ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT ( the "Agreement") is made this day of December
1999, by and between Xxxxx X. Xxxxxxx, a Utah resident ("Advisor") and Power
Exploration, Inc., a Nevada Corporation with its offices located in Fort Worth,
Texas (the "Company").
WHEREAS, Advisor and Advisors's Personnel (as defined below) have
experience in evaluating and effecting mergers and acquisitions, advising
corporate management, and in performing general administrative duties for
publicly-held companies and development stage investment ventures; and
WHEREAS, the Company desires to retain Advisor to advise and assist the
Company in its development on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and Advisor
agree as follows:
1. Engagement
The Company hereby retains Advisor, effective as of the date hereof (
the "Effective Date") and continuing until termination, as provided
herein, to assist the Company in it's effecting the purchase of
businesses and assets relative to its business and growth strategy,
general business and financial issues consulting, the introduction of
the Company to brokers and dealers, public relations firms and
consultants and others that may assist the Company in its plans and
future and to assist in the acquisition of xxxxx and other producing
properties (the "Services"). The Services are to be provided on a "best
efforts" basis directly and through Advisor's officers or others
employed or retained and under the direction of Advisor ("Advisor's
Personnel"); provided, however, that the Services shall expressly
exclude all legal advice, accounting services or other services which
require licenses or certification which Advisor may not have.
2. Term
This Agreement shall have an initial term of twelve (12) months (the
"Primary Term"), commencing with the Effective Date. At the conclusion
of the Primary Term this Agreement will automatically be extended on
for the same term ( the "Extension Period") unless Advisor or the
Company shall serve written notice on the other party terminating the
Agreement. Any notice to terminate given hereunder shall be in writing
and shall be delivered at least thirty (30) days prior to the end of
the Primary Term or any subsequent Extension Period.
3. Time and Effort of Advisor
Advisor shall allocate time and Advisors Personnel as it deems
necessary to provide the Services. The particular amount of time may
vary from day to day or week to week. Except as otherwise agreed,
Advisor's monthly statement identifying, in general, tasks performed
for the Company shall be conclusive evidence that the Services have
been performed. Additionally, in the absence of willful misfeasance,
bad faith, negligence or reckless disregard for the obligations or
duties hereunder by Advisor, neither Advisor nor Advisor's Personnel
shall be liable to the Company or any of its shareholders for any act
or omission in the course of or connected with rendering the
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Services, including but not limited to losses that may be sustained in
any corporate act in any subsequent Business Opportunity (as defined
herein) undertaken by the Company as a result of advice provided by
Advisor or Advisors's Personnel.
4. Compensation
The Company agrees to pay Advisor a fee for the Services ("Advisory
Fee") by way of the issuance by the company of Seven Hundred Fifty
Thousand (750,000) shares of the Company's common stock as an initial
fee following the closing of the acquisition of interests from Xxxx Oil
Properties, Inc., as follows: Four Hundred Thousand (400,000) of the
shares shall be issued after January 1, 2000 and within ninety days
after the closing thereof, and the balance of the shares shall be
issued 150 days following the closing of the Xxxx Oil Properties, Inc.
Acquisition. As incentive to execute this Agreement, the Company does
hereby grant to Advisor the right to purchase up to Seven Hundred Fifty
Thousand (750,000) shares at an option price of $0.66667 per share,
such option being valid beginning 150 days following the closing of the
Xxxx Oil Company Acquisition and shall continue thereafter for the
primary term of this agreement.
5. Other Services
If, the Company enters into a merger or exchanges securities with, or
purchases the assets or enters into a joint venture with, or makes an
investment in a company introduced by Advisor ( a "Business
Opportunity"), the Company agrees to pay Advisor a fee equal to ten
percent (10%) of the value of each Business Opportunity introduced by
Advisor and acquired or otherwise participated in by the Company
(collectively referred to herein, in each instance, as the "Transaction
Fee"), which shall be payable immediately following the closing of each
such transaction, in restricted shares of the Company's common stock or
in kind if an acquisition is made at the Company's option, if paid in
cash the Transaction Fee shall be reduced to five percent (5%).
6. Registration of Shares
Company agrees that any shares issued to satisfy a Transaction Fee may
be registered by the Company with the Securities and Exchange
Commission under any subsequent applicable registration statement filed
by the Company at the Company's discretion. Such issuance or
reservation of shares shall be in reliance on representations and
warranties of Advisor set forth herein.
7. Costs and Expenses
All third party and out-of-pocket expenses incurred by Advisor in the
performance of the Services or for the settlement of debts shall be
paid by the Company, or Advisor shall be reimbursed if paid by Advisor
on behalf of the Company, within ten (10) days of receipt of written
notice by Consultant, provided that the Company must approve in advance
all such expenses in excess of $500 per month.
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8. Place of Services
The Services provided by Advisor or Advisor's Personnel hereunder will
be performed at Advisor's offices except as otherwise mutually agreed
by Advisor and the Company.
9. Independent Contractor
Advisor and Advisor's Personnel will act as an independent contractor
in the performance of its duties under this Agreement. Accordingly,
Advisor will be responsible for payment of all federal, state, and
local taxes on compensation paid under this Agreement, including income
and social security taxes, unemployment insurance, and any other taxes
due relative to Advisor's Personnel, and any and all business license
fees as may be required. This Agreement neither expressly nor impliedly
creates a relationship of principal and agent, or employee and
employer, between Advisor's Personnel and the Company. Neither Advisor
nor Advisor's Personnel are authorized to enter into any agreements on
behalf of the Company. The Company expressly retains the right to
approve, in its sole discretion, each Asset Opportunity or Business
Opportunity introduced by Advisor, and to make all final decisions with
respect to effecting a transaction on any Business Opportunity.
10. Rejected Asset Opportunity or Business Opportunity
If, during the Primary Term of this Agreement or any Extension Period,
the Company elects not to proceed to acquire, participate or invest in
any Business Opportunity identified and/or selected by Advisor,
notwithstanding the time and expense the Company may have incurred
reviewing such transaction, such Business Opportunity shall revert back
to and become proprietary to Advisor, and Advisor shall be entitled to
acquire or broker the sale or investment in such rejected Business
Opportunity for its own account, or submit such assets or Business
Opportunity elsewhere. In such event, Advisor shall be entitled to any
and all profits or fees resulting from Advisor's purchase, referral or
placement of any such rejected Business Opportunity, or the Company's
subsequent purchase or financing with such Business Opportunity in
circumvention of Advisor
11. No Agency Express or Implied
This Agreement neither expressly nor impliedly creates a relationship
of principal and agent between the Company and Advisor, or employee and
employer as between Advisor's Personnel and the Company.
12. Termination
The Company and Advisor may terminate this Agreement prior to the
expiration of the Primary Term upon thirty (30) days written notice
with mutual written consent. Failing to have mutual consent, without
prejudice to any other remedy to which the terminating party may be
entitled, if any, either party may terminate this Agreement with thirty
(30) days written notice under the following conditions:
(A) By the Company.
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(i) If during the Primary Term of this Agreement or any
Extension Period, Advisor is unable to provide the
Services as set forth herein for thirty (30)
consecutive business days because of illness, accident,
or other incapacity of Advisor's Personnel; or,
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(ii) If Advisor willfully breaches or neglects the duties
required to be performed hereunder; or,
(iii)At Company's option without cause upon 30 days written
notice to Advisor; or
(B) By Advisor.
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(i) If the Company breaches this Agreement or fails to make
any payments or provide information required hereunder;
or,
(ii) If the Company ceases business or, other than in an
Initial Merger, sells a controlling interest to a third
party, or agrees to a consolidation or merger of itself
with or into another corporation, or enters into such a
transaction outside of the scope of this Agreement, or
sells substantially all of its assets to another
corporation, entity or individual outside of the scope
of this Agreement; or,
(iii)If the Company subsequent to the execution hereof has
a receiver appointed for its business or assets, or
otherwise becomes insolvent or unable to timely satisfy
its obligations in the ordinary course of, including
but not limited to the obligation to pay the Initial
Fee, the Transaction fee, or the Advisory Fee; or,
(iv) If the Company subsequent to the execution hereof
institutes, makes a general assignment for the benefit
of creditors, has instituted against it any bankruptcy
proceeding for reorganization for rearrangement of its
financial affairs, files a petition in a court of
bankruptcy, or is adjudicated a bankrupt; or,
(v) If any of the disclosures made herein or subsequent
hereto by the Company to Consultant are determined to
be materially false or misleading.
In the event Advisor elects to terminate without cause or this
Agreement is terminated prior to the expiration of the Primary Term or
any Extension Period by mutual written agreement, or by the Company for
the reasons set forth in A(i) and (ii) above, the Company shall only be
responsible to pay Advisor for unreimbursed expenses, Advisory Fee and
Transaction Fee accrued up to and including the effective date of
termination. If this Agreement is terminated by the Company for any
other reason, or by Advisor for reasons set forth in B(i) through (v)
above, Advisor shall be entitled to any outstanding unpaid portion of
reimbursable expenses, Transaction Fee, if any, and for the remainder
of the unexpired portion of the applicable term (Primary Term or
Extension Period) of the Agreement.
13. Indemnification
Subject to the provisions herein, the Company and Advisor agree to
indemnify, defend and hold each other harmless from and against all
demands, claims, actions, losses, damages, liabilities, costs and
expenses, including without limitation, interest, penalties and
attorneys' fees and expenses asserted against or imposed or incurred by
either party by reason of or resulting from any action or a breach of
any representation, warranty, covenant, condition, or agreement of the
other party to this Agreement.
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14. Remedies
Advisor and the Company acknowledge that in the event of a breach of
this Agreement by either party, money damages would be inadequate and
the non-breaching party would have no adequate remedy at law.
Accordingly, in the event of any controversy concerning the rights or
obligations under this Agreement, such rights or obligations shall be
enforceable in a court of equity by a decree of specific performance.
Such remedy, however, shall be cumulative and nonexclusive and shall be
in addition to any other remedy to which the parties may be entitled.
15. Miscellaneous
(A) Subsequent Events. Advisor and the Company each agree to
notify the other party if, subsequent to the date of this
Agreement, either party incurs obligations which could
compromise its efforts and obligations under this Agreement.
(B) Amendment. This Agreement may be amended or modified at any
time and in any manner only by an instrument in writing
executed by the parties hereto.
(C) Further Actions and Assurances. At any time and from time to
time, each party agrees, at its or their expense, to take
actions and to execute and deliver documents as may be
reasonably necessary to effectuate the purposes of this
Agreement.
(D) Waiver. Any failure of any party to this Agreement to comply
with any of its obligations, agreements, or conditions
hereunder may be waived in writing by the party to whom such
compliance is owed. The failure of any party to this Agreement
to enforce at any time any of the provisions of this Agreement
shall in no way be construed to be a waiver of any such
provision or a waiver of the right of such party thereafter to
enforce each and every such provision. No waiver of any breach
of or noncompliance with this Agreement shall be held to be a
waiver of any other or subsequent breach or noncompliance.
(E) Assignment. Neither this Agreement nor any right created by it
shall be assignable by either party without the prior written
consent of the other or as stated herein.
(F) Notices. Any notice or other communication required or
permitted by this Agreement must be in writing and shall be
deemed to be properly given when delivered in person to an
officer of the other party, when deposited in the United
States mails for transmittal by certified or registered mail,
postage prepaid, or when deposited with a public telegraph
company for transmittal, or when sent by facsimile
transmission charges prepared, provided that the communication
is addressed:
(i) In the case of the Company: Power Exploration, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
Attention: Xxx Xxxxxxx
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(ii) In the case of Advisor: Xxxxx X. Xxxxxxx
000 Xxxx 000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Telephone: (000) 000-0000
or to such other person or address designated in writing by the Company or
Advisor to receive notice.
(G) Headings. The section and subsection headings in this Agreement
are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
(H) Governing Law. This Agreement was negotiated and is being
contracted for in Utah, and shall be governed by the laws of the
State of Utah, and the United States of America, not withstanding
any conflict-of-law provision to the contrary.
(I) Binding Effect. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective
heirs, administrators, executors, successors, and assigns.
(J) Entire Agreement. This Agreement contains the entire agreement
between the parties hereto and supersedes any and all prior
agreements, arrangements, or understandings between the parties
relating to the subject matter of this Agreement. No oral
understan dings, statements, promises, or inducements contrary to
the terms of this Agreement exist. No representations,
warranties, covenants, or conditions, express or implied, other
than as set forth herein, have been made by any party.
(K) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full
force and effect.
(L) Counterparts. A facsimile, telecopy, or other reproduction of
this Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument,
by one or more parties hereto and such executed copy may be
delivered by facsimile or similar instantaneous electronic
transmission device pursuant to which the signature of or on
behalf of such party can be seen. In this event, such execution
and delivery shall be considered valid, binding and effective for
all purposes. At the request of any party hereto, all parties
agree to execute an original of this Agreement as well as any
facsimile, telecopy or other reproduction hereof.
(M) Time is of the Essence. Time is of the essence of this Agreement
and of each and every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date above written.
The "Company" "Advisor"
Power Exploration, Inc. Xxxxx X. Xxxxxxx
A Nevada Corporation A Utah Resident
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By: /s/ Xxx Xxxx Xxxxxxx By: /s/ Xxxxx Xxxxxxx
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Name: Xxx Xxxx Xxxxxxx
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Title: President
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