SUPPORT SERVICES AGREEMENT
Support Services Agreement
(this "Agreement") dated as of June 29, 2009 (the "Effective Date") between
Strands Management Company, LLC, a California limited liability company ("SSMC")
and Pinnacle Energy Corp., a Nevada corporation, (“PENC”).
WHEREAS, PENC wishes to engage
SMC to provide the Services (as defined below) on the terms and conditions set
forth herein and SMC wishes to be so retained;
NOW THEREFORE, in
consideration of the premises and of the mutual covenants, conditions and
agreements contained herein, the parties agree as follows:
ARTICLE
ONE
SERVICES
1.1 Management
Services. PENC hereby
engages SMC to perform the Management Services set forth in Schedule 1 hereto
for the benefit of PENC, and SMC agrees to perform such Management Services, on
the terms and conditions set forth herein.
1.2 Other
Services. PENC may, from
time to time, engage SMC to perform other services for the benefit of PENC
(“Other Services”). The scope of, the applicable fee for, and
any additional terms and conditions relating to any such other services shall be
reflected in a Services Addendum to this Agreement in the form of Exhibit A
hereto.
1.3 Reporting. PENC
shall have the right to request written reports at any time during the term of
this Agreement, which shall be furnished within five (5) days after such
request, describing the progress, status of, and other matters pertaining to the
Management Services and any Other Services provided pursuant to Section 1.2
(collectively, the “Services”) as PENC shall request. PENC may freely utilize
all such information arising out of the performance of the Services under this
Agreement in any manner desired.
ARTICLE
TWO
COMPENSATION
2.1 Compensation.
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(a)
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Management
Services. For each month during the term of this
Agreement, PENC will pay to SMC a fee in respect of the Management
Services (the “MS Fee”) equal to $10,000 in cash. SMC
shall have the right to participate with PENC’s other executive officers
in any executive stock option plan adopted by PENC, at a level
commensurate with its responsibilities as defined in this
Agreement. In order to induce SMC to provide the
Management Services, promptly following the execution and delivery of this
Agreement, PENC shall issue to the certain executive of SMC set forth on
Schedule A that
number of shares of PENC’s common stock set forth opposite the name of
such executive on Schedule A (the “Shares”). Such
Shares shall constitute a non-refundable retainer fee and inducement to
SMC to continue to provide the Management
Services.
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(b) Other
Services. IF PENC has engaged to perform any Other
Services, PENC will pay to SMC the fee specified for such Other Services in the
applicable Services Addendum (the “Other Services Fee”). Unless
otherwise specified in the applicable Services Addendum, the Other Services Fee
will be due and payable in cash within fifteen (15) days following PENC’s
receipt of SMC’s invoice therefore.
2.2 Reimbursement. PENC will
reimburse SMC for any and all reasonable expenses incurred by SMC in
connection with SMC's performance of the Management Services and any Other
Services; provided,
however, that any such expenses must be pre-approved by PENC and
otherwise adhere to control procedures implemented by PENC. All requests for
reimbursement for expenses must be accompanied by documentation in form and
detail satisfactory to PENC. PENC will reimburse SMC for expenses
incurred in compliance with this Section 2.2 within fifteen (15) days following
PENC’s receipt of SMC’s invoice therefore.
ARTICLE
THREE
REPRESENTATIONS,
WARRANTIES AND COVENANTS
3.1 Representations
and Warranties. Each party
represents and warrants to the other that:
(a) It has not entered into any
agreement, whether written or oral, in conflict with this Agreement;
and
(b) It has the full power and authority
to enter into this Agreement.
3.2 SMC’s
Covenants. SMC:
(a) shall act as an independent
contractor with no authority to obligate PENC by contract or
otherwise;
(b) shall exercise only such powers and
perform such duties as may from time to time be vested in SMC or assigned to SMC
by PENC;
(c) shall devote such time and effort
as is reasonably necessary to provide the Services;
(d) shall comply with all applicable
laws in the performance including all applicable securities laws and regulations
of the Services; and
(e) shall not assign or subcontract
performance of this Agreement or any of the Services to any person, firm,
company or organization without PENC’s prior written consent.
ARTICLE
FOUR
CONFIDENTIAL
INFORMATION
4.1 Confidentiality. SMC shall, during
the term of this Agreement and for a period of five years thereafter, keep all
PENC Confidential Information confidential and use such information only for the
purposes expressly set forth herein. PENC Confidential Information
shall mean all information concerning PENC or its current or planned business,
which is disclosed to SMC by PENC or which results from, or in connection with,
any Services performed pursuant to this Agreement.
4.2 Access. SMC agrees to
limit the access to PENC Confidential Information to only those persons under
SMC's direct control who, with PENC’s knowledge and consent, are responsible for
performing the Services set forth in Article One.
4.3 Authorized
Disclosure. SMC shall have no obligation of confidentiality
and non-use with respect to any portion of PENC Confidential Information which
(i) is or later becomes generally available to the public by use, publication or
the like, through no act or omission of SMC; (ii) is obtained from a third party
who had the legal right to disclose the information to SMC; or (iii) SMC already
possesses as evidenced by SMC’s written records predating receipt thereof from
PENC.
4.4 Return of
Information. Upon the
termination of this Agreement, SMC will promptly return to PENC all materials,
records, documents, and other PENC Confidential Information in tangible
form. SMC shall retain no copies except as required by law of such
materials and information and, if requested by PENC, will delete all PENC
Confidential Information stored in any magnetic or optical disc or
memory.
4.5 Third
Party Information. SMC shall not, in connection with the
Services to be performed under this Agreement, disclose to PENC any information,
which is confidential or proprietary to SMC, or any third party.
ARTICLE
FIVE
INDEMNITY;
LIMITATION OF LIABILITY
5.1 Indemnity.
(a) PENC will indemnify and
hold harmless SMC against any and all losses, claims, damages, obligations,
penalties, judgments, awards, liabilities, costs, expenses and disbursements
(and any and all actions, suits, proceedings and investigations in respect
thereof and any and all legal and other costs, expenses and disbursements in
giving testimony or furnishing documents in response to a subpoena or
otherwise), including, without limitation, the costs, expenses and
disbursements, reasonably incurred, as and when incurred, of investigating,
preparing or defending any such action, suit, proceeding or investigation
(whether or not in connection with litigation in which SMC is a party), directly
or indirectly, caused by, relating to, based upon, arising out of, or in
connection with this Agreement or SMC's performance hereunder, except to the
extent primarily caused by the gross negligence or willful misconduct of
SMC.
(b) The indemnification
provisions shall be in addition to any liability which PENC may otherwise have
to SMC or the persons indemnified below in this sentence and shall extend to the
following: SMC, its affiliated entities, members, employees, and controlling
persons (within the meaning of the federal securities laws). All references to
SMC in this Article Five shall be understood to include any and all of the
foregoing.
5.2 Limitation
of Liability. SMC shall not have any liability (whether direct
or indirect, in contract or tort or otherwise) to PENC for or in connection with
this Agreement or SMC’s performance hereunder, except to the extent that any
such liability is found in a final judgment by a court of competent jurisdiction
(not subject to further appeal) to have resulted primarily from SMC's gross
negligence or willful misconduct. In no case shall SMC’s liability
(whether direct or indirect, in contract or tort or otherwise) to PENC for or in
connection with this letter agreement or SMC’s performance hereunder exceed the
aggregate fees paid by PENC to SMC hereunder.
ARTICLE
SIX
TERM
AND TERMINATION
6.1 Term. The initial term of this
Agreement shall be for a period of twelve (12) months from the Effective Date
(the “Initial Term”). After the Initial Term, the term of this
Agreement will automatically be extended for additional successive twelve month
periods unless either party provides written notice to the other party of its
intent not to so extend the term at least 30 days before the expiration of the
then current term. Upon each annual renewal the MS Fee shall be
increased by five percent.
6.2 Termination. (a) This
Agreement may be terminated by either party upon the breach of a material term
hereof by the other party, which breach remains uncured for 30 days after the
date that the non-breaching party has served written notice on the other party,
which notice will set forth the basis of such breach and the non-breaching
party's intent to terminate the Agreement.
(b) In
the event that SMC, any of its members or principals, or the individual made
available by SMC to serve as PENC’s Chief Financial Officer, is charged,
indicted or convicted of any securities laws violations, then PENC shall have
the right to terminate this Agreement and the remaining term hereof without
payment of any additional MS Fees for such remaining term.
6.3 Effect of
Termination. Upon the
expiration or termination of this Agreement, each party shall be released from
all obligations and liabilities hereunder except those arising under Articles
Four, Five and Eight; provided that, following such termination, SMC shall be
entitled to receive all amounts payable by PENC to SMC through the date of
expiration or termination of this Agreement.
ARTICLE
SEVEN
MISCELLANEOUS
7.1 Relationship
of the Parties.
(a) PENC is a sophisticated
business enterprise that has retained SMC for the limited purposes set forth in
this letter agreement, and the parties acknowledge and agree that their
respective rights and obligations are contractual in nature. PENC recognizes
that the relationship contemplated hereby is not an exclusive relationship for
SMC or any of its personnel. Each party disclaims an intention to
impose fiduciary obligations on the other by virtue of the engagement
contemplated by this Agreement.
(b) The Services do not
include requiring SMC to engage in any activities for which an investment
advisor's registration or license is required under the U.S. Investment Advisors
Act of 1940, or under any other applicable federal or state law; or for which a
"broker's" or "dealer's" registration or license is required under the U.S.
Securities Exchange Act of 1934, or under any other applicable federal or state
law. SMC's work on this engagement shall not constitute the rendering
of legal advice, or the providing of legal services, to
PENC. Accordingly, SMC shall not express any legal opinions with
respect to any matters affecting PENC.
(c) SMC will be responsible
for making appropriate filings and payments to the federal, state and local
taxing authorities, including payments of all withholding and payroll taxes due
on compensation received hereunder, estimated income payments, employment and
self-employment taxes, if applicable.
7.2 Waiver. None of the terms of this
Agreement may be waived except by an express agreement in writing signed by the
party against whom enforcement of such waiver is sought. The failure
or delay of either party in enforcing any of its rights under this Agreement
shall not be deemed a continuing waiver of such right.
7.3 Entire
Agreement. This
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements and understandings
among the parties (whether written or oral) relating to said subject
matter.
7.4 Amendments. This Agreement
may not be released, discharged, amended or modified in any manner except by an
instrument in writing signed by a duly authorized officer of PENC and
SMC.
7.5 Assignment. PENC has
specifically contracted for the Services of SMC and, therefore, SMC may not
assign or delegate SMC's obligations under this Agreement, either in whole or in
part, without the prior written consent of PENC.
7.6 Severability. If any provision
of this Agreement is, becomes, or is deemed invalid, illegal or unenforceable in
any jurisdiction, such provision shall be deemed amended to conform to the
applicable laws so as to be valid and enforceable, or, if it can not be so
amended without materially altering the intention of the parties hereto, it
shall be stricken and the remainder of this Agreement shall remain in full force
and effect.
7.7 Headings. Article and Section headings
contained in the Agreement are included for convenience only and are not to be
used in construing or interpreting this Agreement.
7.8 Notices. All notices
provided for in this Agreement shall be in writing and shall be deemed effective
when either served by personal delivery or sent by express, registered or
certified mail, postage prepaid, return receipt requested, to the other party at
the corresponding mailing address set forth below or at such other address as
such other party may hereafter designate by written notice in the manner
aforesaid.
7.9 Force
Majeure. SMC shall be
excused for failure to provide the Services hereunder to the extent that such
failure is directly or indirectly caused by an occurrence commonly known as
force majeure, including, without limitation, delays arising out of acts of God,
acts or orders of a government, agency or instrumentality thereof (whether of
fact or law), acts of public enemy, riots, embargoes, strikes or other concerted
acts of workers (whether of SMC or other persons), casualties or accidents,
delivery of materials, transportation or shortage of cars, trucks, fuel, power,
labor or materials or any other causes, circumstances or contingencies that are
beyond the control of SMC; provided, however,
that SMC shall use its best efforts to resume provision of the Services as soon
as possible. Notwithstanding any events operating to excuse performance by SMC,
this Agreement shall continue in full force for the remainder of its term and
any renewals thereof.
7.10 Counterparts. This Agreement
may be executed in any number of counterparts, each of which shall be an
original and all of which together shall constitute one and the same document,
binding on all parties notwithstanding that each of the parties may have signed
different counterparts.
7.11 Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California and the parties to this
Agreement hereby submit to the exclusive jurisdiction of the courts, both state
and federal, in the County of Orange, State of California.
IN WITNESS WHEREOF, the
parties have entered into this Agreement on the date first above
written.
STRANDS
MANAGEMENT COMPANY,
LLC, Pinnacle
Energy Corp.
a
California limited liability
company
a Nevada corporation
____________________________________
By: Xxxxx
Xxxxx
By: Xxxxx Xxxxxx
Title:
Managing
Member
Title: Chief Executive Officer
Address:
00000 Xxxxxx Xxxxx Xx #000
Xxx Xxxx
Xxxxxxxxxx, XX 9267
Schedule
1
Management
Services
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Make
available an individual(s) acceptable to PENC in its sole discretion to
serve as Chief Financial Officer and Secretary of the board of
PENC.
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Perform
all principal accounting and financial officer
duties.
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Direct
all finance, accounting and treasury functions including SEC filings,
audits, cash forecasting, cash management, operational budgeting,
month-end closing, and ensure accuracy and compliance in
accounting/financial reporting.
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Analyze
financial and operating information for management to facilitate
decision-making and provide input for corrective action, where
applicable.
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Forecast
and monitor financial information against goals and operating
strategy.
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Manage/oversee
relationships with independent auditors, banks and investment banking
community.
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Handle
financial negotiations with other third party
relationships.
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Prepare
quarterly updates to the financial
forecast.
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Lead
the financial due diligence
efforts.
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Lead
the integration of accounting and finance systems for
mergers.
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Provide
all acquisition support functions, including due diligence, transaction
and integration support.
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Develop
processes and systems to train Company personnel to succeed Management
company in all roles
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Support
and evaluate all corporate capital formation activities including debt,
equity, and debt issuance
transactions.
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Develop
long term corporate strategic plans with management input and direction
from the Company’s Board
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Schedule
A
Common
Stock to Be Issued:
Xxxx
Xxxx: 50,000
common shares
Attachment
A
Services
Addendum
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Scope
of Other Services:
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Other
Services Fee:
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Other
Terms and Conditions:
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Acknowledged
and agreed by:
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By:/s/ W. XXXXX
XXXXXX
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Date:
JUNE 30, 2009
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STRANDS
MANAGEMENT COMPANY, LLC
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By:/s/ XXXXX
XXXXX
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Date: JUNE 30,
2009
