CONSULTING AGREEMENT
This Consulting Agreement (this "Agreement") is made and entered into as of
March 9, 1996 by and between Xxxxx Oil and Gas Company, or the surviving entity
in any merger of the Company or any entity which receives all or substantially
all of its assets (hereinafter referred to as the "Company"), and Beta Capital
Group, Inc., or any entity or individuals which or who receive all or
substantially all of its assets (hereinafter referred to as the "Consultant").
RECITALS
WHEREAS, Consultant has certain experience and contacts associated with
developing and implementing capitalization plans, including utilization of debt
capital in business operations; and
WHEREAS, the Consultant and the Company over the past six months have met and
discussed potential opportunities that may exist, and as a result of those
discussions agreed in concept to the mutual promises and covenants contained
hereon on February 12, 1996; and
WHEREAS, the Company wishes to engage the Consultant as described herein to
assist the Company in the business operations of the Company and Consultant
desires to provide such services to the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained, the parties hereby memorialize those concepts agreed to on February
12, 1996 and agree as follows:
1. CONSULTING SERVICES
Attached hereto as Exhibit A is a description of the services to be
provided by the Consultant hereunder (the "Consulting Services"). Consultant
hereby agrees to utilize its best efforts in performing the Consulting Services;
however, the Consultant makes no warranties, representation or guarantees to the
other regarding the funds to be raised, any appreciation of Company stock price,
the results of the Consulting Services to be provided herein.
2. TERM OF AGREEMENT
Subject to the following, this Agreement shall be in full force and
effect commencing on the earlier of March 9, 1996 or the signing of this
Agreement and concluding two years thereafter, unless extended as hereinafter
provided.
(A) Cancellation by Company. This Agreement can be unilaterally
canceled by the Company on 15 days written notice if (a) 90 days after
the date a private offering memorandum for use in the Series A offering
contemplated by Exhibit A is completed by the Company, at least $1.0
million in gross proceeds has not been raised by the Company, (b) if
after one year from the effective date of this contract, at least
one-half
of the Company's presently outstanding callable $1.25 warrants are not
callable and have not been callable during the past year because the
market price of the Company's common stock has not increased to a point
where the Company is entitled to call the warrants for redemption, (c)
if after one year from the effective date of this contract, (i) the
Series A warrants described in Exhibit A are not callable or have not
been callable during the past year because the market price of the
Company's common stock has not increased to a point where the Company
is entitled to call the warrants for redemption, and (ii) at least $0.5
million in gross proceeds has not been received by the Company through
the exercise of warrants to purchase Company common stock unless the
Company elects not to call or interferes with the call of the warrants,
or (d) if the total consulting fees paid under Exhibit B, including
compensation for the broker relations consultant, as described in
Section 10, and the reimbursed expenses actually paid by the Company
under Exhibit C, exceed 15% of the sum of (i) the net amounts received
by the Company from the Series A and Series B financings described or
contemplated in Exhibit A and (ii) from exercise of any warrants. The
provisions set forth in 2(A)(d) shall be computed on an annual basis
commencing on the anniversary date of this Agreement. In the event the
Consultant has received funds in excess of 15% as described above, the
Company shall give Consultant written notice, and Consultant will have
30 days to cure the overpayment. Furthermore, the provisions set forth
in 2(A)(d) shall be subject to additional authorized expenditures as
approved and ratified prior to expenditure by the Company.
(B) Extension by Consultant. This Agreement can be unilaterally
extended by Consultant for up to one year (until February 28, 1999) if
at least $5.0 million in gross proceeds has been raised by the Company
from the sale of Series A or Series B debt and/or the exercise of
Series A or Series B warrants as described or contemplated on Exhibit A
and (i) the Company's reported common stock market price has been at
least $3.00 per share for two consecutive weeks between June 1, 1997
and February 28, 1998 and (ii) the Company has received at least an
additional $500,000 in gross proceeds from the exercise of warrants
described or contemplated on Exhibit A or other equity investment in
the Company.
(C) Other Terminations. Either party shall have the right to terminate
this Agreement without notice in the event of bankruptcy, insolvency,
or assignment for the benefit of creditors of the other party or, with
10 days prior written notice, if the other party shall have failed to
comply with its obligations under the terms of this Agreement,
including, without limitation, any responsibilities for payment of fee
or performance of services set forth herein.
3. TIME DEVOTED BY CONSULTANT
It is expected that Xxxxx Xxxxx, President of Consultant, shall
initially devote a majority of his time to the Consulting Service described in
this Agreement, in particular during the time when the Company is undertaking to
offer and sell the Series A and Series B debt described on Exhibit A or other
2
alternate financing arrangements to which the parties mutually agree;
thereafter, the Consultant shall devote such time as is reasonably deemed
necessary by the Consultant and the Company to perform the obligations of
Consultant hereunder. Consultant reasonably shall make available the services of
Xxxxx Xxxxx during the term of this Agreement, unless Xx. Xxxxx has suffered
death or disability and the Company has raised at least $6.0 million from the
financings described or contemplated in Exhibit A and/or from the exercise of
warrants or from other equity investments. It is agreed by the parties that the
amount of time devoted to the business of the Company by other partners,
independent contractors or employees of the Consultant may vary from time to
time and that other employees of the Consultant may provide consulting services
for other clients during the term of this Agreement. Consultant shall provide
written reports to the Board of Directors of the Company describing the
consulting services performed for the Company on a monthly or other basis as may
be mutually agreed upon by the Consultant and the Company.
4. PLACE WHERE SERVICES WILL BE PERFORMED
The Consultant will perform most services in accordance with this
Agreement at offices of the Consultant. Consultant will be available, at the
expense of the Company, to perform services at such other places as the
Consultant and Company shall mutually agree, given the nature and extent of the
services described on Exhibit A.
5. COMPENSATION TO CONSULTANT
The Consultant's compensation for the Consulting Services performed
under this Agreement shall be the fees and compensation described on Exhibit B.
All direct expenses related to the Consulting Services being performed incurred
by Consultant and the broker relations consultant described in Section 10 in
performing the Consulting Services hereunder shall be reimbursed by the Company,
including, but not limited to, telephone and other communications expenses
incurred by Consultant or the broker relations consultant, photocopying,
printing and postage; and for travel, lodging and entertainment. Consultant
agrees to obtain prior approval from the Company for any single expense in
excess of $1,000 which is not itemized on the two-year reimbursable expense
budget set forth on Exhibit C. In addition, Consultant agrees to obtain prior
approval, at least in concept, for any single expense or activity in excess of
$1,000 regardless of whether such expense is itemized on the two-year
reimbursable expense budget set forth on Exhibit C. Company and Consultant agree
that all the services of the broker relations consultant, and cash monthly
consulting fees and reimbursed expenses as budgeted on Exhibit C will not exceed
15% of the Company's net proceeds from the Series A and Series B financings
described or contemplated on Exhibit A, and other financings that may be
contemplated and mutually agreed upon, plus the net proceeds to the Company from
the exercise of any warrants. In the event this Agreement is extended for an
additional year by the Consultant under Section 2, it is agreed that the Exhibit
C budget shall serve as the reimbursable expense budget for the third year,
subject to the 15% limitation described in this Section 5. For the purposes of
this calculation expenditures and proceeds are agreed to be cumulative for the
term of the contract.
3
The Company shall pay separately the costs and expenses it incurs in
connection with the financing activities described on Exhibit A, including the
Company's legal fees and independent due diligence reports or evaluations.
The Company shall pay consulting fees to Consultant on a monthly basis,
in advance, by the first day of each month, with the first monthly fee of
$12,500 due on signing of this Agreement. The Company shall prepay the last
month's consulting fee at the earlier of (1) receipt of proceeds of at least
$12,500 from the exercise of Team Warrants (as described in Section (5) of
Exhibit B) or (2) upon receipt by the Company of at least $1.0 million in gross
proceeds from the exercise of outstanding Warrants or proceeds from the Series A
and/or Series B debt financings or, other alternate financings that may be
contemplated and mutually agreed upon.
Company and Consultant agree that any additional consulting or similar
services performed by the Consultant for the Company not contemplated by this
Agreement or agreed to by the parties shall be negotiated before performance and
any fee or compensation to be earned by Consultant from the Company or
obligation to pay by Company shall be set forth in a writing signed by the
obligated party. This includes any acquisitions that may result from
introduction by Consultant or Consultant's contacts inclusive of and not limited
to those defined as Consultant's confidential information in Section 7.
6. INDEPENDENT CONTRACTOR
Consultant and the broker relations consultant shall each be, and shall
each be deemed to be, an independent contractor in the performance of the
Consulting Services under this Agreement. Consultant shall have no power to
enter into any agreement on behalf of, or otherwise bind, Company. Consultant
shall be free to pursue, conduct and carry on for its own account (or for the
account of others) such activities, employments, ventures, businesses, or other
pursuits as may determine in its sole, absolute and unfettered discretion,
provided that, Consultant agrees not to engage in any activity, venture,
business or pursuit that is harmful to the business of the Company. Nothing
contained in this Agreement shall be construed to imply that Consultant, or any
employee, agent or other authorized representative of Consultant, is a partner,
joint venturer, agent, officer, employee, or other representative of Company and
neither the Consultant nor any representative of the Consultant shall represent
to anyone to the contrary; provided that Xxxxx Xxxxx may become a director of
the Company as described in Section 11.
7. CONFIDENTIAL INFORMATION
Consultant recognizes that, in the course of providing services to
Company hereunder, Company may divulge information relating to its business
affairs, financial affairs and future plans that Company considers confidential
and proprietary (collectively, "Confidential Information"), and Consultant
agrees that Consultant will use such Confidential Information only within the
scope of Consultant providing services to Company hereunder, and will neither
disclose to, nor permit, any person or entity, other than Company and its
principals, agents, employees and
4
other paid experts and professionals who agree to be bound by the terms of this
paragraph, to view or have access to the Confidential Information.
Notwithstanding anything contained herein to the contrary, the term
"Confidential Information" shall not include the following: (i) information
previously known to Consultant, (ii) information rightfully received by
Consultant from a third party holding such Confidential Information legally and
without a continuing restriction on its use, or (iii) information which is or
becomes a part of the public domain through no breach by Consultant of this
Agreement. Notwithstanding anything to the contrary hereunder, Consultant shall
not be liable for (i) any inadvertent or accidental disclosure if Consultant has
exercised the same degree of care as Consultant would take to preserve or
safeguard his own proprietary information, or (ii) disclosure of the
Confidential Information which is within the public domain at the time of
disclosure, or is or becomes publicly available without breach of this Agreement
by Consultant, or is received by Consultant from a third party holding the
Confidential Information legally and having the legal right to disseminate it
without breach of this Agreement by Consultant or is disclosed by Consultant
with the written approval of the President of Company, or is disclosed by
Company to others on a nonrestricted basis. Upon expiration of this Agreement,
Consultant shall, at the request of Company, return all Confidential Information
and other materials belonging to Company which are in Consultant's possession.
The Consultant and the Company acknowledge that each will have access
to proprietary information regarding their respective business operations and
agree to keep all such information secret and confidential and not to use or
disclose any such information to any individual or organization without the
non-disclosing party's prior written consent. Consultant hereby designates its
sources of funding, sources of acquisitions, advisors, agents identified by
Consultant to Company as Consultant's confidential information. The parties
agree that from time to time Consultant or the Company may designate certain
additional information as confidential for purposes of this Agreement.
8. NON-CIRCUMVENTION AND NON-DISCLOSURE
The Company hereby irrevocably agrees not to circumvent or disclose to
others, either directly or indirectly, the clients, sources of funding, sources
of acquisitions, advisers, agents, brokers, associates or other contacts that
Consultant or its affiliates have, provided that the Company may make disclosure
required by law and shall notify Consultant before any such disclosure is made.
The Company hereby confirms that the identity of any or all of the
entities introduced to the Company by Consultant which did not have a previous
relationship with the Company or have not been previously engaged in business
negotiations with the Company are considered proprietary to the Consultant and
its affiliates and shall remain so for the term of this Agreement and for one
year beyond the term of this Agreement. The Company agrees not to complete a
financing with any of such entities unless this Agreement is in force. The
Company and the Consultant agree that financings not described on Exhibit A
completed with persons or entities not first identified to the Company by
Consultant or completed without substantial involvement or assistance by the
5
Consultant shall not be considered proprietary to the Consultant. For instance,
bank financings by the Company, financings completed through relationships or
assistance by persons not associated or affiliated with Consultant, mezzanine
financings with which Consultant had no material involvement and similar
financings would not be covered by this Section 8 of this Agreement. The parties
agree that any financings not contemplated by this Agreement for which
Consultant may claim compensation shall be discussed by the parties before
involvement by the Consultant and the Company's agreement to deem such
financings covered by this Agreement shall be reduced to writing.
If the Company completes a financing within one year after it has
terminated this Agreement in accordance with its rights under subparagraph (A)
of Section 2 above, or, should circumvention to any of such entities be
attempted by the Company or should the Company seek to disclose the identity of
any such entities for purposes inconsistent with this Agreement, the Consultant,
in addition to having the right to invoke other legal or equitable remedies,
shall be compensated by the Company in an amount equal to what such compensation
would have been had this Agreement been in full force and effect at the time of
such action by the Company, or if larger, the amount which Consultant would have
received had such financing with the other entity been completed with the advise
and assistance of Consultant. Any amount payable hereunder shall be due
immediately upon any attempted circumvention and/or disclosure together with any
court costs, attorney fees, or other charges or damages reasonably incurred in
connection with enforcement of rights under this paragraph.
9. INDEMNIFICATION
The Company hereby agrees to indemnify and hold Consultant harmless
from any and all liabilities incurred by Consultant under the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended
(collectively referred to as the "Act"), the various state securities acts, or
otherwise, insofar as such liabilities arise out of or are based upon (i) any
material misstatement or omission contained in any offering documents provided
by the Company (ii) any actions by the Company, direct or indirect, in
connection with any offering by the Company, in violation of any applicable
federal or state securities laws or regulations, or (iii) a breach of this
Agreement by the Company. The Company's obligation to indemnify Consultant shall
not extend to any liability under the Act or any state securities act arising or
alleged as a result of unlawful activities by Consultant or activity alleged not
to be in compliance with the requirements of the Act or various state securities
acts.
Consultant hereby agrees to indemnify and hold the Company harmless
from any and all liabilities incurred by the Company under the Act, the various
state securities acts, or otherwise, insofar as such liabilities arise out of
and are based upon (i) any actions by Consultant, direct or indirect, in
connection with any offering by the Company, in violation of any applicable
federal or state securities laws or regulations, or (ii) any breach of this
Agreement by Consultant.
6
10. BROKER RELATIONS CONSULTANT
The Company agrees that Xxxxx Xxxxxxx, or another individual agreed on
by the Company, shall be retained by Consultant as an independent contractor of
Consultant to perform as broker relations services to benefit the Company. The
Company shall reimburse Consultant for $5,000 per month for these additional
services for a period of up to two years commencing when $1.0 million in gross
proceeds is received by the Company from the Series A debt financing described
or contemplated on Exhibit A. The Company agrees that the arrangement for the
broker relations consultant will be extended for an additional one year if the
Consultant extends this Agreement as authorized under Section 2(B) above.
11. BOARD SEATS
The Company agrees to use its best efforts to increase the size of its
Board of Directors at the earliest practicable time (including using its best
efforts to obtain shareholder approval of an amendment to its Articles of
Incorporation if it becomes necessary to increase the size of the Board of
Directors above 10 members) and to add Xx. Xxxxxxx Xxxxxxxx and Xx. Xxxxx Xxxxx
as directors of the Company if such persons are willing to serve as directors at
the time that the Series A financing described on Exhibit A is completed or
anytime thereafter during the term of this Agreement. Upon completion of the
Series B debt financing described on Exhibit A, the Company and the Consultant
shall mutually agree on one additional Board Member affiliated with a
substantial equity investor in the Company to become a director at the earliest
practicable time. The Company agrees to purchase of appropriate Directors and
Officers Liability Insurance Policy to provide coverage for directors of the
Company, including coverage for expenses and liabilities incurred in connection
with defense or payment of a claim under the Act, provided that appropriate
coverage acceptable to the Board of Directors of the Company can be obtained for
an annual premium not greater than $50,000 per year. Such insurance shall be
acquired, if available, by the end of 1996. The Board of Directors of the
Company will consider compensation for outside directors of the Company with a
view toward increasing compensation to a level comparable to what other
similarly sized public companies pay outside directors.
12. COMPANY MATTERS
The Company specifically makes no warranties, representations or
guarantees to Consultant regarding the Company's business or its past, present
or future business plans.
13. MISCELLANEOUS
(A) Any controversy arising out of or relating to this Agreement or any
modification or extension thereof, including any claim for damages
and/or rescission, shall be settled by arbitration in Las Vegas, Nevada
in accordance with the Commercial Arbitration rules of the American
Arbitration Association before a panel of one arbitrator. The
arbitrator sitting in any such controversy shall have no power to alter
or modify any express provisions of the Agreement or to render any
award which by its terms effects any such
7
alteration, or modification. This Section 13 shall survive the
termination of the Agreement.
(B) This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto, their heirs, administrators, successors and
assigns. This Agreement shall not be assignable by either party hereto
without the prior written consent of the other.
(C) This Agreement contains the entire understanding of the parties and
supersedes all prior agreements between them.
(D) In the event of a dispute related to or arising from the terms of
this Agreement, the prevailing party shall be entitled to all
attorney's fees and costs.
(E) This Agreement shall be constructed and interpreted in accordance
with and governed by the laws of the State of California.
(F) No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by the parties. No waiver of any of
the provisions of this Agreement shall be deemed, or shall constitute,
a waiver of any other provision, whether or not similar, nor shall any
waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
(G) If any provision hereof is held to be illegal, invalid or
unenforceable under present or future laws, effective during the term
hereof, such provisions shall be fully severable. This Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof, and the remaining
provisions hereof shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by
its severance here from.
(H) The obligation of the Company to pay compensation to Consultant
under this Agreement is subject to the ratification and approval of
this Agreement by a majority of the directors of the Company at a
regular or special meeting of the Board of Directors. If such approval
has not been received by March 15, 1996, either party may, upon notice
to the other, terminate the Agreement with no further obligation.
IN WITNESS WHEREOF, the parties hereto have placed their signatures hereon on
the day and year first above written.
XXXXX OIL AND GAS COMPANY BETA CAPITAL GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxx, Xx. /s/ Xxxxx Xxxxx
------------------------- -----------------------------
Xxxxxxx X. Xxxxx, Xx., President Xxxxx Xxxxx, President
8
EXHIBIT A
DESCRIPTION OF BETA CAPITAL'S CONSULTING SERVICES
Consultant shall perform the following services pursuant to the terms of this
Agreement:
(1) Locating potential sources of debt and equity capital which is presently
contemplated to include the provisions set forth below. The parties may
mutually agree to revise the nature and terms of these financings and
references in the Agreement shall be modified consistent with any such
revisions.
(a) Private Bond "Series A"
o $1.0 million minimum to $1.5 million maximum of 10%
convertible debt.
o 10% commission will be paid to retail broker or brokers
(with 5% warrants at $2.00).
o Five year term.
o Interest only for five years; principal due at the end of
five years.
o Convertible at $3.00 per share into public stock at
investor's option.
o Bond will a call feature by the Company of $3.00 if the
stock trades at $4.00 per share for five consecutive
business days.
o Each $4.00 of convertible debt sold will include three
warrants exercisable at $1.25, callable at $1.75 (the call
feature will not be enforceable before six months after
issuances).
o Underlying securities will be registered (piggyback
registration) at the Company's next registration.
o Bond A to become senior debt pari passu to Bond B when bank
debt repaid (accomplished via proceeds of Bond B).
o The initial $1.0 million is an immediate raise (targeted 30
days after offering memorandum is prepared by legal
counsel).
(b) Registered Bond "Series B"
o $2.5 million minimum $5.0 million maximum 10% senior debt.
o 10% commission will be paid to retail broker or brokers
(with 5% warrants at $2.00).
o Five year term.
o Interest only for five years; principal due at the end of
five years.
o Convertible at $4.00 per share into public stock at
investor's option.
o Bond will have a call feature by the Company of $4.00 if the
stock trades at $5.00 per share for five consecutive days.
o One warrant for each $2.00 sold. Exercise price will be 25%
premium above the market price at close of offering.
Callable at a 50% premium above market when trading is at
that level for five consecutive days
o Underlying securities will be registered (shelf
registration).
Exhibit A, Page 1
o Bond A to be made senior debt pari passu to Bond B when bank
debt repaid (accomplished via proceeds of Bond B).
(2) Coordinating and assisting in the preparation of financing offering
documentation;
(3) Utilizing Consultant's broker-dealer database and network;
(4) Performing ongoing marketing efforts via selected licensed brokers in
connection with the raising of capital;
(5) Monitoring and assisting Company in development of road show presentations
and meetings for purposes of raising capital;
(6) Identification of Market Markers;
(7) Performing ongoing marketing efforts via selected licensed brokers in
connection with stock promotion; and
(8) Participation of Xxxxx Xxxxx at meetings of the Board of Directors, when
practicable. It is understood that no director's fees or other compensation
will be paid to Xx. Xxxxx or Consultant for the participation of Xx. Xxxxx
at meetings of the Board of Directors regardless of whether Xx. Xxxxx or
Beta serves as a consultant or as an advisor to the Board of Directors.
Exhibit A, Page 2
EXHIBIT B
TERMS OF COMPENSATION
The Consultant's compensation hereunder shall be divided into the
following components:
(1) Private Financing Compensation: Consultant shall receive an
amount equal to 2% of the gross amount of all private equity
and/or debt financing received directly or indirectly by the
Company during the term of this Agreement if the financing is
(a) one of the financings described on Exhibit A, (b) the
receipt of proceeds from exercise of warrants, or (c)
Consultant is the identifying or procuring cause of the
financing, or (d) any financing not contemplated by this
Agreement if the Company has agreed to pay the compensation.
The foregoing compensation shall be payable when the Company
receives the equity or debt financing. Up to one-third can be
assigned by Consultant to the broker relations consultant.
(2) Public Financing Compensation: Consultant shall receive an
amount equal to 2% of the amount of any public offering as a
nonrefundable expense allowance on each public equity or debt
financing which is commenced during the term of this Agreement
if the financing is (a) one of the financings described on
Exhibit A, (b) the receipt of proceeds from the exercise of
warrants, or (c) Consultant is the identifying or procuring
cause of the financing, and (d) any financing not contemplated
by this Agreement if the Company has agreed to pay the
compensation. Up to one-third can be assigned by Consultant to
the broker relations consultant. The timing of payment of this
nonaccountable expense allowance will be discussed at the
onset of each offering, but will never be later than 50% at
the escrow break, and 50% thirty days thereafter.
(3) Consulting Fee: A monthly consulting fee equal to $12,500 per
month earned upon the effective date of the contract and
payable on the first of each month with the exception of first
and last month's fees due upon signing as follows: $12,500 at
signing (first month), and $12,500 at the earlier of receipt
of (1) proceeds from the exercise of at least $12,500 from the
exercise of Team Warrants, or (2) $1,000,000 of any gross
proceeds.
(4) Bonus Fee: A 5% Bonus Fee will be paid to Consultant for each
warrant exercise, inclusive of existing warrants, of which up
to one-third can be assigned to the broker relations
consultant. This fee will be paid to Consultant at the time
the warrants are exercised during the term of this Agreement
and for up to six months after the expiration or termination
of this Agreement if the stock price was at a level entitling
the Company to call the warrants during the term of this
Agreement.
(5) Equity Compensation: One million common stock purchase
warrants exercisable at $0.75 per share will be granted to
Consultant upon signing this Agreement, of which up to 50% are
assignable to other team members and certain key brokers.
Exhibit B, Page 1
Shares of common stock issuable upon exercise of these
warrants will be included as "piggyback" in the shelf
registration described on Exhibit A and the warrants shall
have a five year term, commencing on the date of this
Agreement and shall include the following cancellation
provisions:
WARRANTS CANCELLATION PROVISIONS
(a) 250,000 Not cancelable.
(b) 250,000 If $1.0 million in gross proceeds in the Series A
financing has not been raised within six months from the
effective date of this Agreement, the warrant shall be
deemed cancelled.
(c) 250,000 If $1.0 million gross proceeds from Series A
financing has not been raised within six months from the
effective date or if $2.0 million of gross proceeds from the
Series B financing (or any agreed alternative) is not raised
within one year of the completion of $1.0 million of gross
proceeds from the Series A financing or if the Agreement is
cancelled under Section 2(A) prior to raising $2.0 million
in Series B financing (or agreed upon alternative), this
warrant shall be deemed cancelled.
(d) 250,000 If the consulting agreement is not extended into
year three under Section 2(B) of the Agreement, this warrant
shall be deemed cancelled.
(6) In the event the Company chooses not to accept or otherwise
takes action (other than action required under applicable
state corporate law or the Act or the Securities Exchange Act
of 1934 upon the written advice of Company counsel, unless
Consultant's counsel disagrees in writing with the advice)
which has the effect of preventing a proposed financing or the
stock price appreciation goals from occurring, or otherwise
terminates this Agreement except in accordance with the terms
of this Agreement, all warrants shall be immediately vested.
Exhibit B, Page 2
EXHIBIT C
XXXXX OIL AND GAS COMPANY
ANNUAL PROJECTED REIMBURSABLE EXPENSES
BETA TRAVEL EXPENSES:
Two Conferences ........................................... $ 20,000
Boston/New York roadshows ................................. 8,000
Six other major city corporate presentations .............. 14,000
Due diligence to Newport Beach, California or
Grand Junction, Colorado or corporate presentations
by outside participants (average 6 trips per annum
6,000
OTHER MARKETING EXPENSES:
Phone and fax charges ..................................... 15,000
(Salaries and commissions to telemarketers and
staff paid by BCG, Inc.; refers to direct charges
only)
Marketing materials and supplies .......................... 10,000
Initial mailout ........................................... 5,000
Subsequent mailouts ....................................... 15,000
Local PR .................................................. 12,000
--------
105,000
10% contingency fees ...................................... 10,500
--------
Total estimated expenses ........................................... $115,500
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Exhibit C, Page 1
