CONSULTING SERVICES AGREEMENT
Among :
PLURIS ENERGY GROUP INC..
And :
PETROGEN, INC.
And :
KJM HOLDINGS, INC.
Pluris Energy Group Inc.
Suite 1100 – 10777 Westheimer,
Houston, Texas, U.S.A., 77042
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CONSULTING SERVICES
AGREEMENT
THIS CONSULTING SERVICES
AGREEMENT is made and dated for
reference effective as at June 1st, 2007 (the “
Effective Date ”)
as fully executed on this 1 st day of June,
2007
AMONG :
PLURIS ENERGY GROUP INC.
, 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 Suite 1100, 10777 Westheimer,
Houston, Texas, U.S.A., 77042
(the “ Company ”);
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 Suite 1100, 10777 Westheimer,
Houston, Texas, U.S.A., 77042
(“ 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 :
KJM HOLDINGS, INC. , having an address for notice and delivery located at 124165
IH-10 West, Suite 217-410, San Antonio, Texas, 78257
(the “ Consultant ”);
OF THE THIRD PART
(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
management, financial and corporate services to oil and gas
development companies and their principals;
D.
The Company is 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 management consulting specialist, and
the Consultant is hereby desirous of accepting such position, in
order to provide certain management consulting 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;
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:
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(a)
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“ 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;
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(b)
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“ Arbitration
Act ” means the
Commercial Arbitration Act (British
Columbia), R.S.B.C. 1996, as amended, as set forth in Article
“8” hereinbelow;
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(c)
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“ Board of Directors ” means the Board of
Directors of the Company as duly constituted from time to time;
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(d)
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“ Business ” has the meaning ascribed to it in
recital “D.” hereinabove.
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(e)
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“ business day ” means any day during which
Canadian Chartered Banks are open for business in the City of
Vancouver, Province of British Columbia;
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(f)
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“ Companies ” means the Company and Petrogen,
Inc.;
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(g)
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“ 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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(h)
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“ Company’s Non-Renewal Notice ” has the
meaning ascribed to it in section “3.2”
hereinbelow;
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(i)
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“ Consultant ” means KJM Holdings, Inc.;
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(j)
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“ Effective Date ” has the meaning ascribed to
it on the front page of this Agreement;
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(k)
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“ Effective Termination Date ” has the meaning
ascribed to it in section “3.3” hereinbelow;
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(l)
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“ Expenses ” has the meaning ascribed to it in
section “4.3” hereinbelow;
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(m)
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“ 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;
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(n)
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“ Indemnified Party ” has the meaning ascribed
to it in section “6.1” hereinbelow;
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(o)
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“ Initial Term ” has the meaning ascribed to it
in section “3.1” hereinbelow;
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(p)
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“ Notice of Termination ” has the meaning
ascribed to it in section “3.2” hereinbelow;
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(q)
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“ Options ” has the meaning ascribed to it in
section “4.1” hereinbelow;
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(r)
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“ Option Agreement ” has the meaning ascribed to
it in section “4.1” hereinbelow;
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(s)
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“ Option Plan ” has the meaning ascribed to it
in section “4.1” hereinbelow;
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(t)
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“ Option Share ” has the meaning ascribed to it
in section “4.1” hereinbelow;
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(u)
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“ 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 successors and permitted assigns as
the context so requires;
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(v)
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“ 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;
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(w)
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“ 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
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authorization, approval or other action is required to be obtained
or to be made in connection with the transactions contemplated by
this Agreement;
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(x)
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“ Rule ” has the meaning ascribed to it in
section “4.1” hereinbelow;
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(y)
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“ Securities Act ” has the meaning ascribed to
it in section “4.1” hereinbelow; and
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(z)
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“ Stock Appreciation Right ” has the meaning
ascribed to it in section “4.2” herein below;
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(aa)
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“ 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.
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1.2
Interpretation . For the purposes of this Agreement,
except as otherwise expressly provided or unless the context
otherwise requires:
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(a)
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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;
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(b)
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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
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(c)
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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:
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Schedule
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Description
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Schedule “A”:
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General Services; and
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Schedule “B”:
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Option Agreement; and
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Schedule “C”:
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Stock Appreciation Rights Agreement.
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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
management consulting and related services as may be
determined by t he 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.
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 three months 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
automatically terminate upon the expiration of the Initial Term, or
unless otherwise agreed to in writing by the Parties to this
Agreement, whereby any such renewal thereafter agreed upon shall
occur on a month by month basis and 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:
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(a)
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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);
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(b)
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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)
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the other Party commits fraud or serious neglect or
misconduct in the discharge of its respective duties hereunder or
under the law; or
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(d)
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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.
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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 45,000 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. $0.35 per
Option Share underlying any such Option; and which Option or
Option(s) shall, vest only as to 15,000 Option Shares per month
during the first three months of the exercise period of any such
Option, and shall be granted in accordance with the form of Option
Plan agreement (the “ Option
Agreement ”), unless otherwise
determined by the Board of Directors, which is attached hereto
as Schedule “B” and which forms a material part
hereof.
4.2
Stock Appreciation Rights.
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 Equity Incentive Plan (the “Equity Incentive Plan” )
and the final determination of the Board of Directors, acting
reasonably, an incentive stock appreciation right or stock
appreciation rights in and to the Company (each being a
“ Stock Appreciation
Right ”) to receive cash or
shares of Common Stock, or a combination of both, at the election
and sole discretion of the Board, having a value on the date the
Stock Appreciation Right is exercised equal to the excess of
(a) the Market Value (as defined in the Plan) of a share of
Common Stock at the time of exercise over (b) the Base Price
per Share set forth above, which equals the Market Value of the
Common Stock on the Grant Date. The Stock Appreciation Rights
consist of a single Stock Appreciation Right for each share of
Common Stock, whereby the Consultant is granted the right
for the underlying entitlements to the Stock
Appreciation Rights for not less than an aggregate of up to 45,000
Stock Appreciation Rights of the Company (each being an
“ SAR ”); which incentive SAR or SAR(s) will be exercisable for
a period of at least one year from the date of granting at an
exercise price of U.S. $0.35 per SAR; and which SAR or SAR(s)
shall, vest only as to 15,000 SARs per month during the first three
months of the exercise period of any such SAR, and shall be granted
in accordance with the form of Stock Appreciation Rights agreement
(the “ SAR Agreement
”), unless otherwise determined by the Board
of Directors, which is attached hereto as Schedule
“C” 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 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:
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(a)
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no obligation to register any Option Shares or
SARs : the Consultant understands that
the Company is under no obligation to register any Option Shares or
SARs 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 and SARs 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 and/or SARs 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;
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(b)
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disposition of Option Shares and SARs
: 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
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