AMENDED AND RESTATED XXXXX RESOURCES AGREEMENT
This Amended and Restated Agreement ("Agreement") is made effective as of
January 1, 2005, between Natural Gas Systems, Inc. a Nevada corporation (the
"COMPANY"), and Xxxxx CFO Partners, LLP ("XXXXX"). This Agreement shall be
effective as of the date written above.
WHEREAS, the Company, through its predecessor in interest and wholly owned
subsidiary Natural Gas Systems, Inc., a Delaware corporation, entered into an
agreement to provide compensation of cash and equity in exchange for certain
resources offered by Xxxxx under the Resource Agreement (the "ORIGINAL
AGREEMENT"), dated September 18, 2003, a copy of which is attached hereto as
EXHIBIT A;
WHEREAS, the parties desire to memorialize their understanding of any and
all payment obligations of the Company to Xxxxx;
WHEREAS, the parties hereto desire to amend and restate the terms of the
Original Agreement so as to accelerate the vesting of certain warrants and
limiting further compensation;
NOW, THEREFORE, in consideration of the mutual obligations in this
Agreement and the ancillary agreements referenced herein, the parties to this
Agreement agree as follows:
THE ORIGINAL AGREEMENT IS HEREBY AMENDED AND RESTATED TO READ IN ITS ENTIRETY AS
FOLLOWS:
1. Xxxxx Resources
The parties understand that the Company desires to maintain the employment
of Xxxxxx X. Xxxxxx ("XXXXXX" or the "EMPLOYEE"), one of Xxxxx'x partners, as
Chief Executive Officer of the Company (the "EMPLOYEE") pursuant to Herlin's
employment agreement with the Company; and the parties acknowledge that the
Employee is and will remain a partner in Xxxxx. Xxxxx will provide certain
resources to the Company to be accessible by Herlin for the Company's use. These
resources (the "RESOURCES") include a platform for knowledge sharing, e.g.,
database access, specialized software and patent-pending processes, specialized
work product and training, and virtual access to other Xxxxx partners through
Xxxxx'x proprietary internet portal (the "XXXXX PORTAL").
This Agreement sets forth the rights of the Company, through the Employee,
to use such resources for the benefit of the Company, and for the payment of
compensation for such Resources under Section 2 hereof (the "COMPENSATION").
Since the Employee will be under the control and direct management of the
Company, and not Xxxxx, Xxxxx cannot assume the same risks as if Xxxxx itself
served as part of the Company's management team. Xxxxx'x obligations to the
Company are exclusively those set forth in this Agreement. SCHEDULE A sets forth
provisions dealing with the limitation of Xxxxx'x liability and other terms and
conditions, which allow Xxxxx to provide this unique relationship. This offers
both the value of a traditional employment relationship, through separate
employment directly with the Employee, and the resources and benefits of a
national firm through the provision of Resources pursuant to this Agreement.
Herlin shall participate in the benefits plan of the Company in lieu of
participating in the Xxxxx group plan.
2. Compensation
A. SERVICE FEES. The Company shall pay Xxxxx a monthly service and license
fee of $1,000.00 for the period of January 2005 through December 2005 (the
"SERVICE FEES"). The $12,000 of Service Fees for all 2005 shall be prepaid in
advance no later than April 15, 2005. After December 31, 2005, Service Fees
shall be payable at $1,000 per month on a monthly basis if this Agreement has
not been terminated.
B. WARRANTS. In partial consideration of Xxxxx'x agreement to provide the
Resources, the Company shall issue Xxxxx warrants ("WARRANTS") to purchase
262,500 shares of the Company's common stock at $0.001 per share under the terms
and conditions of a certain Warrant Agreement being executed concurrently with
this Agreement.
Other than the Service Fees and the one time issuance of Warrants
described above, no further Compensation shall be due or payable by the Company
to Xxxxx. For clarification, Xxxxx hereby acknowledges and agrees that the
Compensation referenced above satisfies any and all past and future payment
obligations of any kind owed by the Company to Xxxxx in connection with the
subject matter of this Agreement. At the end of the Term, only the monthly
Service Fees as described above shall be required to keep this agreement in full
force and effect.
3. Miscellaneous Provisions.
The initial term of this Agreement ("INITIAL TERM") is from the effective
date until December 31, 2005. Following the Initial Term, this Agreement shall
be automatically renewed for succeeding terms of one month each (a "RENEWAL
TERM"), unless either party shall give written notice to the other of its
intention not to renew this Agreement at least five days prior to the
commencement of the next succeeding Renewal Term.
In addition this Agreement will terminate immediately upon the effective
date of termination or expiration of Herlin's employment with the Company or
upon Herlin ceasing to be a partner of Xxxxx.
In the event that either party commits a breach of this Agreement and
fails to cure the same within ten (10) days following delivery by the
non-breaching party of written notice specifying the nature of the breach, the
non-breaching party will have the right to terminate this Agreement immediately
effective upon written notice of such termination.
This Agreement contains the entire agreement between the Parties hereto
with respect to the subject matter hereof, superseding any prior oral or written
statements or agreements, including the Original Agreement; provided, however,
that nothing herein shall limit the Company's ability to modify, amend or
terminate the Company's employment relationship with Employee as provided in his
employment agreement.
Neither the Company nor Xxxxx will be deemed to have waived any rights or
remedies accruing under this Agreement unless such waiver is in writing and
signed by the party electing to waive the right or remedy. This Agreement binds
and benefits the successors of Xxxxx and the Company.
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Neither party will be liable for any delay or failure to perform under
this Agreement (other than with respect to payment obligations) if and to the
extent such delay or failure is a result of an act of God, war, earthquake,
civil disobedience, court order, labor dispute, or other cause beyond such
party's reasonable control.
The terms of this Agreement are severable and may not be amended except in
a writing signed by Xxxxx and the Company. If any portion of this Agreement is
found to be unenforceable, the rest of the Agreement will be enforceable except
to the extent that the severed provision deprives either party of a substantial
portion of its bargain.
The provisions in this Agreement concerning payment of the Xxxxx
Compensation, limitation of liability, reimbursement of costs and expenses,
directors' and officers' insurance, and arbitration will survive any termination
or expiration of this Agreement.
Noting in this Agreement shall confer any rights upon any person or entity
other than the parties hereto and their respective successors and permitted
assigns and Herlin.
This Agreement will be governed by and construed in all respects in
accordance with the laws of the State of Texas without giving effect to
conflicts-of-laws principles.
Each person signing below is authorized to sign on behalf of the party
indicated, and in each case such signature is the only one necessary.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the date and year first above written.
XXXXX CFO PARTNERS, LLP NATURAL GAS SYSTEMS
By:____________________________ By: ________________________
Name: Xxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxx
Title: Area Managing Partner Title: President and CEO
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SCHEDULE A
DISCLAIMERS AND RELATED TERMS
DISCLAIMERS & LIMITATIONS OF LIABILITY
It is to be understood that Xxxxx does not have a contractual obligation to the
Company other than to make the Employee available to serve the Company and to
make its resources available to the Company through the Employee. Xxxxx
Compensation will be for the resources provided and not as compensation as an
employee or partner of or in a joint venture with the Company or as an employer
of the Employee, and Xxxxx will have no control or management over the Employee.
Xxxxx'x obligation under this Agreement is to make Xxxxx'x resources available
to the Employee for the benefit of the Company under the terms and conditions of
this Agreement.
The Company acknowledges that any Resources will be provided by Xxxxx to the
Employee as a tool to be used in the discretion of the Employee. Xxxxx makes no
representation or warranty as to the accuracy or reliability of reports,
projections, forecasts, or any other information derived from use of the
Resources, and Xxxxx will not be liable for any claims of reliance on such
reports, projections, forecasts, or information. Xxxxx disclaims all warranties,
either express or implied, including, but not limited to, implied warranties of
merchantability and fitness for a particular purpose, with regard to all
information and applications that may be provided by the Resources or the Xxxxx
Portal. Xxxxx will not be liable for any non-compliance of reports, projections,
forecasts, or information or services with federal, state, or local laws or
regulations.
The Company agrees that, with respect to any claims the Company may assert
against Xxxxx in connection with this Agreement or the relationship arising
hereunder, Xxxxx'x total liability will not exceed two months of Service Fees.
As a condition for recovery of any liability, the Company must give Xxxxx
written notice of the alleged basis for liability within thirty (30) days of
discovering the circumstances giving rise thereto, provided that the failure of
the Company to give such notice will only affect the rights of the Company to
the extent that Xxxxx is actually prejudiced by such failure. In any event, the
Company must assert any claim against Xxxxx within six (6) months after
discovery or thirty (30) days after the termination or expiration of this
Agreement, whichever is earlier.
Xxxxx will not be liable in any event for incidental, consequential, punitive,
or special damages, including without limitation, any interruption of business
or loss of business, profit, or goodwill.
ARBITRATION
If the parties are unable to resolve any dispute arising out of or in connection
with this Agreement, either party may refer the dispute to arbitration by a
single arbitrator selected by the parties according to the rules of the American
Arbitration Association ("AAA"), and the decision of the arbitrator will be
final and binding on both parties. Such arbitration will be conducted by the
Houston, Texas office of the AAA and governed by Texas law. In the event that
the parties fail to agree on the selection of the arbitrator within thirty (30)
days after either party's request for arbitration under this paragraph, the
arbitrator will be chosen by AAA. The arbitrator may in his discretion order
documentary discovery, but in no event may depositions be taken. The arbitrator
will have no authority to award punitive damages. Judgment on the award of the
arbitrator may be entered in and enforced by any court of competent
jurisdiction. The arbitrator will have no authority to award damages in excess
or in contravention of this Schedule A and may not amend or disregard any
provision of this Schedule A. Notwithstanding the foregoing, no issue related to
the ownership of intellectual property will be subject to arbitration but will
instead be subject to determination by a court of competent jurisdiction.
DIRECTOR AND OFFICER INSURANCE
To the extent the Company has directors' and officers' liability insurance in
effect, the Company will provide such insurance coverage for the Employee, along
with written evidence to Xxxxx or the Employee that the Employee is covered by
such insurance.
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SUBPOENAS
In the event that any partner of Xxxxx (including without limitation the
Employee to the extent not otherwise entitled in his or her capacity as an
officer of the Company) is subpoenaed or otherwise required to appear as a
witness or Xxxxx or such partner is required to provide evidence, in either case
in connection with any action, suit, or other proceeding initiated by a third
party against the Company or by the Company against a third party, then the
Company shall reimburse Xxxxx for the costs and expenses (including reasonable
attorneys' fees) actually incurred by Xxxxx or such partner and provide Xxxxx
with compensation at Xxxxx'x customary rate for the time incurred.
MISCELLANEOUS
Xxxxx represents to the Company that Xxxxx has conducted its standard screening
and investigation procedures with respect to the Employee becoming a partner in
Xxxxx, and the results of the same were satisfactory to Xxxxx. Except as
provided in the immediately preceding sentence, Xxxxx does not make any
representations or warranties concerning the Employee's qualifications or
services.
Xxxxx shall be entitled to receive all reasonable costs and expenses incidental
to the collection of overdue amounts under this Agreement, including but not
limited to attorneys' fees actually incurred.
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