ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT (the "Agreement') is made this 21st day of September
2000, by and between Howard A. Pence, a Texas resident ("Advisor") and Power
Exploration, Inc., a Nevada Corporation with its offices located in Fort Worth,
Texas (the "Company").
WHEREAS, Advisor and Advisor's Personnel (as defined below) have experience
in evaluating and effecting acquisitions of oil and gas properties, acquisitions
of oil and gas drilling prospects, and in performing general administrative
duties for oil and gas companies; and
WHEREAS, the Company desires to retain Advisor to advise and assist the
Company in its development on the terms and conditions set forth below.
NOW THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and Advisor
agree as follows:
1. Engagement
The Company hereby retains Advisor, effective as of the date hereof
(the "Effective date") and continuing until termination, as provided
herein, to assist the Company in it's effecting the purchase of
businesses and assets relative to its business and growth strategy,
the introduction of others that may assist the Company in its plans
and future and to assist in the acquisition of wells and other
producing properties (the "Servicee). The Services are to be provided
on a 'liest efforts" basis directly and through Advisor's officers or
others employed or retained and under the direction of Advisor
("Advisor's Personnel"); provided however. that the Services shall
expressly exclude all legal advice, accounting services or other
services which require licenses or certification which Advisor may not
have.
2. Term
This Agreement shall have an initial term of twelve (12) months (the
"Primary Tenn"), commencing with the Effective Date. At the conclusion
of the Primary Term this Agreement will automatically be extended on
for the same term (the "Extension Period") unless Advisor or the
Company shall serve written notice on the other party terminating the
Agreement. Any notice to terminate given hereunder shall be in writing
and shall be delivered at least thirty (30)days prior to the end of
the Primary Term or an subsequent Extension Period.
3.Time and Effort of Advisor
Advisor shall allocate time and Advisors Personnel as it deems
necessary to provide the Services. The particular amount of time may
vary from day to day or week to week. Except as otherwise agreed,
Advisor's monthly statement identifying, in general, tasks performed
for the Company shall be conclusive evidence that the Services have
been performed. Additionally, in the absence of willful misfeasance,
bad faith, negligence or reckless disregard for the obligations or
duties hereunder by Advisor, neither Advisor nor Advisor's Personnel
shall be liable to the Company or any of its shareholders for any act
or omission in the course of or connected with rendering the Services,
including but not limited to losses that may be sustained in any
corporate act in any subsequent Business Opportunity (as defined
herein) undertaken by the Company as a result of advice provided by
Advisor or Advisor's Personnel.
4.Compensation
The Company agrees to pay Advisor a fee for the Services CAdvisory
Fee') by way of the issuance by the company of Two Hundred Thousand
(200,000) shares of the Company's common stock as an initial fee: plus
all bonuses agreed upon throughout the duration of this agreement.
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5.Other Services
If the Company enters into a merger or exchanges securities with, or
purchases the assets or enters into a joint venture with, or makes an
investment in a company introduced by Advisor (a "Business
Opportunity"), the Company agrees to pay Advisor a fee equal to ten
percent (100/o) of the value of each Business Opportunity introduced
by Advisor and acquired or otherwise participated in by the Company
(collectively referred to herein, in each instance, as the
"Transaction Fee'), which shall be payable immediately following the
closing of each such transaction, in shares of the Company's common
stock or in kind if an acquisition is made at the Company's option, if
paid in cash the Transaction Fee shall be reduced to five percent
(5%).
6.Registration of Shares
The Company will issue shares for the above Initial Fee, all
subsequent Bonuses and all Transaction Fees as authorized and
registered under the Company's Form S-8 Registration Statement filed
December 13, 1999 (1999 Stock Benefit Plan of Power Exploration,
Inc.).
7.Costs and Expenses
All third party and out-of-pocket expenses incurred by Advisor in the
performance of the Services or for the settlement of debts shall be
paid by the Company, or Advisor shall be reimbursed if paid by Advisor
on behalf of the Company, within ten (10) days of receipt of written
notice by Consultant, provided that the Company must approve in
advance all such expenses in excess of $500.00 per month.
8. Place of Services
The Services provided by Advisor or Advisor's Personnel hereunder will
be performed at Advisor's offices except as otherwise mutually agreed
by Advisor and the Company.
9.Independent Contractor
Advisor and Advisor's Personnel will act as an independent contractor
in the performance of its duties under this Agreement. Accordingly,
Advisor will be responsible fbr payment of all federal, state and
local taxes on compensation paid under this Agreement, including
income and social security taxes, unemployment insurance, and any
other taxes due relative to Advisor's Personnel, and any and all
business license fees as may be required. This Agreement neither
expressly nor impliedly creates a relationship of principal and agent,
or employee and employer, between Advisor's Personnel and the Company.
Neither Advisor nor Advisor's Personnel are authorized to enter into
any agreements on behalf of the Company. The Company expressly retains
the right to approve, in its sole discretion, each Asset Opportunity
or Business Opportunity introduced by Advisor, and to make all final
decisions with respect to effecting a transaction on any Business
Opportunity.
10. Rejected Asset Opportunity or Business Opportunity
If, during the Primary Term of this Agreement or any Extension Period,
the Company elects not to proceed to acquire, participate or invest in
any Business Opportunity identified and/or selected by Advisor,
notwithstanding the time and expense the Company may have incurred
reviewing such transaction, such Business Opporttmity shall revert
back to and become proprietary to Advisor, and Advisor shall be
entitled to acquire or broker the sale or investment in such rejected
Business Opportunity for its own account, or submit such assets or
Business Opportunity elsewhere. In such event, Advisor shall be
entitled to any and all profits or fees resulting from Advisor's
purchase, referral or placement of any such rejected
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Business Opportunity, or the Company's subsequent purchase or
financing with such Business Opportunity in circumvention of Advisor.
11. No Agency Express or Implied
This Agreement neither expressly nor iinpliedly creates a relationship
of principal and agent between the Company and Advisor, or employee
and employer as between Advisor's Personnel and the Company.
12. Termination
The Company and Advisor may terminate this Agreement prior to the
expiration of the Primary Term upon thirty (30) days written notice
with mutual written consent. Failing to have mutual consent, without
prejudice to any other remedy to which the terminating party may be
entitled, if any, either party may terminate this Agreement with
thirty (30) days written notice under the following conditions:
(A) By the Company
(i) If during the Primary Term of this Agreement or any
Extension Period, Advisor is unable to provide the Services
as set forth herein for thirty (30) consecutive business
days because of illness, accident, or other incapacity of
Advisor's Personnel; or,
(ii) If Advisor willfully breaches or neglects the duties
required to be performed hereunder; or,
(iii)At Company's option without cause upon 30 days written
notice to Advisor; or
(B) By Advisor
(i) If the Company breaches this Agreement or filils to make any
payments or provide information required hereunder; or,
(ii) If the Company ceases business or, other than in an Initial
Merger, sells a controlling interest to a third party, or
agrees to a consolidation or merger of itself with or into
another corporation, or enters into such a transaction
outside of the scope of this Agreernen@ or sells
substantially all of its assets to another corporation,
entity or individual outside the scope of this agreement;
or,
(iii)If the Company subsequent to the execution hereof has a
receiver appointed for its business or assets, or otherwise
becomes insolvent or unable to timely satisfy its
obligations in the ordinary course of, including but not
limited to the obligation to pay the Initial Fee, the
Transaction Fee, or the Advisory Fee; or,
(iv) If the Company subsequent to the execution hereof
institutes, makes a general assignment for the benefit of
creditors, has instituted against it any bankruptcy
proceeding for reorganization for rearrangement of its
financial affairs, files a petition in a court of
bankruptcy, or is adjudicated a bankrupt; or,
(v) If any of the disclosures made herein or subsequent hereto
by the Company to Consultant are determined to be materially
false or misleading.
In the event Advisor elects to terminate without cause or this Agreement is
terminated prior to the expiration of the Primary Term or any Extension Period
by mutual written agreement, or by the Company for the reasons set forth in A
(i) and (ii) above, the Company shall only be responsible to pay Advisor for
unreimbursed expenses, Advisory Fee and Transaction Fee accrued up to and
including the effective date of termination. If this Agreement is terminated by
the Company for any other reason, or by Advisor for reasons set forth in B (i)
thru (v) above, Advisor shall be entitled to any outstanding
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unpaid portion of reimbursable expenses, Transaction Fee,, if any, and for the
remainder of the unexpired portion of the applicable term (Primary Term or
Extension Period) of the Agreement.
13. Indemnification
Subject to the provisions herein, the Company and Advisor agree to
indemnify, defend and hold each other harmless from and against all
demands, claims, actions, losses, damages, liabilities, costs and
expenses, including without limitation, interest, penalties and
attorneys' fees and expenses asserted against or imposed or incurred
by either party by reason of or resulting from any action or a breach
of any representation, warranty, covenant, condition, or agreement of
the other party to this Agreement.
14. Remedies
Advisor and the Company acknowledge that in the event of a breach of
this Agreement by either party, money damages would be inadequate and
the non-breaching party would have no adequate retnedy at law.
Accordingly, in the event of any controversy concerning the rights or
obligations under this Agreement, such rights or obligations shall be
enforceable in a court of equity by a decree of specific performance.
Such remedy, however, shall be cumulative and nonexclusive and shall
be in addition to any other remedy to which the parties may be
entitled.
15. Miscellaneous
(A) Subseciuent,Events. Advisor and the Company each agree to notify
the other party if, subsequent to the date of this Agreement,
either party incurs obligations which could compromise its
efforts and obligations under this Agreement.
(B) Amendment. This Agreement may be amended or modified at any time
and in any manner only by an instrument in writing executed by
the parties hereto.
(C) Further Actions and Assurances. At any time an from time to time,
each party agrees, at its or their expense, to take actions and
to execute and deliver documents as may be reasonably necessary
to effectuate the purposes of this Agreement.
(D) Waiver. Any failure of any party to this Agreement to comply with
any of its Obligations, agreements, or conditions hereunder may
be waived in writing by the party to whmn such compliance is
owed. The failure of any party to this Agreement to enforce at
any time any of the provisions of this Agreement shall in no way
be construed to be a waiver of any such provision or a waiver of
the right of such party thereafter to enforce each and every such
provision. No waiver of any breach of or noncompliance with this
Agreement shall be held to be a waiver of any other or subsequent
breach or noncompliance.
(E) Assignment. Neither this Agreement nor any right created by it
shall be assignable by either party without the prior written
consent of the other or as stated herein.
(F) Notices. Any notice or other communication required or permitted
by this agreement must be in writing and shall be deemed to be
properly given when delivered in person to an officer of the
other party, when deposited in the United States mafls for
transmittal by certified or registered mail, postage prepaid, or
when deposited with a public telegraph company for transmittal,
or when sent by facsimile transmission charges prepared, provided
that the communication is addressed:
In the case of the Company: Power Exploration, Inc.
5416 Birchman Avenue
Fort Worth, Texas 76107-5111
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Telephone: (817) 377-44
Telefax: (817) 377-46
Attn: Joe Bennett
In the case of Advisor: Howard A. Pence
4216 Rockland Dr.
Arlington, Texas 76016
Or to such other person or address designated in writing by the
Company or Advisor to receive notice.
(G) Headings. The section and subsection headings in this Agreement
are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
(H) Governing Law. This Agreement was negotiated and is being
contracted for in Texas, and shall be governed by the laws of the
State of Texas, and the United States of America, notwithstanding
any conflict-of-law provision to the contrary.
(I) Binding Effect. This Agreement shall be binding up on the parties
here to and inure to the benefit of the parties, their respective
heirs, administrators, executors, successors, and assigns.
(J) Entire Agreement. This Agreement contains the entire agreement
between the parties hereto and supersedes any and all prior
agreements, arrangements, or understandings between the parties
relating to the subject matter of this Agreement. No oral
understandings, statements, promises, or inducements contrary to
the terms of this Agreement exist. No representations,
warranties, covenants, or conditions, express or implied, other
than as set forth herein, have been made by any party.
(K) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full
force and effect.
(L) Countparts. A facsimile, telecopy, or other reproduction of this
Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument,
by one or more parties hereto and such executed copy may be
delivered by facsimile or similar instantaneous electronic
transmission device pursuant to which the signature of or on
behalf of such party can be seen. In this event, such execution
and delivery shall be considered valid, binding and effective for
all purposes. At the request of any party hereto, all parties
agree to execute an original of this Agreement as well as any
facsimile, telecopy or other reproduction hereof.
(M) Time is of the Essence. Time is of the essence of this Agreement
and of each and every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date above
written.
The "Company" "Advisor"
Power Exploration, Inc. Howard A. Pence
A Nevada Corporation A Texas Resident
By: /s/ Joe Bill Bennett By: /s/ Howard A. Pence
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Name: Joe Bill Bennett Name: Howard A. Pence
Title: President, CEO
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