the Stock on the one year anniversary of your date of hire, and will vest with respect to the balance on the two year anniversary of your date of hire, subject in both cases to your continued service with the Company on such anniversary date.

 

	
d.  

	
You will be reviewed by your supervisor and the Board, not less than annually, and in connection with such review, will be eligible for a discretionary cash performance bonus each year targeted at between 0% to 100% of your then-current annual base salary, based on defined targets determined by your supervisor and the Board.  You shall also be considered for additional grants of restricted stock and options in the Board’s sole discretion.  You acknowledge that the Company is not obligated to award you any cash or equity bonus in any year.

 

You agree that if any payment of compensation paid to you by the Company or any affiliate, whether under this Agreement or otherwise, results in income or wages to you for federal, state, local or foreign income, employment or other tax purposes with respect to which the Company or any affiliate has a withholding obligation, the Company and its affiliates are authorized to withhold from such payment and any other cash, stock, property or other remuneration then or thereafter payable to you in any capacity any tax required to be withheld by reason of such income or wages.

 

4. EMPLOYEE BENEFITS

 

	
a.  

	
You shall be eligible to participate in the employee benefit plans, programs and policies maintained by the Company for similarly situated employees in accordance with the terms and conditions of such plans, programs, and policies as in effect from time to time.

 

	
b.  

	
In accordance with and subject to the terms of the Company’s expense reimbursement policy, the Company shall pay or reimburse you for reasonable expenses actually incurred or paid by you in the performance of your services hereunder upon the presentation of expense statements or vouchers or such other appropriate supporting information as the Company may reasonably require of you.  To the extent that a reimbursement amount is subject to section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the rules and regulations issued thereunder by the Department of Treasury and the Internal Revenue Service (“Section 409A”) the Company will pay you the reimbursement amount due, if any, in any event before the last day of your taxable year following the taxable year in which the expense was incurred.  Your rights to any reimbursements are not subject to liquidation or exchange for another benefit.  The amount of expense reimbursements for which you are eligible during any taxable year will not affect the amount of any expense reimbursements for which you are eligible in any other taxable year.

 

  

2

  

Mr. Earl W. McNiel

Page 3 of 8

 

	
c.  

	
You will be entitled to up to 28 days of paid time off  per annum (pro-rated for partial years of service) in addition to the normal statutory holidays, provided, however, that vacation is to be taken at such times and intervals as may be agreed by the Company having regard to your workload and needs of the Company.

 

	
d.  

	
You shall be entitled to the benefit of the indemnification provisions contained in the bylaws of the Company, as the same may be amended.

 

5. CONFIDENTIALITY. You acknowledge that, in order for the intents and purposes of this Agreement to be accomplished, you will necessarily be obtaining access to certain confidential information concerning the Company and its affairs, including, but not limited to business methods, information systems, financial data and strategic plans which are unique assets of the Company (“Confidential Information”). In accepting this offer, you covenant not to, either directly or indirectly, in any manner, utilize or disclose to any person, firm, corporation, association or other entity any Confidential Information.  The obligations set forth in this paragraph shall survive any termination of this Agreement and your employment relationship with the Company.

 

6. NON-COMPETE; NON-SOLICIT.  During the period of your employment with the Company and thereafter during the one-year period which starts on the date of the termination of your employment with the Company (the “Restricted Period”), you covenant and agree that, in connection with the business operations and prospective interests of the Company on the date of your termination as an employee of the Company, you shall not, directly or indirectly, own any interest in, manage, control, participate in, consult with, render services for, or in any manner engage in any businesses in competition with the Company or materially adverse to the Company (unless the Board shall have authorized such activity and the Company shall have consented thereto in writing). Investments in less than 5% of the outstanding securities of any class of the Company subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended, shall not be prohibited by this section. For purposes of this Section 6, the term “Company” shall include the Company and any of its affiliates or subsidiaries or any company in which it is a minority shareholder or a joint venture partner. For purposes of this Section, the term “businesses” shall mean any enterprise, commercial venture, or project involving petroleum exploration, development, or production activities in the same geographic areas as the Company’s activities during the period of your employment.  Further, during the period of your employment with the Company and thereafter during the Restricted Period, you covenant and agree that you will not directly or indirectly through another entity induce or otherwise attempt to influence any employee of the Company to leave the Company’s employment or in any way interfere with the relationship between the Company and any employee thereof. Further, you will not induce or attempt to induce any customer, supplier, licensee, joint venture partner, shareholder, licensor or other business relation of the Company to cease doing business with the Company or in any way interfere with the relationship between any such customer, supplier, licensee, joint venture partner, shareholder, licensor or business relation of the Company.

 

If (i) pursuant to the arbitration process described in Section 14 of this Agreement (or such other process as to which the Company and you may agree upon in writing), it is determined that you have violated the provisions of this Section, and (ii) you have received a payment and/or entitled to future payments from the Company pursuant to Section 9 of this Agreement (the aggregate amount paid and payable to you thereunder is referred to as the “Aggregate Severance Amount”), then, in addition to any other remedies that the Company may have, you shall be obligated, and hereby agree, to pay the Company, as liquidated damages, all or such other portion of the Aggregate Severance Amount as the Board, in its sole discretion, shall determine.

 

  

3

  

Mr. Earl W. McNiel

Page 4 of 8

 

7. CONFLICTS OF INTEREST; COMPLIANCE WITH LAW.  You covenant and agree that you will not receive and have not received any payments, gifts or promises and you will not engage in any employment or business enterprises that in any way conflict with your service and the interests of the Company or its affiliates. In addition, you agree to comply with the laws or regulations of any country, including, without limitation, the United States of America, having jurisdiction over you, the Company or any of the Company’s subsidiaries.  Further, you shall not make any payments, loans, gifts or promises or offers of payments, loans or gifts, directly or indirectly, to or for the use or benefit of any official or employee of any government or to any other person if you know, or have reason to believe, that any part of such payments, loans or gifts, or promise or offer, would violate the laws or regulations of any country, including, without limitation, the United States of America, having jurisdiction over you, the Company or any of the Company’s subsidiaries.  By signing this Agreement, you acknowledge that you have not made and will not make any payments, loans, gifts, promises of payments, loans or gifts to or for the use or benefit of any official or employee of any government or to any other person which would violate the laws or regulations of any country, including, without limitation, the United States of America, having jurisdiction over you, the Company or any of the Company’s subsidiaries.

 

8. AT-WILL EMPLOYMENT.  You should understand that your employment with the Company may be terminated by you or the Company at any time and for any reason.  No provision of this Agreement or any other agreement with the Company shall be construed to create a promise of employment for any specific period of time.  This Agreement supersedes in its entirety any and all prior agreements and understandings concerning your employment relationship with the Company, whether written or oral.

 

9. TERMINATION.

 

	
a.  

	
With or without cause, you and the Company may each terminate this Agreement at any time after thirty (30) days advance written notice, and the Company will be obligated to pay you the compensation and expenses due up to the date of your Separation from Service.  Notwithstanding the foregoing sentence, the Company will pay to you an amount equal to the Base Salary plus target annual bonus as determined by the Board for the year in which Separation from Service occurs (the “Separation Payment”) if you incur a Separation from Service due to your termination by the Company without “Cause” and shall also provide the benefits described in Section 9.b. below, and immediately accelerate by twelve (12) months the vesting of all outstanding Company restricted stock and options exercisable for Company Stock then held by you, with all vested Company options held by you (including accelerated options) remaining exercisable for a period of twelve (12) months following your date of Separation from Service, in exchange for a full and complete release of claims against the Company, its affiliates, officers and directors in a form reasonably acceptable to the Company (the “Release”),  which Release has become irrevocable.  For purposes of this provision, “Cause” means your (i) conviction of, or plea of nolo contendere to, a felony or any other crime involving moral turpitude; (ii) fraud on or misappropriation of any funds or property of the Company or any of its affiliates, customers or vendors; (iii)  willful violation of any applicable law, rule or regulation (other than minor traffic violations or similar offenses), or breach of fiduciary duty; (iv) willful failure to perform your responsibilities in the best interests of the Company or any of its affiliates; (v) illegal use or distribution of drugs; (vi) material violation of any rule, regulation, procedure or policy of the Company or any of its affiliates; or (vii) material breach of any provision of this Agreement or any other employment, non-disclosure, non-competition, non-solicitation or other similar agreement executed by you for the benefit of the Company or any of its affiliates, all as determined by the Board or the Company’s affiliate (as the case may be), which determination will be conclusive.  The Separation Payment is intended to qualify as separation pay due to involuntary Separation from Service under Treasury Regulation §1.409A-1(b)(9)(iii).  To the extent the Separation Payment, or any portion thereof, so qualifies or is otherwise exempt from the requirements of Section 409A, such amount shall be paid in 12 equal monthly installments on the last day of each of the first 12 months following the month of your Separation from Service, subject to the Release becoming irrevocable.  If all or any portion of the Separation Payment does not qualify as separation pay due to involuntary Separation from Service under Treasury Regulation §1.409A-1(b)(9)(iii) and is not otherwise exempt from the requirements of Section 409A such amount shall be paid as follows:  (a) if you are not a Specified Employee, such amount shall be paid in 12 equal monthly installments on the last day of each of the first 12 months following the month of your Separation from Service or (b) if you are a Specified Employee, such amount shall be paid in 6 monthly installments beginning the date that is six months following the date of your Separation from Service (and the first payment shall include all amounts that would have been paid to you earlier under this section had you not been a Specified Employee).  For purposes of this Agreement, the terms “Separation from Service” and “Specified Employee” have the meanings ascribed to those terms in Section 409A.

 

  

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b.  

	
If (i) your employment with the Company is terminated by the Company without “Cause” as described in Section 9(a), (ii) you are an active participant in the Company’s group medical plan (the “Group Medical Plan”) on the date of your employment terminates, (iii) you timely elect to continue that Group Medical Plan coverage under section 4980B of the Code (“COBRA Continuation Coverage”), and (iv) you execute and do not revoke the Release, the Company will reimburse you, the excess, if any, of the amount you pay to the Company for such COBRA Continuation Coverage for up to the first 12 months you maintain such COBRA Continuation Coverage, above the amount of the applicable premium that you would have paid for comparable coverage during such 12 month period if you had remained an employee of the Company during such 12 month period.  Any reimbursements by the Company to you required under this Section 9.b shall be made on the last day of each month you pay the amount required by this Section 9.b to the Company for such COBRA Continuation Coverage, for up to the first 12 months of COBRA Continuation Coverage.  If you are a Specified Employee and the benefits specified in this Section 9.b are taxable to you and not otherwise exempt from Section 409A, the following provisions shall apply to the reimbursement or provision of such benefits.  Any amounts to which you would otherwise be entitled under this Section 9.b during the first six months following the date of your Separation from Service shall be accumulated and paid to you on the date that is six months following the date of your Separation from Service.  Except for any reimbursements under the applicable group health plan that are subject to a limitation on reimbursements during a specified period, the amount of expenses eligible for reimbursement under this Section 9.b, or in-kind benefits provided, during your taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year of yours.  Any reimbursement of an expense described in this Section 9.b shall be made on or before the last day of your taxable year following your taxable year in which the expense was incurred.  Your right to reimbursement or in-kind benefits pursuant to this Section 9.b shall not be subject to liquidation or exchange for another benefit.  Subject to your Group Medical Plan COBRA Coverage Continuation rights under section 4980B of the Code, the benefits listed in this Section 9.b shall be reduced to the extent benefits of the same type are received by you, your spouse or any eligible dependent from any other person during such period, and provided, further, that you shall have the obligation to notify the Company that you or they are receiving such benefits.

 

	
c.  

	
Notwithstanding any provision in this Agreement to the contrary, if you have not delivered to the Company an executed Release, which Release has become irrevocable, on or before the sixtieth (60th) day after the date of your Separation from Service, you shall forfeit all of the payments and benefits described in this Section 9 and shall be obligated to repay any such amounts (or the value thereof) that were provided prior to such time.

 

  

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10. EFFECT OF WAIVER. The waiver by either party of the breach of any provision of this Agreement shall not operate as or be construed as a waiver of any subsequent breach thereof.

 

11. NOTICE. Any and all notices referred to herein will be sufficient if furnished in writing at the addresses specified on the signature page hereto or, if to the Company, to the Company’s address as specified in filings made by the Company with the U.S. Securities and Exchange Commission.

 

12. GOVERNING LAW. This Agreement will be interpreted in accordance with, and the rights of the parties hereto will be determined by, the laws of the State of Texas without reference to that state’s conflicts of laws principles.

 

13. ASSIGNMENT. The rights and benefits of the Company under this Agreement will be transferable, and all the covenants and agreements hereunder shall inure to the benefit of, and be enforceable by or against, its successors and assigns.  Your duties and obligations under this Agreement are personal and therefore you may not assign any right or duty under this Agreement without the prior written consent of the Company.

 

14. ARBITRATION AND GOVERNING LAW. ANY UNRESOLVED DISPUTE OR CONTROVERSY BETWEEN YOU AND THE COMPANY ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT SHALL BE SETTLED EXCLUSIVELY BY ARBITRATION, CONDUCTED IN ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION THEN IN EFFECT. THE PARTIES SHALL EQUALLY DIVIDE AND PAY THE ADMINISTRATIVE COSTS OF ANY ARBITRATION UNDER THIS AGREEMENT, INCLUDING THE ARBITRATOR’S FEES. THE ARBITRATOR SHALL NOT HAVE THE AUTHORITY TO ADD TO, DETRACT FROM, OR MODIFY ANY PROVISION HEREOF. THE ARBITRATOR SHALL HAVE THE AUTHORITY TO ORDER REMEDIES WHICH YOU COULD OBTAIN IN A COURT OF COMPETENT JURISDICTION. A DECISION BY THE ARBITRATOR SHALL BE IN WRITING AND WILL BE FINAL AND BINDING. JUDGMENT MAY BE ENTERED ON THE ARBITRATOR’S AWARD IN ANY COURT HAVING JURISDICTION. THE ARBITRATION PROCEEDING SHALL BE HELD IN HOUSTON, TEXAS, UNITED STATES OF AMERICA. NOTWITHSTANDING THE FOREGOING, THE COMPANY SHALL BE ENTITLED TO SEEK INJUNCTIVE OR OTHER EQUITABLE RELIEF FROM ANY COURT OF COMPETENT JURISDICTION, WITHOUT THE NEED TO RESORT TO ARBITRATION IN THE EVENT THAT YOU VIOLATE SECTIONS 5, 6 OR 7 OF THIS AGREEMENT. THIS AGREEMENT SHALL IN ALL RESPECTS BE CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF TEXAS.

 

15. MISCELLANEOUS. If any provision of this Agreement will be declared invalid or illegal, for any reason whatsoever, then, notwithstanding such invalidity or illegality, the remaining terms and provisions of the this Agreement shall remain in full force and effect in the same manner as if the invalid or illegal provision had not been contained herein.

 

  

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16. ARTICLE HEADINGS. The article headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

17. COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one instrument. Facsimile execution and delivery of this Agreement is legal, valid and binding for all purposes.

 

18. ENTIRE AGREEMENT. Except as provided elsewhere herein, this Agreement sets forth the entire agreement of the parties with respect to its subject matter and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party to this Agreement with respect to such subject matter.  Without limiting the generality of the foregoing, you expressly acknowledge that this Agreement replaces and supersedes that certain Consulting Agreement between you and the Company dated as of March 1, 2012 and that the Company has no further obligations to you pursuant to such agreement.

 

[Remainder of Page Left Blank Intentionally]

 

  

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If you are in agreement with the terms set forth herein, please sign below. The offer set forth herein is in effect until the close of business at our Houston, Texas office on March 5, 2013.

 

	 	

Yours truly,

	 
	 	 	 
	 	

CAMAC ENERGY INC.

	 
	 	 	 	 
	
Date

	
By: 

	/s/ Dr. Kase Lukman Lawal	 
	 	 	

Dr. Kase Lukman Lawal

	 
	 	 	

Chief Executive Officer

	 
	 	 	 	 

Agreed and Accepted this ___ day of March, 2013

 ____________________________________

(Signature)

 

__________________________________

(Print Name)

 

 

Signature Page to Offer Letter

 

8

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