Exhibit 10.18

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

 THIS EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is entered into effective
this 1st day of April, 2017 (the “Effective Date”), by and between INTREORG
SYSTEMS, INC., a Texas corporation (the “Company”), and David M. Beach, an
individual (“Executive”).  

 

 FOR AND IN CONSIDERATION of the mutual promises and covenants set forth herein
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows: 

 

1. Employment and Duties.  

 

(a) Employment. The Company hereby employs Executive, and Executive hereby
accepts such employment, on the terms and conditions set forth in this
Agreement. Executive’s employment shall commence on the Effective Date or as
soon thereafter as is mutually acceptable and continue for a period of three
years. Executive will serve as the Company’s President and Chief Executive
Officer, with responsibility for executing all duties and tasks deemed necessary
and prudent by the Company’s board of directors (the “Board”). Executive will
report to the Board and the Executive Director of the Board. Executive will make
his professional relationships, expertise, and experience available to the
Company and devote his best efforts and full business time, skill, and attention
to the performance of his duties on behalf of the Company or an affiliated
company designated by it. Executive will also be expected to adhere to the
general employment policies and practices of the Company that may be in effect
from time to time, except that when the terms of this Agreement conflict with
the Company’s general employment policies or practices, this Agreement will
control. Executive hereby represents that he is not a party to any agreement
which would be an impediment to entering into this Agreement and that he is
permitted to enter into this Agreement and perform his obligations hereunder.
Notwithstanding the foregoing, Executive shall have the right to perform such
incidental services in connection with consulting or acting as a board advisor
to other companies, but only if such incidental services do not interfere with
the performance of Executive’s services hereunder, are not rendered to
competitors of the Company and are not rendered to companies that have or may
have conflicts of interest with the Company as reasonably determined by the
Board, unless otherwise previously approved in writing by the Board. 

 

(b) Duties. As an executive of the Company, Executive herein acknowledges and
agrees to execute all common law, statutory, and other fiduciary duties owed to
the Company, including the duty of care and loyalty. As a condition of
Executive’s employment, Executive further agrees to the terms of the Company’s
standard form Covenant Not to Compete, a copy of which is attached hereto as
Exhibit A, and the Proprietary Information and Inventions Agreement, a copy of
which is attached hereto as Exhibit B. Executive and the Company shall execute
and deliver both of such agreements contemporaneously with the execution of this
Agreement. 

 

(c) Location of Employment. At the direction of the Board, the Executive may
from time to time be asked to travel to various domestic and foreign locations
and will use his best efforts to do so, taking account of the impact such travel
might have on his personal and family obligations outside of normal working
hours. Executive may maintain an office/home office for use during such time as
Executive is not physically located in the Company’s principal executive
offices. If a local office facility is made available to the Executive it can be
used by the Executive as desired. 

 

 

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2. Compensation; Expenses.  

 

(a) Base Salary. In consideration of and as compensation for the services agreed
to be performed by Executive hereunder, the Company agrees to pay Executive an
initial annual salary of $180,000, in cash, payable in accordance with the
Company’s regular bi-monthly payroll schedule (“Base Salary”). In any month in
which the Executive shall be employed for less than the entire number of days in
such month, the compensation payable under this subsection 2(a) shall be
prorated on the basis of the number of days during which the Executive was
actually employed divided by the number of days in such month.  

 

(b) Increase. Upon the Company reporting monthly revenue of at least $50,000 for
a period of at least three months, the Base Salary will increase to $240,000, in
cash, salary paid bi-monthly payable in accordance with the Company’s regular
payroll schedule. The Base Salary is a gross amount, and the Company will be
required to withhold from such amount deductions with respect to federal, state
and local taxes, FICA, unemployment compensation taxes and similar taxes,
assessments, or withholding requirements. The Base Salary will be subject to
increase at the sole discretion of the Board with annual performance review
periods.  

 

(c) Annual Bonus and Equity Incentives. In addition to the salary payable
pursuant to subsection 2(a), the Company shall pay to Executive a “target
bonus,” payable based on milestones set by the Board of Directors within 30 days
after reaching the following milestones:  

 

(i) As an incentive for joining the Company, the Executive shall be awarded an
option to purchase 300,000 shares of common stock with an exercise price of
$0.20 per share and a three-year maturity. The above-referenced options will
vest and become exercisable in 1/12 of the number granted per month during the
succeeding 12 months, but, the Executive must still be an employee or consultant
of the Company, as more particularly set forth in accordance with the Company’s
Nonqualified Stock Option Agreement in the form attached hereto as Exhibit C. 

 

(ii) Upon the Company reporting monthly revenue of $100,000 for six months,
Executive shall be awarded a performance stock option of 500,000 common shares
with an exercise price of $0.20/share and a three-year maturity.  

 

(iii) Upon the completion of a capital raise of at least $500,000, acceptable to
the Board, the Executive shall be awarded a performance stock option to purchase
150,000 shares of common stock with an exercise price of $0.20 share and a
three-year maturity.  

 

(iv) Upon the completion of a capital raise of at least $3,000,000, acceptable
to the Board, the Executive shall be awarded a performance stock option to
purchase 250,000 shares of common stock with an exercise price of $0.20 share
and a three-year maturity. 

 

(v) Upon the completion of any strategic acquisition acceptable to the Board,
the Executive shall be awarded a performance stock option to purchase 250,000
shares of common stock with an exercise price of $0.20 share and a three-year
maturity.  

 

(vi) Executive is eligible for a cash bonus up to two times of Base Salary at
the discretion of the Board. 

 

 

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(d) Participation in Benefit Plans. During the Employment Term, Executive shall
be entitled to participate in any pension, group insurance, medical
hospitalization, annual physical, disability or other similar benefit plan at
the Company’s expense, to the extent permitted by law, that may from time to
time be adopted by the Board, that is generally available to the other senior
executive officers of the Company, except to the extent such participation in
any plan would, in the opinion of the Board, alter the intended tax treatment of
such plan. The Company shall use commercially reasonable efforts to provide
coverage and benefits for Executive and his dependents that are at least as
comprehensive and favorable to Executive as the coverage and benefits provided
to Executive under his current family benefit plans with no pre-existing
condition exclusions for conditions that were covered under such previous
employer’s benefit plans. Executive shall have a right under or by virtue of
this Agreement to participate in any stock option, stock purchase or other plan
relating to shares of capital stock of the Company or its affiliates. If the
Company is not able to purchase the above mentioned benefits, the Executive may
purchase his own benefits that shall be paid by the Company.  

 

(e) Reimbursement of Expenses. The Company shall reimburse Executive for all
reasonable business expenses incurred by Executive on behalf of the Company
during the Employment Term, provided that: (i) such expenses are ordinary and
necessary business expenses incurred on behalf of the Company, including,
without limitation: (1) economy-class travel (or business-class travel for
travel over four hours total flight time), meals, and lodging expenses incurred
by Executive in connection with travel required of Executive; and (2) fees and
dues required to maintain professional licenses and affiliations relevant to
Executive’s duties and (ii) Executive provides the Company with itemized
accounts, receipts, and other documentation for such expenses as are reasonably
required by the Company.  

 

(f) Vacation. During the Term, Executive will be entitled to four weeks of paid
vacation per annum. Executive may take vacation prior to its accrual provided
that Executive will be obliged to return wages paid for, and the Company may
withhold from any amounts owed to Executive, such period if Executive’s service
with the Company terminates before such amount has accrued. 

 

3. Term of Employment. The term of employment (the “Term”) means the period
commencing on the Effective Date and ending after a period of three years,
unless terminated as set forth in section 4.  

 

4. Termination of Employment.  

 

(a) Defined Terms: 

 

(i) “Cause” shall mean any one of the following: 

 

(1) Gross negligence, willful misconduct, or the repeated failure of Executive
to perform his duties and responsibilities to the reasonable satisfaction of the
Board or any breach by Executive of his fiduciary duties to the Company or any
material term of this Agreement; provided that the Company has given the
Executive 10 days advance written notice of such failure or breach and such
failure remains uncured during the 10-day period; provided further that no such
notice or cure period shall be given if such failure or breach is not reasonably
susceptible to cure;  

 

 

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(2) the conviction of Executive for a felony or other crime of dishonesty or
moral turpitude which is materially injurious to the Company or the commission
of an act of fraud against, or the willful misappropriation of material property
belonging to, the Company; or 

 

(3) the repeated and intemperate use by Executive of alcohol or drugs; provided
that the Company has given the Executive advance written notice that it will
terminate Executive for such repeated and intemperate use and such repeated and
intemperate use continues. 

 

(ii) “Change in Control” shall mean the occurrence of any of the following
events with respect to the Company: 

 

(1) all or substantially all of the assets of the Company are sold or
transferred to another corporation or entity; or 

 

(2) the Company is sold, transferred, merged, consolidated, or reorganized into
or with another corporation or entity, with the result that upon conclusion of
the transaction less than a majority of the outstanding securities entitled to
vote generally in the election of directors or other capital interests of the
acquiring corporation or entity are owned, directly or indirectly, by the
stockholders of the Company immediately prior to the sale, transfer, merger,
consolidation, or reorganization. 

 

(iii) “Constructive Termination” shall mean Executive’s voluntary termination
within 60 days following Executive’s knowledge of the occurrence of any of the
following: 

 

(1) a reduction in Executive’s Base Salary after a Change in Control from that
in effect immediately prior to the Change in Control;  

 

(2) a material or substantial reduction or change in job duties,
responsibilities and requirements after a Change in Control from Executive’s
prior duties, responsibilities and requirements immediately prior to the Change
in Control; or 

 

(3) relocation of the Company’s principal executive offices (which shall be the
principal place for performance of Executive’s duties with the Company) to a
location not conducive to Executive’s desired location. 

 

Notwithstanding the foregoing, a termination shall not be treated as a
Constructive Termination if Executive shall have specifically consented in
writing to the occurrence of the event giving rise to the claim of Constructive
Termination.

 

(b) Method of Termination. Executive’s employment pursuant to this Agreement and
the Term provided for herein shall terminate upon the earlier of the following: 

 

(i) Executive’s death; 

 

 

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(ii) date that written notice is deemed given or made by the Company to
Executive that: (1) the Board has reasonably determined that the Executive has
become unable to substantially perform his services and duties hereunder because
of any physical or mental injury or disability, and that it is reasonably likely
that he will not be able to resume substantially performing his services and
duties on substantially the terms and conditions as set forth in this Agreement;
or (2) the Executive has been unable to substantially perform his services and
duties hereunder as a result of any physical or mental injury or disability for
either a period of four consecutive months or 12 weeks in any 12-month period; 

 

(iii) upon the Constructive Termination of Executive’s employment with the
Company;  

 

(iv) date that written notice is deemed given or made by the Company to
Executive of termination for Cause;  

 

(v) Executive’s resignation or voluntary departure as an Executive of the
Company other than in a situation that constitutes Constructive Termination; 

 

(vi) date that written notice is deemed given or made by the Company to
Executive of Executive’s termination without “cause”; or 

 

(vii) Company has not completed its capital raise and has not started operations
that are generating revenues and cash flow by December 31, 2017. 

 

Executive is an “at will” employee, and nothing herein alters Executive’s and
the Company’s separate rights to terminate the employment relationship at any
time, for any reason, with or without “cause;” but, by way of explanation that
this in no way prejudices Executive’s rights, if any, under section 4.

 

(c) Effect of Termination. Upon the termination of Executive pursuant to
subsection 4(b), Executive will not be entitled to any compensation or other
rights or benefits from the Company under section 2 of this Agreement (other
than pursuant to subsection 4(d) in the event of a termination pursuant to
subsection 4(b)(iii) or subsection 4(b)(vi)), except the following: 

 

(i) that portion of the Base Salary and vacation pay accrued, and reasonable
business expenses incurred, under section 2 of this Agreement through the
effective date of the termination of Executive’s employment with the Company;  

 

(ii) such benefits, if any, as may be required to be provided by the Company
under the Comprehensive Omnibus Budget Reconciliation Act (COBRA); and 

 

(iii) severance pay of six months except the event of termination in subsection
4(b)(vii). 

 

(d) Effect of Termination without Cause or Constructive Termination. Upon the
termination of Executive pursuant to subsection 4(b)(iii) or subsection
4(b)(vi), in addition to the compensation set forth in subsection 4(c),
Executive shall be entitled to his then existing Base Salary and benefits for 12
months from the date of termination, payable in accordance with the Company’s
regular payroll schedule. 

 

 

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(e) Resignation as an Officer. In the event Executive’s employment with the
Company terminates for any reason, Executive agrees to immediately resign from
all officer positions with the Company. 

 

5. At-Will Employment. Executive’s employment with the Company will be
“at-will.” This means that either Executive or the Company may terminate
Executive’s employment at any time, for any reason or for no reason, upon not
less than 30 days’ prior written notice, but, the Company may terminate this
Agreement without prior written notice under the following circumstances: 

 

(a) Executive has materially breached the terms hereof;  

 

(b) Executive, in the determination of the Board, has been grossly negligent in
the performance of his duties;  

 

(c) Executive has substantially failed to meet written standards established by
Employer for the performance of his duties; 

 

(d) Executive has engaged in material willful or gross misconduct in the
performance of his duties hereunder; or  

 

(e) a final, nonappealable conviction of, or a plea of guilty or nolo contendere
by, Executive to a felony or misdemeanor involving fraud, embezzlement, theft,
or dishonesty or other criminal conduct against Employer.  

 

6. Arbitration. To ensure the rapid and economical resolution of disputes that
may arise in connection with Executive’s employment with the Company, Executive
and the Company agree that any and all disputes, claims, or causes of action, in
law or equity, arising from or relating to the enforcement, breach, performance,
or interpretation of this Agreement, Executive’s employment with the Company,
the termination of Executive’s employment, the Covenant Not to Compete attached
hereto as Exhibit A, the Proprietary Information and Inventions Agreement
attached hereto as Exhibit B, or the Nonqualified Stock Option attached hereto
as Exhibit C shall be resolved, to the fullest extent permitted by law, by
final, binding, and confidential arbitration in the county in which the
Company’s principal executive offices are located in accordance with the
American Arbitration Association’s Commercial Arbitration Rules, with the
application of its Expedited Procedures, before a single arbitrator experienced
in the industry in which the Company is then principally engaged. The parties
expressly agree that prior to the selection of the arbitrator, nothing in this
Agreement shall prevent any party from applying to a court that would otherwise
have jurisdiction in the premises for provisional or interim legal or equitable
relief. Executive acknowledges that by agreeing to this arbitration procedure,
both Executive and the Company waive the right to resolve any such dispute
through a trial by jury or judge or administrative proceeding. Executive will
have the right to be represented by legal counsel at any arbitration proceeding.
The arbitrator shall: (a) have the authority to compel adequate discovery for
the resolution of the dispute and to award such relief as would otherwise be
permitted by law, so long as such discovery does not unreasonably delay
resolution of the underlying dispute; and (b) issue a written statement signed
by the arbitrator regarding the disposition of each claim and the relief, if
any, awarded as to each claim, the reasons for the award, and the arbitrator’s
essential findings and conclusions on which the award is based. The arbitrator
shall be authorized to award all relief that Executive or the Company would be
entitled to seek in a court of law. The Company shall pay all the American
Arbitration Association arbitration fees in excess of the administrative fees
that Executive would be required to pay if the dispute were decided in a court
of law. Nothing in this Agreement is intended to prevent either Executive or the
Company from obtaining injunctive relief in court to prevent irreparable harm
pending the conclusion of any such arbitration. 

 

 

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7. Miscellaneous.  

 

(a) Interpretation. Section headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement. Except when the context clearly requires to the contrary:
(i) all references in this Agreement to designated “Sections” are to the
designated sections and other subdivisions of this Agreement; (ii) instances of
gender or entity-specific usage (e.g., “his,” “her,” “its,” or “individual”)
shall not be interpreted to preclude the application of any provision of this
Agreement to any individual or entity; (iii) the word “or” shall not be applied
in its exclusive sense, unless the context otherwise requires; (iv) ”including”
shall mean that the items listed are illustrative, without any implication that
all or even most of the components are mentioned; (v) references to laws,
regulations, and other governmental rules (collectively, “rules”), as well as to
contracts, agreements, and other instruments (collectively, “instruments”),
shall mean such rules and instruments as in effect at the time of determination
(taking into account any amendments thereto effective at such time without
regard to whether such amendments were enacted or adopted after the Effective
Date) and shall include all successor rules and instruments thereto;
(vi) references to “$,” “cash,” or “dollars” shall mean the lawful currency of
the United States; (vii) references to “federal” shall be to laws, agencies, or
other attributes of the United States (and not to any state or locality
thereof); (viii) the meaning of the term “foreign” shall be determined by
reference to the United States; (ix) if any day specified in this Agreement for
any notice, action, or event is not a business day, then the due date for such
notice, action, or event shall be extended to the next succeeding business day;
(x) references to “days” shall mean calendar days; references to “business days”
shall mean all days other than Saturdays, Sundays, and days that are legal
holidays in the state of New York; (xi) references to monthly or annual
anniversaries shall be to the actual calendar months or years at issue (without
taking into account the actual number of days in any such month or year);
(xii) days, business days, and times of day shall be determined by reference to
local time in New York; and (xiii) whenever in this Agreement a person or group
is permitted or required to make a decision in its “discretion” or under a grant
of similar authority or latitude, such person or group shall be entitled to
consider only such interests and factors as it deems appropriate, in its
absolute discretion. 

 

(b) Entire Agreement. This Agreement is the final, complete, and exclusive
statement of the parties respecting the subject matter hereof and of the terms
and conditions of Executive’s employment with the Company and supersedes and
replaces any and all prior agreements or representations with regard thereto,
whether written or oral. It is entered into without reliance on any promise or
representation other than those expressly contained herein. No modification or
amendment to this Agreement or waiver of any rights under this Agreement will be
effective unless in writing and signed by Executive and a duly authorized Board
member. Any subsequent change or changes in Executive’s duties, salary, or
compensation will not affect the validity or scope of this Agreement. As used in
this Agreement, the period of Executive’s employment includes any time during
which Executive may be retained by the Company as a consultant. The terms,
covenants, and conditions of all agreements, if any, between Executive and
Medical Intelligence, Ltd., from which the Company acquired certain assets, are
hereby merged with and into this Agreement, including any and all amounts or
equity interests due Executive pursuant to such agreements, in consideration of
the execution of this Agreement by the Company.  

 

 

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(c) Successors and Assigns. This Agreement is intended to bind and inure to the
benefit of and be enforceable by the Company and Executive, and their respective
successors, assigns, heirs, executors, administrators, and other legal
representatives, except that Executive may not assign any of his duties or
rights hereunder without the express written consent of the Company.  

 

(d) Severability and Reformation. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal, or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality, or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed, and enforced as if such invalid, illegal, or unenforceable
provisions had never been contained herein.  

 

(e) Governing Law. This Agreement and the terms of Executive’s employment with
the Company shall be governed by the laws of the state of Texas as those laws
are applied to contracts entered into and to be performed entirely in Texas by
Texas residents.  

 

(f) Employment. Nothing in this Agreement or the attached exhibits shall confer
any right respecting continuation of Executive’s employment by the Company or
interfere in any way with Executive’s right or the Company’s right to terminate
Executive’s employment at any time, with or without sound reason. 

 

(g) Survival. The provisions of this Agreement shall survive the termination of
Executive’s employment and the assignment of this Agreement by the Company to
any successor-in-interest or other assignee. 

 

(h) Waiver. No waiver by the Company of any breach of this Agreement shall be a
waiver of any preceding or succeeding breach. No waiver by the Company of any
right under this Agreement shall be construed as a waiver of any other right.
The Company shall not be required to give notice to enforce strict adherence to
all terms of this Agreement. 

 

(i) Notices. Any notice, demand, request, or other communication permitted or
required under this Agreement shall be in writing and shall be deemed to have
been given as of the date so delivered, if personally delivered; as of the date
so sent, if transmitted by facsimile and receipt is confirmed by the facsimile
operator of the recipient; as of the date so sent, if sent by electronic mail
and receipt is acknowledged by the recipient; and one day after the date so
sent, if delivered by overnight courier service; addressed as follows: 

 

If to the Company, to: Thomas Lindholm, Executive Director 

INTREorg Systems, Inc.

2600 E Southlake Blvd., Suite 120-366

Southlake, TX 76902

E-mail: Thomas.lindholm@intreorg.com

 

If to Executive, to:  David M. Beach 

745 Fifth Avenue, Suite 500

New York, NY 10151

Phone: (504) 400-9977

E-mail: clarklondon@mac.com

 

 

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Each party, by notice duly given in accordance herewith, may specify a different
address for the giving of any notice hereunder.

 

(j) Counterparts; Execution. This Agreement and attached exhibits may be
executed in any number of counterparts, each of which shall be an original, but
all of which together constitute one instrument. Counterpart signatures of this
Agreement and attached exhibits (or applicable signature pages hereof) that are
manually signed and delivered by facsimile transmission; by a uniquely marked,
computer-generated signature; or by other electronic methods, shall be deemed to
constitute signed original counterparts hereof and shall bind the parties
signing and delivering in such manner and shall be the same as the delivery of
an original.  

 

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective
as of the date first written above. 

 

 

INTREORG SYSTEMS, INC.

 

 

Date: April 20, 2017

By: /s/ Thomas E. Lindholm

 

Thomas E. Lindholm, Executive Director

 

 

 

 

Date: April 20, 2017

/s/ David M. Beach

 

DAVID M. BEACH

 

 

 

 

 

 

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EXHIBIT A

 

COVENANT NOT TO COMPETE

 

 In consideration of engagement by INTREORG SYSTEMS, INC. (the “Company”), and
the compensation now and hereafter paid to DAVID M. BEACH (“Executive”),
Executive hereby agrees as follows: 

 

1. Prohibited Activities.  

 

(a)     Executive agrees that during the period of his employment by the Company
he will not, without the Company’s express written consent, engage in any
employment other than for the Company. As used in this Covenant Not to Compete,
the period of Executive’s employment includes any time during which he may be
retained by the Company as a consultant or advisor. 

 

(b)     Executive agrees that for the period of his employment by the Company
and during the Restricted Period (as defined below) he will not: (i) induce any
employee of the Company to leave the Company’s employ; or (ii) solicit the
business of any client or customer of the Company (other than on the Company’s
behalf). 

 

(c)     During the Restricted Period (as defined below) Executive will not,
directly or indirectly, anywhere in the Geographic Area (as defined below), own,
manage, control, engage in, be employed by, or act as a consultant to any person
directly or indirectly engaged in, or maintain any interest in or provide or
arrange financing for any person (whether as a manager, director, officer,
agent, representative, security holder, equity owner, partner, member, or
otherwise) directly or indirectly engaged in, a Competing Business, or any other
planned business or activity that has not been approved by the Board, or control
or be exclusively employed by a Competing Business, unless approved by the Board
during the term of Executive’s employment by the Company; but, Executive may own
not more than 15% of any class of publicly traded securities of any legal entity
engaged in a Competing Business. “Competing Business” means any business or
organization engaged, directly or indirectly, in the design, development,
ownership, sale, operation, or provision of shareholder analytics, shareholder
compliance, and related consulting services, including internal investor
relations and external public relations for micro-cap, and small-cap, and
mid-cap market growth companies, whether delivered directly, automatically, or
delivered by a stock transfer analytics tool or other software, whether or not a
stand-alone product or a product integrated into another product. 

 

(d)     “Restricted Period” means: 

 

(i) in the event of termination for Cause or resignation by Executive, this
Covenant Not to Compete shall be in effect for one year following the later of:
(1) Executive’s termination of employment; or (2) the last period for which the
Company pays Executive’s salary following Executive’s termination of employment;
or 

 

(ii) in the event of termination without Cause, this Covenant Not to Compete
shall be in effect for 90 days following the later of: (1) Executive’s
termination of employment; or (2) the last period for which the Company pays
Executive’s salary following Executive’s termination of employment. 

 

 

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(a)      “Geographic Area” means any state of the United States in which the
Company has or has had a place of business or an affiliated person offering
products or services developed or offered by the Company, prior to the
employment of the Executive. 

 

(b)    “Cause” shall mean (in each case following at least one written warning
from the Company): (i) Executive’s repeated failure, in the reasonable judgment
of the Board, to substantially perform his assigned duties or responsibilities,
as reasonably directed or assigned by the Company (other than a failure
resulting from Executive’s death or disability); (ii) Executive’s engaging in
knowing and intentional illegal conduct that was or is materially injurious to
the Company; (iii) Executive’s knowing violation of a federal or state law or
regulation directly or indirectly applicable to the Company’s business, which
violation was or is reasonably likely to be injurious to the Company;
(iv) Executive’s material breach of the terms of any confidentiality agreement,
noncompetition agreement, or invention assignment agreement between Executive
and the Company; (v) repeated misuse of alcohol, narcotics, or other controlled
substances that is materially detrimental to the Company and that materially
interferes with Executive’s performance of his duties; (vi) Executive’s
conviction of, or entry of a plea of nolo contendere to, a felony or committing
any act of moral turpitude or fraud against, or the misappropriation of material
property belonging to, the Company; or (vii) termination for cause, whether or
not termed as such in Executive’s separate written agreement with the Company.  

 

(c)      In the event that any of the provisions of this section 1 are deemed by
a court of law to exceed the time, geographic, or scope limitations permitted by
applicable law, then such provisions will be reformed to the maximum time,
geographic, or scope limitations, as the case may be, permitted by applicable
laws. 

 

2. No Conflicting Obligation. Executive represents that his performance of all
the terms of this Covenant Not to Compete shall not conflict with any
third-party agreement to which he is a party. Executive has not entered into,
and agrees that he will not enter into, any agreement either written or oral in
conflict herewith. 

 

3. Legal and Equitable Remedies. Because Executive’s services are personal and
unique, the Company shall have the right to enforce this Covenant Not to Compete
and any of its provisions by injunction, specific performance, or other
equitable relief, without bond and without prejudice to any other rights and
remedies that the Company may have for a breach of this Covenant Not to
Compete. 

 

4. Notices. Any notice, demand, request, or other communication permitted or
required under this Covenant Not to Compete shall be in writing and shall be
deemed to have been given as of the date so delivered, if personally delivered;
as of the date so sent, if transmitted by facsimile and receipt is confirmed by
the facsimile operator of the recipient; as of the date so sent, if sent by
electronic mail and receipt is acknowledged by the recipient; and one day after
the date so sent, if delivered by overnight courier service; addressed as
follows: 

 

If to the Company, to: Thomas Lindholm, Executive Director 

INTREorg Systems, Inc.

2600 E Southlake Blvd., Suite 120-366

Southlake, TX 76902

E-mail: Thomas.lindholm@intreorg.com

 

 

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If to Executive, to:  David M. Beach 

745 Fifth Avenue, Suite 500

New York, NY 10151

Phone: (504) 400-9977

E-mail: clarklondon@mac.com

 

Each party, by notice duly given in accordance herewith, may specify a different
address for the giving of any notice hereunder.

 

5. General Provisions. 

 

(a)      Governing Law. This Covenant Not to Compete shall be governed by the
laws of the state of Texas as those laws are applied to contracts.  

 

(b)      Amendment. No modification or amendment to this Covenant Not to
Compete, or any waiver of any rights under this Covenant Not to Compete, will be
effective unless in writing and signed by the party to be charged. Any
subsequent change or changes in Executive’s duties or compensation will not
affect the validity or scope of this Agreement.  

 

(c)      Severability. If one or more of the provisions in this Covenant Not to
Compete are deemed unenforceable by law, then such provision will be deemed
stricken from this Covenant Not to Compete and the remaining provisions will
continue in full force and effect. 

 

(d)      Successors and Assigns. This Covenant Not to Compete will be binding
upon Executive’s heirs, executors, administrators, and other legal
representatives and will be for the benefit of the Company and its successors
and assigns. 

 

(e)     Survival. The provisions of this Covenant Not to Compete shall survive
the termination of Executive’s employment and the assignment of this Covenant
Not to Compete by the Company to any successor-in-interest or other assignee. 

 

(f)     Employment. Executive agrees and understands that nothing in this
Agreement shall confer any right respecting continuation of employment by the
Company or interfere in any way with Executive’s right or the Company’s right to
terminate Executive’s employment at any time, with or without cause. 

 

(g)      Waiver. No waiver by the Company of any breach of this Covenant Not to
Compete shall be a waiver of any preceding or succeeding breach. No waiver by
the Company of any right under this Covenant Not to Compete shall be construed
as a waiver of any other right. The Company shall not be required to give notice
to enforce strict adherence to all terms of this Covenant Not to Compete. 

 

 

 

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This Covenant Not to Compete shall be effective as of the Effective Date,
namely: April 1, 2017.

 

I have read this covenant not to compete carefully and understand its terms.

 

 

Date: April 20, 2017

/s/ David M. Beach

 

DAVID M. BEACH

 

745 Fifth Avenue, Suite 500

 

New York, NY 10151

 

Phone: (504) 400-9977

 

E-mail: clarklondon@mac.com

 

 

ACCEPTED AND AGREED TO:

 

INTREorg Systems, Inc.

 

By: /s/ Thomas E. Lindholm

 

Name: Thomas E. Lindholm

 

Title: Executive Director

 

 

 

 

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EXHIBIT B

 

PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

 

 In consideration of engagement by INTREORG SYSTEMS, INC. (the “Company”), and
the compensation now and hereafter paid to DAVID M. BEACH (“Executive”),
Executive hereby agrees as follows: 

 

1. Proprietary Rights and Information.  

 

(a) Recognition of Company’s Rights; Nondisclosure. At all times during the term
of his employment and thereafter (as used in this Proprietary Information and
Inventions Agreement, the term of Executive’s employment includes any time
during which he may be retained by the Company as an advisor or consultant),
Executive will hold in strictest confidence and will not disclose, use, lecture
upon, or publish any of the Company’s Proprietary Information (defined below),
except as such disclosure, use, or publication may be required in connection
with his work for the Company or unless his supervisor expressly authorizes such
in writing. Executive hereby assigns to the Company any rights he may have or
acquire in such Proprietary Information and recognizes that all Proprietary
Information shall be the sole property of the Company and its assigns and the
Company and its assigns shall be the sole owner of all trade secret rights,
patent rights, copyrights, mask work rights, and all other rights throughout the
world (collectively, “Proprietary Rights”) in connection therewith. 

 

(b) Definitions. The term “Proprietary Information” shall mean trade secrets,
confidential knowledge, data, or any other proprietary information of the
Company. By way of illustration but not limitation, “Proprietary Information”
includes (a) trade secrets, inventions, mask works, ideas, processes, formulas,
source and object codes, data, programs, other works of authorship, know-how,
improvements, discoveries, developments, designs, and techniques (hereinafter
collectively referred to as “Inventions”); 

 

2. Third-party Information. Executive understands, in addition, that the Company
has received and in the future will receive from third parties confidential or
proprietary information (“Third-party Information”) subject to a duty on the
Company’s part to maintain the confidentiality of such information and to use it
only for certain limited purposes. During the term of his employment and
thereafter, Executive will hold Third-party Information in the strictest
confidence and will not disclose (to anyone other than the Company personnel who
need to know such information in connection with their work for the Company) or
use, except in connection with Executive’s work for the Company, Third-party
Information unless expressly authorized by Executive’s Board of Directors. 

 

3.      Assignment of Inventions. 

 

(a)      Assignment. Executive hereby assigns to the Company all his right,
title, and interest in and to any and all Inventions (and all Proprietary Rights
with respect thereto) whether or not patentable (including business process
patents) or registrable under copyright or similar statutes, made, conceived,
reduced to practice, or learned by Executive, either alone or jointly with
others, during the period of his employment with the Company that are related to
or useful in the business of the Company; result from tasks assigned to
Executive by the Company; or result from the use of premises leased, owned, or
contracted for by the Company. Inventions assigned to or as directed by the
Company by this section 3 are hereinafter referred to as “Company Inventions.”
Executive recognizes that this Proprietary Information and Inventions Agreement
does not require assignment of any invention that he developed entirely on his
own time without using the Company’s equipment, supplies, facilities, or trade
secret information. 

 

 

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(b)      Works for Hire. Executive acknowledges that all original works of
authorship that are made by him (solely or jointly with others) within the scope
of his employment and that are protectable by copyright are “works made for
hire,” as that term is defined in the United States Copyright Act (17 U.S.C.
Section 101). 

 

(c)      Enforcement of Proprietary Rights.  

 

(i) Executive will assist the Company in every proper way to obtain and from
time to time enforce United States and foreign Proprietary Rights relating to
Company Inventions in any and all countries. To that end, Executive will
execute, verify, and deliver such documents and perform such other acts
(including appearances as a witness) as the Company may reasonably request for
use in applying for, obtaining, perfecting, evidencing, sustaining, and
enforcing such Proprietary Rights and the assignment thereof. In addition,
Executive will execute, verify, and deliver assignments of such Proprietary
Rights to the Company or its designee. Executive’s obligation to assist the
Company respecting Proprietary Rights relating to such Company Inventions in any
and all countries shall continue beyond the termination of his employment, but
the Company shall compensate Executive at a reasonable rate after his
termination for the time actually spent by him at the Company’s request on such
assistance. 

 

(ii) In the event the Company is unable for any reason, after reasonable effort,
to secure Executive’s signature on any document needed in connection with the
actions specified in the preceding paragraph, Executive hereby irrevocably
designates and appoints the Company and its duly authorized officers and agents
as his agent and attorney-in-fact, which appointment is coupled with an
interest, to act for and in his behalf to execute, verify, and file any such
documents and to do all other lawfully permitted acts to further the purposes of
the preceding paragraph with the same legal force and effect as if executed by
Executive. Executive hereby waives and quit-claims to the Company any and all
claims, of any nature whatsoever, that he now has or may hereafter have for
infringement of any Proprietary Rights assigned hereunder to the Company. 

 

(d)      Obligation to Keep the Company Informed.  

 

(i) During the period of his employment and for six months after termination of
his employment with the Company, Executive will promptly disclose to the Company
fully and in writing all Inventions authored, conceived, or reduced to practice
by him, either alone or jointly with others. In addition, Executive will
promptly disclose to the Company all patent applications filed by him or on his
behalf within a year after termination of employment.  

 

(ii) Executive agrees to keep and maintain adequate and current records (notes,
sketches, drawings, and any other form that may be required by the Company) of
all Proprietary Information developed by him and all Inventions made by him
during the period of his employment at the Company, which records shall be
available to and remain the sole property of the Company at all times. 

 

 

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4. Prior Inventions. Inventions, if any, patented or unpatented, that Executive
made prior to the commencement of his employment with the Company are excluded
from the scope of this Proprietary Information and Inventions Agreement.  

 

5. No Improper Use of Materials. During his employment by the Company, Executive
will not improperly use or disclose any confidential information or trade
secrets, if any, of any former employer or any other person to whom he has an
obligation of confidentiality, and Executive will not bring onto the premises of
the Company any unpublished documents or any property belonging to any former
employer or any other person to whom he has an obligation of confidentiality
unless consented to in writing by that former employer or person. Executive will
use in the performance of his duties only information that is generally known
and used by persons with training and experience comparable to his own, common
knowledge in the industry or otherwise legally in the public domain, or
otherwise provided or developed by the Company. 

 

6. No Conflicting Obligation. Executive represents that his performance of all
the terms of this Proprietary Information and Inventions Agreement and as an
employee of the Company does not and will not breach any agreement to keep
information acquired by him in confidence or in trust prior to his employment by
the Company. Executive has not entered into, and agrees that he will not enter
into, any agreement either written or oral in conflict herewith. 

 

7. Return of Company Documents. When Executive leaves the employ of the Company,
he will deliver to the Company any and all drawings, notes, memoranda,
specifications, devices, formulas, and documents, together with all copies
thereof in all formats, and any other material containing or disclosing any
Company Inventions, Third-party Information, or Proprietary Information.
Executive further agrees that any property situated on the Company’s premises
and owned by the Company, including devices, disks and other storage media,
filing cabinets, or other work areas, is subject to inspection by the Company
personnel at any time with or without notice. Prior to leaving, Executive will
cooperate with the Company in completing and signing the Company’s termination
statement for technical and management personnel. 

 

8. Legal and Equitable Remedies. Because Executive’s services are personal and
unique and because he may have access to and have become acquainted with the
Proprietary Information, the Company shall have the right to enforce this
Proprietary Information and Inventions Agreement and any of its provisions by
injunction, specific performance, or other equitable relief, without bond and
without prejudice to any other rights and remedies that the Company may have for
a breach of this Proprietary Information and Inventions Agreement. 

 

9. Notices. Any notice, demand, request, or other communication permitted or
required under this Proprietary Information and Inventions Agreement shall be in
writing and shall be deemed to have been given as of the date so delivered, if
personally delivered; as of the date so sent, if transmitted by facsimile and
receipt is confirmed by the facsimile operator of the recipient; as of the date
so sent, if sent by electronic mail and receipt is acknowledged by the
recipient; and one day after the date so sent, if delivered by overnight courier
service; addressed as follows: 

 

 

B-3

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If to the Company, to: Thomas Lindholm, Executive Director 

INTREorg Systems, Inc.

2600 E Southlake Blvd., Suite 120-366

Southlake, TX 76902

E-mail: Thomas.lindholm@intreorg.com

 

If to Executive, to:  David M. Beach 

745 Fifth Avenue, Suite 500

New York, NY 10151

Phone: (504) 400-9977

E-mail: clarklondon@mac.com

 

Each party, by notice duly given in accordance herewith, may specify a different
address for the giving of any notice hereunder.

 

10. General Provisions. 

 

(a)      Governing Law. This Proprietary Information and Inventions Agreement
shall be governed by the laws of the state of Texas as those laws are applied to
contracts. 

 

(b)      Entire Agreement. No modification or amendment to this Proprietary
Information and Inventions Agreement or any waiver of any rights under this
Proprietary Information and Inventions Agreement will be effective unless in
writing and signed by the party to be charged. Any subsequent change or changes
in Executive’s duties or compensation will not affect the validity or scope of
this Proprietary Information and Inventions Agreement. As used in this
Proprietary Information and Inventions Agreement, the period of Executive’s
employment includes any time during which he may be retained by the Company as a
consultant. 

 

(c)      Severability. If one or more of the provisions in this Proprietary
Information and Inventions Agreement are deemed unenforceable by law, then such
provision will be deemed stricken from this Proprietary Information and
Inventions Agreement and the remaining provisions will continue in full force
and effect. 

 

(d)      Successors and Assigns. This Proprietary Information and Inventions
Agreement will be binding upon Executive’s heirs, executors, administrators, and
other legal representatives and will be for the benefit of the Company, its
successors, and its assigns. 

 

(e)      Survival. The provisions of this Proprietary Information and Inventions
Agreement shall survive the termination of Executive’s employment and the
assignment of this Proprietary Information and Inventions Agreement by the
Company to any successor-in-interest or other assignee. 

 

(f)      Employment. Executive agrees and understands that nothing in this
Proprietary Information and Inventions Agreement shall confer any right
respecting continuation of his employment by the Company or interfere in any way
with his right or the Company’s right to terminate his employment at any time,
with or without Sound Reason. 

 

 

B-4

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(g)      Waiver. No waiver by the Company of any breach of this Proprietary
Information and Inventions Agreement shall be a waiver of any preceding or
succeeding breach. No waiver by the Company of any right under this Proprietary
Information and Inventions Agreement shall be construed as a waiver of any other
right. The Company shall not be required to give notice to enforce strict
adherence to all terms of this Proprietary Information and Inventions
Agreement. 

 

 This Proprietary Information and Inventions Agreement shall be effective as of
the Effective Date, namely: April 1, 2017. 

 

 EXECUTIVE UNDERSTANDS THAT THIS PROPRIETARY INFORMATION AND INVENTIONS
AGREEMENT AFFECTS HIS RIGHTS TO INVENTIONS HE MAKES DURING HIS EMPLOYMENT AND
RESTRICTS HIS RIGHT TO DISCLOSE OR USE THE COMPANY’S CONFIDENTIAL INFORMATION
DURING OR SUBSEQUENT TO HIS EMPLOYMENT. 

 

 ADVISER HAS READ THIS PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
CAREFULLY AND UNDERSTANDS ITS TERMS.  

 

 

 

 

Date: April 20, 2017

/s/ David M. Beach

 

DAVID M. BEACH

 

745 Fifth Avenue, Suite 500

 

New York, NY 10151

 

Phone: (504) 400-9977

 

E-mail: clarklondon@mac.com

 

 

ACCEPTED AND AGREED TO:

 

INTREorg Systems, Inc.

 

By: /s/ Thomas E. Lindholm

 

Name: Thomas E. Lindholm

 

Title: Executive Director

 

 

 

 

B-5

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EXHIBIT C

 

INTREORG SYSTEMS, INC.

 

Nonqualified Stock Option

 

It is important that you retain this document. This original Nonqualified Stock
Option must be delivered to the Company on exercise or transfer of the Option.

 

THE SECURITIES REPRESENTED BY THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ARE "RESTRICTED
SECURITIES" WITHIN THE MEANING OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT.
THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR
TRANSFERRED WITHOUT COMPLYING WITH RULE 144 IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION OR OTHER COMPLIANCE UNDER THE SECURITIES ACT.

 

This Option and the common stock issuable on exercise of this Option are subject
to

substantial restrictions on transfer as set forth herein.

 

 THIS NONQUALIFIED STOCK OPTION (“Option”) is granted effective this ____ day of
________________________ (the “Date of Grant”), by INTREORG SYSTEMS, INC., a
Texas corporation (the “Company”) to DAVID M. BEACH (“Optionee”).  

 

1. Grant of Option. The Company hereby irrevocably grants to Optionee the right
and option to purchase all or any part of an aggregate of __________ shares of
common stock, par value $0.001, of the Company (the “Shares”), on the terms and
conditions hereinafter set forth in this Option.  

 

2. Exercise Price. The exercise price of this Option shall be $0.20 per Share
(the “Exercise Price”).  

 

3. Term of Option.  

 

(a) Except as otherwise provided in this Option, the right to exercise this
Option shall vest as to 1/12th of the Shares specified in Section 1 above on the
last day of the month succeeding the Date of Grant, and as to an additional
1/12th of the Shares on the last day of each successive month thereafter until
fully vested for 100% of such Shares, provided that on each such monthly
anniversary date Optionee is then a full-time employee or consultant of the
Company, as determined by the Company’s board of directors (the “Board”). In the
event of a Liquidity Transaction, except to the extent expressly prohibited by
any Applicable Law or regulation, this Option shall automatically vest and be
deemed exercised immediately before the Liquidity Transaction, without regard to
the amount of time that has passed since the Date of Grant and shall be
converted into the right to receive an amount of cash, without interest, equal
to the excess, if any, of the price per Share paid in connection with the
Liquidity Transaction over the Exercise Price, as and when payable in accordance
with the Liquidity Transaction. “Liquidity Transaction” means: (i) the sale,
lease, transfer, conveyance, or other disposition, in one transaction or a
series of related transactions, of all or substantially all of the assets of the
Company to an independent third party; (ii) a transaction or series of
transactions (including by way of merger, consolidation, recapitalization,
reorganization, or sale of stock) the result of  

 

 

C-1

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which is that, after giving effect to the transaction, the Company is no longer
the “beneficial owner” (as such term is defined in Rule 13d-3 and Rule 13d-5
promulgated under the Securities Exchange Act of 1934), directly or indirectly
through one or more intermediaries, of more than 50% of the voting power of the
outstanding voting securities of the entity; or (iii) a transaction or series of
transactions (including by way of merger, consolidation, recapitalization,
reorganization, or sale of securities) the result of which is that, after giving
effect to such transaction, the stockholders immediately before the transaction
are no longer, in the aggregate, the “beneficial owners” (as such term is
defined in Rule 13d-3 and Rule 13d-5 promulgated under the Securities Exchange
Act of 1934), directly or indirectly through one or more intermediaries, of more
than 50% of the voting power of the outstanding voting securities of the
Company. “Applicable Law” means the applicable requirements relating to Texas
corporate laws, U.S. federal and state securities laws, the Internal Revenue
Code, the rules of any stock exchange or quotation system on which the Shares
are listed or quoted, and the applicable laws of any other country or
jurisdiction whose residents are granted stock options and stock grants by the
Company. If Optionee’s employment or service with the Company terminates upon
Optionee’s death, retirement after 15 years of service (six years in the case of
directors), disability (within the meaning of Section 22(e)(3) of the Internal
Revenue Code or such longer period or more restrictive requirements provided in
any agreement between Optionee and the Company), or due to the Company’s breach
of any employment agreement with Optionee or unauthorized significant change in
the scope or nature of Optionee’s duties as provided therein, except to the
extent expressly prohibited by any Applicable Law, all unvested Options shall
automatically vest and become immediately exercisable.

 

(b) This Option shall expire on the third anniversary of the Date of Grant,
unless otherwise provided herein. 

 

4. Stockholder’s Rights. Optionee shall have the rights of a stockholder only
for Shares for which he has fully paid under this Option. 

 

5. Persons Entitled to Exercise; Prohibited Transfers and Encumbrances. During
Optionee’s lifetime, unless expressly waived by the Company, this Option can
only be exercised by Optionee, and neither this Option nor any right hereunder
can be transferred other than by testamentary disposition or the laws of descent
and distribution; provided that, if so determined by the Board, Optionee may, in
a manner established by the Board, designate a beneficiary to exercise the
rights of Optionee for any Option upon the death of Optionee and to receive
Shares or other property issued or delivered under the Option. Neither this
Option nor any right hereunder shall be subject to lien, attachment, execution,
or similar process. In the event of any alienation, assignment, pledge,
hypothecation, or other transfer of this Option or any right hereunder, or in
the event of any levy, attachment, execution, or similar process, other than as
provided herein, this Option and all rights granted hereunder shall be
immediately null and void.  

 

6. Adjustment of Exercise Price and Number of Shares. The number of Shares
subject to this Option shall be adjusted to take into account any stock split,
stock dividend, or recapitalization of the Company’s common stock. 

 

7. Notice of Certain Events. In the event of: 

 

(a) any taking by the Company of a record of the holders of any class of
securities of the Company for the purpose of determining the holders thereof
that are entitled to receive any dividends or other distribution or any right to
subscribe for, purchase, or otherwise acquire any shares of stock of any class
or any other securities, property, or rights;  

 

 

C-2

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(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, any transfer of all or
substantially all of the assets of the Company to any other person, or any
consolidation, share exchange, or merger involving the Company; or 

 

(c) any voluntary or involuntary dissolution, liquidation, or winding up of the
Company; 

 

the Company will mail to Optionee, at least 20 days before the earliest date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of the dividend, distribution, or right; the amount and
character of the dividend, distribution, or right; or the date on which any such
reorganization, reclassification, transfer, consolidation, share exchange,
merger, dissolution, liquidation, or winding up of the Company will occur and
the terms and conditions of the transaction or event.

 

8. Method of Exercise.  

 

(a) This Option may be exercised, in accordance with all of the terms and
conditions set forth in this Option, by delivery of this Option together with a
notice of exercise, the form of which is attached hereto as Exhibit A and
incorporated herein by this reference, indicating the number of Shares that
Optionee then elects to purchase and full payment of the Exercise Price for the
Shares. The Exercise Price for the Shares may be paid: (i) in cash or its
equivalent; or (ii) through any other method approved by the Board in its sole
discretion.  

 

(b) As soon as practicable after receipt by the Company of the notice and of
payment in full of the Exercise Price of all the Shares exercised pursuant to
the Option, a certificate or certificates representing the Shares that have been
paid for shall be issued in the name of Optionee, or if Optionee shall so
request in the notice exercising the Option, in the name of Optionee and another
person jointly, with right of survivorship. To the extent required by the terms
of this Option, all Shares shall be issued only upon receipt by the Company of
Optionee’s representation that the Shares are purchased for investment and not
with a view to distribution thereof. If this Option is not exercised for all
Shares subject hereto, Optionee shall be entitled to receive a similar Option of
like tenor covering the number of Shares for which this Option shall not have
been exercised. 

 

9. Availability of Common Stock. During the term of this Option, the Company
shall, at all times, keep available that number of shares of common stock
required to satisfy the Option. 

 

10. Limitation on Exercise.  

 

(a) If the Board, in its sole discretion, shall determine that it is necessary
or desirable to list, register, or qualify the Shares under any state or federal
law, this Option may not be exercised, in whole or part, until the listing,
registration, or qualification shall have been obtained free of any conditions
not acceptable to the Board. 

 

 

C-3

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(b) In the event that Optionee is terminated from his relationship with the
Company at any time for Cause, as defined in the Executive Employment Agreement
between Optionee and the Company, then further vesting of all unvested Options
shall immediately terminate as of the date of the termination. Notwithstanding
the foregoing, Optionee shall not be deemed to have been terminated for Cause,
without: (i) reasonable notice to Optionee setting forth the reasons for the
Company’s intention to terminate for Cause; and (ii) delivery to Optionee of
written notice of termination setting forth the finding that in the good faith
opinion of the Board that Optionee was guilty of Cause and specifying the
particulars thereof in detail. The Board may, in its discretion, waive all or
part of the provisions of this paragraph for Optionee with regard to the facts
and circumstances of any particular situation involving a determination under
this paragraph. 

 

(c) This Option shall terminate three months after termination of Optionee’s
employment or other relationship with the Company. 

 

11. No Right of Employment. Nothing contained in this Option shall be construed
as conferring any right to continue or remain as an officer, director, or
employee of the Company.  

 

12. Restrictions on Transfer. In addition to the restrictions on transfer in
Section 5, this Option and the Shares (collectively referred to as the
“Securities”) are subject to registration under the Securities Act of 1933, as
amended (the “Securities Act”), and any applicable state securities statutes.
Optionee acknowledges that unless a registration statement respecting the
Securities is filed and declared effective by the U.S. Securities and Exchange
Commission and the appropriate state governing agency, the Securities have been,
or will be, issued in reliance on specific exemptions from the registration
requirements for transactions by an issuer not involving a public offering and
specific exemptions under state statutes. Any disposition of the Securities may,
under certain circumstances, be inconsistent with such exemptions. The
Securities may be offered for sale, sold, or otherwise transferred only: (a) if
registered under the Securities Act, and in some cases, under the applicable
state securities statutes; or (b) if not registered, pursuant to an exemption
from the registration requirements and only after Optionee provides an opinion
of counsel or other evidence satisfactory to the Company to the effect that
registration is not required. In some states, specific conditions must be met or
approval of the securities regulatory authorities may be required before any
such offer or sale. The Company is under no obligation to register the
Securities with the U.S. Securities and Exchange Commission or any state agency.
If Rule 144 is available (and no assurance is given that it will be), only
routine sales of the Shares in limited amounts can be made as determined and in
accordance with the terms and conditions of Rule 144. The Company is under no
obligation to make Rule 144 available. In the event Rule 144 is not available,
compliance with Regulation A or some other disclosure exemption may be required
before Optionee can sell, transfer, or otherwise dispose of the Securities
without registration. The Company and its registrar and transfer agent will
maintain a stop-transfer order against the transfer of the Securities, and this
Option and any other certificate or agreement representing the Securities is
subject to the following legend: 

 

The securities represented by this [Option, agreement, or certificate] have not
been registered under the Securities Act of 1933, as amended (the “Securities
Act”), and are “restricted securities” within the meaning of Rule 144
promulgated under the Securities Act. The securities have been acquired for
investment and may not be sold or transferred without complying with Rule 144 in
the absence of an effective registration or other compliance under the
Securities Act.

 

 

C-4

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The Company may refuse to transfer the Securities to any transferee who does not
furnish in writing to the Company the same representations and warranties set
forth in this section and agree to the same conditions respecting such
Securities as are set forth herein. The Company may further refuse to transfer
the Securities if certain circumstances are present reasonably indicating that
the proposed transferee’s representations are not accurate. In any event, the
Company may refuse to consent to any transfer in the absence of an opinion of
legal counsel, satisfactory to and independent of counsel of the Company, that
the proposed transfer is consistent with the above conditions and applicable
securities laws.

 

13. Withholding.  

 

(a) To the extent required by Applicable Law, Optionee shall be required to
satisfy, in a manner satisfactory to the Company any withholding tax obligations
that arise by reason of the Option exercise or vesting. The Company shall not be
required to issue or deliver Shares, make any payment, or recognize the transfer
or disposition of Shares until such obligations are satisfied. Except to the
extent the obligations are paid in cash, the Board shall permit and may require
these obligations to be satisfied by having the Company withhold a portion of
the Shares that otherwise would be issued or delivered to Optionee upon exercise
of the Option or by tendering shares of common stock previously acquired, in
each case, having a fair market value on the day preceding the date of vesting
or settlement equal to the minimum amount required to be withheld or paid.  

 

(b) If authorized by the Board upon request by Optionee, the Company may defer
payment of the withholding obligation for a reasonable period, but in no event
beyond the due date specified by the Internal Revenue Code or the regulations
promulgated thereunder for the deposit of such withholding, to allow Optionee an
opportunity to sell Shares issuable on the exercise of this Option. In the event
of a deferral, Optionee hereby grants to the Company a continuing security
interest in such Shares and all proceeds thereof and appoints the Company’s
President, and any successor thereto, as attorney-in-fact to sell the number of
Shares and collect the proceeds therefrom as may be necessary, in the opinion of
the Company, to satisfy all obligations for the payment of the taxes. 

 

(c) The Company may withhold from any compensation or other amount owing to
Optionee the amount (in cash, common stock, or other property as the Company may
determine) of the withholding obligation. 

 

In all events, delivery of the Shares issuable on exercise of this Option shall
be conditioned upon and subject to the satisfaction or making provision for the
satisfaction of the withholding obligation of the Company resulting from the
exercise of this Option. The Company is hereby further authorized to take such
other action as may be necessary, in the opinion of the Company, to satisfy all
obligations for the payment of such taxes.

 

14. Validity and Construction. The validity and construction of this Option
shall be governed by the laws of the state of Texas. 

 

 

C-5

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 EFFECTIVE as of the date first above written. 

 

INTREORG SYSTEMS, INC.

 

By: _________________________________

Name: _______________________________

Its: __________________________________

 

Agreed and Accepted:

 

OPTIONEE:

DAVID M. BEACH

745 Fifth Avenue, Suite 500

New York, NY 10151

Phone: (504) 400-9977

E-mail: clarklondon@mac.com

 

 

 

C-6

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Exhibit A

 

 

Form of Exercise

(to be signed only upon exercise of Option)

 

 

 

TO: INTREORG SYSTEMS, INC.

 

 

 The undersigned, the owner of the attached Option, hereby irrevocably elects to
exercise the purchase rights represented by the Option for, and to purchase
thereunder, __________ shares of common stock of INTREorg Systems, Inc. Enclosed
is payment in the amount of $_______, the exercise price of the shares to be
acquired, in the form of [insert description of manner of payment]
______________________________________________________________________________.
Please have the certificate(s) registered in the name of
______________________________________________, social security no.
________________ and delivered to the following address: _____________________
____________________________________________________________________________________.
If this exercise does not include all of the shares covered by the attached
Option, please deliver a new Option of like tenor for the balance of the shares
to the undersigned at the foregoing address.  

 

 DATED this ____ day of _____________________. 

 

 

 

 __________________________________ 

 Signature of Optionee  

 (Signature must be guaranteed by a bank  

 or securities broker-dealer) 

Signature Guarantee:

 

 

__________________________________

 

 

 

C-7