EXHIBIT 10.4
 
**Confidential portions have been omitted pursuant to a request for confidential
treatment
and have been filed separately with the Securities and Exchange Commission (the
“Commission”).**
 
 
PROFESSIONAL SERVICES AGREEMENT
 
This Professional Services Agreement (this “Agreement”) is entered into
effective as of May 1, 2013 (the “Effective Date”), by and between Smart Online,
Inc., a Delaware corporation with its principal offices located at 4505 Emperor
Boulevard, Suite 320, Durham, NC 27703 (“Smart Online” or the “Company”), and
Entre-Strat Consulting, LLC, a Georgia limited liability company with its
principal address, at P.O. Box 751, Rome, Georgia 30162 (“ES Consulting”). Each
of Smart Online and ES Consulting may be referred to herein individually as, a
“Party,” and collectively as, the “Parties”.
 
BACKGROUND
 
A.           ES Consulting and its affiliates provide clients with various
consulting services.
 
B.           Each of Smart Online and ES Consulting desires to enter into this
Agreement pursuant to which ES Consulting will perform the Services (as defined
below) for Smart Online
 
NOW, THEREFORE, in consideration of the foregoing and of the Parties’ mutual
covenants and agreements set forth herein, and of other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, the
Parties, hereby cancel the previous agreement between them dated September 11,
2012, effective the Effective Date, and now agree as follows:
 
AGREEMENT
 
1. Services.
 
a. During the Term (as defined below), Smart Online hereby engages ES Consulting
as an independent contractor, and ES Consulting hereby accepts such engagement,
to provide consulting service (“Consulting Services”) as described in Exhibit A
and business development services (sales, resale, merger and/or acquisition)
(“BD Services”) as described in Exhibit B attached hereto, and such other
services as may be agreed upon by each of Smart Online and ES Consulting from
time to time (jointly referred to as the “Services”), and BD Services subject to
representation terms described in Exhibit C (“Representation Terms”).
 
b. Smart Online hereby agrees the Services may be performed by members of ES
Consulting, its partners, affiliates, contacts or other parties available to ES
Consulting (“Consultants”). Further, Consultants shall devote such time to the
Consultants’ performance of the Consulting Services not to exceed a cumulative
of THE CONFIDENTIAL PORTION HAS BEEN SO OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION per
month unless the Parties otherwise agree in writing. Consultants shall devote
such time to the Consultants’ performance of the BD Services as ES Consulting
deems appropriate.
 
c. Smart Online shall provide ES Consulting and the Consultants with reasonable
access to Smart Online’s technology, personnel and other resources, as may be
reasonably required in connection with such performance. To the extent that the
Consultants are required to utilize any software not owned by ES Consulting in
performing the Services, ES Consulting agrees the Consultants shall comply with
all applicable laws and licenses.
 
d. ES Consulting shall be allowed to provide all services listed herein to Smart
Online’s current and potential customers, partners, resellers, or other such
parties during the term and post termination of this agreement, at no cost to
Smart Online, unless Smart Online requests or contracts ES Consulting for such
services to be provided to parties defined here in Section 1 e, in an effort to
further broaden Smart Online’s market penetration and for other appropriate
business goals.
 
2. Payment for Services.
 
a. As consideration for ES Consulting’s performance of the Services, during the
Term, Smart Online shall pay ES Consulting, and ES Consulting shall accept as
consideration from Smart Online for consulting services, a monthly fee equal to
$5,000 payable in advance commencing on the Effective Date and in advance of
each monthly period; provided, however, that Smart Online’s board of directors
(excluding any member of such board affiliated with ES Consulting) or management
may increase such fee from time to time. If ES Consulting provides more than THE
CONFIDENTIAL PORTION HAS BEEN SO OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION of Services in a
calendar month at the request of Smart Online, Smart Online will compensate ES
Consulting at the rate of THE CONFIDENTIAL PORTION HAS BEEN SO OMITTED PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE
COMMISSION for each hour in excess of THE CONFIDENTIAL PORTION HAS BEEN SO
OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED
SEPARATELY WITH THE COMMISSION. If Smart Online’s need for additional hours is
emergent in nature and ES Consulting must reschedule other projects or
activities, Smart Online will compensate ES Consulting at the rate of THE
CONFIDENTIAL PORTION HAS BEEN SO OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION. Nothing herein
shall guarantee or require that ES Consulting shall be available for additional
hours. As a condition to Smart Online’s payment obligations set forth herein, ES
Consulting must deliver to Smart Online a written invoice describing the amounts
then due. ES Consulting should obtain prior written consent from Smart Online
for the additional hours and failing to do so will not oblige Smart Online to
compensate ES Consulting for the unapproved additional hours.
 
 
 

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b. for business development services (“BD Services”), a commission fee or M&A
professional services fee as defined in Exhibit B attached hereto;
 
c. a quarterly Intellectual Property Bonus (as defined in Exhibit D attached
hereto) payable on the 15th of the month immediately after the close of each
calendar quarter as set forth in Exhibit D;
 
d. The foregoing is in addition to any fees and compensation necessary for
Robert Brinson’s service as a member of Smart Online’s board of directors, for
so long as Robert Brinson continues to serve as a member of Smart Online’s board
of directors.
 
3. Reimbursement for Expenses.
 
Smart Online will reimburse ES Consulting for reasonable out-of-pocket business
expenses incurred by ES Consulting in connection with its performance of the
Services subject to the following conditions: (i) travel-related expenses
(including car rentals, accommodations and meals), other than those subsequently
agreed by the Parties to be urgent, emergency, or otherwise extraordinary, must
be approved in an advance writing by the person designated by Smart Online; (ii)
all requests for expense reimbursement must be submitted to Smart Online in
accordance with Smart Online’s standard policies and procedures therefor; (iii)
each expense for which ES Consulting requests reimbursement must be set forth in
an invoice as a separate line item with a reasonable description of the nature
of the expense; and (iv) ES Consulting must submit to Smart Online supporting
documentation for all expenses. Smart Online will pay all valid and undisputed
invoices for expenses accompanied by supporting documentation within ten (10)
days after Smart Online’s receipt thereof For purposes of avoiding doubt,
“reasonable out-of-pocket, business expenses” do not include a daily per diem or
reimbursement for any meal unless such meal is directly related to ES
Consulting’s performance of the Services.
 
4. Relationship of the Parties; Taxes.
 
a. ES Consulting hereby acknowledges and agrees that neither it nor Consultants
are an employee, representative or agent of Smart Online except to the extent of
the agency relationship expressly set forth herein. ES Consulting will be
classified as an independent contractor for certain federal and state legal and
tax purposes. Accordingly, Smart Online will not pay or report federal, state or
local income tax withholdings, social security taxes or unemployment insurance
taxes (FICA and FUTA) with respect to ES Consulting or the Consultants, all of
which will be ES Consulting’s sole responsibility. Other than as set forth in
this Agreement, ES Consulting will not be entitled to any benefits of any kind
or nature from Smart Online (such as health or disability insurance, retirement
benefits or any other welfare or pension benefits under any plans or programs of
Smart Online), all of which will be the sole responsibility of ES Consulting.
 
b. ES Consulting will be responsible solely for payment of all wages or other
compensation to the Consultants; the provision of benefits thereto; payment,
withholding and transmittal of payroll and other applicable taxes; payment of
unemployment insurance contributions; provision of workers’ compensation
insurance; and administration of unemployment and workers’ compensation claims
involving the Consultants.
 
c. Smart Online expressly authorizes ES Consulting (and the Consultants through
ES Consulting) to act as Smart Online’s limited agent in connection with its
performance of the Services.
 
5. Term; Termination.
 
a. The term of this Agreement will commence on the Effective Date and will
continue for a period of one (1) year unless earlier terminated pursuant to this
Section 5 (the “Initial Term”). Upon the expiration of the Initial Term or any
Renewal Term (as defined herein), this Agreement will automatically renew for
additional one (1)-year terms (each, a “Renewal Term”) until earlier terminated
pursuant to this Section 5 (the Initial Term and each Renewal Term, together,
the “Term”).
 
b. At any time, a Party may terminate this Agreement without Cause (as defined
below), by providing the other Party with thirty (30) days’ prior written notice
of its intention to so terminate.
 
c. This Agreement may be terminated immediately upon the mutual written consent
of the Parties.
 
d. In the event of termination all fees and/or expenses due shall be paid.
 
e. In the event of termination, commissions and M&A professional services fees
shall survive for the life of such customer but shall be limited to a maximum of
twenty four (24) months after termination date.
 
 
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6. Confidentiality.
 
At all times, each Party shall: (i) not copy, disclose to third parties, or use
the other Party’s Confidential Information for any purpose other than for the
performance of its obligations under this Agreement; and (ii) protect the other
Party’s Confidential Information with the same degree of care it exercises to
protect its own Confidential Information (but in any event, with no less than a
reasonable degree of care) to prevent the unauthorized, negligent, or
inadvertent use, disclosure, or publication thereof. For purposes hereof,
“Confidential Information” shall mean any proprietary or not publicly available
information disclosed or provided by or on behalf of a Party that reasonably
should be understood to be confidential or proprietary in light of the
circumstances of such disclosure or provision. Confidential Information shall
not include any information which: (A) was known to the receiving Party before
such information was disclosed to, or obtained by, such receiving Party, as
evidenced by such receiving Party’s prior written records; (B) is or later
becomes publicly known through no wrongful act of either Party; or (C) is
received without restriction with respect to use or disclosure by the receiving
Party from a third party not known by such receiving Party to be the subject of
a confidentiality obligation with the other Party and without violation of
applicable law. If a Party is required by order or other requirement of a court,
administrative agency, or other governmental body or applicable law, to disclose
the other Party’s Confidential Information, it may comply with such requirement
provided that, in such event, such Party provides the disclosing Party with
prompt written notice of such required disclosure, to the extent permitted under
applicable law, and reasonable assistance in obtaining an appropriate injunction
or protective order. Upon the earlier to occur of a Party’s request or the
expiration or termination of this Agreement, each Party shall return or destroy,
as instructed by the other Party, all of such other Party’s Confidential
Information.
 
7. Intellectual Property Ownership.
 
For purposes hereof, “Works” means, but not limited to, works of authorship,
inventions, discoveries, compositions of matter, formulas, techniques,
processes, concepts, designs, sketches, schematics, configurations, schedules,
costs, pricing information, reports, research, studies, findings, business and
market plans, customer or affiliate lists or any combinations thereof, including
moral rights thereto, whether or not they may be patentable or subject to
copyright, trademark or trade secret protection, learned, made or conceived by
ES Consulting (or the Consultants), alone or in conjunction with others, during
its performance of the Services that relate to the Scope of Business; and “Scope
of Business” means the development of the Smart Online mobile and web
application building, configuration, deployment and management platform.
 
a. ES Consulting agrees Smart Online shall own all right, title and interest in
and to any and all Works. ES Consulting expressly acknowledges that all aspects
of the Works are to be considered “works made for hire” within the meaning of
the Copyright Act of 1976, as amended (hereinafter the “Act”), and that Smart
Online is to be the “author” within the meaning of the Act. In connection with
the foregoing assignment, ES Consulting hereby agrees to execute and deliver all
documents requested by Smart Online in connection with its registration and
enforcement of all patents, copyrights and other intellectual property rights
and protections in any and all countries, without further consideration. In the
event that Smart Online is unable for any reason, after reasonable effort, to
secure ES Consulting’s authorized representative’s signature on any document
needed in connection with the actions specified in this Section 7(a), or to
otherwise perfect in Smart Online the entire right, title, and interest in and
to the patent application and related inventions, ES Consulting hereby
irrevocably designates and appoints Smart Online and its duly authorized
officers and agents as ES Consulting’s agent and attorney-in-fact, to act for
and in ES Consulting’s behalf to execute, verify and file any such documents and
to do all other lawfully permitted acts to further the purposes of this
assignment with the same legal force and effect as if executed by ES
Consulting’s authorized representative.
 
b. Notwithstanding Section 7(a) above, intellectual property which ES Consulting
developed prior to the Term or outside of the scope of Consulting Services will
not be considered Works.
 
c. Smart Online agrees that the professional and personal contacts (individuals
and entities) and relationships of ES Consulting and its affiliates
(individually and collectively, the “ESC Network”) are uniquely valuable,
proprietary and confidential and that Smart Online shall not, directly or
indirectly, without the prior express written consent of ES Consulting through a
supplemental agreement that provides adequate consideration and protections to
ES Consulting: 1) approach, communicate with or otherwise interact with
previously identified ESC Network or 2) use information about ESC Network,
gained through Company’s relationship with ES Consulting or Consultants, in
Company’s or Company’s subsidiaries’, assigns’, successors, affiliates’,
agents’, resellers’, partners’ or other affiliated entities’ own business
development and sales efforts, marketing or operations.
 
8. Specific Performance.
 
Each Party hereby acknowledges and agrees that the terms, conditions and
restrictions set forth in Sections 6 and 7 hereof are reasonably necessary for
the protection of the other Party’s business and goodwill, and that any breach
or threatened breach by such Party of any of such terms, conditions and
restrictions may cause such other Party substantial and irreparable harm for
which monetary damages alone may not be adequate; and accordingly, that in the
event of such a breach or threatened breach, the aggrieved Party shall have the
right to seek immediate injunctive relief and/or specific performance, in
addition to any other remedies available at law or in equity.
 
9. Representations and Warranties.
 
Each Party represents and warrants to the other Party that: (i) its performance
under the Agreement will not violate any applicable law; (ii) it is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization; (iii) it has the full right, power and
authority to enter into this Agreement and to perform its obligations hereunder;
and (iv) this Agreement has been duly executed by an authorized representative
and is legally binding upon it, enforceable in accordance with its terms, and
does not conflict with any agreement, instrument, or understanding, oral or
written, to which it is a party or by which it may be bound.
 
 
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10. Indemnification.
 
Each Party (in such case, the “Indemnifying Party”) will indemnify, defend and
hold harmless the other Party and its officers, directors, managers,
stockholders, employees, agents, representatives, successors and assigns (each,
an “Indemnified Party”) from and against each and every third party demand,
claim, loss, liability, or damage of any kind, including reasonable attorneys’
fees, that any Indemnified Party may incur by reason of, or arising out of: (i)
a material breach of this Agreement or of any representation, warranty or
covenant made herein by the Indemnifying Party; or (ii) the gross negligence or
willful misconduct of the Indemnifying Party.
 
11. Limitation of Liability.
 
In no event will either Party be liable to the other Party for any special,
indirect, incidental, exemplary, consequential or punitive damages arising from
or related to this Agreement, including, but not limited to, damages for loss of
profits, even if such Party has been advised of the possibility of such loss or
damages. Further, in no event will either Party’s cumulative liability to the
other Party for claims, losses or damages of any kind, whether based on
contract, tort, negligence, indemnity or otherwise, arising from or related to
this Agreement exceed the value of the actual compensation paid to ES Consulting
pursuant to Section 2 above as of the date of the cause of action underlying
such claim, loss or damage.
 
12. Governing Law; Dispute Resolution.
 
This Agreement and the rights and obligations of the respective Parties
hereunder shall be governed by, and interpreted and enforced in accordance with,
the laws of the State of North Carolina, except for those conflicts of law rules
thereof that would require or permit the application of the laws of another
jurisdiction. Upon demand of either Party, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement between or among
Parties shall be resolved by binding arbitration in accordance with the then
current Commercial Rules of the American Arbitration Association (including the
expedited procedures and optional rules for emergency measures of protection
thereunder) (the “Arbitration Rules”). All arbitration hearings shall be
conducted in Raleigh, North Carolina. The arbitration shall be conducted by a
panel of three persons selected as follows: each of Smart Online and ES
Consulting shall select one person to act as arbitrator; and such arbitrators
shall select a third arbitrator within thirty (30) days of their appointment;
all in accordance with the Arbitration Rules. Each Party shall bear its own
costs and expenses and attorneys’ fees, and an equal share of the arbitrators’
fees and any administrative fees of arbitration.
 
13. Notices
 
Notices or other communications hereunder shall be in writing, and shall be
deemed effectively given: upon personal delivery; upon confirmed delivery by
facsimile or electronic email without notice of transmittal failure; on the
third (3rd) day following delivery by a reputable overnight courier; or on the
fifth (5th) day following mailing by registered or certified mail, postage
prepaid; in each instance, addressed to the address set forth in the
introductory paragraph hereof (or such other addresses so designated in
accordance with this Section 14).
 
14. Miscellaneous.
 
This Agreement shall be binding upon and shall inure to the benefit of the
Parties, and their respective heirs, executors, administrators, personal
representatives, and permitted successors and assigns. This Agreement may be
executed simultaneously in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. This Agreement may be executed by facsimile or PDF signatures. No
delay or omission by a Party to exercise any right or remedy accruing pursuant
to any of the terms hereof shall impair any such right or remedy or be construed
to be a waiver thereof A waiver by either Party of any of the covenants and
agreements hereof shall not be construed to be a waiver of the future
enforceability of such covenants and agreements or any other covenant or
agreement herein contained. Any modification or amendment of any provision of
this Agreement must be made in writing and signed by an authorized
representative of each Party. This Agreement and the agreements described herein
constitute and set forth the entire agreement and understanding among the
Parties with respect to the subject matter hereof If any provision of this
Agreement is declared invalid or unenforceable as a matter of law, such
invalidity or unenforceability shall not affect or impair the validity or
enforceability of any other provision of this Agreement or the remainder of this
Agreement as a whole. Neither Party will be liable for any delay or failure to
perform resulting directly or indirectly from any causes beyond such Party’s
reasonable control.
 
[Signature Page Follows]
 

 
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IN WITNESS HEREOF, each of the undersigned executes this Agreement as of the
Effective Date.
 
 

 SMART ONLINE        ES CONSULTING  
/s/Amir Elbaz  
   
/s/ Robert M. Brinson, Jr.,
 
Name Amir Elbaz  
   
Name Principal
 
Title Chairman of the Board
   
Title Robert M. Brinson, Jr.,
 

 
 
 
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EXHIBIT A
 
Consulting Services
 
Without limiting the generality of the scope of Services described in Section
1(a) of the Agreement, ES Consulting shall:
 
1.  
assist in the guidance of documentation, filings and IP management processes of
Smart Online’s intellectual property;

 
2.  
offer high-level support on HIPAA and Government technology compliance
requirements;

 
3.  
participate in industry standards and association initiatives and provide Smart
Online with support regarding the results of the efforts of said initiatives;

 
4.  
provide general assistance and info to assist the Company in its efforts to
obtain security clearance for its personnel and secured facility clearance from
the Department of Defense and other national security agencies; and

 
5.  
other services as mutually agreed upon

 
Remainder of Page Intentionally Left Blank
 

 
 
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EXHIBIT B
 
BD Services
 
1) Sales
 
i)  
Sales and sales revenues are defined as contract value for sales or licenses of
Smart Online’s software platform, intellectual property, apps, custom
development services, professional services, white labels, third party products
or services, etc.

 
Smart Online will pay ES Consulting commissions on sales that ES Consulting and
/ or its Consultants have introduced, and assisted:
 
ii)  
Including Smart Online’s sales from resellers, partners and white labels
(“Company Partner Entities”) that were introduced and assisted by ES Consulting
and / or its Consultants or where relationships or agreements with these Company
Partner Entities were made with the assistance of ES Consulting and / or
Consultants. ES Consulting will not receive commissions from Smart Online for
sales by Company Partner Entities if ES Consulting has an agreement for
compensation with said Company Partner Entities for ES Consulting to provide
Company Partner Entities with BD Services.

 
iii)  
Three and a half percent (3.5%) commission on quarterly sales to which cash has
been collected, and subsequent annual (12 month) sales revenues (“Sales
Commission”), where such sales resulted from efforts initiated by ES Consulting
and / or its Consultants, whether closed without or with the assistance of Smart
Online and regardless of being an Exclusive Entity or not. Such Sales Commission
shall be paid within fifteen (15) business days after the end of each calendar
quarter.

 
iv)  
One and a half percent (1.5%) commission on quarterly sales to which cash has
been collected, and subsequent annual (12 month) sales revenues (“Assistance
Sales Commission”), where such sales resulted from efforts initiated by Smart
Online but where Smart Online requests or requires assistance from ES Consulting
and / or its Consultants and where ES Consulting and / or its Consultants
provides assistance. Such Assistance Sales Commission shall be paid within
fifteen (15) business days after the end of each calendar quarter.

 
2) Merger and Acquisition
 
a)  
Smart Online will pay ES Consulting, M&A professional services fees (“M&A Fees”)
on mergers and acquisitions in part or whole of the entity Smart Online, or its
subsidiaries, assigns or successors or its / their intellectual property by
entities or individuals introduced by ES Consulting and / or its Consultants or
where Smart Online requests the assistance of ES Consulting and / or its
Consultants and ES Consulting and / or Consultants agree to provide such
assistance, and where ES Consulting and / or Consultants have assisted in
facilitating the merger or acquisition.

 
b)  
The M&A Fees shall be four percent (4%) of the total net consideration of any
investment, merger or acquisition proceeds or equity value received by the
Company.

 
i)  
Net consideration shall be defined for this agreement as gross consideration
less the reasonable costs of the investment, merger or acquisition transaction.

 
c)  
Payment of any M&A Fees shall be made thirty (30) days after receipt of any net
consideration in any transaction by the Company.

 
i)  
Commissions shall survive termination of this agreement, but shall be limited to
twenty four (24) months post termination.

 
Remainder of Page Intentionally Left Blank
 
 
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EXHIBIT C
 
REPRESENTATION TERMS
 
A. Scope of Representation. Subject to the conditions of removal as set forth in
Sections B through D hereof, Company grants ES Consulting the (1) exclusive
right to generate and assist on sales for the Company and the (2) exclusive
worldwide right to provide professional services in the form of introductions,
diligence, positioning, etc. to the Company in its seeking and acquiring
investment or sale of part or whole of the Company and/or the company’s
intellectual property from, (a) those Entities listed in Appendix A hereto
and/or (b) those Entities approved by the Company, in writing, from time to
time, via email from the Chairman of the Company or otherwise (each Entity added
in accordance with this Section A(2b), (an “Added Entity”) ((A2a and A2b) are
collectively referred to as the “Exclusive Entities” and the list of such
Exclusive Entities shall be referred to as the “Exclusive Entities List”). The
Company shall not unreasonably withhold such approval for suggested Added Entity
upon request of ES Consulting. Company shall not approach Exclusive Entities
without written consent of ES Consulting, and should Company be approached by an
Exclusive Entity, Company shall notify ES Consulting in order for both Company
and ES Consulting to determine the optimal strategy for pursuing the sales in
order to prevent non-coordinated sales related activities being conducted by
both entities that could negatively affect the sales opportunity. ES Consulting
may request and Company will provide sales support, materials, sales engineers,
demonstrations and other reasonable assistance in the performance of the sales
efforts without resulting in the Exclusive Entities’ removal from the Exclusive
Entities List.
 
B. Removal from Exclusive Entities List. Beginning on the Effective Date and on
a continuous basis thereafter, Company shall have the right, upon notice to ES
Consulting (such notice, a “Removal Notice”), to remove each Entity from the
Exclusive Entities List to the extent that ES Consulting has not successfully
generated revenue from such Exclusive Entity during the three (3) month period
immediately preceding ES Consulting’s receipt of a Removal Notice (a “Removal
for Non-Performance”). Notwithstanding the above, this Section B shall not
entitle the Company to remove from the Exclusive Entities List any Entity with
or to whom communication was made by ES Consulting or Consultants, directly or
to contacts who have a relationship(s) with said Entity, within the three (3)
months prior to the date of a Removal Notice and that ES Consulting shall, upon
request by the Company, provide the date on which the communication was made and
provide adequate assurances that such it is ES Consulting’s good faith belief
that such communication is reasonably likely to result in an Sale for the
Company; or where ES Consulting and / or Consultants have performed other a
task(s) related the to Company’s BD and sales efforts regarding such entity and
examples of such tasks include but are not limited to diligence, presentation
preparation, entity or industry research, relationship modeling, proposals, etc.
For the avoidance of doubt, in the event that the Company attempts to remove an
Entity under this Section B that it is not entitled to remove by virtue of the
preceding sentence: ES Consulting shall notify Smart Online and inform it as to
the first date such Entity may be appropriately removed once that date can be
reasonably ascertained.
 
C. Good Faith Dealings Regarding Exclusivity. In addition to the specific
removal rights set forth in Section B above, the Company and ES Consulting shall
work together in good faith to ensure that Entities which ES Consulting does not
reasonably believe it will be able to generate revenue for the Company are
released from the Exclusive Entities List upon the Company’s request for such
release, which such request shall not be made unless the Company has a good
faith belief that it would be able to better service the specific Entity
directly. Notwithstanding anything to the contrary contained herein, any Entity
from which ES Consulting has been able to secure at least $50,000 in annual
contract value within the three (3) month period prior to Smart Online’s request
for removal hereunder shall not be eligible for removal from the Exclusive
Entities List under this Section
 
D. Removal of an Entity from the Exclusive Entities List shall not be construed
as permission, approval or other right for Company to approach, communicate
with, or otherwise interact with, directly or indirectly, the ESC Network. In
order to assist Company in avoiding breach of Section 7(d) of this agreement,
upon removal of an Entity from the Exclusive Entities List, ES Consulting shall
provide Company with the name of the ESC Network individual(s) and / or entities
who were involved in the sales efforts towards said entity. Provision of the ESC
Network information in the previous sentence does not constitute permission, and
Company shall remain subject to the terms, conditions and restrictions set forth
in Section 7(d) of this agreement.
 
Remainder of Page Intentionally Left Blank
 
 
 
 
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Appendix A
Exclusive Entities List
 
Emory University
Time Warner
Boeing
Delta Airlines
3Ci
AT&T Business/iCloud
AT&T mHealth
UPS
FedEx
Juice Analytics
Spring Metrics
PepsiCo Americas
Emory University
UBS Americas
Tmobile
MD Helicopters
SnapOn
MassMutual
One Mind for Research
MagMutual
Billy Graham Foundation
Pillsbury Hotel Properties
Marine Corps Intelligence
Army Training Command — via Deputy Commanding General
PerdueGlobal
Whitehead Consulting
Ash Carter — Dep Sec Def
Joel Ledlow
 
 
 
 
 
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EXHIBIT D
 
INTELLECTUAL PROPERTY BONUS
 
•
ES Consulting will be entitled to receive $100.00 for each patent filed for a
Work and under which any of the Consultants are listed as an inventor (as such
term is generally understood under U.S. law) either individually or jointly (the
“Contributed Patent”); and

 
•
ES Consulting will be entitled to receive one half percent (.50%) of all gross
revenues derived from Works, and to which cash has been collected, or any other
Smart Online product, service and/or transaction (which incorporates or is based
on a Contributed Patent (individually “Invention” or jointly “Inventions”)), for
each Invention (the “Royalty”). ES Consulting will be entitled to receive the
Royalty during the Term and for a period of four (4) calendar years after the
termination of this agreement. Such Royalty shall be paid within fifteen (15)
business days after the end of each calendar quarter.

 
The above entitlements shall be referred to herein as, the “Intellectual
Property Bonus”.
 
 
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