Exhibit 10.3
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (the "Agreement) is made effective as of April
11th, 2007 (the "Effective Date"), by and between Resource Buyers and
Distribution, Inc., a Nevada Corporation (the "Consultant") and Spirit
Exploration, Inc., a Nevada Corporation (the "Company").
WHEREAS, the Consultant is engaged in the business of providing services
and venues for identifying strategic partnerships, business opportunities,
product distribution, media, business development, market evaluation, product
analysis in the global markets and the Company desires to identify and embark
on these various potential opportunities while improving the growth of its
operations after completion of the acquisition;
WHEREAS, the Company desires to secure the efforts of a consultant who is
capable of providing these services to the Company and its customer base;
WHEREAS, Consultant desires to provide services to the Company; and
WHEREAS, Company desires to retain the services of Consultant as provided
herein.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. Engagement. The Company hereby appoints and engages Consultant as the
Company's advisor. The Consultant hereby accepts such appointment and agrees to
perform the services upon the terms and conditions of said Consulting Agreement.
2. Engagement Term. The "Engagement Term" and Consultant's engagement under
this Agreement shall commence on the Effective Date and shall continue for a
period of five (5) years from the Effective Date, ending at the close of
business on April 11, 2012, provided, however, that the Engagement Term shall
automatically extend for successive one-year periods (such extensions also being
referred to as the "Engagement Term"), as long as neither party has given
written notice to the other party at least 180 days prior to the end of the then
current term that such term shall not be extended, and further provided that the
Agreement has not been terminated earlier in accordance with the provisions of
Section 8 below. The parties acknowledge that certain obligations under this
Agreement survive the end of Consultant's engagement.
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3. Authority and Description of Services.
(a) Consultant. The Company shall engage the Consultant as an
independent advisor. Consultant shall render services to the Company from
time to time as requested by the Company and agreed upon by the parties.
Consultant shall perform services commensurate with the services performed
by Consultants to an entity comparable to the Company, including, without
limitation, guiding the development of a strategic business and marketing
plan, identifying business opportunities for the Company, and advising the
company in its capital raising efforts. Consultant shall not participate in
any offering of securities of the Company.
(b) Location and Services. Consultant's services shall be performed at
the main office location of the Consultant or other such designated
location(s) as Consultant and Company agree are the most advantageous for
the work to be performed.
(c) Manner of Engagement. There shall be no specified minimum time
commitment for Consultant to be considered to have performed all of its
duties under this Agreement
(d). Limitations on Services.
(i) Investment Banking Activities. Consultant shall not be
required to perform any investment banking related activities on
behalf of Company as a condition of this Agreement. For the purposes
of this Agreement, investment banking activities include, without
limitation, (i) the location, negotiation and/or securing of public or
private debt for the Company; (ii) the location, negotiation and/or
securing of any public or private equity for the Company; (iii) the
production of any documentation that is to be utilized for the
purposes and activities as relating to the activities as outlined in
subheadings (i) and (ii); and (iv) any other activities as may
normally be associated with the practice of investment banking.
(ii) Release of Information. The parties hereto recognize that
certain responsibilities and obligations are imposed by Federal and
State securities laws and by the applicable rules and regulations of
stock exchanges, the National Association of Securities Dealers,
in-house "due diligence" or "compliance" departments of brokerage
houses, etc. Accordingly, Consultant shall NOT release any financial
or other information or data about Company or customers of the Company
without the consent and approval of Company; and Consultant shall NOT
release any information or data about Company or customers of the
Company to any selected or limited person(s), entity, or group if
Consultant is aware that such information or data has not been
generally released or promulgated and Company requests in writing that
said information or data is not to be so released or promulgated.
4. Base Compensation. Commencing on the Effective Date, the Company shall
pay the Consultant base compensation in the gross amount of $10,000 per month
for the first twelve months, which payment shall be deferred until April 11,
2008 or until
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funding of the Company, whichever is earlier. Commencing on April 11, 2008, the
Company shall pay the Consultant base compensation in the gross amount of
$20,000 per month, which payment shall be paid periodically in accordance with
normal Company payroll practices. Thereafter Base Compensation shall increase
by 5% annually. Base compensation shall also be subject to reviews and
increases in the sole discretion of the Board ("Base Compensation").
5. Additional Consideration. In addition to Base Compensation, the
Consultant shall be entitled:
(a) To an immediate grant to Consultant or Assigns Common Stock
Purchase Warrants, in the form attached as Exhibit A hereto, to purchase
800,000 shares of the Company's common stock for a period of five years at
an exercise price of $1.00 per share.
(b) To an immediate grant of 3,500,000 shares of the Company's common
stock to the Consultant or its assigns.
6. Duties of Company. Company shall supply Consultant, on a regular and
timely basis with all approved data and information about Company or it's
customer (s), its management, its products, and its operations and Company shall
be responsible for advising Consultant of any facts which would affect the
accuracy of any prior data and information previously supplied to Consultant so
that Consultant may take corrective action. Consultant reports are not intended
to be used in the sale or offering of securities. In that Consultant relies on
information provided by Company for a substantial part of its preparations and
report, Company represents that said information is neither false nor
misleading, nor omits to state a material fact and has been reviewed and
approved by counsel to Company.
7. Termination of the Agreement.
(a) Termination by the Consultant.
(i) For Good Reason. If Consultant terminates the Agreement for
Good Reason, as defined in subsection (e) below, Consultant shall be
entitled to receive (i) Consultant's Base Compensation through the
date of termination, (ii) the Net Smelter Return Royalty for the full
term specified in Section 5(c) above, and (iii) the Severance Benefit,
as defined in subsection (g) below.
(ii) Without Good Reason. If the Consultant terminates the
Agreement during the Engagement Term other than for Good Reason, as
defined in subsection (e) below, the Company shall have no liability
to Executive except to pay (i) Consultant's Base Compensation through
the date of termination, and (ii) the Net Smelter Return Royalty for
the full term specified in Section 5(c) above. Consultant shall not be
entitled to receive severance or other benefits.
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(iii) Notice of Non-Renewal. Notice given by Consultant of
non-renewal of this Agreement as provided for in Section 2 shall be
treated as a termination without Good Reason, unless the Notice
specifically sets forth a basis for Good Reason, for purposes of this
Section 8.
(b) Termination by Company
(i) For Cause. If the Company terminates the Agreement during the
Engagement Term for Cause, as defined in subsection (d) below, the
Company shall have no liability to Consultant except to pay (i)
Consultant's Base Compensation through the date of termination, and
(ii) the Net Smelter Return Royalty for the full term specified in
Section 5(b) above. Consultant shall not be entitled to receive
severance or other benefits.
(ii) Without Cause. If the Company terminates the Agreement
during the Engagement Term without Cause (and for reasons other than
Death, Disability or Change in Control as provided for in this Section
8), Consultant shall be entitled to receive (i) Consultant's Base
Compensation through the date of termination, (ii) the Net Smelter
Return Royalty for the full term specified in Section 5(b) above, and
(iii) the Severance Benefit.
(iii) Notice of Non-Renewal. Notice given by the Company of
non-renewal of this Agreement as provided for in Section 2 shall be
treated as a termination without Cause, unless the Notice specifically
sets forth a basis for Cause, for purposes of this Section 8.
(c) Termination Due to Change in Control. If the Company terminates
the Agreement without Cause (and for reasons other than Death or
Disability) in conjunction with a Change in Control, as defined in
subsection (f) below, Consultant shall be entitled to receive (i)
Consultant's Base Compensation through the date of termination, (ii) the
Net Smelter Return Royalty for the full term specified in Section 5(b)
above, and (iii) the Change in Control Benefit, as defined in subsection
(h) below.
(d) Cause. The following acts by Consultant, as determined by the
Board in its reasonable discretion, shall constitute "Cause" for
termination:
i. Theft or embezzlement, or attempted theft or embezzlement, of
money or material tangible or intangible assets or property of the
Company, its Subsidiaries or its employees or business relations;
ii. An intentional violation of any law or any act or acts of
moral turpitude which negatively affects the interests, property,
business, operations or reputation of the Company or its Subsidiaries;
iii. Other than as a result of a disability, a material failure
to carry out effectively Consultant's duties and obligations to the
Company, upon not less
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than ten (10) days' advance written notice of the asserted problem and
a reasonable opportunity to cure;
iv. Gross negligence or willful misconduct in the performance of
Consultant's duties;
v. Consultant's material breach of this Agreement which, after
written notice by the Company of such breach, is not cured within ten
(10) days of such notice.
(e) Good Reason. Termination by Consultant of this Agreement for "Good
Reason" shall mean a Termination by Consultant within sixty (60) days after
(i) a material diminution in Consultant's position, duties or
responsibilities; (ii) a reduction in Executive's then Base Compensation;
or (iii) the Company's material breach of this Agreement. Prior to a
Resignation for Good Reason, Consultant shall give the Company written
notice of the basis for his claim that he has Good Reason to terminate his
employment and allow the Company ten (10) days to cure.
(f) Change in Control. For purposes of this Agreement, a "Change in
Control" shall mean the occurrence of any of the following events:
i. A merger or consolidation involving the Company or any
subsidiary of the Company after the completion of which: (A) in the
case of a merger (other than a triangular merger) or a consolidation
involving the Company, the stockholders of the Company immediately
prior to the completion of such merger or consolidation beneficially
own (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or comparable
successor rules), directly or indirectly, outstanding voting
securities representing less than fifty percent (50%) of the combined
voting power of the surviving entity in such merger or consolidation,
and (B) in the case of a triangular merger involving the Company or a
subsidiary of the Company, the stockholders of the company immediately
prior to the completion of such merger beneficially own (within the
meaning of Rule 13d-3 promulgated under the Exchange Act, or
comparable successor rules), directly or indirectly, outstanding
voting securities representing less than fifty percent (50%) of the
combined voting power of the surviving entity in such merger and less
than fifty percent (50%) of the combined voting power of the parent of
the surviving entity in such merger;
ii. An acquisition by any person, entity or "group" (within the
meaning of Sections 13(d) or 14(d) of the Exchange Act or any
comparable successor provisions), other than any employee benefit
plan, or related trust, sponsored or maintained by the Company or an
affiliate of the Company and other than in a merger or consolidation
of the type referred to in clause (i)" of this Section 9(j)(i), of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act, or comparable successor rules) of outstanding
voting securities of the Company representing more than fifty percent
(50%) of the combined voting power of the Company (in a single
transaction or series of related transactions); or
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iii. In the event that the individuals who, as of the Effective
Date, are members of the Board (the "Incumbent Board"), cease for any
reason to constitute at least fifty percent (50%) of the Board.
(However, if the subsequent election, or nomination by the Board for
election by the Company's stockholders, of any new member of the Board
is approved by a vote of at least fifty percent (50%) of the Incumbent
Board, such new member of the Board shall be considered as a member of
the Incumbent Board.)
(g) Severance Benefit. The "Severance Benefit" shall mean continuation
of Consultant's Base Compensation in effect immediately prior to such
termination or resignation for the term of this Consultation Agreement, but
in any event such compensation shall be for no less than twelve (12) months
("Severance Benefit Period").
(h) Change in Control Benefit. The "Change in Control Benefit" shall
mean a Continuation of Consultant's Base compensation in effect immediately
prior to such termination or resignation for a period equal to twice the
amount of the Severance Benefit Period or the remainder of the then current
Engagement Term ("Change in Control Benefit Period"), whichever is longer
8. Representation, Undertakings and Indemnification.
(a) Company shall be deemed to make a continuing representation of the
accuracy of any and all material facts, material, information and data
which it supplies to Consultant and Company acknowledges its awareness that
Consultant will rely on such continuing representation in disseminating
such information and otherwise performing its functions hereunder.
(b) Consultant, in the absence of notice in writing from Company, will
rely on the continuing accuracy of material, information and data supplied
by Company.
(c) Company shall cooperate fully and timely with Consultant to enable
Consultant to perform its duties and obligations under this Consulting
Agreement.
(d) The execution and performance of this Consulting Agreement by
Company has been duly authorized by the Board of Directors of Company in
accordance with applicable law, and, to the extent required, by the
requisite number of shareholders of Company.
(e) The performance by Company of this Consulting Agreement will not
violate any applicable court decree or order, law or regulation, nor will
it violate any provision of the organizational documents and/or bylaws of
Company or any contractual obligation by which Company may be bound.
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(f) Company shall act diligently and promptly in reviewing materials
submitted to it by Consultant to enhance timely distribution of the
materials and shall inform Consultant of any inaccuracies contained therein
within a reasonable time prior to the projected or known publication date.
9. Consultant as an Independent Contractor. Consultant shall provide said
services as an independent contractor, and not as an employee of the Company or
of any entity affiliated with Company. Consultant has no authority to bind
Company or any affiliate of Company to any legal action, contract, agreement, or
purchase, and such action cannot be construed to be made in good faith or with
the acceptance of Company, thereby becoming the sole responsibility of
Consultant. Consultant is not entitled to any medical coverage, life insurance,
savings plans, health insurance, or any and all other benefits afforded Company
employees. Consultant shall be solely responsible for any Federal, State or
local taxes and fees, and should Company for any reason be required to pay taxes
at a later date, Consultant shall reassure such payment is made by Consultant
and not by Company. Consultant shall be responsible for all workers'
compensations payments and herein holds Company harmless for any and all such
payments and responsibilities related hereto.
10. Confidential and Proprietary Information.
(a) Consultant agrees that he will not use or disclose to any person,
entity, association, firm or corporation, any of the Company's Confidential
Information, except with the written authorization of the Board or as
necessary to perform his duties under this Agreement. The term
"Confidential Information" means information and data not generally known
outside of the Company (unless as a result of Consultant's breach of any of
the obligations imposed by this Agreement or the duties imposed by any
then-existing statute, regulation, ordinance or common law) concerning the
Company's business and technical information, and includes, without
limitation, information relating to: (i) the identities of clients and the
Company's other Business Relations (as defined below) and their purchasing
habits, needs, business information, contact personnel and other
information; (ii) suppliers' and vendors' costs, products, contact
personnel and other information; and (iii) the Company's trade secrets,
products, research and development, financial and marketing information,
personnel and compensation information, and business plans. Consultant
understands that this Section 10 applies to computerized as well as written
information and to other information, whether or not in written form. It is
expressly understood, however, that the obligations of this Section 10
shall only apply for as long as and to the extent that the Confidential
Information has not become generally known to or available for use by the
public other than by Consultant's act(s) or omission(s) in violation of
this Agreement.
(b) Consultant agrees that upon the end of his employment with the
Company for any reason, he will not take with him any Confidential
Information that is in written, computerized, machine readable, model,
sample, or other form capable of physical delivery, without the prior
written consent of the Board. The Consultant also agrees that upon the end
of his employment with the Company for any reason or at any
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other time that the Company may request, he will deliver promptly and
return to the Company all such documents and materials in his possession or
control, along with all other property and documents of the Company or
relating to the Company's employees, suppliers, customers, and business.
11. Modification of the Agreement. This Consulting Agreement may not be
modified or amended unless such modifications or amendments are mutually agreed
upon in writing, and signed by the party against whom enforcement of the
Agreement is being sought.
12. Successors and Assignees. This Agreement may be assigned by the Company
to any successor or assignee of a substantial portion of the business of the
Company (whether by transfer of assets or stock, merger or other business
combination). Consultant may not assign his rights or obligations under this
Agreement.
13. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties and their respective heirs, successors, legal
representatives and permitted assigns.
14. Waiver. The failure of either party, at any time, to require any such
performance by any other party shall not be construed as a waiver of such right
to require such performance, and shall in no way affect such party's right to
require such performance and shall in no way affect such party's right
subsequently to require full performance hereunder.
15. Notices. All notices hereunder shall be in writing and addressed to the
party at the address herein set forth, or at such other address which notice
pursuant to this section may be given, and shall be given by either personal
delivery, certified mail, express mail or other national or three (3) business
days after being mailed or delivered to such courier service. Any notices to be
given hereunder shall be effective if executed by and sent by the attorneys for
the parties giving such notice, and in connection therewith the parties and
their respective counsel agree that in giving such notice such counsel may
communicate directly in writing with such parties to the extent necessary to
give such notice. Any notice required or permitted by this Consulting Agreement
to be given shall be given to the respective parties at the address first
written above, on page one (1) of this Consulting Agreement.
16. Severability of Provisions. If any provision of this Consulting
Agreement shall be held to be contrary to law, invalid or unenforceable for any
reason, the remaining provisions shall continue to be valid and enforceable. If
a court finds that any provision of this Consulting Agreement is contrary to
law, invalid or unenforceable, and that by limiting such provision it would
become valid and enforceable, then such provision shall be deemed to be written,
construed, and enforced as so limited.
17. Reasonable Restrictions/Remedies. Executive acknowledges that the
provisions contained in Sections 11 through 14 of this Agreement are reasonable
in
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scope, area and duration and are necessary for the Company to protect its
legitimate business interests, including its confidential information and
business relationships. Executive and Company acknowledge and agree that damages
would not adequately compensate Company if Executive were to breach any of his
covenants contained in Sections 11 through 14 above. Consequently, Executive
agrees that in the event of any such breach, Company shall be entitled to
enforce this Agreement by means of an injunction or other equitable relief, in
addition to any other remedies, including without limitation monetary damages
set off against any amounts due Executive by Company.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada.
20. Arbitration. Any dispute, claim or controversy arising out of or
relating to this Agreement or the breach, termination, enforcement,
interpretation or validity thereof, including the determination of the scope or
applicability of this agreement to arbitrate, shall be determined by arbitration
in Las Vegas, Nevada, before one arbitrator. The arbitration shall be
administered by the American Arbitration Association pursuant to its Employment
Arbitration Rules and Procedures. Judgment on the Award may be entered in any
court having jurisdiction. This clause shall not preclude the parties from
seeking provisional remedies in aid of arbitration from a court of appropriate
jurisdiction. All fees and costs of any arbitration conducted pursuant to this
Agreement shall be divided equally between the parties, with each paying his or
its own attorney's fees, costs and expenses.
21. Entire Agreement. This Consulting Agreement contains the entire
agreement of the parties. It is declared by both parties that there are no oral
or other agreements or understanding between them affecting this Consulting
Agreement, or relating to the business of Consultant. This Consulting Agreement
supersedes all previous agreements between Consultant and Company.
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IN WITNESS WHEREOF, the undersigned have set forth their hands effective as
of the date first written above.
RESOURCE BUYERS AND SPIRIT EXPLORATION, INC.
DISTRIBUTION, INC.
By: \s\ Xxxxxxx X'Xxxxx By: \s\ Xxxxx X. Laipnieks
------------------------- --------------------------
Name: Xxxxxxx X'Xxxxx Name: Xxxxx Laipnieks
Title: President Title: President
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