CONSULTING SERVICES AGREEMENT
Exhibit
10.34
This
Consulting Services Agreement (“Agreement”) is made as of the __2nd day
of January, 2007 to the _29th day of February, 2008, by and between Daybreak
Oil
and Gas, Inc., (“Daybreak”), a Washington corporation, and Xxxxxxx X. Xxxxxxx,
doing business as Xxxxxxx Energy and Natural Resources (“Consultant”), 00000
Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000.
Whereas,
Daybreak desires to be assured of the association and services of the Consultant
in order to avail itself of the Consultant’s experience, skills, abilities,
knowledge and background to facilitate long range strategic planning and to
advise Daybreak in business and/or exploration matters, and
Whereas,
Daybreak wishes to engage Consultant to provide advisory and other services
for
Daybreak and Consultant wishes to accept such engagement, all on the terms
and
conditions set forth herein.
Whereas,
the Board of Directors of the Company considers it to be in the best interests
of the Company to enter into this Agreement with the Consultant and this
Agreement has been duly approved by the Board of Directors of the
Company;
Now
therefore, in consideration of the mutual promises herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Engagement. Daybreak
hereby engages the Consultant on a non-exclusive basis, and the Consultant
hereby accepts the engagement, to become a consultant to Daybreak and to render
such advice, consultation, information, and services to the directors and
officers of Daybreak regarding the exploration for and production of gas and
oil
energy including but not limited to:
(a) assess
current capital allocation in existing exploration and production operations
and
to identify and develop future core areas for growth;
(b) create
strategic exploration, acquisition, exploitation and development portfolio
and
to balance capital spending to enhance current financial returns while providing
significant future reserves and production growth;
(c) review
and interpret physical data such as maps, seismic sections, digital data bases,
drilling reports, well files, gravity surveys, geochemical surveys and regional
maps; and
(d) carry
out exploration work in order to ascertain whether particular projects contain
commercially exploitable gas and oil resources and make recommendations to
the
Board of Directors and officers of the Company.
The
Consultant will report to the person or positions designated by the Company
to
whom the Consultant will be reporting and will discharge such duties and
responsibilities as are assigned to the Consultant from time to
time.
2. Term. The
term of this Agreement shall commence on February ____, 2007 and continue in
effect until February ____, 2008. Notwithstanding the foregoing, this
Agreement may be terminated prior to the end of the term by either Daybreak
or
Consultant, for any reason or for no reason, upon thirty (30) days written
notice to the other party. In the event of termination, Consultant
shall be entitled to all fees and other consideration contained in this
Agreement earned and accrued to the effective date of termination.
3. Compensation.
(a) Monetary. In
exchange for his commitment to provide services to Daybreak under Section One
above, Daybreak agrees to pay Consultant a daily work rate in the amount of
One
Thousand Five Hundred Dollars ($1,500.00) per day rate plus out of pocket
expenses.
The
Consultant shall submit invoices to the Corporation for each month or portion
thereof for which services are provided during the period covered by the invoice
and also including any proper claim for travel expenses. Each invoice
shall indicate the period covered, the month or portion of a month worked,
the
rate and the total charge for consulting services.
The
Company will reimburse the Consultant, at actual cost, for out-of-pocket
expenses incurred in accordance with the Corporation’s standard practice for the
reimbursement of reasonable travel expenses incurred by its contractors or
its
own personnel. The Corporation will also reimburse the Consultant for
any reasonable long distance telephone, fax or photocopying charges incurred
by
the Consultant. Expenses claimed must be supported by the applicable
receipts.
(b)
Restricted Shares.
(i) Grant
and Issuance. As consideration for Consultant’s employment with
Daybreak, Daybreak grants and issues to Consultant Two Hundred Thousand
(200,000) unregistered and restricted common shares of its stock valued at
$1.00
per share (“Granted Shares”). In addition, the term “Granted Shares”
shall include any shares of stock received by Consultant from any stock split,
stock dividend, combination of shares, or any other change or exchange for
other
securities by reclassification, reorganization, merger, consolidation,
recapitalization, or otherwise, derived from the Two Hundred Thousand (200,000)
unregistered and restricted common shares granted and issued pursuant to Section
3.b of this Agreement. The Company acknowledges that the shares of
Common Stock to be issued pursuant to this Agreement (collectively the “Shares”)
have not been registered under the Securities Act of 1933 (the “Act”), and
accordingly are “restricted shares” within the meaning of Rule 144 of the
Act. The Shares shall be restricted and as such the Shares may not be
resold or transferred unless the Company has received an opinion of counsel
reasonably satisfactory to the Company that such resale or transfer is exempt
from the registration requirements of the Act.
(ii) Rights
as Shareholder. During the term of this Agreement, Consultant
will have all the rights of a shareholder with respect to Granted Shares,
including the right to vote them and to receive all dividends and other
distributions paid with respect to them, provided however that the shares shall
be subject to the restrictions provided for in Section 3.b of this
Agreement.
(iii) Not
Transferable. Consultant may not sell, exchange, transfer,
pledge, hypothecated, or otherwise dispose of (“Transfer”) Granted Shares to
anyone other than Daybreak during the term of this Agreement, and Granted Shares
may only be Transferred to Daybreak if Consultant forfeits Granted Shares
pursuant to Section 3.b.iv of this Agreement.
(iv) Forfeiture. If
Consultant’s employment is terminated, except as provided below, either by
Consultant or by Daybreak prior to the expiration of the term of this Agreement,
Consultant shall forfeit and endorse over to Daybreak a proportionate number
of
Granted Shares based upon the number of months remaining on the term of this
Agreement as compared to the entire term of this Agreement. If
Consultant’s employment is terminated prior to the end of a month, it is shall
be presumed that the month of termination is a remaining month on the term
of
this Agreement.
Example
1. The term of this Agreement is twelve (12) months. If
Consultant’s employment is terminated effective as of the end of the fifth month
of employment, Consultant has completed five (5) months of employment and there
are seven (7) months remaining on the term of this Agreement. As
such, Consultant forfeits 7/12ths of the
Granted
Shares and must endorse those shares of stock over to Daybreak for no
consideration.
Example
2. Same facts as in Example 1, except Consultant’s employment was
terminated five (5) days into the eighth month of employment, Consultant has
only completed seven (7) months of employment and there are six (5) months
remaining on the term of this Agreement. As such, Consultant forfeits
7/12ths of the
Granted Shares and must endorse those shares of stock over to Daybreak for
no
consideration.
In
the
event of the death of the Consultant, the parties agree that the Consultant
shall not forfeit any of the granted shares issued to the Consultant by Daybreak
under the terms of this Agreement.
(v) Legend. Stock
certificates representing Granted Shares shall be imprinted with a legend in
substantially the same form set forth herein stating that the shares represented
thereby may not be sold, exchanged, transferred, pledged, hypothecated, or
otherwise disposed of except as otherwise provided in this
Agreement.
THIS
SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), IN RELIANCE UPON THE
EXEMPTIONS FROM REGISTRATION PROVIDED IN THE ACT AND REGULATION D UNDER THE
ACT. AS SUCH, THE ACQUISITION OF THIS SECURITY WAS NECESSARILY WITH
THE INTENT OF INVESTMENT AND NOT WITH A VIEW FOR
DISTRIBUTION. THEREFORE, ANY SUBSEQUENT TRANSFER OF THIS SECURITY OR
ANY INTEREST THEREIN WILL BE UNLAWFUL UNLESS IT IS REGISTERED UNDER THE ACT
OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE. FURTHERMORE, IT
IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY INTEREST
THEREIN, WITHOUT THE OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT THE
PROPOSED TRANSFER OR SALE DOES NOT AFFECT THE EXEMPTIONS RELIED UPON BY THE
COMPANY IN ORIGINALLY DISTRIBUTING THE SECURITY AND THAT REGISTRATION IS NOT
REQUIRED.
(vi) Stock
Splits, Dividends, etc. If, due to a stock split, stock
dividend, combination of shares, or any other change or exchange for other
securities by reclassification, reorganization, merger, consolidation,
recapitalization, or otherwise, Consultant, as the owner of the Granted Shares
subject to the restrictions hereunder, shall be entitled to new, additional,
or
different shares of stock or securities, the certificate or certificates for,
or
otherwise evidence of, such new, additional, or different shares or securities,
together with a stock power or other instrument of transfer appropriately
endorsed, also shall be endorsed with a legend as provided in Section 3.b.v
of
this Agreement.
4. Independent
Contractor Status. In the performance of the work
contemplated in this Agreement, Consultant is an independent contractor with
the
authority to control and direct the performance of the details of the work,
Daybreak being interested only in the results obtained. Consultant is
not an agent or employee of Daybreak for any purpose, and the employees of
Consultant are not entitled to any of the benefits that Daybreak provides for
its employees. Consultant shall be responsible for payment of all
taxes, including federal, state, and local taxes arising out of its activities
under this Agreement, including, but not limited to, income tax, social security
tax, and unemployment insurance tax that might be due. It is
understood that Daybreak does not agree to use Consultant
exclusively. Nothing in this Agreement shall constitute or be
construed as a creation of a partnership or joint venture between Consultant
and
Daybreak, or their successors or assigns. The parties acknowledge and
agree that Consultant, its principals, associates and employees, are not engaged
in the practice of law nor are they engaged in providing legal advice or counsel
in connection with their representation of Daybreak.
The
parties further acknowledge and agree that any association or referral with
or
to any law firm by or with Consultant shall not be considered or construed
to be
the practice of law by Consultant in connection with such association or
referral.
5. Confidential
Information. In the course of providing services for
Daybreak, each of Daybreak and Consultant may learn or discover information
that
is identified by the other as non-public, proprietary
information. Each of Daybreak and Consultant agrees that, during the
term of engagement and for a period of twenty-four (24) months thereafter,
it
will not, directly or indirectly, disclose or use any such information of the
other party (“Confidential Information”) without the consent of such
party. Confidential Information shall not include: information
which is currently in the public domain or hereafter enters the public domain
without the fault or involvement of the receiving party; information known
to
the receiving party prior to its disclosure by other party and information
disclosed to a receiving party from a source (other than the other party) having
a lawful right to make such disclosure to the receiving party, or information
required to be disclosed under any court order or governmental directive. The
terms of this Agreement shall be treated as Confidential Information by both
parties.
6. Summons/Subpoenas. In
the event that Consultant or any party acting on behalf of Consultant
(Consultant and any such person being a “Subpoenaed Party”) receives a subpoena
or summons requesting that the Subpoenaed Party produce documents or records
containing Confidential Information of Daybreak or otherwise pertaining to
the
services rendered hereunder or testify concerning such Confidential Information
of Daybreak or services, the Subpoenaed Party will immediately notify
Daybreak. Daybreak may, within the time permitted for the Subpoenaed
Party to respond to any such requests, initiate such legal action seeking a
protective order or other relief as Daybreak deems appropriate to protect
information from disclosure. If Daybreak takes no action within the
time permitted for the Subpoenaed Party to respond or if Daybreak’s actions do
not result in a judicial order preventing the Subpoenaed Party from supplying
or
disclosing the requested information or testifying, the Subpoenaed Party may
comply with the request. Daybreak agrees to reimburse and pay the
Subpoenaed Party for all costs and expenses incurred by the Subpoenaed Party
(or
such person) in connection with any such summons or subpoenas concerning
Daybreak, including reasonable attorney’s fees and time spent by the Subpoenaed
Party ‘s personnel, billed at their regular rates.
7. Indemnification. Each
party agrees to indemnify and hold the other party, its officers and employees,
harmless against any and all claims, lawsuits, judgments, costs, liens, losses,
expenses, fees (including reasonable attorney’s fees and costs of defense),
proceedings, actions, demands, causes of action, liability and suits of any
kind
and nature, including but not limited to, personal injury (including death),
property damage, or other harm for which recovery damages is sought that may
arise out of or be occasioned or caused by each party’s negligent act, error or
omission or the negligent act, error or omission of any agent, officer,
director, representative, employee, consultant or subconsultant of each party
and their respective officers, agents, employees, directors and representatives
while in the exercise of performance of the rights or duties under this
Agreement.
8. General.
(a) This
Agreement shall be interpreted and construed in accordance with the laws of
the
State of Washington without giving effect to principles of conflict of
law. Any action arising in connection with this Agreement must be
brought in Spokane County Superior Court, Spokane, Washington. By
this Agreement, the parties confer jurisdiction over the subject matter of
and
parties to this Agreement. The party who prevails in any such action
will be entitled to an award of the reasonable costs and attorneys’ fees
incurred in the action.
(b) The
terms and conditions set forth in this Agreement are intended by Daybreak and
Consultant to constitute the final and complete statement of their agreement,
and all prior proposals, communications, negotiations, understandings, and
representations relating to the subject matter of this Agreement, whether verbal
or written, are hereby superseded. No modification or amendment of
this Agreement shall be effected unless the same is in writing and signed by
both parties.
(c) Any
notice required or desired to be given under this Agreement shall be given
in
writing and sent by certified mail, return receipt requested, addressed as
follows:
i. To
Daybreak:
Daybreak
Oil and Gas, Inc.
Xxxxxx
X.
Xxxxxxxxx
1012
Washington Mutual Financial Center
000
Xxxx
Xxxx Xxxxxx
Xxxxxxx,
Xxxxxxxxxx 00000
ii. To
Consultant:
Xxxxxxx
X. Xxxxxxx
00000
Xxxxxxxxx Xxxxx
Xxxxxxx,
Xxxxx 00000
Notice
shall be effective upon receipt.
(d) Consultant
consents in advance to Daybreak’s right to assign this Agreement to any
successor in interest that expressly assumes Daybreak’s obligations hereunder in
writing. Consultant may not assign its rights and obligations under
this Agreement.
(e) Each
of the sections contained herein shall be and remain separate from, independent
of, and severable from all and any other sections herein except as otherwise
indicated by the context of this Agreement. Any decision or
declaration that one or more of the sections or subsections are null and void
shall have no effect on the remaining sections or subsections of this
Agreement.
(f) Upon
any termination of employment, Consultant shall within ten (10) business days,
deliver or cause to be delivered to the Company all books, documents, effects,
monies received in trust, or other property belonging to the Company or its
subsidiaries for which the Company or its subsidiaries are liable to others,
which are in possession, charge, control, or custody of the
Consultant.
(g) This
Agreement shall inure to the benefit of and be binding upon the Consultant
and
its heirs, executors, legal personal representatives, and administrators, and
upon the Company.
(h) This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original and together shall constitute a single
agreement. Facsimile signatures shall be good and sufficient evidence
of signature for all purposes of this Agreement.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the 2nd day
of
January, 2007.
COMPANY:
Daybreak
Oil and Gas, Inc.
By: /s/
Xxxxxx X.
Xxxxxxxxx
Xxxxxx
X. Xxxxxxxxx, Treasurer
CONSULTANT:
/s/
Xxx X.
Xxxxxxx
Xxxxxxx
X. Xxxxxxx
