EXHIBIT 1.01
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (this "Agreement") dated as of May 5, 2008, is
made by and between Blackwater Midstream Corp. ("Blackwater" and, together with
its subsidiaries now or hereafter existing, the "Company ") and Xxxxxxxxxxx X.
Xxxxxx ("Xxxxxx").
AGREEMENT
NOW, THEREFORE, in consideration of the premises and covenants set forth
herein, and intending to be legally bound hereby, the parties to this Agreement
hereby agree as follows:
1. Effectiveness of the Agreement. This Agreement shall become effective
on May 5, 2008.
2. Engagement. The Company hereby engages Xxxxxx to perform management
services for the benefit of the Company on the terms and conditions set forth in
this Agreement. The Company is hereby obtaining from Xxxxxx the services set
forth on Schedule 1 (the " Management Services ").
3. Duties.
(a) The provision of Management Services by Xxxxxx shall be subject to
Blackwater's Charter, Bylaws (including without limitation the provision that
the business and affairs of Blackwater shall be managed by its Board of
Directors (the " Board ")) and other governing documents, including committee
charters, as well as applicable laws and regulations, including the regulations
of any securities exchange on which Blackwater's securities are listed or
traded. For purposes of this Agreement, the Charter and Bylaws of Blackwater
shall be deemed to mean the Charter and Bylaws of Blackwater as they exist today
(including any future amendments).
(b) The parties acknowledge that Xxxxxx will be designated to serve as the
Chairman of the Board of Directors, Chief Executive Officer and Chief Financial
Officer of Blackwater. Except as expressly set forth in this Agreement,
Blackwater shall take all necessary actions so that Xxxxxx will continue to
serve in those capacities at Blackwater throughout the Term (as defined below)
of this Agreement, including by adopting all necessary resolutions of the Board.
(c) Subject to the provisions of Section 3(a) and applicable law, Xxxxxx
shall be authorized to make decisions with respect to all aspects of the
management and operation of the Company's business, including without limitation
organization and human resources, marketing and sales, logistics, finance,
administration of day-to-day operations and such other areas as he may identify,
in such manner as he deems necessary or appropriate in his reasonable judgment
in a manner consistent with the business judgment rule and the provisions of
applicable law.
(d) Xxxxxx shall furnish such time at such locations as is reasonably
necessary to perform the Management Services. Consequently, it is hereby
understood and agreed that Xxxxxx is not required to devote his full time to
this engagement, although it is expected that Xxxxxx will be devoting the
requisite amount of time to carry out the duties of his position with
Blackwater.
(e) In undertaking to provide the services set forth herein, none of
Xxxxxx or any other person or entity guarantees or otherwise provides any
assurances that their efforts to build the Company's operational and financial
health and stability will be successful and, except for the amount referenced in
Section 5(b), the Company's obligation to provide the compensation specified
under Section 5 hereof shall not be conditioned upon any particular results
being obtained.
4. Term.
(a) The initial term of Xxxxxx'x engagement hereunder (the "Term") shall
be for one year commencing on the date of the Closing Date. The Term shall
continue thereafter on a month-to-month basis unless terminated by either party
upon 60 days' advance written notice.
(b) Blackwater shall have the right to terminate the Management Services,
effective upon 15 days advance written notice, if Xxxxxx, prior to the
engagement of a new CEO and CFO, respectively, as contemplated by the terms of
Schedule 1 , is not actively engaged in the provision of Management Services
whether due to death, disability or by reason of a material breach of this
Agreement by Xxxxxx (it being understood and agreed that Xxxxxx, in addition to
pursuing other activities not related to or for the benefit of the Company may
be on personal vacation for up to four weeks a year).
5. Compensation. The following compensation shall be payable to Xxxxxx for
provision of the Management Services by Xxxxxx:
(a) Base Fee. Blackwater shall pay Xxxxxx a monthly fee (the "Base Fee")
of $2,500, pro-rated for partial months and payable in advance no later than the
first day of every month during the Term. If the Term is extended pursuant to
Section 4(b), the Fee shall be renegotiated in good faith between both parties.
The Base Fee includes up to 10 hours per month. Time in excess of 10 hours will
be billed at an hourly rate of $350 per hour.
(b) Stock Grant. The Company shall issue to Xxxxxx 50,000 shares of common
stock upon execution of this Agreement., of which all 50,000 shares will
immediately vest. Xxxxxx shall be eligible to be granted additional equity
compensation awards, at least annually as determined by the Board in its sole
discretion.
(c) Expenses. During the Term, Blackwater shall reimburse Xxxxxx for all
reasonable business expenses incurred in connection with the provision of
Management Services in accordance with Blackwater's policies in effect from time
to time with respect to travel, entertainment and other business expenses for
senior executives; provided that Xxxxxx complies with Company expense
reimbursement policies including the provision of receipts.
(d) Other Benefits. Xxxxxx and other persons performing Management
Services shall also be entitled to coverage for services rendered to the Company
while they serve as directors or officers of the Company under director and
officer liability insurance policy(ies) maintained by the Company from time to
time.
(e) In the event of any breach of this Agreement by the Company, the
aggregate amount of (i) unpaid Base Fees and any other earned but unpaid
compensation, (ii) unpaid expense reimbursements or other cash entitlement,
(iii) Base Fees for the remaining Term and (iv) the aggregate of all unpaid
Bonus Fees shall become immediately due and payable to Xxxxxx, irrespective of
whether the corresponding milestones have been achieved. In addition, in such
event, all Blackwater stock issued or to be issued to Xxxxxx shall become
immediately vested notwithstanding the terms thereof. The Company agrees to file
a registration statement on Form S-8 or equivalent to register such shares upon
issuance.
7. Representations and Warranties. Each party represents and warrants to
the other party as follows:
(a) It is a legal entity duly organized and validly existing under the
laws of the jurisdiction in which it was organized and has all requisite
corporate power to enter into this Agreement.
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(b) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated herein nor compliance by it with
any of the provisions hereof will: (i) violate any order, writ, injunction,
decree, law, statute, rule or regulation applicable to it or (ii) require the
consent, approval, permission or other authorization of, or qualification or
filing with or notice to, any court, arbitrator or other tribunal or any
governmental, administrative, regulatory or self-regulatory agency or any other
third party.
(c) This Agreement has been duly authorized, executed and delivered by it
and constitutes its legal, valid and binding agreement.
8. Indemnification.
(a) The Company shall indemnify and hold Xxxxxx, its principals, officers,
shareholders, employees and agents harmless from and against any and all
liability, demands, claims, actions, losses, interest, costs of defense and
expenses (including, without limitation, reasonable attorneys' fees) which arise
out of or in connection with the acceptance of this Agreement and the
performance of its duties hereunder except such acts or omissions as may result
from the willful misconduct or gross negligence of Xxxxxx. Promptly after
receipt by Xxxxxx of notice of any demand or claim or the commencement of any
action, suit or proceeding relating to this Agreement, Xxxxxx shall promptly
notify the Company in writing. IT IS EXPRESSLY THE INTENT OF THE COMPANY TO
INDEMNIFY XXXXXX FROM ERRORS IN JUDGMENT OR OTHER ACTS OR OMISSIONS NOT
AMOUNTING TO WILFULL MISCONDUCT OR GROSS NEGLIGENCE.
(b) The Company shall be solely responsible for all obligations, including but
not limited to any payments due under this Agreement, and none of its officers,
directors, attorneys, agents or employees shall have any personal liability to
Xxxxxx.
9. Insurance.
(a) Blackwater agrees immediately after the closing it will obtain a
Directors and Officers insurance policy in a form acceptable to Xxxxxx. As long
as the same can be done at a commercially reasonable cost, during the term of
this Agreement, Blackwater shall maintain directors and officers liability
insurance coverage, employment practices insurance coverage and fiduciary
liability insurance coverage comparable as to terms (including without
limitation the provisions or any similar provision regarding extension of the
discovery period thereunder) and amounts not lower than those provided under the
Policies, with any such replacement coverage being obtained from an insurer with
a rating from a nationally recognized rating agency not lower than that of the
Insurer presently providing such coverage. Upon any cancellation or nonrenewal
of any Policies by any Insurer, as long as the same can be done at a
commercially reasonable cost, Blackwater shall exercise its rights under the
applicable clause of the relevant Policy to extend the claim period for a
one-year "discovery period" and shall exercise such rights and pay the premium
required thereunder within the 30-day period specified therein. Blackwater shall
use commercially reasonable efforts, in connection with the next renewal of each
Policy, to negotiate to obtain an option to extend the discovery period set
forth in such Policies from one to three years, as long as the same can be
obtained at a commercially reasonable cost.
10. Limitations on Liability. The Company agrees that Xxxxxx and its
personnel will not be liable to the Company for any claims, liabilities, or
expenses relating to this engagement in excess of the fees paid by them to
Xxxxxx pursuant to this Agreement, unless there is a final, nonappealable order
of a Court of competent jurisdiction finding Xxxxxx or its personnel performing
Management Services liable for gross negligence or willful misconduct. In no
event xxxx Xxxxxx or any person or entity, or their personnel be liable for
consequential, special, indirect, incidental, punitive or exemplary loss,
damages or expenses relating to the provision of Management Services. These
limitations on liability provisions extend to the employees, representatives,
agents and counsel of Xxxxxx. The limitation on liability contained in this
Agreement and the indemnification agreements referenced in Section 8 shall
survive the completion or termination of this Agreement.
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11. Independent Contractor; Taxes. The parties intend that Xxxxxx shall
render services hereunder as an independent contractor, and nothing herein shall
be construed to be inconsistent with this relationship or status. Xxxxxx and any
person providing Management Services shall be solely responsible for any tax
consequences by reason of this Agreement and the relationship established
hereunder, and the Company shall not be responsible for the payment of any
federal, state or local taxes or contributions imposed under any employment
insurance, social security, income tax or other tax law or regulation with
respect to Xxxxxx'x performance of management services hereunder.
Notwithstanding anything in this Agreement to the contrary, the Company shall be
entitled to effect any withholding from any amount payable by it pursuant to
this Agreement to the extent required by law.
12. Jurisdiction. Each of Xxxxxx and the Company hereby irrevocably and
unconditionally (a) submits for itself and its property in any legal action or
proceeding relating to this Agreement, to the non-exclusive general jurisdiction
of the State of California, the Courts of the United States of America for the
Central District of California located in Orange County, California, and
appellate courts from any thereof; (b) consents that any such action or
proceeding may be brought in such courts and waives any objection that it may
now or hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same; (c) agrees that service of process in any
such action or proceeding may be effected in any manner permitted by law and
agrees that nothing herein shall affect the right to effect service of process
in any manner permitted by law or shall limit the right to xxx in any other
jurisdiction; and (d) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this subsection any special, exemplary or punitive or consequential
damages.
13. Survival of Agreement. Except as provided in this Agreement, the
obligations set forth Sections 5, 10 and 12 shall survive the expiration,
termination, or supersession of this Agreement.
14. Amendments. Any amendment to this Agreement shall be made in writing
and signed by the parties hereto.
15. Enforceability. If any provision of this Agreement shall be invalid or
unenforceable, in whole or in part, then such provision shall be deemed to be
modified or restricted to the extent and in the manner necessary to render the
same valid and enforceable, or shall be deemed excised from this Agreement, as
the case may require, and this Agreement shall be construed and enforced to the
maximum extent permitted by law as if such provision had been originally
incorporated herein as so modified or restricted or as if such provision had not
been originally incorporated herein, as the case may be.
16. Construction. This Agreement shall be construed and interpreted in
accordance with the internal laws of the State of California.
17. Notices. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person or duly sent by certified mail, postage
prepaid or by an overnight delivery service, charges prepaid; addressed to such
party at the address set forth below or such other address as may hereafter be
designated in writing by the addressee to the addressor:
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If to the Company: Blackwater Midstream Corp.
0 Xxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxx
If to Xxxxxx: Xxxxxxxxxxx X. Xxxxxx
0 Xxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Any party may from time to time change its address for the purpose of notices to
that party by a similar notice specifying a new address, but no such change
shall be deemed to have been given until it is actually received by the party
sought to be charged with its contents.
18. Waivers. No claim or right arising out of a breach or default under
this Agreement shall be discharged in whole or in part by a waiver of that claim
or right unless the waiver is supported by consideration and is in writing and
executed by the aggrieved party hereto or his or its duly authorized agent. A
waiver by any party hereto of a breach or default by the other party hereto of
any provision of this Agreement shall not be deemed a waiver of future
compliance therewith, and such provisions shall remain in full force and effect.
19. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, and all of which shall together
constitute one and the same instrument.
20. Entire Agreement. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement among
the parties hereto with regard to the subjects hereof and thereof and no party
shall be liable or bound to any other in any manner by any representations,
warranties, covenants and agreements except as specifically set forth herein and
therein.
21. No Third Party Beneficiaries. This Agreement is for the sole and
exclusive benefit of the Parties hereto and nothing herein, expressed or
implied, shall give or be construed to give any person or entity, other than the
parties hereto, any legal or equitable rights hereunder.
22. Assignment. Except as specifically stated in this Agreement, neither
this Agreement nor any of the rights, interests or obligations of any party
hereunder shall be assigned or delegated by either party without the prior
written consent of the other party, not to be unreasonably withheld. Any
unauthorized assignment or delegation shall be null and void. Notwithstanding
the foregoing, Xxxxxx may assign this Agreement to an affiliated entity for tax
or organizational reasons, so long as the Management Services and Xxxxxx shall
be as contemplated herein. Furthermore, either party may, without the other's
consent, assign this Agreement to a present or future affiliate, successor in a
merger or similar transaction or purchaser of all or substantially all of such
party's assets.
IN WITNESS WHEREOF, this Agreement has been executed by the parties as of
the date first above written.
BLACKWATER MIDSTREAM CORP.
BY: /s/ Xxxxxx Xxxxx Xxxxxx BY: /s/ Xxxxxxxxxxx X. Xxxxxx
-------------------------------- --------------------------------
XXXXXX XXXXX XXXXXX, PRESIDENT XXXXXXXXXXX X. XXXXXX
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SCHEDULE 1
MANAGEMENT SERVICES
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Xxxxxx will provide executive management services (the "Management
Services") to the Company, including, without limitation, fulfilling the duties
typically performed by a chief executive officer and chief financial officer.
The Management Services shall include:
o Managing the day-to-day operations of the Company;
o Preparing filings as required by the SEC and applicable law;
o Preparing for and holding Company board meetings;
o Reviewing capital-raising efforts; and
o Leading business development functions such as deal pipeline
generation, conducting due diligence and negotiating transactions.
It is understood and agreed that the Management Services to be provided by
Xxxxxx do not encompass all services required to manage the Company and that the
Company will need to utilize, at the Company's cost, additional specialists.
These specialists may include, without limitation, legal, tax, environmental,
accounting, investor relations, website design and other advisory persons.
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