EXHIBIT 10.2
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is entered into effective as
of the 1st day of July, 2001, by and between BLESSING PETROLEUM GROUP, LLC,
Q'Manager"), PUMA ENERGY, INC. and CASPIAN ENERGY INTERNATIONAL, INC. (the
"Companies"),
WITNESSETH:
WHEREAS, Manager is primarily engaged in the business of providing
management and advisory services relating to oil and gas assets; and
WHEREAS, the Companies are primarily engaged in the oil and gas business,
including the acquisition, development and exploration and production of oil and
gas properties and in the acquisition and ownership of gas processing plants and
gathering facilities; and
WHEREAS, in order to reduce overhead and operating expenses and in an
effort to manage their affairs in a more cost effective and efficient manner,
the Companies desire to retain the Manager to provide certain management,
administrative and support services to the Companies, and the Manager desires to
render such services to the Companies, all upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises contained herein and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I. Appointment of Manager
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Section 1.1 Appointment. The Companies hereby appoint the Manager to
conduct the activities described herein by and on behalf of, and for the account
of, the Companies, pursuant to and as set forth in this Agreement. The Companies
shall at all times have and retain ultimate control over their business and
operations.
Section 1.2 Acceptance. The Manager hereby accepts the appointment and
agrees to perform the duties and obligations herein imposed in a prudent manner,
consistent with generally accepted standards for the Companies.
Section 1.3 Legal Ownership Retained in the Companies. The Manager shall
not take title to any properties owned of record or beneficially by the
Companies during the Term of Agreement, all of which will be segregated on the
books and records of the Manager as provided in Section 8.2. Any addition to the
assets of the Companies purchased, leased, or otherwise acquired with the
Companies funds or securities shall be acquired in the name of the Companies.
Section 1.4 Duties Retained by the Companies. The Companies shall remain
responsible for (i) making all decisions required of the Companies under this
Agreement, (ii) such other duties as shall be specifically identified in writing
by the Companies to the Manager and (iii) authorizing (in its discretion) and
executing all agreements, contracts, and other documents in connection with
their business.
ARTICLE II. Status of Manager
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The Manager shall render services hereunder as the Companies agent to the
extent specifically provided herein or as further delegated from time to time by
the Companies and accepted in writing by the Manager. The relationship created
by this Agreement is one of principal and agent, and nothing to the contrary
shall be inferred from this Agreement.
ARTICLE III. Authority and Responsibilitv of the Manager
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Section 3.1 General. As agent for the Companies, the Manager shall have the
authority and the responsibility for the supervision and management of the
day-to-day operations of the Companies' activities covered hereby. As agent for
the Companies, the Manager agrees, to the extent that adequate funds are made
available to the Manager, to manage the Companies' activities covered hereby in
a prudent manner, consistent with generally accepted standards for businesses
similar to the Companies' activities covered hereby. The Manager shall have no
obligation to advance funds for the account of the Companies or to pay any sums
of its own in connection with the performance of the actions which it is
authorized to take hereunder. The Manager's management and activities under this
Agreement shall be specifically subject to the terms hereof and the general
control, direction and supervision of the Companies.
Section 3.2 Compliance with Laws. The Manager shall use reasonable efforts
to insure for full compliance with federal, state and municipal laws,
ordinances, regulations and orders relative to the use, operation, development
and maintenance of the Companies' activities covered hereby. The Manager shall
use reasonable efforts to remedy any violation of any such law, ordinance, rule,
regulation or order which comes to its attention.
Section 3.3 Compliance with Obligations. The Manager, to the extent such
matters are reasonably within its control, shall use reasonable efforts to cause
compliance with all terms and conditions contained in any contract, agreement,
judicial, administrative or governmental order, lease, mortgage, deed of trust
or other contractual or security instrument affecting the Companies' activities
covered hereby; provided, however, that, except as otherwise set forth herein,
the Manager shall not be required to make any payment or incur any liability on
account thereof The Manager shall promptly notify the Companies of any violation
of any covenant in such instruments or agreements.
ARTICLE IV. Administrative Services
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Section 4.1 Provision of Administrative Services. The Manager shall provide
Administrative Services to the Companies, subject to the general approval and
direction of the Companies. Administrative Services shall mean the following:
(a) providing the Companies with such office space, equipment, facilities
and supplies, and the services of such secretarial, clerical and other
personnel as may be required for the reasonable conduct of the business of
the Companies;
(b) making such arrangements with and employing, at the expense and for
the benefit of the Companies, such accountants, attorneys, banks, transfer
agents, custodians, underwriters, engineers, technical consultants,
insurance companies and other persons as may from time to time be requested
by the Companies or may reasonably be necessary to manage the business of
the Companies;
(c) maintaining in good order the books and accounts, ledgers and records
of the Companies and performing all day-today accounting functions of the
Companies, including, without limitation, matters related to paying and
receiving from the bank accounts of the Companies, billing, reserve
estimates, contract coordination and administration and tax return
preparation. Without limiting the generality of the foregoing, the Manager
shall prepare, or assist in the preparation of, all requisite accounting
reports and interim financial statements of the Companies, including
balance sheets, statements of operations, changes in stockholders' equities
and cash flow and shall assist the Companies, if requested, in selecting an
independent public accounting firm for the purpose of conducting annual
financial audit reviews of the Companies and shall aid in coordinating such
audits;
(d) assisting in determining the Companies long and short-term capital
requirements, in determining the best method of fulfilling the Companies
capital requirements, in locating sources of equity and long and short-term
debt financing, in preparing formal presentations to potential investors
and lenders, in negotiating the terms and conditions of such financing and
in consummating such financing;
(e) timely preparing and filing on behalf of the Companies, all reports,
forms, documents, certificates and other instruments required by the
Securities and Exchange commission, any national securities exchange on
which the Companies securities are traded, state securities commissions,
federal, state and local tax authorities, regulatory agencies, including
federal and state energy regulatory agencies, and other governmental bodies
in order to lawfully conduct the business of the Companies;
(f) analyzing reports, economic data and other information relating to the
business of the Companies and periodically reporting to the Board of
Directors of the Companies all such information obtained and analyzed,
including making recommendations with respect thereto;
(g) maintenance activities, including overseeing and managing the
interests of the Companies in the various partnerships, joint ventures,
companies and other entities which the Companies have an interest in, and
reporting to the Companies any significant fact or matter which relates to
such interests;
1
(h) providing the Companies, at their request, with relevant information
for assessing the value of, or making decisions with respect to the
acquisition, funding, management or disposition of, existing or future
assets or investments of the Companies;
(i) advising the Companies of any potential investments coming to its
attention which the Manager believes the Companies may be interested in and
which are within the scope of the business of the Companies; and
(j) taking such other actions and performing such other services as are
deemed necessary, customary or appropriate in the opinion of the Manager to
conduct the business of the Companies.
Section 4.2 Administrative Costs. The Companies shall pay their share of
all costs and expenses incurred on their behalf hereunder. All common
administrative expenses that are not directly allocable to the Company shall be
divided between the Companies based upon the allocation formula in effect for
the current year. For the years 2001 and 2002, the allocation formula shall be
80% to Puma Energy, Inc. and 20% to Caspian Energy International, Inc.
ARTICLE V. Other Services
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Section 5.1 Other Services. The Manager may, at its discretion, perform all
other activities related or incidental to the business of the Companies for the
account of the Companies, at the request of the Companies, including investment
activities or financing activities. Such activities shall be performed under the
control and supervision of the Companies.
Section 5.2 Payment of Out-of -Pocket Expenses. The Manager shall pay all
out-of-pocket expenses of the Manager and its employees, agents and consultants
including the following, travel, food, lodging, entertainment and similar
expenses ("Out-of-Pocket Expenses"), pursuant to the policies and procedures
established by the Manager for the payment or reimbursement of such costs with
respect to activities conducted by the Companies under this Article V. The
Companies shall reimburse the Manager, within thirty days after the end of each
month during the Term of Agreement, for all such Out-of-Pocket Expenses paid by
the Manager on behalf of each Companies or in connection with the business of
the Companies during such month.
Section 5.3 Required Companies Approval. The Companies must specifically
approve the following matters before they are undertaken by the Manager for the
account of the Companies, and, notwithstanding any other provisions hereof, none
of the following shall be undertaken without the Companies prior approval:
(a) the issuance of any capital stock or security convertible into or
exchangeable for such capital stock;
(b) the entering into of capital leases or making of capital expenditures
in excess of $10,000;
(c) the execution of any agreements for borrowing of funds (other than
trade accounts payable incurred in the ordinary course of business of the
Companies) on a long- term basis;
(d) the pledge, hypothecation or other encumbrance of any material asset
of the Companies;
(e) the acquisition or disposition of any material asset of the Companies,
other than in the ordinary course of business or as contemplated herein;
(f) the initiation or compromise of any single litigation matter (or
settling of any single claim) with a cost to the Companies of $10,000 or
more; and
(g) the execution of any contract whose term extends beyond one year from
its effective date.
Notwithstanding any provision of this Agreement to the contrary, the Manager
shall have no authority to take any action that will contravene the Companies
Articles of Incorporation or Bylaws.
ARTICLE VI. Personnel Administration
------------------------
Section 6.1 General. The Manager shall have in its employ or available to
it at all times during the term of this Agreement a sufficient number of
personnel to enable it to properly and adequately manage, operate, maintain, and
account for the business of the Companies as herein provided. All matters
pertaining to the employment, supervision compensation, promotion and discharge
of any employees or personnel of the Manager are the responsibility of the
Manager, which are in all respects the employer of any such employees. All such
employment arrangements are solely the Manager's concern and, other than as set
forth in Article VI hereof, the Companies shall have no liability with respect
thereto.
Section 6.2 Employees. The Manager shall determine the number and
qualifications of employees needed in the operation of the Business and shall
implement the policies of the Companies with regard to employer/employee
matters.
Section 6.3 Consultants and Others. Except as otherwise provided herein,
the Manager shall have the power and authority to retain and pay as independent
contractors, on behalf of and for the account of the Companies, lawyers,
accountants, engineers, contractors, technical consultants, architects, and
others in connection with the conduct of the business of the Companies.
ARTICLE VII. Indemnities
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Section 7.1 Indemnification by the Manager. The Manager shall protect,
indemnify, defend and hold harmless the Companies and their officers, directors,
shareholders and Affiliates from any and all threatened or actual claims,
demands, causes of action, suits, proceedings (formal or informal) , losses,
damages, fines, penalties, liabilities, costs and expenses of any nature,
including attorneys' fees and court costs, sustained or incurred by or asserted
governmental authority, partnership or other entity by reason of or arising out
of: (i) any breach of this Agreement by the Manager, its affiliates, agents, or
employees; or (ii) any act of fraud, willful misconduct or gross negligence of
the Manager and its affiliates or any of its respective employees, or acts or
omission outside the scope of the Manager authorized duties and responsibilities
contained herein. In case any action or proceeding shall be brought against the
Companies or its Affiliates in respect of which the indemnification contemplated
by this Section 10.1 may be sought against the Manager, the Manager, upon the
receipt of notice from the Companies, shall defend such action or proceeding by
counsel reasonably satisfactory to the Companies and the Manager, and the
Manager shall pay for all expenses therefor unless such action or proceeding is
resisted and defended by counsel for any carrier of public liability insurance
that benefits the Companies or the Manager. The Companies shall promptly give
written notice to the Manager when a claim is made against the Companies for
which indemnity is owed to the Companies by the Manager pursuant to this Section
7.1. The Manager shall participate at its own expense in defense of such claims,
but the Companies shall have the right to employ its own separate counsel. The
Companies shall assist the Manager in the defense of any claim for which the
Manager owes indemnification hereunder and is undertaking to provide a defense,
by making available to the Manager such records and personnel as may be
reasonably requested in the defense of such claim.
Section 7.2 Indemnification by the Companies. The Companies hereby agree to
indemnify, defend, and hold harmless the Manager and its officers, directors,
shareholders, employees, agents and affiliates from any and all threatened or
actual claims, demands, causes of action, suits, proceedings (formal or
informal), losses, damages, fines, penalties, liabilities, costs and expenses of
any nature, including attorneys' fees and court costs, sustained or incurred by
or asserted against the Manager or its affiliates, officers, directors,
employees and agents by any person, firm, corporation, governmental authority,
partnership or other entity by reason of or arising out of: (i) the conduct of
the Companies, other than conduct by or at the direction of the Manager, or (ii)
the conduct of the business of the Companies or the provision of services by the
Manager pursuant to this Agreement, except to the extent specifically limited by
the foregoing Section 7.1. In case any action or proceeding shall be brought
against the Manager in respect to which the indemnity contemplated by this
Section 7.2 may be sought against the Companies, the Manager shall give notice
of such action to the Companies, and the Companies shall defend such action or
proceeding by counsel reasonably satisfactory to the Companies and the Manager,
and the Companies shall pay for all expenses therefor unless such action or
proceeding is resisted and defended by counsel for any carrier of public
liability insurance that benefits the Companies or the Manager. The Manager
shall promptly give written notice to the Companies when a claim is made against
the Manager for which indemnity is owed to the Manager by the Companies pursuant
to this Section 7.2. The Companies shall participate in defense of such claims,
but the Manager shall have the right to employ its own separate counsel, and the
Manager shall assist the Companies in the defense of any claim for which the
Companies owes indemnification hereunder and is undertaking to provide a
defense, by making available to the Companies such records and personnel of the
Manager as may be reasonably requested.
Section 7.3 Non-Assumption of Liabilities. The Manager shall not, by
entering into this Agreement, assume or become liable for any of the
obligations, debts or other liabilities of the Companies in existence or arising
on or after the date hereof
Section 7.4 Standard of Conduct of Manager. The Manager shall not be liable
for damages to the Companies or any stockholder of the Companies under this
Agreement or for any actions in connection with the management of the Companies,
except for gross negligence or willful misconduct.
ARTICLE VIII. Access to Information, Books and Records:
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Confidentiality: Power of Attorney
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Section 8.1 Access to Books and Records. The Manager and its duly
authorized representatives shall have complete access to the Companies offices,
facilities and records wherever located, in order to discharge the Manager's
responsibilities hereunder. All records and materials furnished to the Manager
by the Companies in performance of this Agreement shall at all times during the
Term of Agreement remain the property of the Companies.
Section 8.2 Confidentiality. For at least two years after the Term of
Agreement, the Manager agrees to keep confidential all non-public information
concerning the Companies acquired by the Manager or its Affiliates during the
Term of Agreement. For the purpose of this Section 8.2, confidential information
shall not include any information available to or otherwise disclosed by the
Companies to third parties generally. Nothing in this Section 8.2 shall prohibit
any announcement or disclosure by a Party that such Party determines is required
to be disclosed by applicable law or court order.
Section 8.3 Power of Attorney. By execution of this Agreement, the
Companies do hereby irrevocably make, constitute and appoint the Manager, and
its successors, with full power of substitution, as its true and lawful attorney
and agent with full power and authority in its name, place and stead to execute,
swear to, acknowledge, deliver, file, record in the appropriate public offices
and publish any and all contracts, agreements, instruments, conveyances,
mortgages, deeds, notes and other documents of any kind or nature related to,
arising out of or in connection with the business of the Companies or the
Manager's performance of this Agreement.
During the Term of Agreement, the power of attorney granted herein shall be
irrevocable and a power coupled with an interest, shall survive the death,
incompetency, bankruptcy, dissolution or other termination of the Companies,
shall extend and be binding upon the Companies successors and assigns and shall
continue in full force and effect regardless of the occurrence of any of the
foregoing. The Companies hereby agree to be bound by any such contracts,
agreements, instruments, conveyances, mortgages, deeds, notes and other
documents executed or otherwise entered into by the attorney and agent acting in
good faith pursuant to such power of attorney, and hereby waives any and all
defenses which may be available to contest, negate, or disaffirm any action of
the attorney and agent taken under such power of attorney except in cases of bad
faith, gross negligence or willful misconduct.
ARTICLE IX. Conflicts of Interest and Good Faith
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Section 9.1 Other Activities. The Companies acknowledge that the Manager
and its affiliates own, manage and/or operate assets that compete directly with
the business of the Companies and may own, manage and/or operate additional
business and assets in the future that may compete with the business of the
Companies, and the Companies agree that the Manager shall have no liability or
accountability to the Companies for any such competing activities or interests
or any profits or value generated therefrom.
ARTICLE X. Term and Termination of A2reement
---------------------------------
Section 10.1 Initial Term. The initial term of this Agreement shall be for
a five year period beginning on the date hereof Thereafter, this Agreement shall
automatically renew for successive one-year periods until terminated by either
party in accordance with the provisions of this Article X.
Section 10.2 Termination. This Agreement may be terminated on the first to
occur of the following:
(a) In the event the parties shall mutually agree in writing, this
Agreement may be terminated on the terms and dates stipulated therein.
(b) Following the initial five year term hereof, either party may, with or
without cause, terminate this Agreement on any anniversary date hereof by
giving to the other party at least 60 days' advance written notice of its
intent to terminate, whereupon his Agreement shall terminate on the future
date specified in such notice.
(c) Subject to events of force majeure (as provided in Section 11.9
hereof), in the event either party shall fail to discharge any of its
material obligations hereunder, or shall commit a material breach of this
Agreement and such default or breach shall continue for a period of 30 days
after the other party has served notice of such default, this Agreement may
then be terminated at the option of the non-breaching party by notice
thereof to the breaching party.
(d) Dissolution or termination for the corporate existence of the Manager
or cessation on the Manager's part to continue to do business, or
bankruptcy, insolvency, foreclosure or conveyance in lieu of foreclosure,
or assignment for the benefit of the creditors of the Manager shall cause
an immediate termination of this Agreement at the election of the
Companies.
(e) Either Company may terminate this Agreement, with or without cause,
upon 12 months prior notice to the Manager, by action of the Compensation
Committee of its Board of Directors.
Section 10.3 Effects of Termination. The termination of this Agreement in
accordance with the provisions of this Article X shall have the following
effects:
(a) Except for the mutual indemnities, covenants or other provisions
herein that by their terms expressly extend beyond the Term of Agreement,
the Parties' obligations hereunder are limited to the term of this
Agreement.
(b) In the event this Agreement is terminated for any reason, the Manager
shall immediately deliver possession to the Companies of all assets, books
and records of the terminating Company in its possession.
(c) Upon a termination of this Agreement (for whatever cause), the
Companies shall pay to the Manager the amount of any and all payroll,
general and administrative and other costs and expenses accrued to the date
of such termination which are payable by the Companies to the manager in
accordance with the provisions hereof
(d) Upon termination of this Agreement by the terminating Company, the
Companies shall reimburse the Manager for all amounts incurred by the
Manager in connection with its activities under this Agreement. Without
limiting the foregoing, the Companies shall (i) hire or pay the costs of
terminating all of Manager's employees used to conduct the Companies
business, (ii) lease or reimburse the Manager for all or a portion of the
rental of any facilities or equipment used by the Manager under the
Agreement which use was discontinued or reduced by termination of this
Agreement, and (iii) succeed to or indemnify the Manager for any contracts
or agreements entered into by the Manager relating to such business.
ARTICLE XI. Miscellaneous
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Section 11.1 Relationship of Parties. This Agreement does not create a
partnership, joint venture or association; nor does this Agreement, or the
operations hereunder, create the relationship of lessor and lessee or xxxxxx and
bailee. Nothing contained in this Agreement or in any agreement made pursuant
hereto shall ever by construed to create a partnership, joint venture or
association, or the relationship of lessor and lessee or xxxxxx and bailee, or
to impose any duty, obligation or liability that would arise therefrom with
respect to wither or both of the Parties except as otherwise expressly provided
in this Agreement or any agreement made pursuant hereto. Specifically, but not
by way of limitation, except as otherwise expressly provided for herein, nothing
contained herein shall be construed as imposing any responsibility on the
Manager for the debts or obligation of the Companies or any of their affiliates.
It is expressly understood that the Manger is hereby engaged by the Companies to
manage the activities set forth herein only as an agent of the Companies.
Subject to the terms of this Agreement, the Manager and its affiliates shall
have the right to render similar services for other business entities and
persons, including its own, whether or not engaged in the same business as the
Companies.
Section 11.2 No Third Party Beneficiaries. Except to the extend a third
party is expressly given rights herein, any agreement to pay an amount and any
assumption of liability herein contained, expressed or implied, shall be only
for the benefit of the parties and their respective legal representatives,
successors and assigns, and such agreement or assumption shall not injure to the
benefit of the obligers of any indebtedness of any party whomsoever, it being
the intention of the parties hereto that no person or entity shall be deemed a
third party beneficiary of this Agreement except to the extent a third party is
expressly given rights herein.
Section 11.3 Governing Law. THIS AGREEMENT HAS BEEN EXECUTED AND DELIVERED
IN AND SHALL BE INTERPRETED, CONSTRUED AND ENFORCED PURSUANT TO AND IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
Section 11.4 Assignment. No assignment of this Agreement or any of the
rights or obligations set forth herein by either party shall be valid without
the specific written consent of the other party.
Section 11.5 Waiver of Breach. The waiver by either party of a breach or
violation of any provision of this Agreement shall not operate as, or be
construed to be, a waiver of any subsequent breach of the same or any other
provision hereof
Section 11.6 Enforcement. In the event either party shall resort to legal
action to enforce the terms and provisions of this Agreement, the prevailing
party may recover from the other party the costs of such action including,
without limitation, reasonable attorneys' fees.
Section 11.7 Additional Assurances. The provisions of this Agreement shall
be self operative and shall not require further accord between the parties
except as may herein specifically be provided to the contrary; provided,
however, that upon the request of either party, the other party shall execute
such additional instruments and take such additional actions as shall be
necessary to effectuate this Agreement.
Section 11.8 Force Maieure. Neither party shall be liable nor deemed to be
in default for any delay or failure of performance under this Agreement or other
interruption of service or employment resulting directly or indirectly from acts
of God, civil or military authority, acts of public enemy, war, accidents,
fires, explosions, earthquakes, floods, failure of transportation, strikes or
other war, interruptions by either party's employees or agent or any similar or
dissimilar cause beyond the reasonable control of either party.
Section 11.9 Severability. In the event any provisions of this Agreement is
held to be unenforceable for any reason, such provision shall be severable from
this Agreement if it is capable of being identified with and apportioned to
reciprocal consideration or to the extent that it is a provision that is not
essential and the absence of which would not have prevented the parties from
entering into this Agreement. The unenforceability of a provision that has been
performed shall not be grounds for invalidation of this Agreement under
circumstances in which the true controversy between the parties does not involve
such provision.
Section 11.10 Article and Section Headings. The articles and section
headings contained in this Agreement are for reference purposes only and shall
not effect in any way the meaning or interpretation of this Agreement.
Section 11.11 Discretionary Terms. Determination of "necessary",
"appropriate" and other discretionary terms as used herein shall be according to
the judgment and discretion of the respective parties in accordance with
generally accepted standards of the oil and gas industry.
Section 11.12 Amendments and Contract Execution. This Agreement supersedes
all previous contracts between the parties and constitutes the entire Agreement
between the parties with respect to the subject matter of this Agreement. No
oral statement or prior written material not specifically incorporated herein
shall be of any force and effect, and no changes in or additions to this
Agreement shall be recognized unless incorporated herein by amendment, such
amendment to become effective on the date stipulated therein.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their respective duly authorized representatives as of the day and year first
above written.
BLESSING PETROLEUM GROUP, LLC
By: /s/Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx, President
PUMA ENERGY, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx, President
CASPIAN ENERGY INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx, President
