Employment Agreement Duane Bacon

(a)    Salary. The Company shall pay you as compensation for your services an initial base monthly salary at a gross rate of $5,500, subject to the provisions of Section 2(b). Such salary shall be payable in accordance with the Company's standard payroll procedures. The compensation specified in this subsection (a), together with any modifications in such compensation that the Company may make from time to time, is referred to in this Agreement as “Base Salary”. The Board of Directors, or any Compensation Committee appointed by the Board, shall review your Base Salary at least annually. Effective as of the date of any change to your Base Salary, the new Base Salary shall be considered the Base Salary for all purposes of this Agreement. However, at the beginning of each calendar year, automatically and without any action from the Board, and in addition to any other compensation the Board may deem appropriate, you shall receive an Annual Cost of Living Increase. The Cost of Living Increase shall be equal in percentage to the cost of living increase received by employees of the Federal Government for the most recent year that data is available.

 

 

(i)    Incentive Based Salary Increase. If, at any point during the life of this Agreement, the Company achieves three consecutive months of positive cash flow to such an extent that the Company would still be in positive cash flow if your salary were increased by the 50%, you shall receive a permanent increase in your salary equal to your current salary multiplied by the 150%. "Positive cash flow", as used in the preceding sentence, shall be determined in good faith by the Board of Directors. An example of how this will work is as follows: if your salary at the time this incentive is reached is $5,000 per month, your new salary shall be $5,000 X 150% = $7,500 per month. The increase described in this paragraph shall occur automatically and without any action from the Board of Directors, other than the approval of this Agreement. You are personally authorized to affect any administrative notices and/or to take any logistical steps that need to be taken to implement this paragraph.

(a)    Severance Pay. If, during the term of this Agreement, the Company terminates your Employment for any reason other than Cause, death, or Permanent Disability, the Company shall pay you severance pay at a rate equal to your Base Salary in effect at the time of termination of your Employment or a period of 4 month(s) following the termination of your Employment (“Severance Pay”). Such severance pay shall be paid in accordance with the Company's standard payroll procedures on the Company's payroll dates and shall be subject to all applicable withholdings. Notwithstanding anything stated herein to the contrary, the severance provided in connection with your termination under this section is intended to be exempt from Code Section 409A pursuant to Treasury Regulation Section 1.409A-l(b)(9)(iii); provided that, to the extent that such severance and any other payments paid to you in connection with your involuntary separation from service does not qualify for or otherwise exceeds the limit set forth in Treasury Regulation Section 1.409A-l(b)(9)(iii)(A), or any similar limit promulgated by Treasury or the IRS, the portion of the severance that does not qualify or otherwise exceeds such limit, as determined by the Company in its sole discretion, shall be paid by no later than the fifteenth (15th) day of the third (3rd) month following the end of your first tax year in which your termination date occurs, or, if later, the fifteenth (15th) day of the third (3rd) month following the end of the Company's first tax year in which your termination date occurs, as provided in Treasury Regulation Section 1.409A-1(b)(4). Your resignation or termination shall not have any impact on your right to the Incentives described in subparagraph 2(c) if those incentives are triggered either prior to, or within thirty days of, your resignation or termination, and the Company shall timely pay all compensation due to you under subparagraph 2(c).

 

(b)   Change in Control of Company. If you resign or are terminated either (i) within six (6) months prior to a change in control of the Company; or (ii) within six (6) months following change in control of the Company, this subsection 6(b) shall apply.

 

Should this subparagraph 6(b) apply, instead of the Severance Pay described in subparagraph 6(a), the Company shall pay a full, accelerated, twelve (12) months’ salary to you within ten (10) days of: (A) your resignation or termination, if such resignation or termination is after the Change in control of the Company; or (B) the Change in control of the Company, if your resignation occurs prior to the Change in control of the Company.

 

Further should this section apply, and any of the Triggering Events described in subparagraph 2(c) occurs within three (3) months following your resignation or termination, your resignation or termination shall have no effect on the compensation outlined in subparagraph 2(c), and the Company shall timely pay to you the corresponding bonuses described in subparagraph 2(c).

 

"Change in control of the Company" shall mean either (i) a change in more than 32% of the members of the Board of Directors in the six months immediately prior to or following your resignation or termination; or (ii) Any entity, individual, or group of related entities or related individuals obtains a gross total of 40% or more ownership in the Company in the six months immediately prior to or following your resignation or termination.

 

 

(c)    Enforcement of this Paragraph. In the event it is necessary for you to take legal action to enforce this Paragraph (Paragraph 6), or Paragraph 2, or it is necessary for you to defend yourself against legal action in any way related to this Paragraph (Paragraph 6), or Paragraph 2, you shall be reimbursed for reasonable attorneys’ fees incurred in legal proceedings, and for any fees and costs incurred in the collection of what is due and owing to you under this Agreement. You shall be entitled to attorneys’ fees and costs of collection whether or not suit is brought. Interest shall accrue on any and all payments, of any type or kind, due to you under this Agreement, beginning on the date in which you are owed such payment, at a rate of 12% per year. This interest shall accrue regardless of whether the payment owed to you is cash, stock, real estate, royalties, mineral interests, or any other form.

 

(d)   Health Insurance. If subsection 6(a) or 6(b) above applies, and if you elect to continue and pay your health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act ("COBRA"') following the termination of your Employment, then the Company shall pay your monthly premium under COBRA until the earliest of (i) the end of the Continuation Period, (ii) the expiration of your continuation coverage under COBRA or (iii) the date when you receive substantially equivalent health insurance coverage in connection with new employment or self-employment.

 

(e)    Definition of “Cause”. For all purposes under this Agreement, "Cause" shall mean exclusively and only:

 

(i)    commission, conviction of, or a plea of "guilty" or "no contest" to a felony under the laws of the United States or any State by you if such felony is work-related, materially impairs your ability to perform services for the Company, or results in a material loss to the Company or material damage to the reputation of the Company;

 

(ii)   your actual theft of funds or property of the Company;