Exhibit 10.8
 
EXECUTIVE EMPLOYMENT AGREEMENT
 
This Executive Employment Agreement (this “Agreement”) is made as of May 2, 2008
(the “Effective Date”) between KENTUCKY USA ENERGY, INC., a Delaware corporation
(the “Company”), and CLARENCE G.COLLINS (the “Executive”).
 
W I T N E S S E T H:
 
WHEREAS, the Executive desires to be employed by the Company as its Director of
Exploration and Development and the Company wishes to employ the Executive in
such capacity;
 
NOW, THEREFORE, in consideration of the foregoing recitals and the respective
covenants and agreements of the parties contained in this document, the Company
and the Executive hereby agree as follows:
 
1. Employment and Duties.  The Company agrees to employ and the Executive agrees
to serve as the Company’s Director of Exploration and Development.  The duties
and responsibilities of the Executive shall include the duties and
responsibilities as the Board may from time to time reasonably assign to the
Executive.
 
The Executive shall devote a significant amount of his working time and efforts
during the Company’s normal business hours to the business and affairs of the
Company and its subsidiaries and to the diligent and faithful performance of the
duties and responsibilities duly assigned to him pursuant to this Agreement. The
particular job responsibilities of the Executive are set forth in Exhibit A
attached hereto.
 
2. Term.  The term of this Agreement shall commence on the Effective Date and
shall continue for a period of four years and shall be automatically renewed for
successive one year periods thereafter unless either party provides the other
party with written notice of his or its intention not to renew this Agreement at
least three months prior to the expiration of the initial term or any renewal
term of this Agreement.  “Employment Period” shall mean the initial four year
term plus renewals, if any.
 
3. Place of Employment.  The Executive’s services shall be performed at the
Company’s offices that will be located in the State of Kentucky, and any other
locus where the Company now or hereafter has a business facility.  The parties
acknowledge, however, that the Executive may be required to travel in connection
with the performance of his duties hereunder.
 
4. Base Salary.  For all services to be rendered by the Executive pursuant to
this Agreement, the Company agrees to pay the Executive during the Employment
Period an initial base salary (the “Base Salary”) at an annual rate of
$90,000.  The Base Salary shall be paid in periodic installments in accordance
with the Company’s regular payroll practices.
 
The Compensation Committee (the “Compensation Committee”) of the Board (or by
the independent members of the Board, if there is no Compensation Committee)
shall review the Executive’s Base Salary annually and shall make a
recommendation to the Board as to whether such Base Salary should be increased
but not decreased, which decision shall be within the Board’s sole discretion.
 
1

--------------------------------------------------------------------------------

 
5. Bonus.  During the term of this Agreement, the Executive shall be entitled to
an annual bonus of at least 25% of his Base Salary (which percentage may be
increased or decreased in the discretion of the Board), to be determined
according to achievement of performance-related financial and operating targets
established annually for the Company and the Executive by the Compensation
Committee (or by the independent members of the Board if there is no
Compensation Committee).  The standards set forth in Exhibit B attached hereto
shall serve as a guideline for determining additional bonus compensation. The
Executive shall have reasonable input in the development of these targets.  Such
performance targets for each fiscal year shall be adopted by the Compensation
Committee prior to the end of the prior fiscal year.  Each annual bonus shall be
paid by the Company to the Executive promptly after determination that the
relevant targets have been met, it being understood that the attainment of any
financial targets shall be determined after the results of the annual audit are
known.
 
6. Expenses.  The Executive shall be entitled to prompt reimbursement by the
Company for all reasonable ordinary and necessary travel, entertainment and
other expenses incurred by the Executive while employed (in accordance with the
policies and procedures established by the Company for its senior executive
officers) in the performance of his duties and responsibilities under this
Agreement; provided, that the Executive shall properly account for such expenses
in accordance with Company policies and procedures.
 
7. Other Benefits.  During the term of this Agreement, the Executive shall be
eligible to participate in incentive, savings, retirement (401(k)) and welfare
benefit plans, including, without limitation, health, medical, dental, vision,
life (including accidental death and dismemberment) and disability insurance
plans (collectively, the “Benefit Plans”), in substantially the same manner and
at substantially the same levels as the Company makes such opportunities
available to the Company’s managerial or salaried executive employees.
 
8. Vacation.  During the term of this Agreement, the Executive shall be entitled
to accrue, on a pro rata basis, paid vacation days per year in accordance with
standard policy to be established by the Company for its senior executives
.  The Executive shall be entitled to carry over any accrued, unused vacation
days from year to year without limitation.
 
9. Stock Options.
 
(a) Grant of Options.  Upon the execution hereof, the Company shall grant the
Executive options to purchase shares of the Company’s common stock (“Options”
[under the Company’s Stock Option Plan (the “Stock Option Plan”) to be
established by the Board of Directors of the Company.  Such grant shall be
evidenced by an option agreement as contemplated by the Stock Option Plan.]  In
subsequent years the Executive shall be eligible for such grants of Options and
other permissible awards [under the Stock Option Plan] as the Compensation
Committee or the Board shall determine.
 
(b) Option Price; Term.  The per share exercise price of the Options shall be
established in accordance with the Stock Option Plan, which represents the fair
market value per share of Company common stock on the date of grant.  The term
of the Option shall be ten years from the date of grant.
 
(c) Exercise.  The percentage of the Options shall become exercisable on each
monthly anniversary of the date of grant in accordance with the Stock Option
Plan.
 
(d) Payment.  The full consideration for any shares purchased by the Executive
upon exercise of the Options shall be paid in cash.
 
(e) Termination of Employment; Accelerated Vesting.
 
(1) If the Executive’s employment is terminated for Cause, as such term is
defined below, all Options, whether or not vested, shall immediately expire
effective the date of termination of employment.
 
2

--------------------------------------------------------------------------------

 
(2) If the Executive’s employment is terminated voluntarily by the Executive
without Good Reason, as such term is defined below, all unvested Options shall
immediately expire effective the date of termination of employment.  Vested
Options, to the extent unexercised, shall expire one month after the termination
of employment.
 
(3) If the Executive’s employment terminates on account of death or Disability,
as defined below, all unvested Options shall immediately expire effective the
date of termination of employment.  Vested Options, to the extent unexercised,
shall expire one year after the termination of employment.
 
(4) If the Executive’s employment is terminated (A) in connection with a Change
of Control, as defined below, (B) by the Company without Cause or (C) by the
Executive for Good Reason, all unvested Options shall immediately vest and
become exercisable effective the date of termination of employment, and, to the
extent unexercised, shall expire one year after any such event.
 
10. Termination of Employment.
 
(a) Death.  If the Executive dies during the Employment Period, this Agreement
and the Executive’s employment with the Company shall automatically terminate
and the Company shall have no further obligations to the Executive or his heirs,
administrators or executors with respect to compensation and benefits accruing
thereafter, except for the obligation to pay to the Executive’s heirs,
administrators or executors any earned but unpaid Base Salary, unpaid pro rata
annual bonus and unused vacation days accrued through the date of death and
reimbursement of any and all reasonable expenses paid or incurred by the
Executive in connection with and related to the performance of his duties and
responsibilities for the Company during the period ending on the termination
date.  The Company shall deduct, from all payments made hereunder, all
applicable taxes, including income tax, FICA and FUTA, and other appropriate
deductions.  In addition, the Executive’s spouse and minor children shall be
entitled to continued coverage, at the Company’s expense, under all health,
medical, dental and vision insurance plans in which the Executive was a
participant immediately prior to his last date of employment with the Company
for a period of one year following the death of the Executive.
 
(b) Disability.  In the event that, during the term of this Agreement, the
Executive shall be prevented from performing his duties and responsibilities
hereunder to the full extent required by the Company by reason of Disability (as
defined below) this Agreement and the Executive’s employment with the Company
shall automatically terminate and the Company shall have no further obligations
or liability to the Executive or his heirs, administrators or executors with
respect to compensation and benefits accruing thereafter, except for the
obligation to pay the Executive or his heirs, administrators or executors any
earned but unpaid Base Salary, unpaid pro rata annual bonus and unused vacation
days accrued through the Executive’s last date of employment with the Company
and reimbursement of any and all reasonable expenses paid or incurred by the
Executive in connection with and related to the performance of his duties and
responsibilities for the Company during the period ending on the termination
date.  The Company shall deduct, from all payments made hereunder, all
applicable taxes, including income tax, FICA and FUTA, and other appropriate
deductions through the last date of the Executive’s employment with the
Company.  For purposes of this Agreement, “Disability” shall mean a physical or
mental disability that prevents the performance by the Executive, with or
without reasonable accommodation, of his duties and responsibilities hereunder
for a period of not less than an aggregate of three months during any twelve
consecutive months.
 
 
3

--------------------------------------------------------------------------------

(c) Cause.
 
(1) At any time during the Employment Period, the Company may terminate this
Agreement and the Executive’s employment hereunder for Cause.  For purposes of
this Agreement, “Cause” shall mean: (a) the willful and continued failure of the
Executive to perform substantially his duties and responsibilities for the
Company (other than any such failure resulting from a Disability) after a
written demand by the Board for substantial performance is delivered to the
Executive by the Company, which specifically identifies the manner in which the
Board believes that the Executive has not substantially performed his duties and
responsibilities, which willful and continued failure is not cured by the
Executive within 30 days of his receipt of such written demand; (b) the
conviction of, or plea of guilty or nolo contendere to, a felony, (c), violation
of Sections 11 or 12 of this Agreement, or (d) fraud, dishonesty or gross
misconduct which is materially and demonstratively injurious to the
Company.  Termination under section 10(c)(1)(b), 10(c)(1)(c) or 10(c)(1)(d)
above shall not be subject to cure.
 
(2) Upon termination of this Agreement for Cause, the Company shall have no
further obligations or liability to the Executive or his heirs, administrators
or executors with respect to compensation and benefits thereafter, except for
the obligation to pay the Executive any earned but unpaid Base Salary, unused
vacation days accrued through the Executive’s last date of employment with the
Company and reimbursement of any and all reasonable expenses paid or incurred by
the Executive in connection with and related to the performance of his duties
and responsibilities for the Company during the period ending on the termination
date.  The Company shall deduct, from all payments made hereunder, all
applicable taxes, including income tax, FICA and FUTA, and other appropriate
deductions.
 
(d) Change of Control.  For purposes of this Agreement, “Change of Control”
shall mean the occurrence of any one or more of the following: (i) the
accumulation, whether directly, indirectly, beneficially or of record, by any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended) of 50% or more of the shares
of the outstanding equity securities of the Company, (ii) a merger or
consolidation of the Company in which the Company does not survive as an
independent company or upon the consummation of which the holders of the
Company’s outstanding equity securities prior to such merger or consolidation
own less than 50% of the outstanding equity securities of the Company after such
merger or consolidation, or (iii) a sale of all or substantially all of the
assets of the Company; provided, however, that the following acquisitions shall
not constitute a Change of Control for the purposes of this Agreement: (A) any
acquisitions of common stock or securities convertible into common stock
directly from the Company, or (B) any acquisition of common stock or securities
convertible into common stock by any employee benefit plan (or related trust)
sponsored by or maintained by the Company.
 
(e) Good Reason.
 
(1) At any time during the term of this Agreement, subject to the conditions set
forth in Section 10(e)(2) below, the Executive may terminate this Agreement and
the Executive’s employment with the Company for “Good Reason.”  For purposes of
this Agreement, “Good Reason” shall mean the occurrence of any of the following
events: (A) the assignment, without the Executive’s consent, to the Executive of
duties that are significantly different from, and that result in a substantial
diminution of, the duties that he assumed on the Effective Date; (B) the
assignment, without the Executive’s consent, to the Executive of a title that is
different from and subordinate to the title Chief Executive Officer; (C) any
termination of the Executive’s employment by the Company, other than a
termination for Cause, within 12 months after a Change of Control; (D) the
assignment, without the Executive’s consent, to the Executive of duties that are
significantly different from, and that result in a substantial diminution of,
the duties that he assumed as Chief Executive Officer on the Effective Date
within 12 months after a Change of Control; or (E) material breach by the
Company of this Agreement.
 
(2) The Executive shall not be entitled to terminate this Agreement for Good
Reason unless and until he shall have delivered written notice to the Company of
his intention to terminate this Agreement and his employment with the Company
for Good Reason, which notice specifies in reasonable detail the circumstances
claimed to provide the basis for such termination for Good Reason, and the
Company shall not have eliminated the circumstances constituting Good Reason
within 30 days of its receipt from the Executive of such written notice.
 
(3) In the event that the Executive terminates this Agreement and his employment
with the Company for Good Reason, the Company shall pay or provide to the
Executive (or, following his death, to the Executive’s heirs, administrators or
executors): (A) any earned but unpaid Base Salary, unpaid pro rata annual bonus
and unused vacation days accrued through the Executive’s last day of employment
with the Company; (B) continued coverage, at the Company’s expense, under all
Benefits Plans in which the Executive was a participant immediately prior to his
last date of employment with the Company, or, in the event that any such Benefit
Plans do not permit coverage of the Executive following his last date of
employment with the Company, under benefit plans that provide no less coverage
than such Benefit Plans, for a period of one year following the termination of
employment; (C) reimbursement of any and all reasonable expenses paid or
incurred by the Executive in connection with and related to the performance of
his duties and responsibilities for the Company during the period ending on the
termination date; and (D) severance in an amount equal to one year’s Base
Salary, as in effect immediately prior to the Executive’s termination
hereunder.  All payments due hereunder shall be payable according to the
Company’s standard payroll procedures.  The Company shall deduct, from all
payments made hereunder, all applicable taxes, including income tax, FICA and
FUTA, and other appropriate deductions.
 
4

--------------------------------------------------------------------------------

 
(f) Without “Good Reason” by the Executive or “Cause” by the Company.
 
(1) By the Executive.  At any time during the term of this Agreement, the
Executive shall be entitled to terminate this Agreement and the Executive’s
employment with the Company without Good Reason by providing prior written
notice of at least 30 days to the Company.  The Executive’s failure to renew the
term of this Agreement pursuant to Section 2 hereof shall be deemed a
termination by the Executive without Good Reason, and no additional notice shall
be required other than that provided for in Section 2.  Upon termination by the
Executive of this Agreement and the Executive’s employment with the Company
without Good Reason, the Company shall have no further obligations or liability
to the Executive or his heirs, administrators or executors with respect to
compensation and benefits thereafter, except for the obligation to pay the
Executive any earned but unpaid Base Salary, unused vacation days accrued
through the Executive’s last day of employment with the Company and
reimbursement of any and all reasonable expenses paid or incurred by the
Executive in connection with and related to the performance of his duties and
responsibilities for the Company during the period ending on the termination
date.  The Company shall deduct, from all payments made hereunder, all
applicable taxes, including income tax, FICA and FUTA, and other appropriate
deductions.
 
(2) By the Company.  At any time during the term of this Agreement, the Company
shall be entitled to terminate this Agreement and the Executive’s employment
with the Company without Cause by providing prior written notice of at least 30
days to the Executive.  The Company’s failure to renew the term of this
Agreement pursuant to Section 2 hereof shall be deemed a termination by the
Company without Cause, and no additional notice shall be required other than
that provided for in Section 2.  Upon termination by the Company of this
Agreement and the Executive’s employment with the Company without Cause, the
Company shall pay or provide to the Executive (or, following his death, to the
Executive’s heirs, administrators or executors):  (A) any earned but unpaid Base
Salary, unpaid pro rata annual bonus and unused vacation days accrued through
the Executive’s last day of employment with the Company; (B) continued coverage,
at the Company’s expense, under all Benefits Plans in which the Executive was a
participant immediately prior to his last date of employment with the Company,
or, in the event that any such Benefit Plans do not permit coverage of the
Executive following his last date of employment with the Company, under benefit
plans that provide no less coverage than such Benefit Plans, for a period of one
year following the termination of employment; (C) reimbursement of any and all
reasonable expenses paid or incurred by the Executive in connection with and
related to the performance of his duties and responsibilities for the Company
during the period ending on the termination date; and (D) severance in an amount
equal to one year’s Base Salary, as in effect immediately prior to the
Executive’s termination hereunder.  All payments due hereunder shall be payable
according to the Company’s standard payroll procedures.  The Company shall
deduct, from all payments made hereunder, all applicable taxes, including income
tax, FICA and FUTA, and other appropriate deductions.
 
11. Confidential Information.
 
(a) The Executive expressly acknowledges that, in the performance of his duties
and responsibilities with the Company, he has been exposed since prior to the
Effective Date, and will be exposed, to the trade secrets, business and/or
financial secrets and confidential and proprietary information of the Company,
its affiliates and/or its clients, business partners or customers (“Confidential
Information”).  The term “Confidential Information” includes information or
material that has actual or potential commercial value to the Company, its
affiliates and/or its clients, business partners or customers and is not
generally known to and is not readily ascertainable by proper means to persons
outside the Company, its affiliates and/or its clients or customers.  However,
Confidential Information shall not include pre-existing information known to the
Executive and not learned during the course of employment.
 
(b) Except as authorized in writing by the Board, during the performance of the
Executive’s duties and responsibilities for the Company and until such time as
any such Confidential Information becomes generally known to and readily
ascertainable by proper means to persons outside the Company, its affiliates
and/or its clients, business partners or customers, the Executive agrees to keep
strictly confidential and not use for his personal benefit or the benefit to any
other person or entity (other than the Company) the Confidential
Information.  “Confidential Information” includes, without limitation, the
following, whether or not expressed in a document or medium, regardless of the
form in which it is communicated, and whether or not marked “trade secret” or
“confidential” or any similar legend:  (i) lists of and/or information
concerning customers, prospective customers, suppliers, employees, consultants,
co-venturers and/or joint venture candidates of the Company, actual or
prospective distributors, its affiliates or its clients or customers; (ii)
information submitted by customers, prospective customers, suppliers, employees,
distributors, consultants and/or co-venturers of the Company, its affiliates
and/or its clients or customers; (iii) non-public information proprietary to the
Company, its affiliates and/or its clients or customers, including, without
limitation, cost information, profits, sales information, prices, accounting,
unpublished financial information, business plans or proposals, expansion plans
(for current and proposed facilities), markets and marketing methods,
advertising and marketing strategies, administrative procedures and manuals, the
terms and conditions of the Company’s contracts and trademarks and patents under
consideration, distribution channels, franchises, investors, sponsors and
advertisers; (iv) proprietary technical information and/or intellectual property
concerning or relating to products and services of the Company, its affiliates
and/or its clients, business partners or customers, including, without
limitation, product data and specifications, diagrams, flow charts, know how,
processes, designs, formulae, inventions and product development; (v) lists of
and/or information concerning applicants, candidates or other prospects for
employment, independent contractor or consultant positions at or with any actual
or prospective customer or client of the Company and/or its affiliates, any and
all confidential processes, inventions or methods of conducting business of the
Company, its affiliates and/or its clients, business partners or customers; (vi)
acquisition or merger targets; (vii) business plans or strategies, data,
records, financial information or other trade secrets concerning the actual or
contemplated business, strategic alliances, policies or operations of the
Company or its affiliates; or (viii) any and all versions of proprietary
computer software (including source and object code), hardware, firmware, code,
discs, tapes, data listings and documentation of the Company; or (ix) any other
confidential information disclosed to the Executive by, or which the Executive
obligated under a duty of confidence from, the Company, its affiliates, and/or
its clients, business partners or customers.
 
5

--------------------------------------------------------------------------------

 
(c) The Executive affirms that he does not possess and will not rely upon the
protected trade secrets or confidential or proprietary information of any prior
employer(s) in providing services to the Company.
 
(d) In the event that the Executive’s employment with the Company terminates for
any reason, the Executive shall deliver forthwith to the Company any and all
originals and copies, including those in electronic or digital formats, of the
Confidential Information.
 
12. Right of First Offer and Non-Solicitation.
 
(a) Executive agrees that if he obtains an opportunity to develop, acquire
and/or invest in oil and/or gas wells located in the states of Tennessee or
Kentucky (the “Territory”), that it will first offer to the Company the
opportunity to acquire and/or invest in such interests (the “Offer”) prior to
directly and/or indirectly proceeding with such opportunity for his own
account.  The Company shall have a period of 15 days from the receipt of written
notice to elect whether it desires to accept the Offer, and absent an
affirmative decision of the Company, in writing to accept the Offer, the
Executive shall be permitted to pursue same for his own account.
 
(b) For a period of one (1) year after the termination of his employment,
Executive shall not:
 
(1)           Recruit, solicit or hire, or attempt to recruit, solicit or hire,
any employee, or independent contractor of the Company to leave the employment
(or independent contractor relationship) thereof, whether or not any such
employee or independent contractor is party to an employment agreement;
 
(2)           Attempt in any manner to solicit or accept from any customer of
the Company, with whom the Company had significant contact during the term of
the Agreement, business of the kind or competitive with the business done by the
Company with such customer or to persuade or attempt to persuade any such
customer to cease to do business or to reduce the amount of business which such
customer has customarily done or is reasonably expected to do with the Company,
or if any such customer elects to move its business to a person other than the
Company, provide any services (of the kind or competitive with the business of
the Company) for such customer, or have any discussions regarding any such
service with such customer, on behalf of such other person; or
 
(3)           Interfere with any relationship, contractual or otherwise, between
the Company and any other party, including, without limitation, any supplier,
distributor, co-venturer or joint venturer of the Company to discontinue or
reduce its business with the Company or otherwise interfere in any way with the
business of the Company.
 
6

--------------------------------------------------------------------------------

 
13. Dispute Resolution.  Any and all controversies, claims, or disputes arising
out of, relating to, or resulting from this Agreement shall be subject to
binding arbitration under the Delaware Uniform Arbitration Act for Commercial
Disputes, (the “Act”), and pursuant to Delaware law.  Any arbitration will be
administered by the American Arbitration Association (“AAA”) in accordance with
its Rules for the Resolution of Commercial Disputes.  The Executive agrees that
the arbitrator shall have the power to decide any motions brought by any party
to the arbitration, including motions for summary judgment and/or adjudication
and motions to dismiss and demurrers, prior to any arbitration hearing.  The
Executive also agrees the arbitrator shall have the power to award any remedies,
including attorneys’ fees and costs, available under applicable law.  The
Executive understands that each party shall bear its own costs and expenses,
including attorneys’ fees, incurred in connection with any arbitration.  The
decision of the arbitrator shall be in writing.  Except as provided by the Act
or as set forth herein, arbitration shall be the sole, exclusive and final
remedy for any dispute under this Agreement.  Accordingly, except as provided by
the Act or as set forth herein, neither the Executive nor the Company will be
permitted to pursue court action regarding this Agreement.  In addition to the
right under the Act to petition the court for provisional relief, the Executive
agrees that any party may also petition the court for injunctive or other forms
of relief where either party alleges or claims a violation of the provisions of
Sections 11 or 12 of this Agreement or any confidential information or invention
assignment agreement between the Executive and the Company or any other
agreement regarding trade secrets, confidential information,
non-solicitation.  In the event either party seeks such injunctive or such other
relief, the prevailing party shall be entitled to recover reasonable costs and
attorneys’ fees.
 
14. Notices.  For purposes of this Agreement, notices and other communications
provided for in this Agreement shall be in writing and shall be delivered
personally or sent by United States certified mail, return receipt requested,
postage prepaid, or by a nationally recognized overnight courier, addressed as
follows:
 

If to the Executive:                   CLARENCE G. COLLINS
107 Forest Hills Drive, 42718
Campbellsville,KY  32718
 

If to the Company:                   KENTUCKY USA ENERGY, INC.
Attention:  Chief Executive Officer
321 Somerset Road
Lexington, KY  40741
 

7

--------------------------------------------------------------------------------

 

 
or to such other address or the attention of such other person as the recipient
party has previously furnished to the other party in writing in accordance with
this paragraph.  Such notices or other communications shall be effective upon
delivery or, if earlier, three days after they have been mailed as provided
above.
 
15. Miscellaneous.
 
(a) All issues and disputes concerning, relating to or arising out of this
Agreement and from the Executive’s employment by the Company, including, without
limitation, the construction and interpretation of this Agreement, shall be
governed by and construed in accordance with the internal laws of the state of
Delaware, without giving effect to that state’s principles of conflicts of law.
 
(b) The Executive and the Company agree that any provision of this Agreement
deemed unenforceable or invalid may be reformed to permit enforcement of the
objectionable provision to the fullest permissible extent.  Any provision of
this Agreement deemed unenforceable after modification shall be deemed stricken
from this Agreement, with the remainder of the Agreement being given its full
force and effect.
 
(c) Failure or delay on the part of either party hereto to enforce any right,
power or privilege hereunder shall not be deemed to constitute a waiver
thereof.  Additionally, a waiver by either party or a breach of any promise
hereof by the other party shall not operate as or be construed to constitute a
waiver of any subsequent waiver by such other party.
 
(d) The Executive and the Company independently have made all inquiries
regarding the qualifications and business affairs of the other which either
party deems necessary.  The Executive affirms that he fully understands this
Agreement’s meaning and legally binding effect.  Each party has participated
fully and equally in the negotiation and drafting of this Agreement.  Each party
assumes the risk of any misrepresentation or mistaken understanding or belief
relied upon by him or it in entering into this Agreement.
 
(e) The Executive’s obligations under this Agreement are personal in nature and
may not be assigned by the Executive to any other person or entity.  This
Agreement shall be enforceable by the Company and its parents, affiliates,
successors and assigns, and the Company shall require any successors and assigns
to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession or assignment had taken place.
 
(f) This instrument constitutes the entire Agreement between the parties
regarding its subject matter.  When signed by each of the parties, this
Agreement supersedes and nullifies all prior or contemporaneous conversations,
negotiations, or agreements, oral and written, regarding the subject matter of
this Agreement.  In any future construction of this Agreement, this Agreement
should be given its plain meaning.  This Agreement may be amended only by a
writing signed by the parties.
 
(g) This Agreement may be executed in counterparts.  A counterpart transmitted
via facsimile and all executed counterparts, when taken together, shall
constitute sufficient proof of the parties’ entry into this Agreement.  The
parties agree to execute any further or future documents which may be necessary
to allow the full performance of this Agreement.  This Agreement contains
headings for ease of reference.  The headings have no independent meaning.
 

SIGNATURE PAGE IMMEDIATELY FOLLOWS
 
 
 
8

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Executive and the Company have caused this Executive
Employment Agreement to be executed as of the date first above written.

 
The Executive:
 
/s/ Clarence G. Collins

--------------------------------------------------------------------------------

Name: CLARENCE G. COLLINS
 
 
 
The Company:
 
KENTUCKY USA ENERGY, INC.,  a Delaware corporation
 
By: /s/ Steven D. Eversole

--------------------------------------------------------------------------------

Name:  Steven D. Eversole
Title:  President

9

--------------------------------------------------------------------------------

EXHIBIT A

JOB RESPONSIBILITIES

The Director of Exploration and Development shall plan and direct engineering
activities to evaluate, acquire, and develop oil and gas fields and produce oil
and gas.  He will formulate company programs for developing oil and gas fields,
planning schedules for drilling wells and for implementing production
facilities.  He will direct all engineering work concerned with drilling new
wells and producing flow of oil or gas from wells, in maintaining well logs, and
in other engineering activities.  He will direct laboratory and field research
to develop new or to improve old methods and equipment for recovery of oil and
gas.  He will select, train, promote, and direct engineering personnel and may
direct mechanical, civil, electrical, and other engineering activities.

10

--------------------------------------------------------------------------------

 

EXHBIIT B

PERFORMANCE TARGETS

Due to the ramp-up of operations in Western Kentucky and the establishment of
field offices and communications in the immediate area, for the initial 12
months after closing, the goal is to drill 18 wells and bring 12 wells
online.  The daily production target from the 12 wells should be 3 MMCF.  The
Company shall also remain in compliance with regulatory, financing and
accounting requirements both internally and externally.  In addition, the
Company must conduct development within budget of AFE.

 
 
 

 

11