EXHIBIT 10.2
CONSULTING SERVICES AGREEMENT
AMONG:
PETROGEN CORP.
AND:
PETROGEN, INC.
AND:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
PETROGEN CORP.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇.▇.▇., ▇▇▇▇▇
__________
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CONSULTING SERVICES AGREEMENT
THIS CONSULTING SERVICES AGREEMENT is made and dated for reference
effective as at March 15, 2003 (the "EFFECTIVE DATE") as fully executed on this
_____ day of April, 2003.
AMONG:
PETROGEN CORP., a company incorporated under the laws of the
State of Nevada, U.S.A., and having an executive office and an
address for notice and delivery located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇.▇.▇., ▇▇▇▇▇
(the "COMPANY");
OF THE FIRST PART
AND:
PETROGEN, INC., a company incorporated under the laws of the
State of Colorado, U.S.A., and also having an executive office
and an address for notice and delivery located at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇.▇.▇., ▇▇▇▇▇
("PETROGEN, INC.");
OF THE SECOND PART
(the Company and Petrogen, Inc. being hereinafter collectively
also referred to as the "COMPANIES" as the context so
requires).
AND:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, having an address for notice and delivery
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, ▇.▇.▇.,
▇▇▇▇▇
(the "CONSULTANT");
OF THE THIRD PART
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(the Company, Petrogen, Inc. and the Consultant being
hereinafter singularly also referred to as a "PARTY" and
collectively referred to as the "PARTIES" as the context so
requires).
WHEREAS:
A. The Company is a reporting company incorporated under the laws of the
State of Nevada, U.S.A., and has its common shares listed for trading on the
NASDAQ Over-The-Counter Bulletin Board;
B. Petrogen, Inc. is a non-reporting company incorporated under the laws of
the State of Colorado, U.S.A., and, in accordance with the terms and conditions
of a certain "Share Exchange Agreement", dated for reference effective as at
October 11, 2002 (the "SHARE EXCHANGE AGREEMENT"), as entered into among the
Company, Petrogen, Inc. and all of the shareholders of Petrogen, Inc., the
Company therein purchased all of the issued and outstanding shares of Petrogen,
Inc. from the shareholders of Petrogen, Inc.;
C. The Consultant specializes in providing various land management and gas
transmission services to oil and gas development companies and their principals;
D. In conjunction with the recent completion by the Company of the Share
Exchange Agreement the resulting Company is now involved in the principal
business of Petrogen, Inc.; which is oil and gas development and production
(collectively, the resulting "BUSINESS"); and, as a consequence thereof, the
Companies are hereby desirous of retaining the Consultant as a qualified land
management specialist, and the Consultant is hereby desirous of accepting such
position, in order to provide certain land management, gas transmission and
related services to the Companies (collectively, the "GENERAL SERVICES") during
the continuance of this agreement (the "AGREEMENT");
E. Since the introduction of the Parties hereto the Parties hereby
acknowledge and agree that there have been various discussions, negotiations,
understandings and agreements between them relating to the terms and conditions
of the proposed General Services and, correspondingly, that it is their
intention by the terms and conditions of this Agreement to hereby replace, in
their entirety, all such prior discussions, negotiations, understandings and
agreements with respect to the proposed General Services; and
F. The Parties hereto have agreed to enter into this Agreement which
replaces, in their entirety, all such prior discussions, negotiations,
understandings and agreements, and, furthermore, which necessarily clarifies
their respective duties and obligations with respect to the within General
Services to be provided hereunder, all in accordance with the terms and
conditions of this Agreement;
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NOW THEREFORE THIS AGREEMENT WITNESSETH that, in consideration of the
mutual covenants and provisos herein contained, THE PARTIES HERETO AGREE AS
FOLLOWS:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, the following words
and phrases shall have the following meanings:
(a) "ADDITIONAL OPTIONS" has the meaning ascribed to it in section
"4.2" hereinbelow;
(b) "AGREEMENT" means this Consulting Services Agreement as from
time to time supplemented or amended by one or more agreements
entered into pursuant to the applicable provisions hereof,
together with any Schedules attached hereto;
(c) "ARBITRATION ACT" means the COMMERCIAL ARBITRATION ACT
(British Columbia), R.S.B.C. 1996, as amended, as set forth in
Article "8" hereinbelow;
(d) "BOARD OF DIRECTORS" means the Board of Directors of the
Company as duly constituted from time to time;
(e) "BUSINESS" has the meaning ascribed to it in recital "D."
hereinabove.
(f) "BUSINESS DAY" means any day during which Canadian Chartered
Banks are open for business in the City of Vancouver, Province
of British Columbia;
(g) "COMPANIES" means the Company and Petrogen, Inc.;
(h) "COMPANY" means Petrogen Corp. {having changed its name from
"Hadro Resources, Inc." as a consequence of the due and
complete closing of the Share Exchange Agreement), a company
incorporated under the laws of the State of Nevada, U.S.A., or
any successor company, however formed, whether as a result of
merger, amalgamation or other action;
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(i) "COMPANY'S NON-RENEWAL NOTICE" has the meaning ascribed to it
in section "3.2" hereinbelow;
(j) "CONSULTANT" means ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇;
(k) "EFFECTIVE DATE" has the meaning ascribed to it on the front
page of this Agreement;;
(l) "EFFECTIVE TERMINATION DATE" has the meaning ascribed to it in
section "3.3" hereinbelow;
(m) "EXPENSES" has the meaning ascribed to it in section "4.3"
hereinbelow;
(n) "GENERAL SERVICES" has the meaning ascribed to it in section
"2.1" hereinbelow; the initial particulars of which are set
forth in Schedule "A" which is attached hereto;
(o) "INDEMNIFIED PARTY" has the meaning ascribed to it in section
"6.1" hereinbelow;
(p) "INITIAL TERM" has the meaning ascribed to it in section "3.1"
hereinbelow;
(q) "NOTICE OF TERMINATION" has the meaning ascribed to it in
section "3.2" hereinbelow;
(r) "OPTIONS" has the meaning ascribed to it in section "4.1"
hereinbelow;
(s) "OPTION AGREEMENT" has the meaning ascribed to it in section
"4.1" hereinbelow;
(t) "OPTION PLAN" has the meaning ascribed to it in section "4.1"
hereinbelow;
(u) "OPTION SHARE" has the meaning ascribed to it in section "4.1"
hereinbelow;
(v) "PARTIES" or "PARTY" means, individually and collectively, the
Company, Petrogen, Inc. and/or the Consultant hereto, as the
context so requires, together with each of their respective
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successors and permitted assigns as the context so requires;
(w) "PETROGEN, INC." means Petrogen, Inc., a company incorporated
under the laws of the State of Colorado, U.S.A., or any
successor company, however formed, whether as a result of
merger, amalgamation or other action;
(x) "REGULATORY AUTHORITIES" and "REGULATORY AUTHORITY" means,
either singularly or collectively as the context so requires,
such regulatory agencies who have jurisdiction over the
affairs of either of the Company, Petrogen, Inc. and/or the
Consultant and including, without limitation, and where
applicable, the British Columbia Securities Commission, the
United States Securities and Exchange Commission, NASDAQ and
all regulatory authorities from whom any such authorization,
approval or other action is required to be obtained or to be
made in connection with the transactions contemplated by this
Agreement;
(y) "RULE" has the meaning ascribed to it in section "4.1"
hereinbelow;
(z) "SECURITIES ACT" has the meaning ascribed to it in section
"4.1" hereinbelow; and
(aa) "SUBSIDIARY" means any company or companies of which more than
50% of the outstanding shares carrying votes at all times
(provided that the ownership of such shares confers the right
at all times to elect at least a majority of the directors of
such company or companies) are for the time being owned by or
held for that company and/or any other company in like
relation to that company and includes any company in like
relation to the subsidiary.
1.2 INTERPRETATION. For the purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the words "HEREIN", "HEREOF" and "HEREUNDER" and other words
of similar import refer to this Agreement as a whole and not
to any particular Article, section or other subdivision of
this Agreement;
(b) any reference to an entity shall include and shall be deemed
to be a reference to any entity that is a permitted successor
to such entity; and
(c) words in the singular include the plural and words in the
masculine gender include the feminine and neuter genders, and
VICE VERSA.
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1.3 SCHEDULES. For the purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, the following shall
represent the Schedules which are attached to this Agreement and which form a
material part hereof:
Schedule Description
________ ___________
Schedule "A": General Services; and
Schedule "B": Option Agreement.
ARTICLE 2
GENERAL SERVICES AND DUTIES OF THE CONSULTANT
2.1 GENERAL SERVICES. During the continuance of this Agreement the
Companies hereby agree to retain the Consultant as a consultant to and on behalf
of the Companies, or to and on behalf of any of the Companies' respective
subsidiaries, as the case may be and as may be determined by the Board of
Directors of the Company, from time to time, and in its sole and absolute
discretion, and the Consultant hereby agrees to accept such position in order to
provide such qualified land management, gas transmission and related services as
may be determined by the Board of Directors, from time to time, and in its sole
and absolute discretion, in order to develop the various Business interests of
the Company during the continuance of this Agreement (collectively, the "GENERAL
SERVICES"); it being initially acknowledged and agreed by each of the Parties
hereto that the Consultant's initial and required General Services under the
terms and conditions of this Agreement are particularly described in Schedule
"A" which is attached hereto and which forms a material part hereof; and it
being further acknowledged and agreed by each of the Parties hereto that the
Consultant shall commit and provide to the Company the General Services on a
reasonably full-time basis during the continuance of this Agreement for which
the Company, as more particularly set forth hereinbelow, hereby agree to pay and
provide to the order and direction of the Consultant each of the proposed
Options (as hereinafter determined) and Expense (as hereinafter determined)
payment reimbursements in accordance with Article "4" hereinbelow.
2.2 ADDITIONAL DUTIES RESPECTING THE GENERAL SERVICES. Without in any
manner limiting the generality of the General Services to be provided as set
forth in section "2.1" hereinabove, it is hereby also acknowledged and agreed
that Consultant will, during the continuance of this Agreement, devote
reasonably all of the Consultant's consulting time to the General Services of
the Consultant as may be determined and required by the Board of Directors of
the Company for the performance of said General Services faithfully, diligently,
to the best of the Consultant's abilities and in the best interests of the
Company and, furthermore, that the Consultant's consulting time will be
prioritized at all times for the Company in that regard.
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2.3 ADHERENCE TO RULES AND POLICIES. The Consultant hereby acknowledges and
agrees to abide by the reasonable rules, regulations, instructions, personnel
practices and policies of the Company and any changes therein which may be
adopted from time to time by the same as such rules, regulations, instructions,
personnel practices and policies may be reasonably applied to the Consultant.
ARTICLE 3
INITIAL TERM, RENEWAL AND TERMINATION
3.1 INITIAL TERM. The initial term of this Agreement (the "INITIAL TERM")
is for a period of one calendar year commencing on the Effective Date as set
forth hereinabove, however, is subject, at all times, to the Company's prior
receipt, if required, of approval from each of the Regulatory Authorities to the
terms and conditions of and the transactions contemplated by this Agreement.
3.2 RENEWAL BY THE COMPANY. Subject at all times to sections "3.3" and
"3.4" hereinbelow, this Agreement shall renew automatically if not specifically
terminated in accordance with the following provisions. The Company agrees to
notify the Consultant in writing at least one month prior to the end of the
Initial Term of its intent not to renew this Agreement (the "COMPANY'S
NON-RENEWAL NOTICE"). Should the Company fail to provide a Company's Non-Renewal
Notice this Agreement shall automatically renew on a further one-year basis
after the Initial Term until otherwise specifically renewed in writing by each
of the Parties hereto for the one-year period or, otherwise, terminated upon
delivery by the Company of a corresponding and follow-up 30 calendar day
Company's Non-Renewal Notice in connection with and within 30 calendar days
prior to the end of any such one-year renewal period. Any such renewal on a
one-year basis shall be on the same terms and conditions contained herein unless
modified and agreed to in writing by the Parties.
3.3 TERMINATION FOR CAUSE BY ANY PARTY. Notwithstanding any other provision
of this Agreement, this Agreement may be terminated by any of the Parties hereto
at any time upon written notice to the other Party of such Party's intention to
do so at least 10 calendar days prior to the effective date of any such
termination (herein also the "EFFECTIVE TERMINATION DATE"), and damages sought,
if:
(a) the other Party fails to cure a material breach of any
provision of this Agreement within 10 calendar days from its
receipt of written notice from said Party (unless such
material breach cannot be reasonably cured within said 10
calendar days and the other Party is actively pursuing to cure
said material breach);
(b) the other Party is willfully non-compliant in the performance
of its respective duties under this Agreement within 10
calendar days from its receipt of written notice from said
Party (unless such willful non-compliance cannot be reasonably
corrected within said 10 calendar days and the other Party is
actively pursuing to cure said willful non-compliance);
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(c) the other Party commits fraud or serious neglect or misconduct
in the discharge of its respective duties hereunder or under
the law; or
(d) the other Party becomes adjudged bankrupt or a petition for
reorganization or arrangement under any law relating to
bankruptcy, and where any such involuntary petition is not
dismissed within 10 calendar days.
3.4 EFFECT OF TERMINATION. Terms of this Agreement relating to accounting,
payments, confidentiality, accountability for damages or claims and all other
matters reasonably extending beyond the terms of this Agreement and to the
benefit of the Parties hereto or for the protection of the Business interests of
the Companies shall survive the termination of this Agreement, and any matter of
interpretation thereto shall be given a wide latitude in this regard. In
addition, and without limiting the foregoing, section "3.3" hereinabove shall
survive the termination of this Agreement.
ARTICLE 4
GENERAL SERVICES COMPENSATION OF THE CONSULTANT
4.1 OPTIONS. Subject to the following, it is hereby acknowledged and agreed
that, during the continuance of this Agreement, the Consultant shall render the
General Services as defined hereinabove and shall thus be compensated by the
Company from the Effective Date of this Agreement to the termination of the same
by way of the granting by the Company to the Consultant, subject to each of the
rules and policies of the Regulatory Authorities and applicable securities
legislation, the terms and conditions of the Company's existing stock option
plan (the "OPTION PLAN") and the final determination of the Board of Directors,
acting reasonably, an incentive stock option or stock options in and to the
Company (each being an "OPTION") for the collective purchase of not less than an
aggregate of up to 25,000 common shares of the Company (each being an "OPTION
Share"); which incentive Option or Option(s) will be exercisable for a period of
at least one year from the date of granting at an exercise price of U.S. $0.50
per Option Share underlying any such Option; and which Option or Option(s) shall
be granted in accordance with the form of Option Plan agreement (the "OPTION
AGREEMENT") which is attached hereto as Schedule "B" and which forms a material
part hereof.
In this regard, and subject also to the following and the form of final
Option Agreement, it is hereby acknowledged and agreed that the exercise of any
such Option(s) shall be subject, at all times, to such resale provisions as may
then be contained in the Company's Option Plan, the form of final Option
Agreement and as may be finally determined by the Board of Directors, acting
reasonably. Notwithstanding the foregoing, however, it is hereby also
acknowledged and agreed that, in the event that this Agreement is terminated in
accordance with section "3.3" hereinabove, such portion of the within and
remaining Option(s) which shall have then vested in the foregoing manner and on
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the determined Effective Termination Date shall, notwithstanding the remaining
exercise period of the Option(s), then be fully exercisable by the Consultant
for a period of one year from the original date of grant of such remaining
Option(s).
In this regard, and in accordance with the terms and conditions of the
final form of Option Agreement, the Consultant hereby also acknowledges and
agrees that:
(a) NO OBLIGATION TO REGISTER ANY OPTION SHARES: the Consultant
understands that the Company is under no obligation to
register any Option Shares under the United States SECURITIES
ACT OF 1933, as amended (the "SECURITIES ACT"), and that, in
the absence of any such registration, the Option Shares may
not be sold unless they are sold pursuant to an exemption from
registration under the Securities Act. Furthermore, the
Consultant fully understands that the Option Shares may not be
registered under the Securities Act and that they will be
issued in reliance upon an exemption which is available only
if the Consultant acquires such Option Shares for investment
and not with a view to distribution. The Consultant is
familiar with the phrase "acquired for investment and not with
a view to distribution" as it relates to the Securities Act
and the special meaning given to such term in various releases
of the United States Securities and Exchange Commission;
(b) DISPOSITION OF OPTION SHARES: the Company is under no
obligation to comply, or to assist the Consultant in complying
with, any exemption from such registration requirement,
including supplying the Consultant with any information
necessary to permit routine sales of the Option Shares under
Rule 144 of the United States Securities and Exchange
Commission (the "RULE"). The Consultant also understands that,
with respect to the Rule, routine sales of securities made in
reliance upon such Rule only can be made in limited amounts in
accordance with the terms and condition of the Rule, and that
in cases in which the Rule is inapplicable, compliance with
either Regulation A or another disclosure exemption under the
Securities Act will be required. Thus, the Option Shares will
have to be held indefinitely in the absence of registration
under the Securities Act or an exemption from registration.
The Consultant also acknowledges and understands that:
(i) the Option Shares are restricted securities within
the meaning of Rule 144;
(ii) the exemption from registration under Rule 144 will
not be available in any event for at least one year
from the date of purchase and payment of the Option
Shares by the Consultant, and even then will not be
available unless (A) a public trading market then
exists for the common stock of the Company, (B)
adequate information concerning the Company is then
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available to the public and (C) other terms and
conditions of Rule 144 are complied with; and
(iii) any sale of the Option Shares may be made by the
Consultant only in limited amounts in accordance with
such terms and conditions.
The Consultant further acknowledges and understands that,
without in anyway limiting the acknowledgements and
understandings as set forth hereinabove, the Consultant agrees
that the Consultant shall in no event make any disposition of
all or any portion of the Option Shares which the Consultant
may acquire hereunder unless and until:
(iv) there is then in effect a "REGISTRATION STATEMENT"
under the Securities Act covering such proposed
disposition and such disposition is made in
accordance with said Registration Statement; or
(v) (A) the Consultant shall have notified the Company of
the proposed disposition and shall have furnished the
Company with a detailed statement of the
circumstances surrounding the proposed disposition,
(B) the Consultant shall have furnished the Company
with an opinion of the Consultant's own counsel to
the effect that such disposition will not require
registration of any such Option Shares under the
Securities Act and (C) such opinion of the
Consultant's counsel shall have been concurred in by
counsel for the Company and the Company shall have
advised the Consultant of such concurrence; and
(c) REGISTRATION STATEMENT AND THE EXERCISE OF THE OPTION: The
Consultant acknowledges and understands that, from the
Effective Date until and including February 12, 2003 (the
"NON-REGISTRATION PERIOD"), any decision made by the Company
to file a Registration Statement under the Securities Act
covering any proposed registration and disposition of any of
the Option Shares acquired hereunder by the Consultant will be
in the sole and absolute discretion of the Board of Directors
of the Company. The Consultant also acknowledges and agrees
that if any Option Shares are acquired by the Consultant
hereunder during the Non-registration period and while no
Registration Statement covering the proposed registration and
disposition of such Option Shares is in place, the Consultant
will, during the Non-registration period, neither authorize
for private sale in advance, hedge forward sale, pledge, lend,
hypothecate nor in any other manner encumber any such Option
Shares without the prior written approval of the Board of
Directors. In addition, the Consultant further acknowledges
and agrees that if any Option Shares are acquired by the
Consultant hereunder during the Non-registration period and
while a Registration Statement covering the proposed
registration and disposition of the same is in place, the
Consultant may be required, at that time and during the
Non-registration period, and in the sole and absolute
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discretion of the entire Board of Directors of the Company,
acting reasonably, to submit all or any such Option Shares to
such pooling or lock up agreement as may have then been
determined by the Board of Directors of the Company to provide
for the orderly trading of the Company's common stock during
the Non-registration period.
4.2 ADDITIONAL OPTIONS. Subject to each of the terms and conditions as set
forth in section "4.1" hereinabove and in the final form of Option Agreement
determining the same, it is hereby also acknowledged and agreed that, subsequent
to the Initial Term and during each year during the ongoing continuance of this
Agreement, the Consultant shall also be compensated by the Company from the
commencement of each such year of this Agreement to the termination of the same
by way of the granting by the Company to the Consultant, again subject to each
of the rules and policies of the Regulatory Authorities and applicable
securities legislation, the terms and conditions of the Company's existing
Option Plan and the final determination of the Board of Directors, acting
reasonably, a further incentive stock option or stock options in and to the
Company (each being an "ADDITIONAL OPTION") for the collective purchase of not
less than a further aggregate of up to 25,000 Option Shares of the Company for
each such year of this Agreement; and which further incentive Additional Option
or Additional Option(s) will be exercisable for a period of at least one year
from the date of granting at an exercise price per Option Share underlying any
such Additional Option determined at 20% below the then ten-day trading average
of the Company's shares on any recognized exchange in North America immediately
prior to the date of granting; and which Option or Option(s), subject to the
final form of Option Agreement, shall, unless otherwise determined by the Board
of Directors, vest only as to 3,000 Additional Option Shares after the first
month and on equivalent monthly basis (that being as to 2,000 Additional Option
Shares each) during the remaining 11 months during the first year of the
exercise period of any such Additional Option.
4.3 REIMBURSEMENT OF EXPENSES. It is hereby also acknowledged and agreed
that the Consultant shall also be reimbursed for all direct, pre-approved and
reasonable expenses actually and properly incurred by the Consultant for the
benefit of the Companies (collectively, the "EXPENSES"); and which Expenses, it
is hereby acknowledged and agreed, shall be payable by Petrogen, Inc. to the
order, direction and account of the Consultant as the Consultant may designate
in writing, from time to time, in the Consultant's sole and absolute discretion,
as soon as conveniently possible after the prior delivery by the Consultant to
Petrogen, Inc. of written substantiation on account of each such reimbursable
Expense.
ARTICLE 5
ADDITIONAL OBLIGATIONS OF THE CONSULTANT
5.1 REPORTING. At such time or times as may be required by the Board of
Directors of the Company, acting reasonably, the Consultant will provide the
Board of Directors with such information concerning the results of the
Consultant's General Services and activities hereunder for the previous month as
the Board of Directors may reasonably require.
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5.2 NO CONFLICT, NO COMPETITION AND NON-CIRCUMVENTION. During the
continuance of this Agreement the Consultant shall not engage in any business or
activity which reasonably may detract from or conflict with the Consultant's
respective duties and obligations to the Companies as set forth in this
Agreement without the prior written consent of the Board of Directors of the
Company. In addition, during the continuance of this Agreement and for a period
of at least six months following the termination of this Agreement for any
reason whatsoever the Consultant shall not engage in any business or activity
whatsoever which reasonably may be determined by the Board of Director, in its
sole and absolute discretion, to compete with any portion of the Business
interests as contemplated hereby without the prior written consent of the Board
of Directors. Furthermore, the Consultant hereby acknowledges and agrees, for a
period of at least six months following the termination of this Agreement for
any reason whatsoever, not to initiate any contact or communication directly
with either of the Companies or any of their respective subsidiaries, as the
case may be, together with each of their respective directors, officers,
representatives, agents or employees, without the prior written consent of the
Board of Directors and, notwithstanding the generality of the foregoing, further
acknowledges and agrees, even with the prior written consent of the Board of
Directors to such contact or communication, to limit such contact or
communication to discussions outside the scope of any confidential information
(as hereinafter determined). For the purposes of the foregoing the Consultant
hereby recognizes and agrees that a breach by the Consultant of any of the
covenants herein contained would result in irreparable harm and significant
damage to the Companies that would not be adequately compensated for by monetary
award. Accordingly, the Consultant agrees that, in the event of any such breach,
in addition to being entitled as a matter of right to apply to a Court of
competent equitable jurisdiction for relief by way of restraining order,
injunction, decree or otherwise as may be appropriate to ensure compliance with
the provisions hereof, the Consultant will also be liable to the Companies, as
liquidated damages, for an amount equal to the amount received and earned by the
Consultant as a result of and with respect to any such breach. The Parties
hereby acknowledge and agree that if any of the aforesaid restrictions,
activities, obligations or periods are considered by a Court of competent
jurisdiction as being unreasonable, the Parties agree that said Court shall have
authority to limit such restrictions, activities or periods as the Court deems
proper in the circumstances. In addition, the Parties further acknowledge and
agree that all restrictions or obligations in this Agreement are necessary and
fundamental to the protection of the Business interests and are reasonable and
valid, and all defenses to the strict enforcement thereof by the Consultant are
hereby waived.
5.3 CONFIDENTIALITY. The Consultant will not, except as authorized or
required by the Consultant's duties hereunder, reveal or divulge to any person
or companies any information concerning the organization, business, finances,
transactions or other affairs of the Companies or of any of the Companies'
respective subsidiaries which may come to the Consultant's knowledge during the
continuance of this Agreement, and the Consultant will keep in complete secrecy
all confidential information entrusted to the Consultant and will not use or
attempt to use any such information in any manner which may injure or cause loss
either directly or indirectly to the Companies' respective Business interests.
This restriction will continue to apply after the termination of this Agreement
without limit in point of time but will cease to apply to information or
knowledge which may come into the public domain.
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5.4 COMPLIANCE WITH APPLICABLE LAWS. The Consultant will comply with all
Canadian, U.S. and foreign laws, whether federal, provincial or state,
applicable to the Consultant's duties hereunder and, in addition, hereby
represents and warrants that any information which the Consultant may provide to
any person or company hereunder will, to the best of the Consultant's knowledge,
information and belief, be accurate and complete in all material respects and
not misleading, and will not omit to state any fact or information which would
be material to such person or company.
5.5 OPINIONS, REPORTS AND ADVICE OF THE CONSULTANT. The Consultant
acknowledges and agrees that all written and oral opinions, reports, advice and
materials provided by the Consultant to the Companies in connection with the
Consultant's engagement hereunder are intended solely for the Companies' benefit
and for the Companies' uses only, and that any such written and oral opinions,
reports, advice and information are the exclusive property of the Companies. In
this regard the Consultant covenants and agrees that the Companies may utilize
any such opinion, report, advice and materials for any other purpose whatsoever
and, furthermore, may reproduce, disseminate, quote from and refer to, in whole
or in part, at any time and in any manner, any such opinion, report, advice and
materials in the Companies' sole and absolute discretion. The Consultant further
covenants and agrees that no public references to the Consultant or disclosure
of the Consultant's role in respect of the Companies may be made by the
Consultant without the prior written consent of the Board of Directors of the
Company in each specific instance and, furthermore, that any such written
opinions, reports, advice or materials shall, unless otherwise required by the
Board of Directors, be provided by the Consultant to the Companies in a form and
with such substance as would be acceptable for filing with and approval by any
Regulatory Authority having jurisdiction over the affairs of the Company from
time to time.
5.6 CONSULTANT'S BUSINESS CONDUCT. The Consultant warrants that the
Consultant shall conduct the business and other activities in a manner which is
lawful and reputable and which brings good repute to the Companies, the Business
interests and the Consultant. In particular, and in this regard, the Consultant
specifically warrants to provide the General Services in a sound and
professional manner such that the same meets superior standards of performance
quality within the standards of the industry or as set by the specifications of
the Companies. In the event that either of the Companies has a reasonable
concern that the business as conducted by the Consultant is being conducted in a
way contrary to law or is reasonably likely to bring disrepute to the Business
interests or to the Companies' or the Consultant's reputation, the Companies may
require that the Consultant make such alterations in the Consultant's business
conduct or structure, whether of management or Board representation or employee
or sub-licensee representation, as the Board of Directors may reasonably
require, in its sole and absolute discretion, failing which the Company, in its
sole and absolute discretion, may terminate this Agreement upon 30 calendar
days' prior written notice to the Consultant. In the event of any debate or
dispute as to the reasonableness of the Board of Directors of the Company's
request or requirements, the judgment of the Board of Directors shall be deemed
correct until such time as the matter has been determined by arbitration in
accordance with Article "8" hereinbelow.
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ARTICLE 6
INDEMNIFICATION AND LEGAL PROCEEDINGS
6.1 INDEMNIFICATION. The Parties hereto hereby each agree to indemnify and
save harmless the other Party hereto and including, where applicable, their
respective subsidiaries and affiliates and each of their respective directors,
officers, employees and agents (each such party being an "INDEMNIFIED PARTY")
harmless from and against any and all losses, claims, actions, suits,
proceedings, damages, liabilities or expenses of whatever nature or kind and
including, without limitation, any investigation expenses incurred by any
Indemnified Party, to which an Indemnified Party may become subject by reason of
the terms and conditions of this Agreement.
6.2 NO INDEMNIFICATION. This indemnity will not apply in respect of an
Indemnified Party in the event and to the extent that a Court of competent
jurisdiction in a final judgment shall determine that the Indemnified Party was
grossly negligent or guilty of willful misconduct.
6.3 CLAIM OF INDEMNIFICATION. The Parties hereto agree to waive any right
they might have of first requiring the Indemnified Party to proceed against or
enforce any other right, power, remedy, security or claim payment from any other
person before claiming this indemnity.
6.4 NOTICE OF CLAIM. In case any action is brought against an Indemnified
Party in respect of which indemnity may be sought against either of the Parties
hereto, the Indemnified Party will give both Parties hereto prompt written
notice of any such action of which the Indemnified Party has knowledge and the
relevant Party will undertake the investigation and defense thereof on behalf of
the Indemnified Party, including the prompt employment of counsel acceptable to
the Indemnified Party affected and the relevant Party and the payment of all
expenses. Failure by the Indemnified Party to so notify shall not relieve the
relevant Party of such relevant Party's obligation of indemnification hereunder
unless (and only to the extent that) such failure results in a forfeiture by the
relevant Party of substantive rights or defenses.
6.5 SETTLEMENT. No admission of liability and no settlement of any action
shall be made without the consent of each of the Parties hereto and the consent
of the Indemnified Party affected, such consent not to be unreasonable withheld.
6.6 LEGAL PROCEEDINGS. Notwithstanding that the relevant Party will
undertake the investigation and defense of any action, an Indemnified Party will
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel will be at the
expense of the Indemnified Party unless:
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(a) such counsel has been authorized by the relevant Party;
(b) the relevant Party has not assumed the defense of the action
within a reasonable period of time after receiving notice of
the action;
(c) the named parties to any such action include that any Party
hereto and the Indemnified Party shall have been advised by
counsel that there may be a conflict of interest between any
Party hereto and the Indemnified Party; or
(d) there are one or more legal defenses available to the
Indemnified Party which are different from or in addition to
those available to any Party hereto.
6.7 CONTRIBUTION. If for any reason other than the gross negligence or bad
faith of the Indemnified Party being the primary cause of the loss claim,
damage, liability, cost or expense, the foregoing indemnification is unavailable
to the Indemnified Party or insufficient to hold them harmless, the relevant
Party shall contribute to the amount paid or payable by the Indemnified Party as
a result of any and all such losses, claim, damages or liabilities in such
proportion as is appropriate to reflect not only the relative benefits received
by the relevant Party on the one hand and the Indemnified Party on the other,
but also the relative fault of relevant Party and the Indemnified Party and
other equitable considerations which may be relevant. Notwithstanding the
foregoing, the relevant Party shall in any event contribute to the amount paid
or payable by the Indemnified Party, as a result of the loss, claim, damage,
liability, cost or expense (other than a loss, claim, damage, liability, cost or
expenses, the primary cause of which is the gross negligence or bad faith of the
Indemnified Party), any excess of such amount over the amount of the fees
actually received by the Indemnified Party hereunder.
ARTICLE 7
FORCE MAJEURE
7.1 EVENTS. If either Party hereto is at any time either during this
Agreement or thereafter prevented or delayed in complying with any provisions of
this Agreement by reason of strikes, walk-outs, labour shortages, power
shortages, fires, wars, acts of God, earthquakes, storms, floods, explosions,
accidents, protests or demonstrations by environmental lobbyists or native
rights groups, delays in transportation, breakdown of machinery, inability to
obtain necessary materials in the open market, unavailability of equipment,
governmental regulations restricting normal operations, shipping delays or any
other reason or reasons beyond the control of that Party, then the time limited
for the performance by that Party of its respective obligations hereunder shall
be extended by a period of time equal in length to the period of each such
prevention or delay.
7.2 NOTICE. A Party shall within three calendar days give notice to the
other Party of each event of FORCE MAJEURE under section "7.1" hereinabove, and
upon cessation of such event shall furnish the other Party with notice of that
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event together with particulars of the number of days by which the obligations
of that Party hereunder have been extended by virtue of such event of FORCE
MAJEURE and all preceding events of FORCE MAJEURE.
ARTICLE 8
ARBITRATION
8.1 MATTERS FOR ARBITRATION. Except for matters of indemnity or in the case
of urgency to prevent material harm to a substantive right or asset, the Parties
agree that all questions or matters in dispute with respect to this Agreement
shall be submitted to arbitration pursuant to the terms hereof. This provision
shall not prejudice a Party from seeking a Court order or assistance to garnish
or secure sums or to seek summary remedy for such matters as counsel may
consider amenable to summary proceedings.
8.2 NOTICE. It shall be a condition precedent to the right of any Party to
submit any matter to arbitration pursuant to the provisions hereof that any
Party intending to refer any matter to arbitration shall have given not less
than five business days' prior written notice of its intention to do so to the
other Parties together with particulars of the matter in dispute. On the
expiration of such five business days the Party who gave such notice may proceed
to refer the dispute to arbitration as provided for in section "8.3"
hereinbelow.
8.3 APPOINTMENTS. The Party desiring arbitration shall appoint one
arbitrator, and shall notify the other Parties of such appointment, and the
other Parties shall, within five business days after receiving such notice,
appoint an arbitrator, and the two arbitrators so named, before proceeding to
act, shall, within five business days of the appointment of the last appointed
arbitrator, unanimously agree on the appointment of a third arbitrator, to act
with them and be chairperson of the arbitration herein provided for. If the
other Parties shall fail to appoint an arbitrator within five business days
after receiving notice of the appointment of the first arbitrator, and if the
two arbitrators appointed by the Parties shall be unable to agree on the
appointment of the chairperson, the chairperson shall be appointed in accordance
with the Arbitration Act. Except as specifically otherwise provided in this
section, the arbitration herein provided for shall be conducted in accordance
with such Arbitration Act. The chairperson, or in the case where only one
arbitrator is appointed, the single arbitrator, shall fix a time and place for
the purpose of hearing the evidence and representations of the Parties, and the
chairperson shall preside over the arbitration and determine all questions of
procedure not provided for by the Arbitration Act or this section. After hearing
any evidence and representations that the Parties may submit, the single
arbitrator, or the arbitrators, as the case may be, shall make an award and
reduce the same to writing, and deliver one copy thereof to each of the Parties.
The expense of the arbitration shall be paid as specified in the award.
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8.4 AWARD. The Parties agree that the award of a majority of the
arbitrators, or in the case of a single arbitrator, of such arbitrator, shall be
final and binding upon each of them.
ARTICLE 9
GENERAL PROVISIONS
9.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement to
date between the Parties hereto and supersedes every previous agreement,
expectation, negotiation, representation or understanding, whether oral or
written, express or implied, statutory or otherwise, between the Parties with
respect to the subject matter of this Agreement.
9.2 NO ASSIGNMENT. This Agreement may not be assigned by any Party hereto
except with the prior written consent of the other Parties.
9.3 NOTICE. Each notice, demand or other communication required or
permitted to be given under this Agreement shall be in writing and shall be sent
by prepaid registered mail deposited in a recognized post office and addressed
to the Party entitled to receive the same, or delivered to such Party, at the
address for such Party specified on the front page of this Agreement. The date
of receipt of such notice, demand or other communication shall be the date of
delivery thereof if delivered, or, if given by registered mail as aforesaid,
shall be deemed conclusively to be the third business day after the same shall
have been so mailed, except in the case of interruption of postal services for
any reason whatsoever, in which case the date of receipt shall be the date on
which the notice, demand or other communication is actually received by the
addressee. Any Party may at any time and from time to time notify the other
Parties in writing of a change of address and the new address to which notice
shall be given to it thereafter until further change.
9.4 TIME OF THE ESSENCE. Time will be of the essence of this Agreement.
9.5 ENUREMENT. This Agreement will enure to the benefit of and will be
binding upon the Parties hereto and their respective heirs, executors,
administrators and assigns.
9.6 CURRENCY. Unless otherwise stipulated, all payments required to be made
pursuant to the provisions of this Agreement and all money amount references
contained herein are in lawful currency of the United States.
9.7 FURTHER ASSURANCES. The Parties will from time to time after the
execution of this Agreement make, do, execute or cause or permit to be made,
done or executed, all such further and other acts, deeds, things, devices and
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assurances in law whatsoever as may be required to carry out the true intention
and to give full force and effect to this Agreement.
9.8 REPRESENTATION AND COSTS. It is hereby acknowledged by each of the
Parties hereto that ▇▇▇▇▇▇ ▇▇▇▇▇▇, Barristers and Solicitors, and the law office
of ▇▇▇▇ & ▇▇▇▇, PC, act solely for the Companies, and, correspondingly, that the
Consultant has been required by each of ▇▇▇▇▇▇ ▇▇▇▇▇▇, the law office of ▇▇▇▇ &
▇▇▇▇, PC and the Companies to obtain independent legal advice with respect to
its review and execution of this Agreement. In addition, it is hereby further
acknowledged and agreed by the Parties hereto that ▇▇▇▇▇▇ ▇▇▇▇▇▇, Barristers and
Solicitors, and certain or all of its principal owners or associates, from time
to time, may have both an economic or shareholding interest in and to Companies
and/or a fiduciary duty to the same arising from either a directorship,
officership or similar relationship arising out of the request of the Companies
for certain of such persons to act in a similar capacity while acting for the
Companies as counsel. Correspondingly, and even where, as a result of this
Agreement, the consent of each Party hereto to the role and capacity of ▇▇▇▇▇▇
▇▇▇▇▇▇, Barristers and Solicitors, and its principal owners and associates, as
the case may be, is deemed to have been received, where any conflict or
perceived conflict may arise, or be seen to arise, as a result of any such
capacity or representation, each Party hereto acknowledges and agrees to, once
more, obtain independent legal advice in respect of any such conflict or
perceived conflict and, consequent thereon, ▇▇▇▇▇▇ ▇▇▇▇▇▇, Barristers and
Solicitors, together with any such principal owners or associates, as the case
may be, shall be at liberty at any time to resign any such position if it or any
Party hereto is in any way affected or uncomfortable with any such capacity or
representation. Each Party to this Agreement will also bear and pay its own
costs, legal and otherwise, in connection with its respective preparation,
review and execution of this Agreement and, in particular, that the costs
involved in the preparation of this Agreement, and all documentation necessarily
incidental thereto, by ▇▇▇▇▇▇ ▇▇▇▇▇▇, Barristers and Solicitors, and the law
office of ▇▇▇▇ & ▇▇▇▇, PC shall be at the cost of the Companies.
9.9 APPLICABLE LAW. The situs of this Agreement is Vancouver, British
Columbia, and for all purposes this Agreement will be governed exclusively by
and construed and enforced in accordance with the laws and Courts prevailing in
the Province of British Columbia.
9.10 SEVERABILITY AND CONSTRUCTION. Each Article, section, paragraph, term
and provision of this Agreement, and any portion thereof, shall be considered
severable, and if, for any reason, any portion of this Agreement is determined
to be invalid, contrary to or in conflict with any applicable present or future
law, rule or regulation in a final unappealable ruling issued by any court,
agency or tribunal with valid jurisdiction in a proceeding to which any Party
hereto is a party, that ruling shall not impair the operation of, or have any
other effect upon, such other portions of this Agreement as may remain otherwise
intelligible (all of which shall remain binding on the Parties and continue to
be given full force and effect as of the date upon which the ruling becomes
final).
9.11 CAPTIONS. The captions, section numbers and Article numbers appearing
in this Agreement are inserted for convenience of reference only and shall in no
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way define, limit, construe or describe the scope or intent of this Agreement
nor in any way affect this Agreement.
9.12 COUNTERPARTS. This Agreement may be signed by the Parties hereto in as
many counterparts as may be necessary, and via facsimile if necessary, each of
which so signed being deemed to be an original and such counterparts together
constituting one and the same instrument and, notwithstanding the date of
execution, being deemed to bear the Effective Date as set forth on the front
page of this Agreement.
9.13 NO PARTNERSHIP OR AGENCY. The Parties have not created a partnership
and nothing contained in this Agreement shall in any manner whatsoever
constitute any Party the partner, agent or legal representative of the other
Parties, nor create any fiduciary relationship between them for any purpose
whatsoever.
9.14 CONSENTS AND WAIVERS. No consent or waiver expressed or implied by
either Party in respect of any breach or default by the other in the performance
by such other of its obligations hereunder shall:
(a) be valid unless it is in writing and stated to be a consent or
waiver pursuant to this section;
(b) be relied upon as a consent to or waiver of any other breach
or default of the same or any other obligation;
(c) constitute a general waiver under this Agreement; or
(d) eliminate or modify the need for a specific consent or waiver
pursuant to this section in any other or subsequent instance.
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IN WITNESS WHEREOF the Parties hereto have hereunto set their
respective hands and seals as at the Effective Date as hereinabove determined.
The CORPORATE SEAL of )
PETROGEN CORP., )
the Company herein, was hereunto affixed )
in the presence of: ) (C/S)
)
___________________________________________ )
Authorized Signatory )
The CORPORATE SEAL of )
PETROGEN, INC., )
Petrogen, Inc. herein, was hereunto affixed )
in the presence of: ) (C/S)
)
___________________________________________ )
Authorized Signatory )
SIGNED, SEALED and DELIVERED by )
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, )
the Consultant herein, in the presence of: )
)
___________________________________________ )
Witness Signature )
______________________________
) ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
___________________________________________ )
Witness Address )
)
___________________________________________ )
Witness Name and Occupation )
__________
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SCHEDULE A
This is Schedule "A" to that certain Consulting Services Agreement
respecting the Company, Petrogen, Inc. and the Consultant.
GENERAL SERVICES
Without in any manner limiting the generality of the General Services to be
provided by the Consultant as set forth in section "2.1" of the Agreement
hereinabove, it is hereby also acknowledged and agreed that the Consultant will
provide the following specific consulting services to the Company, or to any of
the Company's respective subsidiaries, as the case may be and as may be
determined by the Board of Directors of the Company, from time to time, in their
sole and absolute discretion, and in conjunction with the maintenance and
development of the Company's various Business interests subject, at all times,
to the direction of the Board of Directors:
(a) assistance in the initiation, coordination, implementation and
management of all aspects of any program or project in
connection with the maintenance and development of the
Company's various land management Business interests;
(b) assistance in the organization and preparation of any and all
business plans and technical reports for the Company, or for
any of the Company's respective subsidiaries, as the case may
be and as may be determined by the Board of Directors of the
Company, from time to time, in its sole and absolute
discretion, and in connection with the maintenance and
development of the Company's various land Business interests;
(c) assistance in the negotiation and structuring of any proposed
transaction which will maximize the Company's land interests
in each subject transaction together with the presentation of
a written summary of said structure; and
(d) assistance in all other matters and services in connection
with the maintenance and development of the Company's various
land management Business interests as may be determined by the
Board of Directors of the Company, from time to time, in its
sole and absolute discretion.
In this regard it is hereby acknowledged and agreed that the Consultant
shall be entitled to communicate with and rely upon the immediate advice and
instructions of such Director or Officer of the Company as may be designated,
from time to time, by the Board of Directors of the Company, or upon the advice
or instructions of such other Director or Officer of the Company as such
designated Director or Officer shall, from time to time, designate in times of
such Director's and/or Officer's absence, in order to initiate, coordinate and
implement the General Services as contemplated herein.
__________
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SCHEDULE B
This is Schedule "B" to that certain Consulting Services Agreement
respecting the Company, Petrogen, Inc. and the Consultant.
OPTION AGREEMENT
See the attached Option Agreement draft.
__________
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