REVISED
EXECUTIVE EMPLOYMENT AGREEMENT
THIS REVISED EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is entered
into this 27th day of September, 1996 (the "Execution Date"), to be effective
September 1, 1996 (the "Effective Date"), by and between FORELAND CORPORATION, a
Nevada corporation ("Employer"), and [Name of Executive] ("Executive").
For and in consideration of the mutual covenants contained herein and of
the mutual benefits to be derived hereunder, the parties agree as follows:
1. Employment. Employer hereby employs Executive to perform those duties
generally described in this Agreement, and Executive hereby accepts and agrees
to such employment on the terms and conditions hereinafter set forth.
2. Term. The term of this Agreement shall be for a period of thirty-six
(36) months commencing on the Effective Date of this Agreement and shall, on the
first day of each calendar month following the Effective Date hereof,
automatically be renewed and extended for a new thirty-six (36) month term
unless previously terminated pursuant to the terms hereof. Notwithstanding the
foregoing, Executive may terminate this Agreement at any time upon at least
ninety (90) days' prior written notice to Employer, and the board of directors
of Employer may resolve at any time not to extend this Agreement for an
additional thirty-six (36) month term upon the first day of the next succeeding
month, whereupon the term of this Agreement shall expire upon the termination of
the then current thirty-six (36) month term.
3. Duties. During the term of this Agreement, Executive shall be
employed by Employer and shall initially occupy the office of of
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Employer, as the board of directors of Employer may determine. Executive agrees
to serve in such offices or positions with Employer or any subsidiary of
Employer and such substitute or further offices or positions of substantially
consistent rank and authority as shall, from time to time, be determined by
Employer's board of directors. Executive shall devote substantially all of his
working time and efforts to the business of Employer and its subsidiaries and
shall not during the term of this Agreement be engaged in any other substantial
business activities which will significantly interfere or conflict with the
reasonable performance of his duties hereunder. Executive shall observe and
comply with the rules and regulations of Employer respecting its business and
shall carry out and perform orders, directions and policies of Employer as may
be given to Executive, either orally or in writing, by the board of directors or
such superior officer as the bylaws of Employer or the board of directors may
provide. Executive shall further observe and comply with all applicable rules,
regulations, and laws governing the business of Employer.
4. Compensation.
(a) For all services rendered by Executive, Employer shall pay to
Executive an initial base salary of $ per year, subject to
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increase as provided below, payable in equal monthly payments. All base
salary payments shall be subject to withholding and other applicable taxes.
(b) At such time as Employer shall achieve sustained net oil
production at an average of at least 1,000 barrels of oil per day for any
calendar month, the annual base salary payable to Executive shall be
automatically increased to $ .
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(c) The rate of base salary may be increased at any time as the board
of directors may determine, based on results of operations, increased
activities of Employer, or such other factors as the board of directors may
deem appropriate; provided, however, that the base salary payable to
Executive shall be increased on each anniversary date of this Agreement for
the succeeding twelve (12) month period by the percentage increase, if any,
in the Consumer Price Index of all Urban consumers, U.S. City Average, all
Item Index, 1967 equals 100, published by the Bureau of Labor Statistics,
United States Department of Labor, for the year preceding such anniversary
date.
(d) If at any time Executive works less than full-time as provided in
paragraph 3, Executive's base salary hereunder shall be adjusted pro rata
in proportion to the reduced amount of time and efforts being devoted by
Executive to Employer.
5. Incentive Compensation.
(a) Employer shall grant to Executive options to purchase 200,000
shares of common stock of Employer, at an exercise price of $5.00 per
share. The options shall vest, subject to the continued employment of
Executive by Employer, 50,000 on execution of this Agreement and 50,000 on
each of the subsequent three anniversary dates of this Agreement. The
options shall expire on the date that is seven years from the date of
vesting of such options.
(b) Employer shall provide Executive with incentive compensation in
the form of cash bonuses not less often than once each year during the term
of this Agreement. The amount of such bonuses shall be determined in the
sole discretion of the board of directors of Employer or a compensation
committee thereof, taking into consideration the growth and profitability
of Employer, the relative contribution by Executive to the business of
Employer, the economy in general, and such other factors as the board of
directors or compensation committee deems relevant.
6. Extension of Payment and Expiration Dates.
(a) Executive has heretofore delivered a promissory note to Employer
for the payment of the exercise price of certain options exercised by
Executive to purchase shares of common stock of Employer. Such promissory
note provides for installment payments due in September 1996 and September
1997. As additional consideration for the execution of this Agreement, the
due dates for the installment payments due in September 1996 and September
1997 shall be extended to September 1997 and September 1998, respectively.
(b) Executive currently holds options to purchase shares of common
stock that, pursuant to their terms, expire in December 1996. As
additional consideration for the execution of this Agreement, the
expiration date for such options shall be extended to December 31, 1997.
7. Employment Benefits. Employer shall provide health and medical
insurance for Executive in a form and program to be chosen by Employer for its
full-time employees. Executive shall be entitled to participate in any
retirement, pension, profit-sharing, stock option, or other plan as in effect
from time to time on the same basis as other employees.
8. Working Facilities. Employer shall provide to Executive at Employer's
principal executive offices suitable executive offices and facilities
appropriate for his position and suitable for the performance of his
responsibilities.
9. Vacations. Executive shall be entitled each year to a paid vacation
of a least four (4) weeks. Vacation shall be taken by Executive at a time and
with starting and ending dates mutually convenient to Employer and Executive.
Vacation or portions of vacations not used in one employment year shall carry
over to the succeeding employment year, but shall thereafter expire if not used
within such succeeding year.
10. Expenses. Employer will reimburse Executive for expenses incurred in
connection with Employer's business, including expenses for travel, lodging,
meals, beverages, entertainment, and other items. Executive shall provide the
following for all expenses for which Executive desires reimbursement:
(a) A report in which Executive has recorded at or near the time each
expenditure was made: (1) the amount of the expenditure; (2) the time,
place and designation of the type of entertainment, travel or other
expense, or the date; (3) the business reason for the expenditures and the
nature of the business benefit derived or expected to be derived as a
result of the expenditure; and (4) the names, occupations, addresses and
other information concerning each person who was entertained sufficient to
establish the business relationship to Employer; and
(b) Documentary evidence (such as receipts or paid bills), which
states sufficient information to establish the amount, date, place and the
essential character of the expenditure, for each expenditure: (1) of
twenty-five dollars ($25.00) or more (except for transportation charges if
not readily available); and (2) for lodging while traveling away from home.
Employer shall provide to Executive at the election of Executive (a) a company
vehicle of a type suitable for Executive's position, insured at Employer's
expense, for the exclusive use of Executive, or (b) a car allowance of $550 per
month.
11. Covenant Not to Compete. For a period of two (2) years after
termination of this Agreement, except in the event of breach of this Agreement
by Employer, Executive agrees that he will not directly or indirectly engage in,
assist, perform services for, establish or open or have any equity interest
(other than such interest, if any, held as of the date hereof, and ownership of
ten percent (10%) or less of the outstanding stock of any corporation listed on
the New York or American Stock Exchange or included in the Nasdaq Stock Market)
in any person, firm, corporation, or business entity (whether as an employee,
officer, director, agent, security holder, creditor, consultant, or otherwise)
that is engaged in any oil exploration, development, or production activity in
the state of Nevada. If in any judicial proceeding, a court shall refuse to
enforce any of the separate covenants deemed included in this paragraph, then
the unenforceable covenants shall be deemed eliminated from these provisions for
the purpose of those proceedings to the extent necessary to permit the remaining
separate covenants (meaning the remaining states) to be enforced.
This covenant not to compete shall not be construed as restricting
Executive's right to own shares in any company or limited partnership or
business entity (other than beneficial ownership of ten percent (10%) or less of
the outstanding stock of any corporation listed on the New York or American
Stock Exchange or included in the Nasdaq Stock Market); provided that, they do
not perform services for, or participate in any way in the management of, a
business entity which competes in the manner outlined above.
This covenant shall survive the termination of this Agreement.
12. Nondisclosure of Information. In further consideration of employment
and the continuation of employment by Employer, Executive will not, directly or
indirectly, during or after the term of employment, disclose to any person not
authorized by Employer to receive or use such information, except for the sole
benefit of Employer, any of Employer's confidential or proprietary data,
information, or techniques, or give to any person not authorized by Employer to
receive it any information that is not generally known to anyone other than
Employer or that is designated by Employer as "Limited," "Private," or
"Confidential," or similarly designated or for which there is any reasonable
basis to be believed is, or which appears to be, treated by Employer as
confidential.
13. Disability. If Executive is unable to perform his services by reason
of illness or incapacity for a period of more than six consecutive months, the
board of directors of Employer shall determine, in their sole and absolute
discretion, whether to continue to pay compensation to Executive, in which event
compensation shall continue to be paid at the rate of 100% of the base salary
provided for in paragraph 4 hereof and the incentive compensation to which he
would be entitled under paragraph 5(b) hereof, or to terminate Executive's
employment, in which event Employer shall pay to Executive an amount equal to
twice the annual base salary then in effect provided for in paragraph 4 hereof
and a pro rata portion of the annual incentive compensation to which he would
otherwise be entitled under paragraph 5(b) for the year during which his
employment terminates, based on the number of full months of his employment
during that year. The amount payable to Executive on termination of his
employment pursuant to the immediately preceding sentence shall be payable, at
the election of Employer, in cash or in shares of common stock of Employer that
are registered for resale under the Securities Act of 1933, as amended (the
"Securities Act"). Notwithstanding the foregoing, no compensation shall be
payable hereunder after the termination of this Agreement. Executive shall be
deemed to be employed by Employer at all times during which payments are being
made to Executive hereunder for purposes of determining vesting of the options
granted to Executive pursuant to paragraph 5(a) hereof. In addition, if
Employer shall terminate Executive's employment pursuant to this paragraph, the
options granted under paragraph 5(a) that would have become vested and
exercisable within the succeeding two years following such termination shall
automatically become vested and exercisable upon such termination. All other
benefits to which Executive was entitled hereunder shall terminate upon the
termination of his employment, except to the extent required under COBRA and
similar laws. For purposes of this Agreement, Executive is "disabled" when he
is unable to continue his normal duties of employment, by reason of a medically
determined physical or mental impairment. In determining whether or not
Executive is disabled, Employer may rely upon the opinion of any doctor or
practitioner of any recognized field of medicine or psychiatric practice
selected jointly by Employer and Executive and such other evidence as Employer
deems necessary.
14. Termination for Cause. Except as set forth in the foregoing
paragraph, Employer may terminate this Agreement during its term for cause
("Cause") by showing that Executive has materially and repeatedly breached the
terms hereof; that Executive, in the determination of the board, has been
grossly negligent on a continuous basis in the performance of his duties; that
Executive has substantially failed on a continuous basis to meet written
standards established by Employer for the performance of his duties; that
Executive has regularly engaged in material willful or gross misconduct in the
performance of his duties hereunder; or that a final non-appealable conviction
of Executive, or a plea of guilty or nolo contendere by Executive, to a felony
or misdemeanor involving fraud, embezzlement, theft, or dishonesty or other
criminal conduct against Employer has been entered. A determination by the
board of directors that Cause exists for the removal of Executive shall be made
by the vote of not less than a majority of the entire board of directors.
Notwithstanding the foregoing, Executive shall not be removed for Cause without
(i) reasonable written notice to Executive setting forth the reasons for the
proposed removal for Cause; (ii) an opportunity for Executive, together with
Executive's counsel, to be heard before a meeting of the board of directors
convened for the purpose of voting on the removal of Executive; and (iii)
delivery to Executive of written notice of removal setting forth the finding
that in the good faith opinion of board of directors Cause existed for removal
and specifying the particulars thereof in detail. Upon termination of this
Agreement for Cause, Employer shall pay Executive an amount equal to one month's
base salary (as then in effect) for each 12 months that Executive has been
employed by Employer and a pro rata portion of the annual incentive compensation
to which he would otherwise be entitled under paragraph 5(b) for the year during
which his employment terminates, based on the number of full months of his
employment during that year. In addition, a pro rata portion, based on the
number of full months of Executive's employment since the immediately preceding
anniversary date of this Agreement, of the options granted pursuant to paragraph
5(a) that would have become vested and exercisable on the next succeeding
anniversary date of this Agreement shall become vested and exercisable on
termination. Employer shall have no further obligation to Executive except for
compensation previously accrued and unpaid.
15. Termination Upon Change of Control. Notwithstanding any provision of
this Agreement to the contrary, Executive may terminate this Agreement,
including the covenant not to compete set forth in paragraph 11, but not the
covenant not to disclose information set forth in paragraph 12, upon the
happening of any of the following events:
(a) The sale by Employer of substantially all of its assets to a
single purchaser or to a group of associated purchasers;
(b) The sale, exchange, or other disposition to a single person or
group of persons under common control in one transaction or series of
related transactions resulting in such person or persons owning, directly
or indirectly, greater than twenty-five percent (25%) of the combined
voting power of the outstanding shares of Employer's common stock;
(c) More than fifty percent (50%) of the members of the board of
directors of Employer shall be persons who are neither nominated for
election by the board or an authorized committee of the board nor elected
by the board;
(d) The decision by Employer to terminate its business and liquidate
its assets; or
(e) The merger or consolidation of Employer in a transaction in which
the shareholders of Employer immediately prior to such merger or
consolidation receive less than fifty percent (50%) of the outstanding
voting shares of the new or continuing corporation.
In the event Executive does not elect to terminate this Agreement upon the
happening of any of the events noted above, and as a result of such event,
Employer is not the surviving entity, then the provisions of this Agreement
shall inure to the benefit of and be binding upon the surviving or resulting
entity. If as a result of the merger, consolidation, transfer of assets, or
other event listed above, the duties of Executive are increased, then the
compensation of Executive provided for in paragraph 4 of this Agreement shall be
reasonably adjusted upward to compensate for the additional duties and
responsibilities assumed.
16. Termination Payments. In the event that Executive's employment is
terminated by Employer during the term hereof for reasons other than Cause as
defined in paragraph 14, or Executive terminates his employment within 30 days
following the occurrence of any of the events described in paragraph 15,
Executive shall be compensated by Employer as follows:
(a) Executive's base salary for the remaining term of this Agreement,
as provided in paragraph 4, shall be paid to Executive, at the election of
Executive, in a lump sum payment of cash or in shares of common stock of
Employer that are registered for resale under the Securities Act;
(b) Executive's coverage under Employer's insurance and employee
benefit plans, as provided in paragraph 7, shall continue through the term
hereof;
(c) Executive shall continue to receive the annual incentive
compensation to which he would otherwise be entitled under paragraph 5 for
the year during which his employment terminates, but prorated to reflect
the number of full months of his employment during that year, payable, at
the election of Executive, in a lump sum payment of cash or in shares of
common stock of Employer that are registered for resale under the
Securities Act; and
(d) All of the options to purchase shares of common stock pursuant to
paragraph 5 hereof and all other options then held by Executive shall
immediately become vested and exercisable.
17. Resignation upon Termination. Upon the termination of this Agreement
for any reason, Executive hereby agrees to resign from all positions held in
Employer or an affiliate of Employer, including without limitation any position
as a director, officer, agent, trustee or consultant of Employer or any
affiliate of Employer.
18. Death During Employment. If Executive dies during the term of this
Agreement, Employer shall pay to the estate of Executive an amount equal to
three years' base salary provided for in paragraph 4 of this Agreement plus a
pro rata portion of the incentive compensation which would have been payable
pursuant to paragraph 5(b), based upon the number of full months from the
beginning of the year of Executive's death to the date of death. In addition, a
pro rata portion, based on the number of full months of Executive's employment
since the immediately preceding anniversary date of this Agreement, of the
options granted pursuant to paragraph 5(a) that would have become vested and
exercisable on the next succeeding anniversary date of this Agreement shall
become vested and exercisable on Executive's death. The amount payable to
Executive pursuant to this paragraph shall be payable, at the election of the
board of directors of Employer made within 60 days after Executive's death, in
cash or in shares of common stock of Employer that are registered for resale
under the Securities Act. A payment of cash under this paragraph may be paid,
at the election of the board of directors of Employer, in a lump sum or in 12
monthly payments beginning on the first day of the month immediately following
the determination by the board of directors of Employer of the method of
payment.
19. Stock Registration Provisions. During the term of this Agreement,
Executive shall have the following rights and obligations with respect to
registration under the Securities Act of 1933, as amended, and applicable blue
sky laws of shares of common stock ("Shares") of Employer owned of record by
Executive or to be acquired on exercise of any options issued in Executive's
name to purchase Shares:
(a) Participatory Registration. Employer shall notify Executive, at
least thirty (30) days prior to the filing of any registration statement of
forms ▇-▇, ▇-▇, ▇-▇, ▇▇-▇, or any successor forms under the Securities Act
of 1933, as amended (specifically excluding any registration statement on
forms ▇-▇, ▇-▇, or any successor forms for similar transactions), covering
any class of stock of Employer and will upon the written request of
Executive delivered at least twenty (20) days prior to such filing, include
in any such registration statement such information as may be required to
register such number of Executive's Shares as Executive may request.
Executive and Employer shall each include customary representations,
warranties, indemnification, and contribution provisions in any
underwriting agreement entered into in connection with such registration.
If the managing underwriters for such registration advise Employer in
writing that in their opinion, the total amount of securities to be
included in such registration statement exceeds the amount which should
reasonably be included in that offering to achieve Employer's financing
goals, Employer may limit the amount of stock to be included as follows:
(i) first, all securities Employer proposes to sell may be included, (ii)
second, stock requested to be included in such registration by all third
parties, other than executives and employees, that have a contractual right
to have such stock so included may be included; (iii) third, Shares of
common stock requested to be included in such registration by all
executives and employees may be included on the basis of the amount of
Shares owned of record by each employee, and (iv) fourth, if applicable,
other stock requested to be included in such registration may be similarly
and ratably adjusted with all executives' and employees' stock pro rata
according to the amount of stock owned of record by any proposed seller.
All incremental expenses of such registration will be allocated pro rata
according to the number of Shares included for Executive. There shall be
no limit on the number of registrations so requested, but each such request
shall cover an amount of Shares having a proposed offering price of not
less than Fifty Thousand Dollars ($50,000.00).
(b) Registration on Request. In addition, Executive's Shares may be
registered on not more than one occasion, in such amount as may be
requested, within one year following the death or the commencement of
disability of Executive. Within thirty (30) days after the receipt of a
request for such registration by Executive's estate or personal
representative pursuant hereto, Employer will commence the process of
preparing for filing a registration statement covering the Shares and use
its best efforts to cause such registration statement to become effective.
Employer and Executive shall use commercially reasonable efforts to obtain
an underwriter to firmly underwrite any such offering. Employer may delay
for up to one hundred eighty (180) days the filing of such a registration
statement if the board of directors of Employer in good faith and for a
bona fide corporate purpose determines that a filing at a requested time
would be adverse to Employer's interests. Employer shall not be obligated
to file any such registration statement at any time during which it is
impossible or impracticable to include the required financial statements.
Employer and Executive shall provide all information required for inclusion
in such registration statement and any underwriting agreement entered into
in connection therewith shall contain the customary representations,
warranties, indemnification, and contribution provisions. All expenses of
such registration shall be allocated pro rata according to the total number
of Shares included therein.
(c) General. In connection with each of the foregoing registrations
and subject to the provisions concerning expenses, Employer shall also (i)
use its best efforts to qualify the Shares for public sale under the blue
sky laws of such jurisdictions as Executive may reasonably request, (ii)
provide such number of preliminary and final prospectuses as Executive may
reasonably request, and (iii) keep the final prospectus in any such
registration current for a reasonable period not to exceed one hundred
twenty (120) days. In connection with the indemnification and contribution
to be provided by Executive to any underwriter or Employer pursuant to this
paragraph 19, the aggregate liability of Executive shall not exceed the
aggregate net proceeds received by Executive from the sale of the
registered Shares, and, in connection with contribution, shall also take
into consideration the relative fault of each contributing person.
20. Representations and Warranties of Executive. Executive represents and
warrants to Employer that (a) Executive understands and voluntarily agrees to
the provisions of this Agreement; (b) Executive is not aware of any existing
medical condition which might cause him to be or become unable to fulfill his
duties under this Agreement; and (c) Executive is free to enter into this
Agreement and has no commitment, arrangement or understanding to or with any
third party that restrains or is in conflict with this Agreement or that would
operate to prevent Executive from performing the services to Employer that
Executive has agreed to provide hereunder.
21. Nontransferability. Neither Executive, Executive's spouse,
Executive's designated contingent beneficiary, nor their estates shall have any
right to anticipate, encumber, or dispose of any payment due under this
Agreement. Such payments and other rights are expressly declared nonassignable
and nontransferable, except as specifically provided herein.
22. Indemnification. Employer shall indemnify Executive and hold
Executive harmless from liability for acts or decisions made by Executive while
performing services for Employer to the greatest extent permitted by applicable
law. Employer shall use its best efforts to obtain coverage for Executive under
any insurance policy now in force or hereafter obtained during the term of this
Agreement insuring officers and directors of Employer against such liability.
23. Assignment. This Agreement may not be assigned by either party
without the prior written consent of the other party.
24. Entire Agreement. This Agreement is and shall be considered to be the
only agreement or understanding between the parties hereto with respect to the
employment of Executive by Employer. All negotiations, commitments, and
understandings acceptable to both parties have been incorporated herein. No
letter, telegram, or communication passing between the parties hereto covering
any matter during this contract period, or any plans or periods thereafter,
shall be deemed as part of this Agreement; and shall not have the effect of
modifying or adding to this Agreement unless it is distinctly stated in such
letter, telegram, or communication that it is to constitute a part of this
Agreement and is to be attached as an amendment to this Agreement and is signed
by the parties to this Agreement.
25. Enforcement. Executive acknowledges that any remedy at law for breach
of paragraphs 11 and 12 would be inadequate, acknowledges that Employer would be
irreparably damaged by an actual or threatened breach thereof, and agrees that
Employer shall be entitled to an injunction restraining Executive from any
actual or threatened breach of paragraphs 11 and 12 as well as any further
appropriate equitable relief without any bond or other security being required.
In addition to the foregoing, each of the parties hereto shall be entitled to
any remedies available in equity or by statute with respect to the breach of the
terms of this Agreement by the other party.
26. Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the state of Colorado.
27. Severability. If and to the extent that any court of competent
jurisdiction holds any provision or any part thereof of this Agreement to be
invalid or unenforceable, such holding shall in no way affect the validity of
the remainder of this Agreement.
28. Waiver. No failure by any party to insist upon the strict performance
of any covenant, duty, agreement, or condition of this Agreement or to exercise
any right or remedy consequent upon a breach hereof shall constitute a waiver of
any such breach or of any covenant, agreement, term, or condition.
29. Litigation Expenses. In the event that it shall be necessary or
desirable for Executive to retain legal counsel and/or incur other costs and
expenses in connection with the enforcement of any and all of Executive's rights
under this Agreement, Executive shall be entitled to recover from Employer
reasonable attorneys' fees, costs, and expenses incurred by Executive in
connection with the enforcement of said rights. Payment shall be made to
Executive by Employer at the time these attorneys' fees, costs, and expenses are
incurred by Executive. If, however, Executive does not prevail in such
enforcement action, Executive shall repay any such payments to Employer.
30. Termination of Prior Agreement. Except with respect to the prior
grant of stock appreciation rights, the provisions of this Agreement shall
supersede in every respect the provisions of the prior employment agreement
entered into between Employer and Executive, which prior agreement is hereby
terminated and void.
AGREED AND ENTERED INTO as of the date first above written.
Employer:
FORELAND CORPORATION
By /s/ N. ▇▇▇▇▇▇ ▇▇▇▇▇▇, President
Executive:
/s/
SCHEDULE:
NAME POSITION BASE SALARY INCREASE
N. ▇▇▇▇▇▇ ▇▇▇▇▇▇ President $125,000 $173,000
▇▇▇▇▇ ▇▇▇▇▇▇ Chairman $ 18,000 $ 36,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Vice-President $119,000 $167,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Vice-President $119,000 $167,000
