Exhibit 10(7)
MANAGEMENT SERVICES AGREEMENT
This Management Services Agreement is made as of April 25 1997 by and between
FOUNTAIN OIL INCORPORATED, a corporation incorporated and existing under the
laws of the State of Delaware, United States of America ("the Company"), and
XXXXXXX XXXXXX, an individual residing in 0 Xxxxxx Xxxx Xxxxx, 000
Xxxxxxxxxxxxx, Xxxxxx XX0X 0XX, Xxxxxxx ("Employee").
RECITATIONS
A. The Company is engaged in the exploration, development, recovery, production,
marketing and sale of oil and gas (the "Business") throughtout the world.
B. Employee has substantial experience in the Business, and is available to
render general and specific services of a technical, administrative and/or
advisory nature with respect to the Business, and is prepared to provide such
services as and when needed by the Company.
C. The Company desires to obtain the services of Employee, and Employee desires
to provide certain services to the Company in the territory (as herein
defined).
NOW, THEREFORE, in consideration of the agreements contained herein and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto agree as follows:
AGREEMENT
SECTION 1. DEFINITIONS in this Agreement and the Exhibits attached hereto and
made a part here of, except where the context otherwise requires, the words and
expressions set forth below shall have the following meanings:
"Agreement" means this Management Services Agreement, as the same may be
amended, modified or extended from time to time.
"Appointment" means the appointment of the Employee by the Company pursuant to
this Agreement.
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"Business" has the meaning set forth in Recitation A.
"Code of Conduct" means that document appended to this Agreement as Exhibit 2.
"Exhibit" means an exhibit to this Agreement.
"Employee Domicile" has the meaning set forth in Section 5.
"Inventions" means all inventions, improvements, modifications, processes,
formulae, know-how, designs, models, prototypes, computer programs, sketches,
drawings, plans or other original matters which the Employee alone or with one
or more others may make in course of and as direct result in the course of the
Appointment and which pertain to the commercial or industrial activities of the
Company or the processes or machinery of the Company for providing the services
of producing or extracting the products of the Company or pertaining to or
resulting from or suggested by any direct work which the Employee has done or
may hereafter perform during the Appointment for the Company.
"Superior" means the individual or entity designated from time to time by the
Company as the individual and/or entity with the responsibility of supervising
Employee. In this case this will be the Company Chief Executive Officer ("CEO")
and/or the Company Board of Directors ("Board").
"Term" has the meaning set forth in Section 3.
"Territory" means specified geographic area agreed to be working in between the
parties hereto.
"Salary" has the meaning set forth in Section 6.
"Tax" or "Taxes" has the meaning set forth in Section 7.
"Section" refer to a section in this Agreement.
SECTION 2. APPOINTMENT
For and during the Term, and subject to the terms and conditions hereinafter set
forth, Employee hereby agrees to serve as a special task for manager delegated
by the Board and the CEO in Territories agreed upon between the parties hereto.
SECTION 3. TERM
The term of this Agreement shall commence upon its execution by both parties and
shall terminate upon the earlier of (i) the expiration of one year from the date
of execution of this Agreement by both parties, (ii) a majority decision of the
Board after the expiry of one year from the date of execution of this Agreement
by both parties, (iii) the mutual agreement in writing of the parties,
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(iv) the liquidation and dissolution of the Company. Termination subject to
items (i) and (ii) and (iv) above shall be subject to a notice period of at
least 6 months, such notice period to commence only upon the expiry of the one
year period referred to in such items.
SECTION 4. DUTIES
During the Term, the Employee will:
(a) perform to the best of his ability all the duties agreed within the
specified areas of duty defined in EXHIBIT ONE 1 for him to do by the Board
of Directors and the CEO in the Territory defined and agreed upon.
(b) comply promptly with all lawful directions and instructions given by or
with the authority of the Supervisor.
(c) Employee will maintain the Company registered presence in London by keeping
office space in his residence.
SECTION 5. VACATION/OVERTIME/SICKNESS/INJURY/RESIDENT BASE
LOCATION/SPECIAL TERMS
VACATION. In addition to Bank and other Public holidays the Employee shall be
entitled to 25 working days holiday in every calendar year to be taken at such
time or times as may be approved by the Company. If the full vacation is not
taken during calendar year, the vacation will accumulate thereafter. The
Employee will do everything in his power to take the full vacation each year.
ADDITIONAL COMPENSATION. Employee shall not be entitled to receive compensation
other than as set forth in Section 6. From time to time the CEO may expressly
request Employee to undertake certain tasks in addition to Employee's routine
tasks. In such case, Employee and CEO shall agree beforehand upon the amount of
additional compensation Employee shall be entitled to receive in connection with
the performance of such tasks.
SICKNESS/INJURY. The Company shall pay to the Employee Statutory Sick Pay
(hereinafter referred to as "SSP") in accordance with regulations prevailing in
the country of residence. These payments will be supplemented by the Company up
to full yearly. Remuneration for the first 12 months of absence from work due to
sickness or injury. From the 13th month the Employee shall be entitled to
disability payment as provided for under the Permanent Health Insurance package
as well as State support.
RESIDENCE AND POINT OF ORIGIN
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For the purpose of this Section 5, the Residence of Employee shall refer to
Employee's place of habitation and shall be located in London, England
("Residence") and the point of origin shall be Stavanger, Norway ("Point of
Origin").
The Company shall reimburse Employee the reasonable, out-of-pocket costs
associated with his move from his current habitation in England to the
Residence. The Residence shall be equipped with an office and shall be of
sufficient standing to enable Employee to entertain business relations in an
appropriate manner. The Company shall provide Employee with a housing allowance
in the amount of GBP 2500 per month. Employee may request additional amounts in
connection with the operation and support of the office in the Residence. Such
requests shall be submitted to the CEO and approved in advance. The Company will
be responsible for the lease/rent of the Residence during the period as agreed
upon with the CEO.
In the event during the term of this Agreement Employee moves from the Residence
to another place of habitation the Company shall reimburse Employee for all
reasonable, out-of-pocket expenses associated with such move. If the Employee is
asked to move in the middle of a lease period, the Company shall be liable for
any remaining lease period agreed upon and entered into by the Employee in
agreement with the Company. Any subsequent move by Employee that is requested by
the Company, or other reasons out of control of the Employee, shall be
reimbursed by the Company. Upon the termination of this Agreement, the Company
shall reimburse Employee for all reasonable, out-of-pocket costs associated with
his move from the Residence, or any successive residence without limitation, to
the Point of Origin.
The portion in the previous employment contract as per March 1, 1995 prefix 11.
(e) will be valid until the lease of present facilities in 0 Xxxxxx Xxxx Xxxxx,
000 Xxxxxxxxxxxxx, Xxxxxx XX0X 0XX terminate 6th August 1997.
SPECIAL TERMS
(a) BONUS SCHEME. The Employee will be eligible to participate in any executive
bonus scheme and share option plan that is created by the Company during
the term of this Agreement.
(b) VISITS TO NORWAY. The Company will pay for (3) three return tickets per
calendar year from location of residence to Stavanger, Norway for the
Employee, wife and Son Xxxx Xxxx, until he is 19 year old. The trips should
be in connection with business if possible.
(c) TELEPHONE/FACSIMILE/E-MAIL. The company will pay for the residence
phone/facsimile/E-mail on behalf of the Employee.
(d) MEMBERSHIP IN PROFESSIONAL ORGANIZATION/CLUBS. The Company will pay for
membership fees on professional and social clubs that can and will improve
the business in relation to the Employee's work for the Company. Special
approval is needed if the membership exceeds $1000 annually.
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(e) EDUCATION. The Company will provide Xxxx Xxxx (son) with GBP 12,000 (Pound
sterling twelve thousand) per educational year, until and including part of
the educational year he is 19 years old.
(f) NEWSPAPER, MEDIA INFORMATION. The Company will pay for economical,
political and technical publications needed for the business, and two daily
publications sent to the Residence/office.
SECTION 6. REMUNERATION
The Company shall pay the following to the Employee for the Appointment:
(a) A salary to be paid in the United Kingdom ("UK") for work performed in the
UK in the amount of USD 105,000 per year to be paid in equal monthly
installments on or before the last day of each calendar month. The parties
may mutually agree in writing upon any adjustment to the amount mentioned
above.
(b) A salary to be paid in the UK for work performed outside of the UK in the
amount of USD 45, 000 per year payable in equal monthly installments on or
before the last day of each calendar month. The compensation set forth in
subsections (a) and (b) shall be referred to in the aggregate as "SALARY".
(c) The Company will pay for a pension and insurance package the premiums and
cost of which shall not in the aggregate exceed an amount equal to 12.5% of
Employee's Salary. Employee refer to the Company insurance policies that
would cover a minimum (a) life insurance with death and disability benefits
in the amount of USD 100,000 and disability benefits in the amount of USD
1500 per month, and with such amounts to be adjusted for inflation. In the
event that the coverage obtained above results in premiums less than the
12.5% cap referred to in the preceding paragraph, Employee may use the
difference for the purpose of obtaining additional insurance or pension
coverage.
The employee shall be entitled or benefits adopted by the Company under an
executive protection plan during the term of this Agreement. In the event
such new plans result in premiums above the 12.5% cap referred to above,
the additional expense shall be borne by the Company.
Adjustment of the remuneration package will be based on the Company's
Compensation Committee determination and on the same criteria as the Company's
executive team. The remuneration is denominated in United States dollars and
paid in local currency as applicable. Currency changes will effect local
currency paid. Adjustments will be made on quarterly averages.
SECTION 7. TAXES
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a) Compliance with Tax Laws. The Company will use its best efforts to comply
with all laws, rules and regulations pertaining to the reporting of the
compensation and reimbursable expenses attributable to Employee's Engagement
and to the withholding and remitting of any taxes including, without
limitation, taxes levied by any country, state, municipality, commune or
other governmental authority (collectively, a "Tax" or "Taxes") on such
compensation and reimbursable expenses.
b) Employee's taxes. The Employee is responsible for his own tax return. The
Company accountant will assist the Employee in the filing of the taxes.
For any assistance requiring local taxation outside the UK the tax equalization
policy for the Company will apply to the adjustment of remuneration to the
Employee. The Employee will not during the Term reduce his net pay based on his
remuneration if located other places than in the UK. The Company will adjust the
gross pay in accordance.
SECTION 8. CONFIDENTIALITY
During the Term of this Agreement and at all times thereafter, Employee shall
hold in strict confidence, and shall not disclose to any person or entity any
labeled Confidential Information of the Company. For the purposes of this
Section 8, the term "Confidential Information" shall include without limitation,
trade information relating to the Company research and development, engineering
data, seismic data, surveys, specifications, process formulations, production
operations or techniques, planning, purchasing, accounting, finance, selling,
marketing, market research, promotional plans, customers, suppliers, and other
information of a similar nature which may include design specifications and
know-how, in which the Company or its suppliers or distributors have proprietary
interests, and all other information pertaining to the business of the Company
that is not publicly available. Employee shall not use such labeled Confidential
Information except for the sole benefit of the Company.
SECTION 9. PROPERTY OF THE COMPANY
Promptly upon the termination of this Agreement, Employee shall surrender to the
Company all written materials (and all copies), all information stored in
computer memories or on microfiche, magnetic tape or diskette, that are at the
time in his direct or indirect possession or control and that pertain to the
business or affairs of the Company.
SECTION 10. INVENTIONS
a) The Employee will disclose and deliver to the Company for the exclusive use
and benefit of the Company any inventions as a direct result of the work
performed for the Company, promptly upon the making, devising or discovering
of the same, and will give all information and data in his possession as to
the exact mode of working, producing and using the same and also all
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such explanations and instructions to the Company as may in the view of the
Supervisor be necessary to enable the full and effectual working, production
or use of the same and will at the expense of the Company furnish it with
all necessary plans, drawings, formulae and models.
b) The Employee will at the expense of the Company execute and do all acts,
matters, documents and things necessary to enable the Company or its nominee
to apply for and obtain protection for the Inventions in any or all
countries and to vest title thereto in the Company or its nominee
absolutely.
c) During the Appointment and at all times thereafter the Employee will
(whether by omission or commission) do nothing to affect or imperil the
validity of the protection for the inventions obtained or applied for by the
Company or its nominee pursuant to section 10 (b). The Employee will at the
direction and expense of the Company render all assistance within his power
and capacity to obtain and maintain such protection or application or any
extension thereof.
d) Nothing in this Agreement shall oblige the Company to seek patent or other
protection for any invention nor to exploit any Invention. The Company has
to claim its wishes to seek the patent within 3 months of the presentation
of any possible patent application or invention presented by the Employee.
If the Company refrains to claim its interest, the Employee is free to
proceed to apply in his own interest the use of the invention for whatever
purposes he decides.
SECTION 11. COVENANTS AGAINST COMPETITION
a) During the Term, the Employee has a duty of loyalty to the Company. This
duty of loyalty requires that during the Term all of Employee's actions be
taken with a view toward and for the purpose of advancing the interest of
the Company. Employee agrees to act in accordance with Employees duty of
loyalty during the Term. In particular, Employee will take no action during
the Term to interfere with or adversely affect willingly and purposely the
Company's relationship with then existing or prospective customers, clients,
employees, suppliers, co-venturer, lenders, consultants, Employees and
professional advisors or otherwise to harm the interest of the Company.
It is understood by the Company that the Employee has been in the oil and
gas industry for 30 years, and during that period has formed partnership
within the industry either directly through family engagements or
indirectly.
The Employee will within his means use engagements and connections to the
benefit for the Company during the Term, that is if it is applicable and
accepted to do so by the Company and partnership.
b) During the Term, and for a period of two years following the date of
termination of this Agreement, Employee shall not directly or indirectly
induce any employee of the Company to
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terminate his or her employment, hire by direct approach any employee of the
Company, or in any way interfere with the relationship of the Company and
any employee, agent or representative;
c) For a period of two years following the date of termination of this
Agreement, Employee shall not directly or indirectly solicit or otherwise
divert or attempt to divert from the Company any Business or any related
business:
(i) which is being conducted by the Company pursuant to contract in
existence during the Term, or
(ii) which may be conducted by the Company pursuant to any extension or
renewal of a contract in existence during the Term, or
(iii) which was the subject of negotiations between the Company and a
potential customer or client during the Term in which negotiations
Employee participated or was in any way involved.
d) at no time, whether during the Term or at any time thereafter shall Employee
use the name "Fountain" or any name likely to cause confusion therewith in
the minds of members of the public for the purposes of a business similar to
or competing with any business carried on by the Company whether by using
such name as part of a corporate name otherwise.
SECTION 12. TERMINATION FOR EVENT OF DEFAULT
Notwithstanding the provisions above, the Company may terminate the Engagement
by notice with immediate effect for any of the following reasons (each an "Event
of Default"):
a) The Employee is proven guilty of dishonesty or of misconduct, including,
without limitation, a breach of Code of Conduct, or willful neglect of
duty, or Employee commits any breach of this Agreement, including, without
limitation, a breach of the Confidentiality Agreement, other than a breach
which is capable of remedy and is remedied forthwith by the Employee at the
Company's request; or
b) The Employee is convicted of a felony or other serious criminal offense.
SECTION 13. DISCIPLINARY RULES; GRIEVANCE PROCEDURES; HEALTH AND
SAFETY
a) Employee acknowledges by the execution of this Agreement that he has
received a copy of Company's Disciplinary Rules and Grievance Procedures
(only US is distributed), as well as the Company's Policy on Employee Safety
and Environmental Handbook and is familiar with the term of both documents.
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b) Employee shall at all times during the course of his Engagement conduct
himself in the conformity with the laws of the United States of America and
those other jurisdictions in which the Employee is engaged in activities on
behalf of the Company or which are directly affected by such activities and
shall otherwise perform his duties hereunder in a professional and
responsible manner. Without limiting the generality of the foregoing, as a
condition to Employee's Engagement, Employee shall execute the Code of
Conduct appended hereto as Exhibit 2 and shall be obligated to conduct
himself in accordance therewith.
SECTION 14. POST TERMINATION PROVISIONS
Any provision of this Agreement which contemplates or is proven capable of
operation after termination of the Engagement shall apply notwithstanding
termination of the Engagement for whatever reason.
SECTION 15. EMPLOYEE'S REPRESENTATION AND WARRANTIES
Employee represents and warrants to the Company (i) that this Agreement
constitutes a valid and binding obligation, enforceable against Employee in
accordance with its terms; (ii) that neither the execution or delivery of this
Agreement nor the performance by Employee of any covenants hereunder will
constitute a default under any contract, agreement or obligation to which
Employee is a party or by which Employee or any of Employee's properties is
bound; (iii) that there are no lawsuits, arbitration actions or other
proceedings (equitable, legal, administrative or otherwise) pending or (to the
best of employee's knowledge) threatened which could adversely affect the
validity or enforceability of this Agreement or Employee's obligation or ability
to perform his obligations hereunder; and (iv) that no consent, approval or
authorization of, or notification to, any governmental entity or any person or
entity is required in connection with the execution, delivery or performance of
this Agreement by Employee.
SECTION 16. NOTICE
Any notices or other communications required or permitted to be given hereunder
or otherwise in connection herewith shall be in writing and shall be sent to the
parties at the following addresses or at such other addresses as shall be
specified by the parties by like notice:
To the Company: Fountain Oil Incorporated
Skysstasjon 11 B, X.X. Xxx 00
0000 Xxxxx, Xxxxxx
c/o Xxxx X. Trulsvik
Tel x00 00 00 00 00
Fax x00 00 00 00 00
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To the Employee: Xxxxxxx Xxxxxx
0 Xxxxxx Xxxx Xxxxx
000 Xxxxxxxxxxxxx
Xxxxxx XX0X 0XX
Tel x00 000 000 0000
Fax x00 000 000 0000
Such notices or other communications shall be deemed to have been duly given and
received (i) on the day of sending if sent by personal delivery, or any way of
electronic transmission as telefax, e-Mail or telex, (ii) on the fifth calendar
day after the day of sending if sent by Federal Express or other agencies
delivery Service or (iii) on the 10th calendar day after the day of sending if
sent by registered mail (return receipt requested).
SECTION 17. AMENDMENTS
Any amendments to the provision of this Agreement shall be in writing and signed
by the parties hereto or their duly assigned representatives.
SECTION 18. SEVERABILITY
If any provision in the Agreement is held invalid or unforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unforceable.
SECTION 19. NO WAIVER
The failure to enforce at any time any of the provisions of this Agreement or to
require at any time performance by the other party hereto of any of the
provisions hereof shall in no way be construed to be a waiver of such provisions
or to affect the validity of this Agreement, or any part thereof, or the right
of either party thereafter to enforce each and every such provision in
accordance with the terms of this Agreement.
SECTION 20. ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties with respect to
the Engagement of Employee by the Company and supersedes any and all prior
understandings,
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agreements or correspondence between the parties. The Exhibits to this Agreement
form an integral part of this Agreement.
SECTION 21. GOVERNING LAW
This Agreement shall governed by, and interpreted in accordance with, the laws
of Norway.
SECTION 22. ARBITRATION
Any dispute, controversy or claim arising out of or relating to this Agreement,
or the breach, termination or invalidity thereof, which cannot be settled in an
amicable way shall be settled by arbitration in accordance with UNCITRAL Rules
as at present in force. The place of arbitration shall be Oslo, Norway. The
appointing authority shall be the Chamber of Commerce in Oslo. Judgment upon the
award rendered by the arbitrators, or at least a majority of them, may be
entered in any court having jurisdiction thereof. The arbitrator(s) shall be
selected under said rules. All arbitral proceedings shall be in English. Each
party hereto shall bear its own costs of such arbitration or litigation,
including reasonable attorney's fees.
SECTION 23. ASSIGNMENT
Neither this Agreement nor any right, remedy, obligation or liability arising
hereunder or by reason hereof may be assigned or delegated by Employee without
the prior written consent of the Company.
SECTION 24. INTERPRETATION
All references to Sections and Exhibits are to sections and exhibits in or to
this Agreement unless otherwise specified. The words "hereof" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Where the context permits, the singular includes the plural and vice verses and
one gender includes any gender.
SECTION 25. MONETARY TERMS
All amounts expressed in dollars "$" in this Agreement shall mean dollars of the
United States of America, and amounts expressed in pounds or "GBP" is sterling
pounds of Great Britain.
SECTION 26. COUNTERPARTS
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This Agreement may be executed in several counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
instrument.
EMPLOYEE FOUNTAIN OIL INCORPORATED
/s/Xxxxxxx Xxxxxx By: /s/Xxxx X. Trulsvik
----------------- ------------------------
Xxxxxxx Xxxxxx Xxxx X. Trulsvik, CEO
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EXHIBIT 1
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DUTIES
------
The Employee will, subject to direction of Company, have duties including, but
not limited to, the following:
* Participate in the Company Management meetings.
* Represent Fountain Oil Incorporated in various Joint Venture Boards as a
director.
* Specify Policy and Guidelines for Operations.
* Participate in Business Development.
* Participate in Strategic takeover, merger and partnering.
* Participate in Project Finance, and financing in general.
* Participate in Operational Support.
* Participate in Heavy Oil technology developments.
* Other Work, as Employee's Supervisor shall so specify from time to time.
The Employee will report to the Board and the CEO for specific tasks to be
performed.
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