THIS AGREEMENT made as of the 1st day of April 2006
US Geothermal Inc., a body corporate having an office at Suite B, 1509 Tyrell Lane Boise, Idaho 83706
Daniel Kunz of 1509 Tyrell Lane, Suite B, Boise, Idaho 83706
(A) theCompany is in the business of developing the Raft River geothermal property;
(B) theCompany wishes to engage the Employee as President and Chief Executive Officer;and
(C) theparties hereto wish to enter into this Agreement for the purpose of fixing thecompensation and terms applicable to the employment of the Employee during theperiod hereinafter set out.
NOW, THEREFORE, THIS AGREEMENT WITNESSES that the parties hereto, inconsideration of the respective covenants and agreements on the part of each ofthem herein contained, do hereby covenant and agree as follows:
TheCompany hereby engages the Employee as President and Chief Executive Officer ofthe Company and the Employee hereby accepts such employment, upon the terms andconditions hereinafter set out.
ThisAgreement will be effective from April 1, 2006 and will remain in full force andeffect until the earlier of December 31, 2008 or until terminated as hereinafterprovided.
TheEmployee will devote appropriate working time to his Employment hereunder, andwhile engaged in his employment will have the authority and duty to perform andcarry out such duties and responsibilities as are customarily carried out bypersons holding similar positions in other development companies comparable insize to
the Company and such additional and related duties as may fromtime to time be assigned, delegated, limited or determined by the Board ofDirectors.
4. Other BusinessActivities
Itis agreed that the Employee’s employment hereunder shall constitute one hundredforty (140) hours per month, which shall be devoted exclusively for the benefitof the Company.
(a) the Employee may engage in any other business activities, so long as suchactivities will not interfere with, or impede, or have the potential to conflictin any significant manner with either the interests of the Company and/or theperformance of his duties as President and Chief Executive Officer of theCompany. Before the Employee can engage in any other geothermal-related businessactivity the Employee must disclose full particulars thereof in writing to theBoard of Directors, and within 15 days after the date of such disclosure, theEmployee must receive from a majority of the Board of Directors a decision thatsuch activities by the Employee will not, in the opinion of the Board ofDirectors, interfere or be in conflict with the interests of the Company and/orthe Employee’s performance of his duties to the Company hereunder;
(b) the Employee shall refer to the Board of Directors any and all matters andtransactions in respect of which an actual or potential conflict of interestbetween the Employee and the Company has arisen or may arise, however remote thepossibility, and the Employee shall not proceed with any such matter ortransaction until the Board of Director’s approval therefore is obtained. Suchapproval shall not be unreasonably withheld. For purposes of clarification, thisprovision is not intended to limit in any way the Employee’s other fiduciaryobligations to the Company, which may arise in law or in equity.
Inconsideration of the performance by the Employee of his responsibilities andduties as President and Chief Executive Officer hereunder:
(a) the Company will pay the Employee the sum of US$132,000 per annum, payablein monthly installments of $11,000 no later than the last working day of themonth;
(b) the Company will grant the Employee incentive stock options in such amountand on such conditions as the Board of Directors of the Company may determinefrom time to time; and,
(c) the Company will provide the Employee and his immediate family (consistingof spouse and children) with medical, dental and related coverage as areavailable to the other employees of the Company. The Company will also providereasonable life insurance and accidental death coverage with the proceedspayable to the Employee’s estate or specified family member.
TheCompany shall reimburse the Employee for any and all reasonable and documentedexpenses actually and necessarily incurred by the Employee in connection withthe performance of his duties under this Agreement. The Employee will furnishthe Company with an itemized account of his expenses in such form or forms asmay reasonably be required by the Company and at such times or intervals as maybe required by the Company.
Employeewill be entitled to a paid vacation of four weeks within each 12-month periodunder the terms of this Agreement, to be calculated from the date of thecommencement of employment set forth in Section 2 herein.
8. Change of Control
Cognizant that the Company is a publicly owned entity, should a Changeof Control occur, the Employee, at his option shall elect to receivecompensation of $250,000 no later than five (5) working days after the effectivedate that the Change of Control has occurred. This compensation is payable bythe Company or its Successor regardless of whether or not the Employee continuesunder employment pursuant to this Employment Agreement or is replaced with a newagreement.
ThisAgreement and the Employee’s employment may be terminated by the Companysummarily and without notice, payment in lieu of notice, severance payments,benefits, damages or any sums whatsoever, on the occurrence of any one or moreof the following events:
The Employee’s failure to carry out his duties hereunder in a competent and professional manner;
The Employee’s appropriation of corporate opportunities for the Employee’s direct or indirect benefit or his failure to disclose any material conflict of interest;
The Employee’s plea of guilty to, or conviction of, an indictable offence once all appeals (if any) have been completed without such conviction having been reversed;
The existence of cause for termination of the Employee at common law including but not limited to cause related to fraud, dishonesty, illegality, breach of statute or regulation, or gross incompetence;
Failure on the part of the Employee to disclose material facts concerning his business interests or employment outside of his employment by the Company, provided such facts relate to the Employee’s duties hereunder;
Refusal on the part of the Employee to follow the reasonable and 1awful directions of the Board of Directors of the Company;
Breach of fiduciary duty to the Company on the part of the Employee;
Material breach of this Agreement or gross negligence on the part of the Employee in carrying out his duties under this Agreement; or
A declaration of bankruptcy on the part of the Employee by a court of competent jurisdiction.
9.1 In the event of the early termination of the Agreement for any reason setout in Section 9 above, the Employee shall only be entitled to such compensationas would otherwise be payable to the Employee hereunder up to and including suchdate of termination, as the case may be.
9.2 This Agreement and the Employee’s employment may be terminated on notice bythe Company to the Employee for any reason other than for the reasons set out inSection 9 above of this Agreement upon one month notice to the Employee. In suchevent, the Employee will be entitled to a lump sum payment of salary andincurred expenses from the date of the notice to the termination date containedin section 2 of this agreement.
9.3 This Agreement and the Employee’s employment may be terminated on notice bythe Employee to the Company for any reason upon one month notice to the Company.In such event, the Employee will be entitled to payment of salary and expensesuntil the date one month after which notice was given.
10. Confidential Information
TheEmployee agrees to keep the affairs and Confidential Information (as definedbelow) of the Company strictly confidential and shall not disclose the same toany person, company or firm, directly or indirectly, during or after hisemployment by the Company except as authorized in writing by the Board.”Confidential Information” includes, without limitation, the following types ofinformation or material, both existing and contemplated, regarding the Companyor its parent, affiliated or subsidiary companies: corporate information,including contractual licensing arrangements, plans, strategies, tactics,policies, resolutions, patent, trademark and trade name applications; anylitigation or negotiations; information concerning suppliers; marketinginformation, including sales, investment and product plans, customer lists,strategies, methods, customers, prospects and market research data; financialinformation, including cost and performance data, debt arrangements, equitystructure, investors and holdings; operational and scientific information,including trade secrets; technical information, including technical drawings anddesigns; any information relating to any mineral projects in which the Companyhas an actual or potential interest; and personnel information, includingpersonnel lists, resumes, personnel data, organizational structure andperformance evaluations. The Employee agrees not to use such information,directly or indirectly, for his own interests, or any interests other than thoseof the Company,
whether or not those interests conflict with the interests ofthe Company during or after his employment by the Company. The Employeeexpressly acknowledges and agrees that all information relating to the Company,whether financial, technical or otherwise shall, upon execution of thisAgreement and thereafter, as the case may be, be the sole property of theCompany, whether arising before or after the execution of this Agreement. TheEmployee expressly agrees not to divulge any of the foregoing information to anyperson, partnership, Company or other legal entity or to assist in thedisclosure or divulging of any such information, directly or indirectly, exceptas required by law or as otherwise authorized in writing by the Board. Theprovisions of this Section 10 and Section 10.1 below shall survive thetermination of this Agreement for a period of one year.
10.1 The Employee agrees that all documents of any nature pertaining to theactivities of the Company or its related corporate entities, includingConfidential Information, in the Employee’s possession now or at any time duringthe Employee’s period of employment, are and shall be the property of theCompany and that all such documents and copies of them shall be surrendered tothe Company when requested by the Company.
Duringthe Non-Competition Period (as defined below), the Employee shall not, eitherindividually or in partnership or jointly or in conjunction with any otherperson, entity or organization, as principal, agent, consultant, lender,contractor, employer, employee, investor, shareholder or in any other manner,directly or indirectly, advise, manage, carry on, establish, control, engage in,invest in, offer financial assistance or services to, or permit the Employee’sname or any part thereof to be used by, any business in geothermal resourcesthat competes with the business of the Company, its parent, affiliated orsubsidiary companies, or any business in which the Company, its parent,affiliated or subsidiary companies is engaged. Competition, for purposes of thisparagraph is defined as a 10-mile radius around any and all geothermalproperties acquired by or in negotiations to be acquired by the Company up toand inclusive of the date of termination. For purposes of this Agreement,”Non-Competition Period” means a period ending twelve (12) months after the endof the termination of this Agreement.
TheEmployee acknowledges that damages would be an insufficient remedy for a breachby him of this Agreement and agrees that the Company may apply for and obtainany relief available to it in a court of law or equity, including injunctiverelief, to restrain breach or threat of breach of this Agreement by the Employeeor to enforce the covenants contained therein and, in particular, the covenantscontained in Sections 10, and 11, in addition to rights the Company may have todamages arising from said breach or threat of breach.
TheEmployee represents and warrants to the Company that the execution andperformance of this Agreement will not result in or constitute a default,breach, or violation, or an event that, with notice or lapse of time or both,would be a default,
breach, or violation, of any understanding, agreement orcommitment, written or oral, express or implied, to which the Employee iscurrently a party or by which the Employee or Employee’s property is currentlybound.
ThisAgreement shall be construed and enforced in accordance with the laws of theState of Idaho, USA.
ThisAgreement constitutes the entire agreement between the parties hereto withrespect to the relationship between the Company and the Employee and supersedesall prior arrangements and agreements, whether oral or in writing between theparties hereto with respect to the subject matter hereof.
Noamendment to or variation of the terms of this Agreement will be effective orbinding upon the parties hereto unless made in writing and signed by both of theparties hereto.
ThisAgreement is not assignable by the Employee. This Agreement is assignable by theCompany to any other company, which controls, is controlled by, or is undercommon control with the Company. This Agreement shall enure to the benefit ofand be binding upon the Company and its successors and permitted assigns and theEmployee and his heirs, executors and administrators.
Anyprovision of this Agreement that is prohibited or unenforceable in anyjurisdiction shall, as to that jurisdiction, be ineffective to the extent of theprohibition or unenforceability and shall be severed from the balance of thisAgreement, all without affecting the remaining provisions of this Agreement oraffecting the validity or enforceability of such provision in any otherjurisdiction.
Thedivision of this Agreement into Sections and the insertion of headings are forconvenience or reference only and shall not affect the construction orinterpretation of this Agreement.
Time shall be of the essence in all respects of this Agreement.
TheEmployee agrees that he has had, or has had the opportunity to obtain,independent legal advice in connection with the execution of this Agreement andhas read this Agreement in its entirety, understands its contents and is signingthis Agreement
freely and voluntarily, without duress or undue influence fromany party.
Any notice required or permitted to be made or given under this Agreement toeither party shall be in writing and shall be sufficiently given if deliveredpersonally , by facsimile, or if sent by prepaid registered mail to the intendedrecipient of such notice at their respective addresses set forth below or tosuch other address as may, from time to time, be designated by notice given inthe manner provided in this Section:
In the case of Company:
U.S. Geothermal Inc.
1509 Tyrell Lane, Suite B
Attention: Corporate Secretary
Fax No.: 208-424-1030
In the case of Employee:
1509 Tyrell Lane, Suite B
Boise, Idaho 83706
Fax No.: 208-424-1030
22.1 Any notice delivered to the party to whom it is addressed shall be deemed tohave been given and received on the day it is so delivered or, if such day isnot a business day, then on the next business day following any such day. Anynotice mailed shall be deemed to have been given and received on the 10thbusiness day following the date of mailing. In the case of facsimiletransmission, notice is deemed to have been given or served on the party to whomit was sent at the time of dispatch if, following transmission, the senderreceives a transmission confirmation report or, if the sender’s facsimilemachine is not equipped to issue a transmission confirmation report, therecipient confirms in writing that the notice has been received.
IN WITNESS WHEREOF the parties hereto have executed thisAgreement as of the day and year first above written.
|U.S. GEOTHERMAL INC.|
|By:||/s/ John Walker|
|Chairman, US Geothermal Inc.|
|SIGNED by the Employee in the presence of:|
|/s/ Kerry D. Hawkley||/s/ Daniel Kunz|
|Kerry D. Hawkley|
|Printed Name of Witness|