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EXHIBIT 1.11
May 6, 1997
Queen Sand Resources, Inc.
0000 Xxx Xxxx, Xxxxx 000, X.X. #00
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx
Gentlemen:
This letter agreement (the "Agreement") sets forth the terms and conditions
pursuant to which Queen Sand Resources, Inc., a Delaware corporation (the
"Company"), will retain ECT Securities Corp., a Delaware corporation ("ECT"),
to act as the Company's advisor.
The Company and ECT agree as follows:
1. Retention of Advisor; Scope of Services.
a. Subject to the terms and conditions set forth herein, the
Company hereby retains ECT to act as an advisor to the Company during
the Agreement Period (as defined in paragraph 3 below).
b. As advisor to the Company, ECT will, from time to time, as
requested by the Company, provide consultation, assistance and advice
to the Company with respect to its operations and properties.
c. The parties hereto acknowledge that (i) ECT is not regularly
engaged in the business of providing advisory services and personnel
and that the services to be performed by ECT hereunder are provided as
an incident to ECT's relationship with Enron Capital Management
Limited Partnership, the General Partner of Joint Energy Development
Investments Limited Partnership ("JEDI") and JEDI's activities as an
owner of equity securities of the Company, (ii) the fees to be paid to
ECT hereunder were established at an amount which is believed to be
approximately equal to the amount of indirect costs and expenses ECT
will incur in providing such services, (iii) ECT is not an "investment
adviser," within the meaning of the Investment Advisers Act of 1940,
as amended, or applicable state laws, or a ''broker" or "dealer" under
the Securities Exchange Act of 1934, as amended, or subject to
regulation
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May 6, 1997
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under the Commodity Futures Trading Act or comparable state laws, (iv)
the nature of the services to be provided by ECT under this Agreement
do not include those of an "investment advisor" (i.e. providing advice
as to the value of securities or the advisability of investing in,
purchasing or selling securities), or those of a "broker" or "dealer"
(i.e. effecting transactions in securities for the account of the
Company or others), and (v) it is specifically intended by the parties
hereto that ECT's activities hereunder not subject ECT to any
regulation or registration under federal or state laws.
d. The parties hereto acknowledge and agree that upon reasonable
request by the Company, ECT will, subject to the availability of such
personnel, make available such of its employees, as ECT may determine
may reasonably be necessary for ECT's performance of its services
hereunder. The parties further acknowledge that unless and until ECT
provides notice to the contrary, all decisions with respect to
staffing, scheduling and allocating ECT's resources for purposes of
this Agreement will be coordinated on behalf of ECT by and any request
by the Company for the performance of services hereunder shall be
directed to W. Xxxxx Xxxxxxxx.
2. Agreement Period and Termination.
a. Unless earlier terminated under subparagraph (b), ECT shall
act as the Company's advisor under this Agreement, effective as of the
date hereof (the "Effective Date") and continuing until the earlier of
(a) the fifth anniversary of the date hereof and (b) such time as JEDI
or its affiliates own less than 10% of the capital stock of the
Company entitled to vote generally in the election of directors. This
Agreement may be terminated effective as of the end of any calendar
quarter of the Company if ECT provides written notice of its election
to terminate the Agreement to the Company not less than 30 days before
the date on which such termination is to be effective.
b. Upon termination of this Agreement, neither party will have
any further obligation under this Agreement, except for (i) the
Company's obligation to pay to ECT the fees then due pursuant to
Paragraph 3, which shall continue after such termination until such
amounts are paid in full, and (ii) the Company's or ECT's obligation
to provide the indemnities contained in Paragraph 4.
3. Advisement Fee. The Company shall pay to ECT a fee of
$100,000 concurrently with the execution of this Agreement. In addition, ECT
shall be entitled to receive quarterly fees for its services provided during
the period from the Effective Date of this Agreement until the date of its
termination pursuant to Section 2 (the "Agreement
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Period"), payable as follows: $25,000 on each March 31, June 30, September 30
and December 31 of each year during the term of this Agreement in arrears,
beginning on September 30, 1997.
4. Indemnification. In consideration of the services performed
and to be performed by ECT for the Company, and for other good and valuable
consideration, the Company and ECT hereby agree as follows:
a. The Company shall indemnify and hold harmless ECT, its
affiliates and affiliated entities, each of its partners, officers,
employees, and agents and each person, if any, who "controls" ECT
(within the meaning of the federal securities laws) (collectively the
"Indemnified Parties" and individually, an "Indemnified Party") from
and against any and all actions or claims and any and all losses,
claims, damages, liabilities, costs or expenses (including, without
limitation, reasonable attorneys' fees and any legal or other expenses
in giving testimony or furnishing documents in response to a subpoena
or otherwise or the costs of investigating, preparing or defending any
action or claim, whether or not in connection with any action or
litigation in which any Indemnified Party is a party), joint or
several, to which any Indemnified Party may become subject, including
but not limited to any liability under the Securities Act of 1933 or
any other federal or state securities law or otherwise as and when
incurred, directly or indirectly, caused by, relating to, based upon
or arising out of any matter related to this Agreement, including,
without limitation, any act or omission by ECT in connection with its
role as advisor and its acceptance of or the performance or
non-performance of its obligations under this Agreement.
b. The indemnity provided for in subparagraph (a) above shall
cover any loss, claim, damage, liability, cost or expense incurred by
an Indemnified Person REGARDLESS OF THE ORDINARY NEGLIGENCE OF SUCH
INDEMNIFIED PERSON, but shall not cover any loss, claim, damage,
liability, cost or expense to the extent it is found in a final
judgment by a court of competent jurisdiction (not subject to further
appeal) to have resulted from an Indemnified Party's gross negligence
or willful misconduct.
c. The indemnity provided for in subparagraph (a) shall be in
addition to any liability that the Company may otherwise have to the
Indemnified Parties and shall be subject to the following:
(i) Promptly after receipt by an Indemnified Party under
subparagraph (a) above of notice of the commencement of any
action, proceeding,
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May 6, 1997
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investigation or other event with respect to which any
Indemnified Party demands indemnification hereunder, such
Indemnified Party shall, if a claim in respect thereof is to
be made against the Company, notify the Company in writing of
the commencement thereof, provided that the failure to so
notify the Company shall not relieve it from any liability
that it may have to any Indemnified Party, except to the
extent the Company is prejudiced by such failure.
(ii) Notwithstanding anything expressed or implied herein
to the contrary, the indemnity provided for herein shall cover
the amount of any settlements entered into in connection with
any claim for which an Indemnified Party may be indemnified
hereunder, if and only if such settlement is consented to by
the Company, which consent will not be unreasonably withheld.
(iii) No settlement binding on an Indemnified Party may be
made without the consent of such Indemnified Party (which
consent shall not be unreasonably withheld).
(iv) If the claim for indemnification arises out of a
claim for damages by a person other than an Indemnified Party,
the Company, after giving notice to the Indemnified Party, may
undertake to defend or settle such claim for damages and may
employ counsel for such purpose. The Indemnified Party, at
its own expense, shall have the right to employ separate
counsel with respect to such claim and to participate in, but
not control, such settlement or defense; provided that, if the
Company is also a defendant in respect of any such claim and a
potential conflict exists between the interests of the Company
and those of an Indemnified Party or if the Company does not
elect to undertake the settlement or defense of such claim,
the Indemnified Parties shall, at the expense of the Company,
have the right to employ not more than one counsel to
represent the Indemnified Parties with respect to such claim
and the Indemnified Parties may control any settlement or
defense applicable to the claims brought against such
Indemnified Parties.
(v) Expenses and other costs incurred by an Indemnified
Party in connection with any suit, action or other proceeding
relating to this Agreement shall be advanced by the Company to
such Indemnified Party prior to any final determination of
whether an Indemnified Party is entitled to be indemnified for
such costs and expenses hereunder, if the Indemnified Party
provides to the Company an undertaking to return any amounts
so
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received to the extent that it is ultimately determined that
he was not entitled to be indemnified for such costs and
expenses hereunder.
(vii) The Company agrees that the Indemnified Parties shall
not have any liability (whether direct or indirect, in
contract, tort or otherwise) to the Company for or in
connection with any matter related to this Agreement, except
for liabilities or expenses that are found in a final judgment
by a court of competent jurisdiction (not subject to further
appeal) to have resulted primarily and directly from ECT or
such other Indemnified Party's gross negligence or willful
misconduct.
d. If it is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) in a proceeding in which
a claim for indemnification has been made by an Indemnified Party,
that the Company has sustained any loss, claim, damage, liability,
cost or expense resulting directly and exclusively from ECT's gross
negligence or willful misconduct in connection with the performance or
non-performance by ECT of its obligations under this Agreement, then
ECT shall indemnify and hold harmless the Company for the amount of
any such loss, claim, damage, liability, costs or expense so
determined to have been sustained by the Company. Notwithstanding any
provision of this Agreement to the contrary, in no event will the
liability of ECT exceed the amount of fees paid to ECT by the Company
pursuant to the terms hereof.
4. GOVERNING LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF TEXAS
APPLICABLE TO CONTRACTS MADE AND TO BE FULLY PERFORMED THEREIN.
5. Successors and Assigns. The benefits of this Agreement shall
inure to the parties hereto, their respective successors and permitted assigns,
and to the indemnified parties hereunder and their successors and
representatives, and the obligations and liabilities assumed in this Agreement
by the parties hereto shall be binding upon their respective successors and
assigns. This Agreement may not be assigned by any party to an unaffiliated
party without the express written consent of the other party hereto.
6. Notices. All communications under this Agreement shall be in
writing and shall be delivered personally or sent by personal delivery,
overnight courier service or telecopy (confirmed by overnight courier service)
as follows:
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May 6, 1997
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If to ECT:
ECT Securities Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Telecopy Number: (000) 000-0000
Attention: W. Xxxxx Xxxxxxxx
If to the Company:
Queen Sand Resources, Inc.
0000 Xxx Xxxx
Xxxxx 000, X.X. #00
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx
Telecopier: (000) 000-0000
and
Queen Sand Resources, Inc.
00 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxx X. Xxxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx and Xxxxx, L.L.P.
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Boeing
Telecopier: (000) 000-0000
Either party may change its address or telecopy number set forth above
by giving the other party notice of such change in accordance with the
provisions of this Paragraph 6. A notice shall be deemed given, if by personal
delivery, on the date of such delivery to such
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May 6, 1997
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address, if by overnight courier service, when delivered, or if by telecopy, on
the date of receipt of the transmission of such notice at such telecopy number.
7. Nature of Relationship. The parties hereto intend that ECT's
relationship to the Company and the relationship of each employee or agent of
ECT to the Company shall be that of an independent contractor. Nothing
contained in this Agreement shall constitute or be construed to be or create a
partnership or joint venture between ECT and the Company or their respective
successors or assigns. Neither ECT nor any partner, employee or agent of ECT
shall ever be considered to be an employee of the Company.
8. Captions. The Paragraph titles herein are for reference
purposes only and do not control or affect the meaning or interpretation of any
term or provision hereof.
9. Amendments. No alteration, amendment, change or addition
hereto shall be binding or effective unless the same is set forth in writing
signed by a duly authorized representative of each party.
10. Partial Invalidity. If the final determination of a court of
competent jurisdiction declares, after the expiration of the time within which
judicial review (if permitted) of such determination may be perfected, that any
term or provision hereof is invalid or unenforceable, (i) the remaining terms
and provisions hereof shall be unimpaired and (ii) the invalid or unenforceable
term or provision shall be replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid
or unenforceable term or provision.
11. Survival. All representations, warranties and agreements
contained herein, or contained in certificates submitted pursuant to this
Agreement, shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, and shall survive
the execution and delivery hereof.
12. Entire Agreement. This Agreement embodies the entire
agreement and understanding of the parties and supersedes any and all prior
agreements, arrangements and understandings relating to matters provided for
herein.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but all of which together
shall be considered one and the same agreement.
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If this Agreement accurately reflects our understanding, please sign
and return a counterpart to the undersigned.
Very truly yours,
ECT SECURITIES CORP.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Title:
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ACCEPTED AND AGREED TO this 6th day of May, 1997:
QUEEN SAND RESOURCES, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
President and Chief Executive Officer
and
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Chief Operating Officer
