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Exhibit 19
ADDENDUM TO STOCK OPTION AGREEMENT
THIS ADDENDUM to that certain Stock Option Agreement, dated September 1,
1996, executed by and between Upland Energy Corporation, a Utah corporation
(the "Employer"), and Xxxxx Xxxxxxx (the "Executive") is entered into
effective as of 27th day of May, 1997.
RECITALS
1. The Employer has previously granted Executive certain options to
purchase two hundred seventy-five thousand (275,000) shares of the common
stock of Employer pursuant to the terms of the Stock Option Agreement.
2. Executive has exercised such options and has paid Employer
consideration for such stock.
The Stock Option Agreement grants to Executive a "put" option to
retransfer shares to the Employer in order to enable Executive to pay for the
tax consequences associated with the exercise of the option.
4. In consideration of the Executive's forbearance from the exercise of
the put option, the Employer has agreed to advance certain funds to the
Executive for the purpose of paying withholding taxes on Executive's behalf,
to be repaid as set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, the parties hereby agree as follows:
1. The Recitals are hereby incorporated by reference in this Agreement.
2. The Employer has agreed to loan Eighty Four Thousand Three Hundred
Seventy Six and no/100 Dollars ($84,376) to Executive, which shall be repaid
to Employer by Employer withholding any bonuses Executive is entitled to
receive pursuant to the terms of that certain Employment Agreement, dated
October 1, 1996, by and between Employer and Executive, or at any time after
ninety (90) days from the date of this Agreement, upon written demand by the
Employer. The amount advanced to Executive by Employer shall bear interest at
the rate of eight percent (8%) per annum.
3. Executive and Employer hereby tentatively agree for the purpose of
determining the value of the shares of stock purchased by Executive from
Employer, that a value of One Dollar ($1.00) per share shall be used.
Executive and Employer each acknowledge that Executive has designated a
professional appraiser to prepare a formal written appraisal of the value of
the shares, the cost for which will be paid by the Employer, and that the
value of the shares will be adjusted to such value determined by the appraiser
once the written appraisal report has been delivered. If the written appraisal
indicates that the value of the stock is higher than the initial $1.00 value
agreed to by the parties, then Employer shall pay such additional withholding
taxes as may be required, and such amount shall be treated as an additional
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loan, repayable on the same terms as set forth in Section 2 above. Employer
will defend Executive from any claim or challenge by the Internal Revenue
Service to the value determined by the appraiser selected by Executive, and
will hold Executive harmless from any interest, penalties, or other charges
(but not additional income tax that may be owed) that may be assessed against
Executive by the Internal Revenue Service. Executive and Employer also agree
that if it is later determined by the Internal Revenue Service (after Employer
has exhausted all reasonable appeals) that the value of the stock was higher
than the value determined by the appraiser designated above, then the parties
agree to adjust the purchase price of any stock previously purchased by
Employer from Executive to the higher value determined by the Internal Revenue
Service.
4. Employer hereby agrees to grant to Executive a continuing put to the
Employer to sell sufficient numbers of his shares, at the value agreed to in
this Agreement (unless otherwise adjusted by the Internal Revenue Service as
set forth above) until the earlier of: (a) Executive has repaid the loan
advanced to him pursuant to this Agreement; or (b) written notice has been
delivered to Executive giving Executive thirty (30) days in which to exercise
such put option. In addition, in the event the Internal Revenue Service
determines that the value of the shares sold to Executive exceeds the value
determined by the appraiser, Employer agrees to grant to Executive a
continuing put option to sell sufficient number of Executive's shares to
Employer, at the value determined by the Internal Revenue Service, in order to
enable Executive to pay for the additional tax liability generated by the
exercise of Executive's option to purchase shares. Executive agrees to attempt
to sell sufficient shares in the open market to pay such additional tax
liability, so long as such sales do not have a material adverse effect on the
market price of Employer's shares, and such sales are otherwise in compliance
with all securities laws.
AGREED AND ENTERED INTO as of the date first above written.
EXECUTIVE: EMPLOYER:
UPLAND ENERGY CORPORATION, a Utah
Corporation
/S/ Xxxxx Xxxxxxx By: /S/ Xxxx X. Xxxxx, Director
Date: By: /S/ Xxx Xxxxxxx, Director
By:_______________________________
Xxxxx Xxxxx, Director
Date:
