CONTRACT SETTLEMENT AGREEMENT BETWEEN
FRONTIER NATURAL GAS CORPORATION
AND XXXXX X. XXXXXXXXXXXXXX
WHEREAS Xxxxx X. Xxxxxxxxxxxxxx ("Employee") has an employment contract with
Frontier Natural Gas Corporation ("Frontier") dated effective January 1,
1993 (the "Contract"); and
WHEREAS Frontier has negotiated with third parties including Aspect Resources
LLC and Esenjay Petroleum Corporation and others in regard to a transaction
which would result in a change of control of Frontier, (which change of
control shall be defined as a change of the majority of the Board of
Directors of Frontier and/or a transaction whereby over fifty percent of the
equity securities of Frontier are issued or committed to be issued to third
parties, and/or Frontier merges with another company, hereafter a "Change of
Control"); and
WHEREAS the Board of Directors has determined that it is in the best
interests of Frontier to satisfy all obligations of Frontier previously
incurred, or to be incurred in the future, pursuant to the contract, but
subject to Frontier closing a transaction which results in a Change of
Control;
NOW THEREFORE
Frontier agrees that in the event Frontier closes any transaction which
results in a Change of Control prior to June 30, 1998 that Frontier shall pay
to Employee the sum of One Hundred and Twelve Thousand Dollars ($112,000.00),
which amount shall be referred to herein as the "Settlement Payment", and
Employee shall be, upon closing of a transaction which results in a Change of
Control, automatically released from all obligations pursuant to the Contract
other then Employees confidentiality obligations to Frontier as set forth in
Paragraph 7.a. of the Contract. Said Settlement Payment and release from
obligations shall be in full satisfaction of the Contract, but in addition to
any other obligations owed Employee; and
Employee agrees that, subject only to timely payment of the Settlement
Payment, that Frontier shall, upon closing of a transaction resulting in a
Change of Control, have no further obligation to Employee pursuant to the
Contract; and
The parties agree that the Settlement Payment shall be due and payable upon
closing of a transaction resulting in a Change of Control, and that it shall
be paid by delivery to Employee of a promissory note bearing interest at ten
percent per annum payable by Frontier to Employee with the principal amount
being paid at the minimum rate of five thousand dollars per month, beginning
the first day of the third calendar month after the referenced closing, and
with all principal and accrued interest being due and payable upon the
earlier of September 30, 1998 or the completion of the public sale of any
equity and/or debt securities of Frontier. The parties further agree that
Employee, at Employees sole discretion may defer payment of up to fifty
percent of the principal amount until January 15, 1999.
___________________________________ January ____, 1998
Xxxxx X. Xxxxxxxxxxxxxx.
Frontier Natural Gas Corporation
By:_________________________________ January ____, 1998
It's:
-------------------------------
