CONSULTING AGREEMENT
EXHIBIT
10.38
This
CONSULTING
AGREEMENT
(the “Agreement”)
is entered into as of June 30, 2008 by and between TRUE
NORTH
ENERGY CORPORATION,
a Nevada
corporation, with its principal offices at 2 Xxxxx Center, 0000 Xxxxx Xxxxxx,
Xxxxxxx, XX 00000 (the “Company”) and PRIME
NATURAL RESOURCES, INC.
with an address at
0000 XxxxXxxx Xxxx, Xxxxx 0000, Xxxxxxx, XX 00000 (“Prime”).
WHEREAS,
the
Company wishes
to engage Prime to provide accounting and related services to the Company and
the Prime wishes to accept such engagement, all upon the terms and subject
to
the conditions contained in this Agreement;
NOW,
THEREFORE, the
parties hereto,
in consideration of the mutual consideration and promises contained herein
and
intending to be bound, hereby agree as follows:
1. Retention
of Prime.
The Company hereby
retains Prime, and Prime agrees to be retained by the Company, upon the terms
in, and subject to the conditions of, this Agreement.
2. Term.
Subject to Section
7 hereof, the term of this Agreement shall commence on July 1, 2008 (the
“Effective Date”) and shall continue in effect for one year thereafter through
and including June 30, 2008.
3. Duties
of Prime.
During the term of
this Agreement, Prime shall provide such bookkeeping, accounting and financial
reporting services and work with the Company’s chief executive officer as may be
directed by the Company from time to time. Prime makes NO WARRANTY, express
or
implied, as to merchantability, fitness for purpose sold, description, quality
or productiveness concerning the services provided hereunder.
4. Compensation.
(a) Consulting
Fee: As
compensation to
Prime for the services to be rendered under this Agreement, the Company shall
pay to Prime a consulting fee consisting of a monthly $5,000 cash payment (the
“Cash Consulting Fee”) and grant to Prime an issuance of $60,000 in common stock
of the Company (the “Stock Consulting Fee”) for each calendar year quarterly
period (i.e.,
the three months
ending on September 30, 2008, December 31, 2008, March 31, 2009 and June 30,
2009 and each being a “Quarter”).
(b) Payment
of Cash
Consulting Fee: The Company will pay the Cash Consulting Fee to Prime monthly
in
advance no later than the 20th
day of the month
prior to the month in which services will be performed.
(c) Payment
of Stock
Consulting Fee: In connection with the Stock Consulting Fee, the Company will
issue to Prime an amount of stock equal to the Stock Consulting Fee no later
than ten (10) business days of the completion of each Quarter. The number of
shares to be issued for each such Quarter will be determined by taking the
sum
of the shares for each month in such Quarter as the shares for each such month
are determined by apportioning a number of shares equal to the amount of $20,000
as based upon the average closing price of the Company’s common stock on the OTC
Bulletin Board for the last five business days of each month in each such
calendar year quarterly period then ended. In connection with the payment of
the
Cash Consulting Fee, Prime
shall
be granted
“piggyback” rights pursuant to which Prime may request that the Company include
the stock provided as the Stock Consulting Fee in any registration statement
filed with the Securities and Exchange Commission to register other common
stock
of the Company (other than a registration on Form S-4 or S-8, or any successor
or other forms promulgated for similar purposes).
(d) Adjustments:
In the
event of early termination of this Agreement by either party, Prime’s cash
payment for the month in which the Agreement will terminate will be subject
to a
pro rata adjustment to reflect the number of days in such month that Prime
will
be providing consulting services. In the event of early termination by the
Company “With Cause” or by the Prime other than for “Good Reason,” as such terms
are defined in Section 7 hereof, Prime’s stock payment will be subject to a pro
rata, downward adjustment to reflect the number of days during which this
Agreement was in effect.
(e) Expenses:
The
Company shall reimburse Prime for all reasonable out-of-pocket business expenses
incurred by Prime in the performance of this Agreement. Any single expense
amount in excess of $1,000 will require advance written approval from the
Company.
5. Status
as Independent Contractor.
The parties intend
and acknowledge that Prime is acting as an independent contractor. The Company
shall not be responsible for any withholding in respect of taxes or any other
deductions in respect of the fees to be paid to Prime and all such amounts
shall
be paid without any deduction or withholding. Nothing in this Agreement shall
be
construed to create any partnership, joint venture or similar arrangement
between the Company and Prime or to render either party responsible for any
debts or liabilities of the
6. Indemnity
and Limitation of Liability.
Except as
otherwise arising from or attributable to the gross negligence of Prime, the
Company shall indemnify, protect, defend and hold Prime and its employees,
officers, directors and shareholders harmless from and against any and all
liabilities, claims and causes of action, including without limitation, all
legal fees and expenses incurred by Prime and its employees, officers, directors
and shareholders in the prosecution, defense, settlement or investigation
thereof, that shall arise or result from the services performed by Prime
hereunder or that may otherwise relate to this Agreement. Neither party hereto
shall be liable to the other for any consequential, special, punitive or
indirect damages arising out of this Agreement. The maximum liability hereunder
of Prime shall be limited to the actual amounts of the Cash Consulting Fee
and
Stock Consulting Fee that it receives from the Company.
7. Confidentiality.
Prime acknowledges
that in connection with the services to be rendered under this Agreement, Prime
may be provided with confidential business information of the Company. The
information will include, but not be limited to, competitive information
pertaining to the Company’s employees, business partners, land and lease
holdings, financial results and drilling and exploration activities. Prime
agrees to keep any information or materials (the “Confidential Information”) in
the strictest confidence and not to disclose or disseminate any such
Confidential Information to any person, firm or other business entity except
to
those employees, Prime’s or other independent contractors of the Company as
shall be necessary or advisable for the carrying out of the purposes of this
Agreement.
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All
materials
relating to the business and affairs of the Company, including, without
limitation, all manuals, documents, reports, equipment, working materials,
lists
of shareholders, customers and clients, and information collected or prepared
by
the Company or Prime in the course of Prime's engagement, are the property
of
the Company. Upon the termination of this Agreement for any reason, Prime shall
cease the use of such materials, return them to the Company (including all
copies and reproductions that may have been made or received), and delete
related information from all retrieval systems and databases used by
Prime
Information
will
not be deemed to be Confidential Information restricted by this Section 6 if
Prime can show that: (i) the information was in Prime’s possession or within
Prime‘s knowledge before the Company disclosed it to Prime; (ii) the information
was or became generally known to those who could take economic advantage of
it;
(iii) Prime obtained the information from a party having the right to disclose
it to Prime without violation of any obligation to the Company, or (iv) Prime
is
required to disclose the information pursuant to legal process (e.g., a
subpoena), provided that Prime notifies the Company immediately upon receiving
or becoming aware of the legal process in question. No combination of
information will be deemed to be within any of the four exceptions in the
previous sentence, however, whether or not the component parts of the
combination are within one or more exceptions, unless the combination itself
and
its economic value and principles of operation are themselves within such an
exception or exceptions.
8. Termination.
Either party may
terminate this Agreement for any reason upon 30 days prior written notice,
including but not limited to termination by the Company “With Cause” or
termination by the Prime for “Good Reason”.
“With
Cause” shall
be (i) Prime’s willful, material and irreparable breach of this Agreement, (ii)
Prime’s willful dishonesty, fraud or material misconduct with respect to the
business or affairs of the Company; (iii) Prime’s conviction for a felony; (iv)
Prime’s gross negligence in the performance of his duties hereunder, or (v)
Prime’s intentional nonperformance of his duties hereunder.
“Good
Reason” shall
exist if the Company does not pay any material amount of compensation due Prime
hereunder within seven (7) days of the due date thereof provided that Prime
shall have provided the Company with written notice of such default and given
the Company 3 business days to cure such default.
9. Amendments,
Modifications, Waivers, Etc.
No amendment or
modification to this Agreement, nor any waiver of any term or provision hereof,
shall be effective unless it shall be in a writing signed by the party against
whom such amendment, modification or waiver shall be sought to be enforced.
No
waiver of any term or provision shall be construed as a waiver of any other
term
or condition of this Agreement, nor shall it be effective as to any other
instance unless specifically stated in a writing conforming with the provisions
of this Section 8.
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10. Successors
and Assigns.
This Agreement
shall be enforceable against any successors in interest, if any, to the Company
and the Prime. Except as specifically provided herein, neither the Company
nor
the Prime shall assign any of their respective rights or obligations hereunder
without the written consent of the other in each instance.
11. Counterparts.
This Agreement
may be executed 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.
12. Notices.
Any notices
required or permitted to be given under this Agreement shall be effective upon
receipt at the respective addresses in the recitals to this Agreement unless
the
address for notice to either party shall have been changed by a notice given
in
accordance with this Section 11.
13. Governing
Law; Dispute Resolution.
This Agreement
shall be governed by, and construed in accordance with, the substantive laws
of
the State of Texas, without regard for principals of conflicts of laws. Any
claims, demands, differences, causes of action, disputes, or controversies
arising out of or in connection with this Agreement shall, as far as possible,
be settled amicably. Failing an amicable settlement within thirty (30) days
of
the written notification by one Party to the other of such difference or
dispute, such difference or dispute shall be referred to arbitration. The
arbitration shall be governed by, be conducted under, and finally settled in
conformance with the Rules of American Arbitration Association in effect on
the
date of this Agreement. The arbitral panel shall be composed of three
arbitrators. Each Party shall appoint one arbitrator within thirty (30) days
of
the filing of the arbitration, and the two arbitrators so appointed shall then
select the presiding arbitrator within thirty (30) days after the latter of
the
two arbitrators have been appointed. If a Party fails to appoint its
Party-appointed arbitrator or if the two Party-appointed arbitrators cannot
reach an agreement on the presiding arbitrator within the specified time period,
then the President of the American Arbitration Association shall nominate the
remainder of the three arbitrators not yet appointed. The arbitration shall
take
place in Houston, Texas and the proceedings shall be in the English language.
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IN
WITNESS
WHEREOF,
the parties hereto
have set their respective hands this 30th day of June 2008.
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TRUE
NORTH ENERGY CORPORATION
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PRIME
NATURAL
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|
RESOURCES,
INC.
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By:
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/s/
Xxxx
Folnovic
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/s/
Xxxx X.
Xxxxx
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Name:
Xxxx
Folnovic
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Name:
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Xxxx
X.
Xxxxx
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Title:
President
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Title:
|
Chief
Financial Officer
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