EXHIBIT 10.39
March 16, 1997
Xx. Xxxxx Xxxxxxxxx, President
Saba Petroleum Company
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxx, Xx. 00000
Re: Representation of Saba Petroleum Company
Dear Xx. Xxxxxxxxx,
When accepted by you, this letter will constitute an agreement for the
representation of Saba Petroleum Company and its subsidiaries (collectively,
"Saba") by the undersigned, Xxxxxx X. Xxxx, A Professional Corporation ("Hill"),
and the written fee agreement required under California law. The terms of the
engagement are as follows:
1. Saba engages Hill to act as its general counsel. Hill's
representation in such respect shall be to advise management and the Board of
Directors on legal matters relating to Saba, to assist management with the
negotiation and execution of agreements with third persons, to perform such
legal services for Saba as Hill deems to be within its areas of legal
competency, to hire and supervise outside counsel for Saba, to direct the
performance of legal services by such outside counsel and to negotiate and
approve for payment fees for legal services rendered by such outside counsel to
Saba.
2. The terms of the engagement shall be at will, such that Saba may
discharge Hill at any time with or without cause. Similarly, Hill may withdraw
from representation of Saba at any time, with or without cause, but in any such
instance, Hill shall assist such counsel as Saba may select to acquaint himself
on the matters on which Hill had been working; further, in such event, Saba
shall compensate Hill at the same billing rate charged Saba by such counsel for
the time expended in assisting such counsel and shall reimburse Hill for all out
of pocket expenditures incurred by Hill in rendering such assistance.
3. It is expected that Hill shall devote a substantial amount of its legal
practice time and efforts to the representation of Saba, but Hill shall be
entitled to continue representation of the client which it presently represents.
The precise amount of time to be devoted by Hill to the representation of Saba
shall be determined by Hill. However, in the event that Hill deems that a
conflict, actual or potential, exists between its representation of Saba and any
new client or former client, Hill shall be entitled to withdraw from the
representation of Saba (and such client or former client) in respect to the
matter as to which Hill believes such a possible conflict exists and cause third
party counsel to Saba to represent Saba with respect to such matter without the
participation therein by Hill is aware of such a potential conflict, which is in
respect of the dealings between Saba and
Geo Petroleum, Inc.; Saba agrees that Hill may represent neither Saba nor Geo
Petroleum, Inc. with respect to their dealings with each other. The clients that
Hill will continue representing in matters not relating to Saba include Geo
Petroleum, Inc., Xxxx X. Xxxxxxxxxx, Capco Resources, Ltd., X.X. Xxxxx, X.X.
Xxxx, Xxxxx Xxxxxxxx, Xxxxx Capital Securities, Inc., Riverby Ltd., and their
respective affiliates. In addition, Saba understands that Hill has various and
gas interests and will continue to acquire and develop such interests in
association with others. Hill shall not be required to offer any such interests
(whether existing or hereafter sought or acquired) to Saba, but Hill shall not
actively compete with Saba for the acquisition of any such interests. At Saba's
election, Xxxxxx X. Xxxx shall be a vice-president of Saba, but shall not be an
employee of Saba, but rather an employee loaned by Hill to Saba.
4. Saba shall compensate Hill on a monthly basis at the annual rate of
$150,000, reduced by any compensation which Xxxxxx X. Xxxx, the sole shareholder
of Hill, annually receives as a director of Saba. For such purpose, Hill shall
be compensated at an interim rate of $10,000 per month and An adjustment shall
be made in December of each year or at such earlier time as Hill's
representation of Saba or membership on the Board of Directors shall cease.
Hill's compensation shall be reviewed on an annual basis and shall be adjusted
if so agreed by Saba and Hill. Saba shall also grant to Hill, effective March
15, 1997, options to purchase 125,000 shares of the common stock of Saba at an
exercise price of $___per share. Such options shall be subject to adjustment in
the case of stock dividends, splits, reclassification or other event which would
give rise to an adjustment in options, warrants, or rights to purchase or
acquire the common stock of Saba held by any third person. The number of options
to be granted to Hill shall be reduced annually by the number of options
acquired by Hill under Saba's directors option plan. Options granted to Hill
shall vest 20% per year on the 15th day of March. Saba shall cause the shares
underlying Hill's options to be registered under the Securities Act of 1933 and
approved for such listing on such exchange or market as the common stock of Saba
may be listed, all no later than the day on which such options shall become
exercisable.
5. Hill shall maintain its offices in Santa Barbara, California , for its
performance of services to Saba. Saba shall install and maintain, at its cost
and on a trial basis, a video teleconferencing system, including ISDN
facilities, between Saba's offices and that of Hill. To perform its duties to
Saba, Hill will be required to be present at Saba's offices in Santa Xxxxx
frequently, but it is anticipated that it will not be presently more than eight
days per month. Should Hill spe3nd the night in Santa Xxxxx, Saba will reimburse
or bear Hill's hotel and
incidental expenses at the Santa Xxxxx Inn or equivalent facility. Saba shall
reimburse Hill for its out of pocket expenses which have been incurred for the
benefit of Saba, including telephone (other than local charges), travel, postage
and other expenses.
6. Saba shall cause Xxxxxx X. Xxxx and his spouse to be included in all
benefit and medical plans maintained by Saba, save those plans for which
eligibility is limited to employees of Saba. Should Xxxxxx X. Xxxx and his
spouse not be eligible for coverage under medical and dental plans maintained,
from time to time, by Saba, Saba will pay to Hill an amount equal to that which
would be paid by Saba to the insurer were Xxxxxx X. Xxxx and his spouse covered
by the apposite medical or dental plan.
7. Saba will pay to Hill an automobile allowance of $400 per month, which
shall compensate Hill for car rental and usage. In addition, Saba shall
reimburse Hill on a monthly basis 1/24 of the cost of insurance on the
automobile acquired by Hill and 1/24 of the annual license and registration fees
for such car. As Hill leases a new automobile ( which shall not be more than
once every two years) Saba shall reimburse Hill for 50% of the deposit and other
first month's charges (save pre-paid rental) due under the lease.
Saba is advised that it should have this letter of agreement reviewed by
counsel other than Hill, so that Saba may have an unbiased and disinterested
opinion as to the contents and effect thereof. After such review and
consideration as Saba determines appropriate, kindly sign and return one copy of
this letter to the undersigned, and it will constitute the retention and fee
agreement required by the Rules of Professional Conduct.
Yours very truly,
Xxxxxx X. Xxxx, A Professional Corporation
By________________________________
Xxxxxx X. Xxxx, its President
ACCEPTED AND AGREED TO On this ____ day of March, 1997.
SABA PETROLEUM COMPANY
