EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into by and between INLAND
RESOURCES INC. (hereinafter referred to as "Employer") and BILL I.
PENNINGTON (hereinafter referred to as "Employee").
WHEREAS, Employer desires to employ Employee as its Vice President
and Chief Financial Officer and Employee desires to accept such
employment.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Employer and Employee
agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee to serve as Vice
President and Chief Financial Officer of Employer.
2. DUTIES. During his employment, Employee shall devote all of
his working time, energies and skills to the management of Employer's
business. Employee agrees to serve Employer diligently and to the best
of his ability. Employee shall render services consistent with those of
a person in his position and shall perform all duties incident to such
office and all such further similar duties that may, from time to time,
be assigned to him by Employer. Employee's duties include finding
further business opportunities for Employer and Employee agrees to bring
to Employer for acceptance or rejection all business opportunities
located by or made available to Employee.
3. COMPENSATION. Employee's compensation for services performed
under this Agreement shall be as follows:
(a) BASE SALARY. Employer shall pay Employee a base salary ("Base
Salary") of One Hundred Thirty Seven Thousand Five Hundred and No/100
Dollars ($137,500.00) per year. In addition, the Board of Directors of
Employer (the "Board of Directors") shall, in good faith, consider
granting increases in such salary based upon such factors as Employee's
performance and the growth and/or profitability of Employer, but it
shall have no obligation to grant any such increases in compensation.
Such Base Salary shall be payable in equal semi-monthly installments on
the fifteenth day and the last working day of the month, or at such
other times and in such installments as may be agreed upon between
Employer and Employee. All payments shall be subject to the deduction
of payroll taxes and similar assessments as required by law.
(b) BONUS. In addition to the Base Salary, Employee shall be
eligible to receive bonus compensation in such amounts and at such times
as the Board
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of Directors shall, from time to time, determine.
4. EXPENSES AND BENEFITS. Employee is authorized to incur reasonable
expenses in connection with the business of Employer, including expenses for
entertainment, travel and similar matters. Employer will reimburse Employee
for such expenses upon presentation by Employee of such accounts and records
as Employer shall, from time to time, require. Employer also agrees to
provide Employee with the following benefits:
(a) EMPLOYEE BENEFIT PLANS. Employee shall be entitled to
participate in employee benefit plans or programs of Employer, if any,
to the extent that his position, tenure, salary, age, health and other
qualifications make him eligible to participate, subject to the rules
and regulations applicable thereto. Such additional benefits shall
include, subject to the approval of the Board of Directors, full
medical, dental and disability income insurance.
(b) OTHER. Such items and benefits as Employer shall, from time
to time, consider necessary or appropriate to assist Employee in the
performance of his duties.
(c) VACATIONS. Employee shall be entitled (in addition to the
usual public holidays) to a paid vacation for a period in each calendar
year not exceeding three (3) weeks, to be taken at such times as may be
approved by Employer.
5. TERM. The term of this Agreement shall commence on the effective
date hereof and shall continue for two years; provided, however, that this
Agreement shall be deemed to have been renewed (and the original term hereof
to have been extended) daily for successive two-year terms beginning on the
date hereof such that there shall at all times be two years remaining in the
term of each employment; provided, further, however, that this Agreement
shall also be subject to termination at any time by either party by giving at
least one (1) year prior written notice, and shall terminate as provided for
in Section 7 or upon the death of Employee.
6. DISABILITY. In the event that Employee becomes Permanently
Disabled (as hereafter defined) during the term of this Agreement and while
engaged in the scope of his employment by Employer, Employee shall continue
in the employ of Employer but his compensation hereunder shall be reduced to
one half (1/2) of the Base Salary then in effect, as set forth in Section 3(a)
hereof, commencing upon the determination of Employee's Permanent Disability
and continuing thereafter until the first to occur of (a) twelve (12) months
or (b) the death of Employee or (c) the expiration of the term of this
Agreement; and during such period of time, Employee shall not be entitled to
payment of expenses or benefits specified in Section 4 hereof (except for
reimbursement of expenses incurred by Employee prior to becoming Permanently
Disabled), except that Employer shall continue to provide Employee with the
insurance benefits specified in Section 4(a) hereof. In addition, any
compensation payable to Employee by Employer shall be reduced by any amount
which Employee is eligible to receive from workers compensation, social
security or disability insurance provided by Employer. If Employee becomes
Permanently Disabled while not engaged in the scope of his employment by
Employer, such disability may be cause for termination for "Cause" under
Section 7 hereof.
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(a) DEFINITION OF DISABILITY. For purposes of this Agreement, the
terms "Permanent Disability" or "Permanently Disabled" shall mean three
(3) months of substantially continuous disability. Disability shall be
deemed "substantially continuous" if, as a practical matter, Employee,
by reason of his mental or physical health, is unable to sustain
reasonably long periods of substantial performance of his duties.
Frequent long illnesses, though different from the preceding illness and
though separated by relatively short periods of performance, shall be
deemed to be "substantially continuous". Disability shall be determined
in good faith by the Board of Directors whose decision shall be final
and binding upon Employee. Employee hereby consents to medical
examinations by such physicians and medical consultants as Employer
shall, from time to time, require.
7. TERMINATION BY EMPLOYER. Employer shall have the right to terminate
Employee's employment as hereinafter provided.
(a) TERMINATION BY EMPLOYER FOR CAUSE. The Board of Directors
shall have the right to terminate Employee's employment under this
Agreement for Cause, in which event no compensation shall be paid or
other benefits furnished to Employee after termination for Cause.
Termination for Cause shall be effective immediately upon notice sent or
given to Employee.
(i) DEFINITION OF CAUSE. For purposes of this
Agreement, the term "Cause" shall mean and be strictly
limited to: (1) conviction of a crime constituting a
felony under state or federal law; (2) determination by
the Board of Directors that Employee has committed any
material act of dishonesty against Employer; (3) gross
negligence by Employee in carrying out his duties; (4)
material breach of this Agreement by Employee; (5) gross
misconduct by Employee, such as intoxication on the job,
use of drugs on the job for non-medical purposes or other
misconduct which has a substantial adverse effect on the
business of Employer; or (6) Employee becoming
Permanently Disabled while not engaged in the scope of
his employment by Employer.
(b) TERMINATION BY EMPLOYER WITHOUT CAUSE. The Board of Directors
shall have the right to terminate Employee's employment under this
Agreement without Cause at any time, by giving written notice of
termination to Employee. In such event, Employer will continue to pay
Employee the full Base Salary for twelve (12) months together with a
prorated monthly bonus in an amount equal to the most recent annual
bonus, if any, paid to Employee divided by twelve (12).
8. NON COMPETITION AND CONFIDENTIALITY.
(a) NON COMPETITION. Employee recognizes and understands that in
performing the responsibilities of his employment, he will occupy a
position of fiduciary trust and confidence, pursuant to which he will
develop and acquire
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experience and knowledge with respect to Employer's business. It is the
expressed intent and agreement of Employee and Employer that such
knowledge and experience shall be used exclusively in the furtherance of
the interests of Employer and not in any manner which would be
detrimental to Employer's interests. Employee further understands and
agrees that Employer conducts its business within a specialized market
segment in its geographic region, and that it would be detrimental to
the interests of Employer if Employee used the knowledge and experience
which he currently possesses or which he acquires pursuant to his
employment hereunder for the purpose of directly or indirectly competing
with Employer, or for the purpose of aiding other persons or entities in
so competing with Employer, anywhere in such region. Employee therefore
agrees that so long as he is employed by Employer, unless Employee first
secures the written consent of Employer, Employee will not directly or
indirectly invest, engage or participate in or become employed by any
entity in direct or indirect competition with Employer's business.
Employee further agrees upon termination of Employee's employment either
(i) by Employer with or without cause or (ii) by Employee, unless
Employee first secures the written consent of Employer, Employee will
not for a period of one year after such termination directly or
indirectly invest, engage or participate in or become employed by any
entity in direct or indirect competition with Employer in any mine or
oil or gas property located anywhere within a 100 mile radius of any
mine or oil or gas property owned or operated (wholly or partially) by
Employer at the time of termination of Employee's employment hereunder.
This non-competition provision is not to be construed to prohibit
Employee from being employed in the mining or oil or gas industry, but
rather to permit him to be so employed so long as such employment does
not involve Employee's direct or indirect participation in a property
within such 100 mile radius. In the event that the provisions of this
Section 8 should ever be deemed to exceed the time or geographic
limitations permitted by applicable laws, then such provisions shall be
reformed to the maximum time or geographic limitations permitted by
applicable laws.
(b) REMEDIES. Employee acknowledges that the restrictions
contained in Section 8(a), in view of the nature of the business in
which Employer is engaged, are reasonable and necessary to protect the
legitimate interests of Employer. Employee understands that the remedies
at law for his violations of any of the covenants or provisions of
Section 8(a) will be inadequate, that such violation will cause
irreparable injury within a short period of time, and that Employer
shall be entitled to preliminary injunctive relief and other injunctive
relief against such violation. Such injunctive relief shall be in
addition to, and in no way in limitation of, any and all other remedies
Employer shall have in law and equity for the enforcement of those
covenants and provisions.
9. GENERAL PROVISIONS.
(a) NOTICES. Any notices to be given hereunder by either party to
the other may be effected by personal delivery, in writing or by mail,
registered or certified, postage prepaid with return receipt requested.
Mailed notices shall be
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addressed to the parties at the addresses set forth below, but each
party may change his or its address by written notice in accordance with
this Section 9(a). Notices delivered personally shall be deemed
communicated as of the actual receipt; mailed notices shall be deemed
communicated as of three (3) days after mailing.
IF TO EMPLOYEE:
Inland Resources Inc.
475 17th Street, Suite 1500
Denver, Colorado 80202
IF TO EMPLOYER:
Inland Resources Inc.
475 17th Street, Suite 1500
Denver, Colorado 80202
(b) PARTIAL INVALIDITY. If any provision in this Agreement is
held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remaining provisions shall, nevertheless, continue in
full force without being impaired or invalidated in any way.
(c) LAW GOVERNING AGREEMENT. This Agreement shall be governed by
and construed in accordance with the laws of the State of Colorado.
(d) ATTORNEYS' FEES AND COSTS. If any action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, costs
and necessary disbursements in addition to any other relief to which he
or it may be entitled.
(e) ASSIGNMENT. This Agreement shall inure to the benefit of and
bind the parties hereto and their respective legal representatives,
successors and assigns.
(f) ENTIRE AGREEMENT. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with
respect to the employment of Employee by Employer and contain all of the
covenants and agreements between the parties with respect to such
employment. Each party to this Agreement acknowledges that no
representations, inducements, or agreements, oral or otherwise, have
been made by any party, or anyone acting on behalf of any party, which
are not embodied herein, and no other agreement, statement or promise
not contained in this Agreement shall be valid or binding. Any
modification of this Agreement will be effected only if it is in
writing signed by the party to be charged.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective the 1st day of June, 1996.
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EMPLOYER:
INLAND RESOURCES INC.
By: /s/ Kyle R. Miller
---------------------------------
Kyle R. Miller,
President and Chief Executive
Officer
EMPLOYEE:
/s/ Bill I. Pennington
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Bill I. Pennington
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