CONSULTING AGREEMENT
This Agreement is entered into between BOOTS & XXXXX INTERNATIONAL WELL
CONTROL, INC. (the "Company"), and K. XXXX XXXXX (the "Consultant") upon the
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following terms and conditions:
PREAMBLE
The parties acknowledge and agree that this Consulting Agreement (the
"Agreement") does not affect, negate, supersede, detract from, reduce or limit
the inherent responsibilities, obligations, or fiduciary duties associated with
any services of Consultant as a member or Chairman of the Board of Directors of
Company.
1. SERVICES
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Consultant agrees to provide, AS AN INDEPENDENT CONTRACTOR, AND NOT AS AN
EMPLOYEE OF THE COMPANY, management consulting services (together, the
"Services") to Company, including the following:
(a) Under the direction and control of the Board of Directors of the
Company, Consultant will advise and assist Company's Chief Executive
Officer and his management staff regarding Company's finances,
business development, strategic planning, mergers and acquisitions,
public disclosures, financial community relations, public and private
equity and debt transactions or similar matters;
(b) In specific and with the advice and consent of the Board of Directors
and in cooperation with the Chief Executive Officer, Consultant shall
work to (i) resolve all outstanding legal issues, (ii) negotiate the
redemption or conversion of the Prudential debt and accrued interest
into an equity instrument, (iii) identify and complete a significant
merger(s) or acquisition(s) in accordance with the strategy set forth
by the Board of Directors and on terms satisfactory to the Board of
Directors, and (iv) carry out the additional duties and
responsibilities of the Chairman of the Board of Director over and
above those required of a Director;
(c) Consultant shall provide such other advisory services as the Board of
Directors may request from time to time; and
(d) Consultant will xxxxxx and promote the positive attributes of the
Company in all respects and assist the Company's Chief Executive
Officer in achieving the goals of the Company as and when requested by
the Company's Board of Directors.
2. TERMINATION OF PRIOR COMPENSATION AGREEMENT
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The Company and Consultant hereby agree that the agreement by and between the
parties hereto dated May 1, 2003, under which Consultant was compensated for the
performance of extraordinary services to the Company as the non-executive
Chairman (the "Prior Compensation
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Agreement"), is effectively terminated, and that this Agreement cancels and
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supersedes that Prior Compensation Agreement.
3. TERM
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This Agreement shall be effective as of July 15, 2004 (the "Effective Date")
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and shall continue for a period of TWO (2) YEARS from the Effective Date hereof
(the "Consulting Term"). The Consulting Term and this Agreement shall be
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automatically renewed for successive one (1) year terms unless notice of
termination is given in writing by either party to the other party at least six
(6) months prior to the expiration of the initial term or any such renewal term.
Any change in Consultant's status as a Director of the Company or as Chairman of
the Board of the Company shall not affect the Consulting Term nor any other
rights and obligations of the parties under this Agreement.
4. CONDUCT OF CONSULTANT
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During the Consulting Term, Consultant shall devote his best efforts to promote
the interests of the Company, and will perform the Services in a diligent and
faithful manner, consistent with sound business practices, and shall devote his
full time, effort and energy to the Company during the period he works for the
Company. During the Consulting Term, Consultant agrees to continue to serve as
a Director on the Company's Board of Directors, if elected to such position by
the stockholders of the Company, and as Chairman of the Board of Directors, if
elected to such position by the Board of Directors. However, in the event the
Company's shareholders do not re-elect the Consultant as a Director of the
Company or in the event the Board of Directors elects another as Chairman of the
Board of the Company, such involuntary failure to serve in either or both of
those roles shall not be a breach of this Agreement by Consultant, and the
rights and obligations of the parties under this Agreement shall continue in
accordance with its terms.
Nothing in this Agreement shall be deemed to preclude the Consultant from
participating in other business, charitable or community opportunities if and to
the extent that (i) such business opportunities are not directly competitive
with or similar to the business of the Company, (ii) the Consultant's activities
with respect to such opportunities do not have a material adverse effect on his
performance of the Services hereunder, and (iii) the Consultant's activities
with respect to such opportunity have been fully disclosed in writing to the
Company's Board of Directors.
5. COMPENSATION
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In consideration of the Services that Consultant performs for the Company
hereunder, the Company shall pay Consultant, as an independent contractor, the
following:
5.1 Compensation. During the Consulting Term, the Company shall pay Consultant
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at the rate of $1,000.00 PER DAY (the "Base Compensation"), payable monthly on
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the last day of each month, with no deductions or withholdings, in accordance
with an invoice submitted by Consultant for the number of days worked on behalf
of Company, including any business expenses incurred in accordance with Company
policy. The number of days to be worked each month shall be set in mutual
agreement between Consultant and the Company prior to the month, adjusted as
necessary for Consultant to accomplish the tasks set forth in this Agreement or
in mutual agreement with the Company. Any and all taxes or other charges levied
against the Company or Consultant as a result of any compensation paid to
Consultant hereunder shall be for the sole account of Consultant, who shall
defend and hold Company harmless therefor. This day rate may be adjusted from
time to time by the Board of Directors in its sole discretion.
5.2 Retainer. In order to accomplish the specific tasks set forth in this
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Agreement, Consultant shall devote his full time, effort and energy during the
INITIAL YEAR of this Agreement and shall be paid a fixed retainer on the last
day of each month in the amount of $20,100.00 plus all approved business
expenses.
5.3 Other. Consultant, in his services as a Director of the Company, shall
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participate in the Company's Director Compensation and Performance Incentive
Plan, as amended from time to time by the Board of Directors or a compensation
committee appointed by the Board of Directors, and the Board of Directors or the
compensation committee, as the case may be, shall have the authority to adjust
such participation upward or downward from time to time in its sole discretion.
While as a director of the Company, and as available to all directors, the
Consultant and his dependents shall be entitle to coverage under the Company's
standard policy of hospitalization and major medical insurance on the same terms
provided to employees of the Company.
In addition and upon execution of this agreement and adoption of a Board of
Director resolution authorizing such action as a reward for prior services, if
not already so awarded, Consultant shall be awarded a one-time OPTION TO
PURCHASE 250,000 SHARES of the Company's Common Stock at the current fair market
value per share, which option shall be immediately vested. In addition and as an
incentive for future performance, Consultant shall be awarded 300,000 SHARES OF
RESTRICTED COMMON SHARES that will vest in equal amounts over the subsequent
five years and an OPTION FOR 150,000 COMMON SHARES that will vest over the two
years of this Agreement, both of which having such other terms as specified in
the Company's long term incentive plan. Upon resolution of the Prudential
obligation to the satisfaction of the Board of Directors, half of the restricted
stock shall accelerate and be immediately vested. Upon completion of a
sufficiently large merger or acquisition on terms satisfactory to the Board of
Directors, half of the restricted stock award shall accelerate and be
immediately vested.
6. EXPENSES
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The Company shall reimburse Consultant for all reasonable expenses and
disbursements incurred by Consultant, and approved by appropriate designees of
the Compensation Committee, in his performance of the Services, including
expenses for entertainment and travel, as are consistent with the policies and
procedures of the Company and Internal Revenue Service regulations. Travel and
other expenses from Consultant's home to the Company's office are not included.
The Company shall furnish Consultant with a cellular telephone at the expense of
the Company. The Company shall rent to Consultant one fully equipped office at
the headquarters of the Company for the amount of $100 per month, which amount
shall be deducted from the invoiced payment due to Consultant each month.
7. INDEPENDENT CONTRACTOR
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The parties hereto acknowledge and agree that the Consultant shall be an
independent contractor during the Consulting Term and that he shall not be
deemed an employee of the Company. In acknowledging that he is providing
Services as an independent contractor, the Consultant acknowledges and agrees
that, except as specifically provided herein, he shall not be entitled to
participate in any insurance, qualified or nonqualified benefit plans or other
fringe benefits provided by the Company to its employees and that, except as
required by federal, state or local law, the Company shall not be required to
withhold nor shall the Company withhold any income, social security,
unemployment or other taxes or similar payments from the amounts payable to the
Consultant hereunder. In the event the Company shall be required by law to
withhold any
such taxes or payments from amounts payable to the Consultant hereunder, the
amounts payable to the Consultant shall be reduced accordingly.
8. CONFIDENTIAL INFORMATION
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Consultant acknowledges that in the course of his engagement hereunder by the
Company, Consultant will receive certain trade secrets and confidential
information belonging to the Company which the Company desires to protect as
confidential. For the purposes of this Agreement, the term "confidential
information" shall mean information or documents of any nature and in any form
relating to the Company or its business which at the time is not known to those
persons outside of the Company engaged in business similar to that conducted by
the Company unless such information is generally available. Consultant agrees
that such information is confidential and that he will not reveal such
information to anyone other than officers, directors, employees or authorized
agents of the Company. Upon termination of this Agreement, for any reason,
Consultant shall surrender all papers, documents and other property of the
Company.
9. INFORMATION, IDEAS, CONCEPTS, IMPROVEMENTS, DISCOVERIES, INVENTIONS, ETC.
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Consultant agrees that during the Consulting Term he will promptly disclose, in
writing, all information, ideas, concepts, improvements, discoveries and
inventions, whether patentable or not, and whether or not reduced to practice,
which are conceived, developed, made or acquired by the Consultant, either
individually, or jointly with others, and which relate to the business, products
or services of the Company, or any of its subsidiaries or affiliates,
irrespective of whether such information, idea, concept, improvement, discovery
or invention was conceived, developed, discovered or acquired by Consultant on
the job, or elsewhere (collectively, the "Inventions"). The Company and
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Consultant have agreed as follows regarding the Inventions:
(a) All inventions are, and shall be, the property of the Company. In
this context, all drawings, memoranda, notes, records, files, correspondence,
manuals, models, specifications, computer programs, maps and all other writings,
or materials of any time embodying any such Inventions are and shall be the sole
and exclusive property of the Company.
(a) Consultant hereby specifically sells, assigns and transfers to the
Company all of his worldwide right, title and interest in and to all such
Inventions, and any United States or foreign applications for patents,
inventor's certificates or other industrial rights that may be filed thereon,
including divisions, continuations, continuations-in-part, reissues and/or
extensions thereof, and applications for registration of any names and marks
included therewith. Both during the Consulting Term and thereafter, Consultant
shall assist the Company and its nominees at all times in the protection of such
Inventions, both in the United States and all foreign countries, including but
not limited to, the execution of all lawful oaths and all assignment documents,
not inconsistent with this Agreement, requested by the Company, or its nominee
in connection with the preparation, prosecution, issuance or enforcement of any
applications for United States or foreign letters patent, including divisions,
continuations, continuations-in-part, reissue, and/or extensions thereof, and
any application for the registration of names and marks included therewith.
(b) Moreover, if during the Consulting Term, Consultant creates any
original work of authorship which is the subject matter of copyright relating to
the Company's business, products, or services, whether such work is created
solely by Consultant or jointly with others, the
Company shall be deemed the author of such work if the work is prepared by
Consultant in the scope of his activities under this Agreement; or, if the work
is not prepared by Consultant within the scope of his activities under this
Agreement, but is specifically ordered by the Company as a contribution to a
collective work, as a part of a motion picture or other audiovisual work, as a
translation, as a supplementary work, as a compilation or as an instructional
text, then the work shall be considered to be a work made for hire and the
Company shall be the author of the work. In the event such work is neither
prepared by the Consultant within the scope of his activities under this
Agreement or is not a work specially ordered and deemed to be a work made for
hire, then Consultant hereby agrees to assign, and by these presents, does
assign, to the Company an undivided one-half interest in and to all of
Consultant's worldwide right, title and interest in and to the work and all
rights or copyright therein, including but not limited to, the execution of all
formal assignment documents requested by the Company or its nominee, not
inconsistent with this Agreement, and the execution of all lawful oaths and
applications for registration of copyright in the United States and foreign
countries.
10. AGREEMENT NOT TO SOLICIT
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During the Consulting Term and for a period of one (1) year after the
termination of this Agreement (the "Termination Date"), regardless of how
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terminated, Consultant will not, solely, jointly, or as a partner, member,
contractor, Consultant or agent of any partnership or as an officer, director,
employee, agent, contractor, stockholder or investor in any other entity or in
any other capacity, directly or indirectly:
(a) induce, or attempt to induce, any person or party who, on the
Termination Date is employed by or affiliated with the Company or at any time
during the term of this covenant is, or may be, or becomes an employee of or
affiliated with the Company, to terminate his, her or its employment or
affiliation with the Company;
(b) induce, or attempt to induce, any person, business or entity which is
or becomes a customer or supplier of the Company, or which otherwise is a
contracting party with the Company, as of the Termination Date, or at any time
during the term hereof, to terminate any written or oral agreement or
understanding with the Company, or to interfere in any manner with any
relationship between the Company and such customer or supplier; or
(c) employ or otherwise engage in any capacity any person who at the
Termination Date or at any time during the period two (2) years prior thereto
was employed, or otherwise engaged, in any capacity by the Company and who, by
reason thereof is or is reasonably likely to be in possession of any
confidential information.
Consultant acknowledges and agrees that the provisions of this paragraph 10
constitute a material, mutually bargained for portion of the consideration to be
delivered under this Agreement and failure to comply with this paragraph 10
shall be deemed a breach of this Agreement.
11. TERMINATION BY THE COMPANY
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Notwithstanding the provisions of paragraph 3, the Company may terminate this
Agreement if any of the following occur:
(a) the death of Consultant;
(b) the Consultant becomes, in the good faith opinion of the Board of
Directors, physically or mentally disabled, for a period of more than six (6)
consecutive months, to the extent he is unable to perform his duties hereunder;
(c) for any reason, or for no reason, at the end of the initial term of
this Agreement or any renewal thereof; or
(d) for "Cause", which for purposes of this Agreement shall mean
Consultant (i) has engaged in gross negligence or willful misconduct in the
performance of the Services, (ii) has willfully refused without proper legal
reason to perform the Services required of him hereunder (provided, however,
that no act or failure to act pursuant to subsections (i) and (ii) above shall
be deemed "willful" if due primarily to an error in judgment or negligence or if
made in good faith with reasonable belief that such act is in the best interest
of the Company), (iii) has materially breached any material provision of this
Agreement (and such breach remains uncorrected 30 days following Consultant's
receipt of written notice of the breach from the Company), or (iv) the
Consultant commits, is arrested or officially charged with any felony, or any
crime involving moral turpitude, which, in the good faith opinion of the
Company, would impair Consultant's ability to perform the Services or would
impair the business reputation of the Company, or Consultant misappropriates any
funds or property of the Company; provided, however, that this Agreement may be
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terminated pursuant to this paragraph 11(d) only if such termination is approved
by at least two-thirds of the members of the Board of Directors, excluding the
Consultant, after Consultant has been given written notice by the Company of the
specific reason for such termination and an opportunity for Consultant, together
with his counsel, to be heard before the Board of Directors. Members of the
Board of Directors may participate in any hearing that is required pursuant to
this paragraph 11(d) by means of conference telephone or similar communications
equipment whereby all persons participating in the hearing can hear and speak to
each other; provided, however, that at least one-half of the members of the
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Board of Directors shall attend the hearing in person.
12. TERMINATION BY CONSULTANT
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Notwithstanding the provisions of paragraph 3, Consultant may terminate this
Agreement if any of the following occur:
(a) in connection with or based upon a material breach by the Company of
any material provision of this Agreement; provided, however, that prior to
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Consultant's termination of this Agreement under this paragraph 12(a),
Consultant must give written notice to the Company of any such breach, and such
breach must remain uncorrected for 30 days following such written notice;
(b) immediately upon a Change in Control, where a "Change in Control" is
defined to mean (i) any merger, consolidation or reorganization in which the
Company is not the surviving entity (or survives only as a subsidiary of an
entity), (ii) any sale, lease, exchange, or other transfer of (or agreement to
sell, lease, exchange, or otherwise transfer) all or substantially all of the
assets of the Company to any other person or entity (in one transaction or a
series of related transactions), (iii) dissolution or liquidation of the
Company, (iv) when any person or entity, including a "group" as contemplated by
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or
gains ownership or control (including, without limitation, power to vote) of
more than 50% of the outstanding shares of the Company's voting stock (based
upon voting power), (v) as a result of or in connection with a contested
election of directors, the persons who were directors of the Company before such
election shall cease to constitute a
majority of the Board of Directors, or (vi) any event that is reported by the
Company under Item 1 of a Form 8-K filed with the Securities and Exchange
Commission; provided, however, that the term "Change in Control" shall not
include any reorganization, merger, consolidation, sale, lease, exchange, or
similar transaction involving solely the Company and one or more previously
wholly-owned subsidiaries of the Company unless such matter is described in
clause (vi) above; or
(c) at any time, for any other reason whatsoever, in the sole discretion
of Consultant.
13. TERMINATION AND COMPENSATION
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(a) Termination and Compensation. In the event that the Company elects to
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terminate this Agreement prior to the expiration of initial term, or renewal
term, of this Agreement for any reason other than termination for Cause as
expressly provided for in Paragraph 11(d), or if Consultant terminates this
Agreement pursuant to Sections 12(a) or 12(b), then, and in that event, the
Company shall pay to Consultant, on the Termination Date, an amount equal to the
unpaid balance of the initial retainer plus any outstanding business expenses.
Separately, if Consultant shall resign as a member of the Board of Directors,
then the Company shall continue providing hospitalization and medical insurance
as before for six months, and thereafter Consultant, as a former director, shall
be entitled to continuing coverage as any other employee terminated for any
reason other than for cause. In the event of a termination for Cause pursuant
to paragraph 11(d) or if Consultant terminates pursuant to 12(c), this Agreement
shall be wholly terminated and Consultant shall not be entitled to any further
compensation or any other benefits provided for herein. However, any of the
provisions of this Agreement relating to activities and conduct after the
termination of the consulting relationship between the Company and Consultant
shall remain in full force and effect and fully enforceable.
(b) No Duty to Mitigate Losses. Any compensation or remuneration received
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by Consultant from a third party for the providing of personal services (whether
by employment or by functioning as an independent contractor) following the
termination of this Agreement shall not reduce the Company's obligation to make
any payments to Consultant (or the amount of such payments) pursuant to the
terms of paragraph 13.
OTHER PROVISIONS
14. NOTICES. All notices or other communications pursuant to this Agreement
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may be given by personal delivery, or by certified mail, addressed to the home
office of the Company or to the last known address of Consultant. Notices given
by personal delivery shall be deemed given at the time of delivery, and notices
sent by certified mail shall be deemed given when deposited with the U.S. Postal
Service.
15. ENTIRETY OF AGREEMENT; AMENDMENT. This Agreement contains the entire
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understanding of the parties and all of the covenants and agreements between the
parties with respect to Consultant's performance of the Services. No amendment
to this Agreement shall be effective unless it is in writing and signed by both
the parties hereto.
16. GOVERNING LAW. This Agreement shall be construed and enforced in
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accordance with, and be governed by, the laws of the State of Texas.
17. WAIVER. The failure of either party to enforce any rights hereunder shall
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not be deemed to be a waiver of such rights, unless such waiver is an express
written waiver which has been
signed by the waiving party. Waiver of one breach shall not be deemed a waiver
of any other breach of the same or any other provision hereof.
18. ASSIGNMENT. This Agreement shall not be assignable by Consultant. Subject
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to Sections 12(b) and 13(b) hereof, in the event of a future disposition of the
properties and business of the Company by merger, consolidation, sale of assets,
or otherwise, then the Company may assign this Agreement and all of its rights
and obligations to the acquiring or surviving entity; provided, that any such
entity shall assume all of the obligations of the Company hereunder.
19. COUNTERPARTS. This Agreement may be executed in any number of
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counterparts, each of which shall be deemed to be an original for all purposes
hereof.
20. ARBITRATION. Any dispute, controversy or claim arising out of or relating
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to this Agreement and/or the Services provided by Consultant hereunder shall be
submitted to and finally settled by binding arbitration to be held in Houston,
Texas, in accordance with the rules of the American Arbitration Association in
effect on the Effective Date, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. All
agreements contemplated herein to be entered into to which the parties hereto
are parties shall contain provisions which provide that all claims, actions or
disputes pursuant to, or related to, such agreements shall be submitted to
binding arbitration. In any proceeding to enforce the provisions hereof, the
prevailing party shall be entitled to recover reasonable expenses incurred by
him, including reasonable attorneys' fees.
This Agreement is entered into as of the Effective Date.
"COMPANY"
BOOTS & XXXXX INTERNATIONAL WELL CONTROL, INC.
By: ____________________________________
Title: _________________________________
"CONSULTANT"
________________________________________
K. Xxxx Xxxxx
