CONSULTING SERVICES AGREEMENT
THIS AGREEMENT is made and entered into this 4th day of December, 2008 by
and between XXXXX GROUP, INC., a Texas corporation, with offices at 0 Xxxxx
Xxxxx, Xxxxxxx, XX 00000 ("Consultant") and XXXXXXX ASSET MANAGEMENT CORP.
("Client").
WHEREAS, Consultant is in the business of providing senior management level
consulting and support services to the oil and gas industry;
WHEREAS, Client desires to retain Consultant to provide advice and
strategic insight into Southern Union Company ("Southern Union") and its
markets; and
WHEREAS, Client and Xxxxxxx Xxxxxxx (the "Principal"), have entered into a
Nominee Agreement dated December 4, 2008 setting forth the terms under which
Principal has agreed to stand for election as a director of Southern Union
Company ("Southern Union") in connection with a proxy solicitation to be
conducted by Client with respect to the 2009 annual meeting of stockholders of
Southern Union expected to be held in May 2009, including any adjournment,
postponement or special meeting held in lieu thereof (the "2009 Annual
Meeting").
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein, Client and Consultant agree as follows:
1. CONSULTANT'S SERVICES
Client hereby retains Consultant and Consultant agrees to be so retained to,
among other things, (i) provide strategic insight and guidance into Southern
Union and its markets, (ii) assist in the development and implementation of an
overall strategy on behalf of Client's proxy initiative in connection with the
2009 Annual Meeting (iii) work with third party alliance partners or investors,
and (iv) identify and assist in the aggregation of additional resources which
may be required to support the proxy initiative (collectively, the "Services").
It is understood and agreed by the parties that the Services are to be performed
by the Principal on behalf of the Consultant.
2. INDEPENDENT CONTRACTOR STATUS
In connection with this Agreement, Consultant shall be an independent contractor
and as such will not have any authority to bind or commit Client. Nothing herein
shall be deemed or construed to create a joint venture, partnership, agency or
employee/employer relationship between the parties for any purpose, including
but not limited to, withholding for purposes of Social Security or income tax,
or entitlement to vacation, insurance, retirement or other employee benefits.
Consultant will be solely responsible for payment of any and all taxes and
insurance, including workers' compensation hereunder regarding itself and its
employees, if any. Consultant further agrees to indemnify Client from and
against any and all claims brought against the Client, whether brought by a
taxing authority or otherwise, relating to any tax liability arising in
connection with Consultant's performance of Services hereunder.
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3. COMPENSATION
Consultant shall be compensated for performance of the Services as set forth in
ATTACHMENT A.
4. REIMBURSEMENT OF EXPENSES
Consultant shall provide Client with monthly reports detailing the expenses
incurred in providing the Services hereunder. Client shall reimburse Consultant
for all reasonable expenses incurred by Consultant in connection with providing
the Services.
In addition, Client agrees to reimburse Consultant for legal fees incurred by
Consultant or the Principal in negotiating this Agreement and the Nominee
Agreement or relating to the provision of the Services, provided that Client
shall not be obligated to reimburse Consultant for any legal fees not based on
fair and reasonable market pricing, and provided further that Client shall not
be obligated to reimburse Consultant for any legal fees in excess of an
aggregate of $20,000, unless such excess legal fees have been pre-approved by
Client, with such approval not to be unreasonably withheld.
5. CONSULTANT OBLIGATIONS
Consultant agrees as follows:
a) In performing the Services hereunder, Consultant will comply at all
times with all applicable laws and regulations of the United States
and any jurisdiction in which it performs the Services hereunder;
b) Consultant agrees that the Services to be performed hereunder shall be
performed promptly, in a professional and workmanlike manner and in
accordance with the customary standards and guidelines for such
Services;
c) The Principal is an employee of the Consultant and under no
circumstances shall be considered an employee or agent of Client.
Consultant shall have sole responsibility for the conduct of the
Principal, for controlling, supervising and directing his work, and
for payment of his compensation.
d) Client will be solely responsible for all public announcements and
communications with third parties regarding the solicitation of
proxies for the 2009 Annual Meeting, which the Services are expected
to support, and any communication with Southern Union; Consultant
agrees that it will communicate with third parties, including Southern
Union, (directly or by way of a public announcement) in respect to the
solicitation or the Services only with the prior consent of Client.
6. TERM
This Agreement shall be effective as of the date hereof and shall remain in
effect until terminated in accordance with Section 7 hereof.
7. TERMINATION
a) Either party may, upon written notice to the other party identifying
specifically the basis for such notice, terminate this Agreement for
breach of a material term or condition of
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this Agreement. The breaching party shall have a ten (10) day cure
period from the date of the notice to cure the breach. If the breach
is not cured before expiration of the cure period the termination will
become effective.
b) This Agreement shall terminate upon the earliest to occur of (i) a
material breach by the Principal of the Nominee Agreement or this
Agreement, (ii) May 31, 2009, or (iii) the 2009 Annual Meeting.
Upon termination, payment for all Services rendered through such date shall be
due in accordance with the payment procedures set forth in Section 3 herein.
8. ASSIGNMENT
This Agreement may not be assigned by either party, except upon the prior
written consent of the other party.
9. NOTICES
Any notice to be given hereunder by any party hereto to any other party shall be
in writing and delivered personally or sent by certified mail, return receipt
requested, postage prepaid addressed as follows:
If to Consultant: If to Client:
XXXXX GROUP, INC. XXXXXXX ASSET MANAGEMENT CORP.
2 Xxxxx Court 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000 Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx Attention: Xxxxxxx Xxxxxxx
or at such other address for a party as shall be specified by like written
notice. Notices shall be deemed to have been duly given and received as of the
date of actual receipt in the case of personal delivery, the date of mailing in
the case of certified mail.
10. COMMUNICATION
Consultant will keep Client reasonably informed of the progress of the
engagement, respond to Client's inquiries and otherwise keep Client reasonably
advised of all material matters related to this engagement. Client will take
reasonable care to provide complete and accurate information to Consultant known
to Client and relevant to this engagement, make resources and personnel
available to the Consultant during the course of Consultant's work, keep
Consultant reasonably informed of all material developments, pay Consultant's
statements on time and otherwise keep Consultant reasonably advised of all
material matters related to this engagement.
11. INDEMNITY
IN ADDITION TO CLIENT'S OBLIGATION TO REIMBURSE CONSULTANT FOR CERTAIN LEGAL
FEES AS DESCRIBED IN SECTION 4, CLIENT HEREBY AGREES TO RELEASE, INDEMNIFY,
DEFEND AND HOLD HARMLESS CONSULTANT FOR, FROM AND AGAINST ANY LOSS, DAMAGE OR
LIABILITY, INCLUDING REASONABLE ATTORNEY FEES, TO ANY PARTY WHATSOEVER ARISING
OUT OF THE SERVICES TO BE PERFORMED BY CONSULTANT HEREUNDER, EXCEPT AS PROVIDED
Page 4 DECEMBER 4, 2008
BELOW. CONSULTANTS RIGHT OF INDEMNIFICATION HEREUNDER SHALL CONTINUE AFTER THE
TERMINATION OF THIS AGREEMENT, BUT ONLY FOR EVENTS THAT OCCURRED PRIOR TO THE
TERMINATION AND SUBSEQUENT TO THE DATE HEREOF. ANYTHING TO THE CONTRARY HEREIN
NOTWITHSTANDING, CLIENT IS NOT INDEMNIFYING CONSULTANT FOR ANY ACTION TAKEN BY
OR ON BEHALF OF CONSULTANT THAT OCCURS PRIOR TO THE DATE HEREOF OR SUBSEQUENT TO
THE TERMINATION OF THIS AGREEMENT.
Nothing herein shall be construed to provide Consultant with indemnification (i)
if Consultant is found to have engaged in a violation of any provision of state
or federal law in connection with the provision of Services unless Consultant
demonstrates that its action was taken in good faith and in a manner Consultant
reasonably believed to be in or not opposed to the best interests of Client;
(ii) if Consultant acted in a manner that constitutes gross negligence or
willful misconduct; or (iii) if Consultant provided false or misleading
information, or omitted material information, in the questionnaire completed by
Consultant at the request of Client or otherwise in connection with the
Services. Consultant shall promptly notify Client in writing in the event of any
third-party claims actually made against Consultant or known by Consultant to be
threatened if Consultant intends to seek indemnification hereunder in respect of
such claims. In addition, upon Consultant's delivery of notice with respect to
any such claim, Client shall be entitled to promptly assume control of the
defense of such claim with counsel chosen by Client. Client shall not be
responsible for any settlement of any claim against Consultant covered by this
indemnity without its prior written consent. However, Client may not enter into
any settlement of any such claim without Consultant's consent unless such
settlement includes (i) no admission of liability or guilt by Consultant, and
(ii) a release of Consultant from any and all liability in respect of such
claim.
12. CONFIDENTIALITY
a) Both parties and their employees, officers, agents and directors shall
treat as confidential and proprietary and shall not disclose to others
during or subsequent to the term of this Agreement, except (i) as
required by law, or (ii) necessary to perform this Agreement or the
solicitation (and in the case of (ii), only on a basis satisfactory to
both parties), any information whether verbal or written, or any
description whatsoever (including any technical information, computer
data or programs, experience or data) regarding Consultant's
performance of the Services or the other party's employees, plans,
programs, facilities, processes, products, costs, equipment or
operations which may come within their knowledge.
b) Both parties acknowledge that a breach of this Section 12 will cause
immediate and irreparable harm and that the damages, which the other
party will suffer, may be difficult or impossible to measure.
Therefore, upon any actual or impending violation of this Section 12,
a party will be entitled to issuance of a restraining order or
preliminary and permanent injunction, without bond, restraining or
enjoining such violation by the other party or its agents, employees,
or contractors. This remedy will be in addition to, and not in
limitation of, any other remedy which may otherwise be available under
this Agreement. Both parties shall inform their employees, officers,
contractors and agents in writing of its confidentiality obligations
under this Agreement.
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c) Notwithstanding the foregoing, nothing contained within this Section
12 shall prevent a party from disclosing to others information that
can be shown to:
1. Have become part of the public domain other than by acts,
omissions or fault of the disclosing party, its employees and
contractors in violation of this Section 12;
2. Have been furnished or made known to the disclosing party by
third parties (other than those acting directly or indirectly for
or on behalf of the disclosing party);
3. Have been in the disclosing party's possession prior to the
disclosure thereof by the other party; or
4. Have been independently developed or learned by the disclosing
party.
d) In the event that a party shall be required by subpoena or by court or
administrative order to disclose any of the information deemed by this
Agreement to be confidential and/or proprietary, that party shall give
immediate written notice to the other party. Upon receipt of same, the
party receiving the notice expressly reserves the right to interpose
all objections it may have to the disclosure of such information.
13. SURVIVAL
The provisions in Sections 3, 4, 11, 12 and 16 of this Agreement shall survive
its termination.
14. MODIFICATIONS
This Agreement may not be amended, modified, or otherwise changed except in
writing executed by both parties.
15. SEVERABILITY
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, it shall, to the extent possible, be modified in such manner as
to be valid, legal and enforceable but so as to most nearly retain the intent of
the parties. If such modification is not possible, such provision shall be
severed from this Agreement. In either case the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
16. GOVERNING LAW
The validity of this Agreement shall be governed by and construed in accordance
with the laws of the State of New York, excluding any conflicts-of-law rule or
principle which might refer same to another jurisdiction.
Each party hereto hereby irrevocably and unconditionally agrees that any action,
suit or proceeding, at law or equity, arising out of or relating to this
Agreement or any agreements or transactions contemplated hereby shall only be
brought in any federal court of the Southern District of New York or any state
court located in New York County, State of New York, and hereby irrevocably and
unconditionally expressly submits to the personal jurisdiction and venue of such
courts for the purposes thereof and hereby irrevocably and unconditionally
waives (by way of motion, as a defense or otherwise) any and all jurisdictional,
venue and convenience
Page 6 DECEMBER 4, 2008
objections or defenses that such party may have in such action, suit or
proceeding. Each party hereby irrevocably and unconditionally consents to the
service of process of any of the aforementioned courts.
17. DESCRIPTIVE HEADINGS
The descriptive headings of the several paragraphs, subparagraphs and clauses of
this Agreement were inserted for convenience only and shall not be deemed to
affect the meaning or construction of any of the provisions hereof.
18. COUNTERPARTS
This Agreement may be executed in any number of counterparts, and each
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts shall constitute but one Agreement.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
XXXXX GROUP, INC.
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxx
Title: President
Date: December 4, 2008
-----------------------------
XXXXXXX ASSET MANAGEMENT CORP.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Managing Director
Date: December 4, 2008
-----------------------------
Page 8 DECEMBER 4, 2008
ATTACHMENT A - COMPENSATION FOR SERVICES
Client shall pay Consultant a fee of: $75,000 (the "Base Fee"), paid in five (5)
monthly installments of $15,000 (each an "Installment"). The first Installment
is due and payable on February 1, 2009 and each subsequent Installment is due
and payable on the first day of each month until the Base Fee is paid in full.
If for any reason other than a material breach this Agreement is terminated
prior to the 2009 Annual Meeting, the Client will pay the aggregate amount of
unpaid Installments of the Base Fee on the first day of the month following the
month in which this Agreement is terminated; provided that such aggregate amount
shall not be payable in the event the termination is the result of a material
breach of this Agreement by Consultant.
Extension Fee: If the 2009 Annual Meeting takes place after May 31, 2009 and
this Agreement has not been terminated, Client shall pay Consultant a $15,000
fee for each month after May 31, 2009 until the month in which the 2009 Annual
Meeting takes place (the "Extension Fee"). The Extension Fee will be payable in
full, and not pro-rated, regardless of the day of the particular month in which
(i) the 2009 Annual Meeting takes place or (ii) this Agreement is terminated.
Each Extension Fee is due and payable on the first day of the month following
the month for which the Extension Fee is owed.
