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EXHIBIT 10.12

 
MEMORANDUM OF AGREEMENT FOR STRATEGIC RELATIONSHIP
 
THIS MEMORANDUM OF AGREEMENT FOR STRATEGIC RELATIONSHIP ("MOA") DATED AS OF
AUGUST 19, 2011 AND BY AND BETWEEN ADVANCED MEDICAL ISOTOPE CORPORATION, A
DELAWARE CORPORATION ("AMIC") AND SPIVAK MANAGEMENT INC., A CALIFORNIA
CORPORATION ("SMI") SETS FORTH THE TERMS OF A STRATEGIC RELATIONSHIP AMONG AMIC,
SMI AND MANN HEALTHCARE PARTNERS INC., A DELAWARE CORPORATION ("MHP") AND IS
ENTERED INTO ON THE FOLLOWING TERMS:
 
WHEREAS
 
A.
Through a joint venture with SMI and SMI's relationship with MHP, SMI and MHP
will assist AMIC with: (1) strategic advice, (2) deal-specific advice and
assistance, (3) board representation, and (4) introductions to potential
investors.

 
B.
The initial use of proceeds will consist of funds to initiate purchase of a
stable isotope company identified by AMIC (the "Initial Target"), operating
overhead for AMIC and pre­payment of SMI's and MHP's expenses to assist AMIC.

 
NOW THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
 
1.
AMIC and SMI hereby agree to form a joint venture (the "Venture"), through which
SMI, directly and through SMI's relationship with MHP, will provide management
and consulting services to AMIC in forming and implementing its commercial and
growth strategies, participate in structuring and negotiating acquisitions and
ventures and introduce AMIC to potential investors and investment bankers.
Neither SMI nor MHP will perform or provide any services for which a license is
required, including, without limitation, investment banking or law. MHP also
will provide advice directly to the Venture and AMIC through a consulting
agreement described below. The Venture will be terminable by either AMIC or SMI
if the introduction described in the first sentence of Section 2 does not occur
within two months after the date the Information Confirmation (as defined in
Section 2) occurs (such outside date, the "Introduction Date"). If either AMIC
or SMI terminates the Venture, thereafter the parties will have no further
obligations to each other, except as otherwise provided for herein. The
foregoing termination right is the sole remedy available to either party for the
fact that an introduction described in Section 2 does not occur.

 
2.
Commencing promptly after formation of the Venture and confirmation of the
financial information of the Initial Target to the summary financial information
presented by AMIC (the "Information Confirmation"), MHP will introduce AMIC to
an entity or entities prepared to invest from $1.2 million to $2 million into
AMIC. The terms and conditions of any investment are in the discretion of AMIC
and the investor(s). The initial use of proceeds will consist of funds to
initiate purchase of the Initial Target, operating overhead for AMIC and
pre­payment of SMI's expenses to assist AMIC, as described in Section 3 below.
The parties recognize that AMIC may also have to pay stock or by means of an
earn-out or other similar consideration for the Initial Target. Except with
respect to the termination right provided in Section 1 above, no party hereto
makes any representation or warranty regarding when or whether the introduction
described in this Section 2 or any other introduction will occur. SMI represents
to AMIC that it has been advised by MHP that MHP is optimistic about making the
introduction described in this Section 2, though MHP has not guaranteed any
particular introduction or the outcome thereof, and the parties acknowledge that
MHP's perspective is based upon the summary financial information presented by
AMIC.

 
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3.
If AMIC accepts the investment, AMIC will contribute to the Venture a fee to be
paid to SMI of $75,000 and the sum of $200,000 as a pre-payment of SMI's and
MHP's expenses with respect to the Venture ("Initial Fee"). If fees, costs and
expenses incurred, paid or payable by SMI and/or MHP with respect to the Venture
are less than $200,000, SMI will reimburse the excess to AMIC following
completion of financing activities. If fees, costs and expenses incurred, paid
or payable by SMI and/or MHP with respect to the Venture exceed $200,000 but are
less than $275,000, reimbursement of such fees, costs and expenses above
$200,000 (and not to exceed $75,000) will be deferred and paid from the next
financing after the $1.2 million financing. If fees, costs and expenses
incurred, paid or payable by SMI and/or MHP with respect to the Venture exceed
$275,000, the amount above $275,000 will be reimbursed by AMIC as incurred. In
the event SMI and/or Ted Maloney is requested to assist AMIC prior to the
payment of the Initial Fee and SMI and/or Maloney agree to so assist AMIC, then
all expenses related to such assistance will be advanced by AMIC and shall be
deducted from the Initial Fee. SMI shall be entitled to select class of travel
and hotel with respect to any requested travel.

 
4.
If so requested by SMI, legal work on matters undertaken in furtherance of the
Venture and related AMIC acquisitions and transactions will be handled by the
law firm of SML LLP on the financial terms typically charged by SML LLP for such
work, unless otherwise requested by AMIC as required or advantageous to AMIC
under the circumstances and consented to by SMI, such consent not to be
unreasonably withheld. The parties hereto hereby acknowledge that Kenin M.
Spivak ("Spivak"), an officer and director of SMI, and Ted Maloney, a partner of
MHP, also are partners in SML LLP.

 
5.
In consideration of SMI's and MHP's respective time, efforts and contributions
to the Venture, AMIC will sell to Spivak as SMI's designee 5,033,333 warrants
(the "Spivak Warrants") and to MHP and its designees 15,100,000 warrants (the
"MHP Warrants" and, together with the Spivak Warrants, the "Warrants"). The
Warrants will be subject to forfeiture as described below. MHP may assign the
MHP Warrants to MHP affiliates or partners and if it does so, all forfeitures
will apply ratably to all MHP Warrants held by each holder unless MHP otherwise
advises AMIC and SMI by written notice at the time of its assignment of the MHP
Warrants to implement a non-ratable forfeiture that totals the same number of
total Warrants at all levels of forfeiture. Except for such assignments and
assignments to affiliates (including intervivos trusts or other entities formed
for estate planning purposes), spouses or by inheritance or intestacy, neither
the Spivak Warrants nor the MHP Warrants are assignable. Whether or not they
execute a joinder agreement to this Agreement, all such assignees take Warrants
subject to the terms of this Agreement, and all certificates or other documents
representing the Warrants will contain appropriate legends, including legends
referencing this Agreement.

 

 
a.
If the following capitalization table understates the number of AMIC shares of
common stock, options, warrants or convertible securities outstanding, the
number of Spivak Warrants and the number of MHP Warrants issued hereunder each
will increase by seventeen and one-half percent (17.5%) of that additional
number of shares of common stock, options, warrants or convertible securities
outstanding. Such additional Warrants will be subject to forfeiture in the same
proportions as described below.

 

  69,959,896                        shares o/s
9,490,000                          options and warrants o/s
6,567,655                          convertible debt

 
 
 
 
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b.
The initial exercise price of the Warrants will be $.20 per share. The Warrants
will have customary weighted average anti-dilution protection, based on a
weighted 30-day moving average, for issuances below market and will have a
full-ratchet anti-dilution protection for issuances below the then-applicable
exercise price.

 

 
c.
AMIC initially will have the right to require exercise at $1.00 per share,
reduced to 500% of the exercise price if the exercise price is reduced by the
anti-dilution protection, and reduced or increased to 500% of the adjusted
exercise price in the event of an adjustment due to stock split (forward or
reverse), stock dividend or other recapitalization transactions.

 

 
d.
Subject to the forced exercise provision, at the holder's election, exercise
will be for cash or cashless.

 
6.
AMIC will be entitled to a purchase price of one-tenth of one cent per Warrant,
provided that AMIC will pay compensation to SMI equal to one-tenth of one cent
for each Spivak Warrant and like compensation to MHP for each MHP Warrant,
offsetting the purchase price. There will be no refund of the purchase price or
compensation if Warrants are forfeited.

 
7.
Spivak Warrants will be forfeited as follows:

 

 
a.
3,523,333 warrants are not subject to forfeiture.

 

 
b.
If AMIC does not enter into contracts acceptable to AMIC by the date two months
after the Introduction Date (the "First Determination Date") to secure capital
in excess of the $1.2 million described above, the sum of the following number
of Warrants will be forfeited:

 

 
i.
503,333 Warrants, plus

 

 
ii.
Up to 1,006,667 Warrants as follows: the same percentage of 1,006,667 Warrants
as the percentage shortfall between $10 million and $1.2 million.

 

 
iii.
By way of illustration, if the total capital contracted is $3 million (inclusive
of the $1.2 million), then the shortfall is 7/9 (77.78%); 77.78% of 1,006,667
Warrants is 782,963 Warrants. In this example, a total of 1,286,296 Warrants
would be forfeited (503,333 + 782,963), leaving 3,747,037 Warrants.

 

 
c.
If AMIC does not enter into contracts acceptable to AMIC by the date five months
after the Introduction Date (the "Second Determination Date") to secure capital
in excess of $10 million of capital, the following number of Warrants will be
forfeited: the same percentage of 503,333 Warrants as the percentage shortfall
between $30 million and $10 million. By way of illustration, if the total
capital contracted is $20 million (inclusive of the $10 million), then the
shortfall is 50%; 50% of 503,333 Warrants in the example above is 251,667
Warrants. In this example, a total of 251,667 Warrants would be forfeited,
leaving 4,781,667 Warrants.

 
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d.
As it relates to forfeiture, references to contracts include memoranda of
understanding, provided that within 90 days thereafter the memorandum is
succeeded by a definitive agreement and/or a completed financing.

 
8.
MHP Warrants will be forfeited as follows:

 

 
a.
3,523,333 warrants are not subject to forfeiture.

 

 
b.
If AMIC does not enter into contracts acceptable to AMIC by the First
Determination Date to secure capital in excess of the $1.2 million described
above, the sum of the following number of Warrants will be forfeited:

 

 
i.
3,523,333 Warrants, plus

 

 
ii.
Up to 8,053,333 Warrants as follows: the same percentage of 8,053,333 Warrants
as the percentage shortfall between $10 million and $1.2 million.

 

 
iii.
By way of illustration, if the total capital contracted is $3 million (inclusive
of the $1.2 million), then the shortfall is 7/9 (77.78%); 77.78% of 8,053,333
Warrants is 6,263,704 Warrants. In this example, a total of 9,787,037 Warrants
would be forfeited (3,523,333 + 6,263,704), leaving 5,312,963 Warrants.

 

 
c.
If AMIC does not enter into contracts acceptable to AMIC by the Second
Determination Date to secure capital in excess of $10 million of capital, the
following number of Warrants will be forfeited: the same percentage of 3,523,333
Warrants as the percentage shortfall between $30 million and $10 million. By way
of illustration, if the total capital contracted is $20 million (inclusive of
the $10 million), then the shortfall is 50%; 50% of 3,523,333 Warrants in the
example above is 1,761,667 Warrants. In this example, a total of 1,761,667
Warrants would be forfeited, leaving 13,338,333 Warrants.

 

 
d.
As it relates to forfeiture, references to contracts include preliminary
documents such as memoranda of understanding, provided that within 90 days
thereafter the preliminary document is succeeded by a definitive agreement
and/or a completed financing.

 
9.
SMI will be entitled to designate one board member. SMI may from time-to-time
remove such member and may from time-to-time designate the successor. SMI, MHP,
the board designee and Spivak will be named beneficiaries and insured under
AMIC's insurance policies.

 
10.
Pursuant to this Section 10, AMIC hereby engages SMI as a consultant to AMIC and
the Venture, and SMI accepts such engagement as a consultant, to provide the
services enumerated as (1), (2) and (3) in Whereas clause A. SMI also will have
the rights and any duties specifically designated for SMI in this Agreement. In
consideration thereof, SMI will receive the compensation described below in
Section 12. AMIC and SMI hereby incorporate herein by this reference SMI's
standard consulting agreement terms and conditions to govern such consulting
arrangement, a copy of which is attached hereto as an Appendix. This Section 10,
the relevant provisions of Sections 12, 13 and 14 and the Appendix constitute
the "SMI Agreement" and at SMI's request will be replaced by a stand­alone
agreement consistent herewith.

 
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11. 
Within five days after entering into this MOA, AMIC will enter into a consulting
agreement (the "MHP Agreement") with MHP on substantially the same terms as the
SMI Agreement, except that: (a) MHP will provide board representation only if so
designated by SMI, (b) MHP will provide the services enumerated as (1), (2) and
(4) in Whereas clause A; (c) SMI (not MHP) will have the approval and
designation rights described in this MOA; (d) MHP's compensation terms differ,
as described in Section 12, (e) if and during any period SMI designates a
representative of MHP to be a director of AMIC, MHP (not SMI) will provide that
individual's services as a director; and (f) there will be other differences as
specified in this Agreement.

 
12. 
The annual compensation payable under each of the SMI Agreement and the MHP
Agreement will be one-third of the cash and stock compensation payable to the
highest compensated executive officer of AMIC in each year and such payments
will be made at the same time and in the same manner as payments are made to
such officer. The initial term of the MHP Agreement will be three years and the
initial term of the SMI Agreement is five years. Each such term will, unless
notice of termination is delivered by either party thereto during the 30 days
prior to each anniversary date, be automatically extended on such anniversary
date for an additional one year.

 

 
a.
The compensation payable to SMI under the SMI Agreement will be reduced below
one-third (33-1/3%) and to a minimum of one-fifth (20%) of the compensation
payable to the highest paid executive of AMIC if AMIC contracts for less than
$10 million of capital by the date three months after the Introduction Date. The
reduction from one-third to one-fifth will be ratable, based on the amount less
than $10 million and more than $1.2 million contracted to by AMIC by the date
three months after the Introduction Date. By way of illustration, if AMIC
contracts for $5 million inclusive of the $1.2 million, the reduction would be
5/9 of the difference between one-third and one-fifth (0.13333), i.e., the
reduction would equal the product of 5/9 and 0.1333, which is 0.074 and as a
result, SMI would be entitled to be compensated at the rate equal to the
difference between 0.3333 and rate of 0.074, which is 25.93% of the compensation
payable to AMIC's highest paid executive.

 

 
b.
The compensation payable under the MHP consulting agreement will be reduced
below one-third (33-1/3%) and to a minimum of one-twentieth (5%) of the
compensation payable to the highest paid executive of AMIC if AMIC contracts for
less than $10 million of capital by the date three months after the Introduction
Date. The reduction from one-third to one-twentieth will be ratable, based on
the amount less than $10 million and more than $1.2 million contracted for by
AMIC by the date three months after the Introduction Date. By way of
illustration, if AMIC contracts for $5 million inclusive of the $1.2 million,
the reduction would be 5/9 of the difference between one-third and one-twentieth
(0.28333), i.e., the reduction would equal the product of 5/9 and 0.28333, which
is 0.1574 and as a result, MHP would be entitled to be compensated at the rate
equal to the difference between 0.3333 and 0.1574, which is 0.1759, resulting in
compensation to MHP equal to 17.59% of the compensation payable to AMIC's
highest paid executive.

 
 
 

 
 
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c.
As it relates to forfeiture, references to contracts include memoranda of
understanding, provided that within 90 days thereafter the memorandum is
succeeded by a definitive agreement and/or a completed financing.

 
13.
As part of its consulting services to AMIC, SMI will advise AMIC in connection
with an identified medical isotope production transaction and an identified
transaction (which may be in the form of a commercial, investment, acquisition
or other transaction) presented through MHP's relationships. This advice will be
included within the compensation structure provided above, provided that if
advice is required prior to the pre-payment of expenses to SMI, AMIC will
separately pre-pay SMI's expenses with respect thereto and then may deduct such
sums from the $275,000 pre-payment of expenses described above.

 
14.
Except as required by law, all public announcements pertaining to this MOA or
made by AMIC pertaining to SMI or MHP shall be mutually approved by AMIC and
SMI.

 
15.
Certain Rules of Construction:

 

 
a.
Captions and Section Headings. Any captions and section headings appearing in
this MOA are included solely for convenience of reference and are not intended
to affect the interpretation of any provision of this MOA.

 

 
b.
No Interpretation Against a Party. Neither this MOA nor any uncertainty or
ambiguity in it shall be construed or resolved using any presumption against any
party. On the contrary, each party acknowledges that this MOA has been reviewed
by its legal counsel and, in the case of any ambiguity or uncertainty, shall be
construed and interpreted according to the ordinary meaning of the words used so
as to fairly accomplish the purposes and intention of the parties.

 

 
c.
References. Reference to MOA. Any reference to this MOA includes any and all
permitted amendments, supplements, extensions, and renewals of this MOA. Any
references in this MOA to any document, instrument or agreement (1) shall
include all exhibits, appendices, schedules and other attachments thereto, (2)
shall include all documents, instruments or agreements issued or executed in
replacement thereof if such replacement is permitted hereby or thereby, and
(iii) shall mean such document, instrument or agreement, or replacement or
predecessor thereto, as amended, modified and supplemented from time to time and
in effect at any given time if such amendment, modification or supplement is
permitted h

 

 
d.
Additional Rules of Construction. References in this MOA to "Persons" shall
include individuals and legal entities, of whatever form. The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this MOA shall
refer to this MOA as a whole and not to any particular provision of this MOA.
Unless the context clearly requires otherwise (1) the plural and singular
numbers shall each be deemed to include the other; (2) the masculine, feminine
and neuter genders shall each be deemed to include the others; (3) "shall,"
"will" or "agrees" are mandatory and "may" is permissive; (4) "or" is not
exclusive, and (5) "includes" and "including" are not limiting and mean "without
limitation."

 
 
 

 
 
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e.
Other Agreements. In the event of any inconsistency between the terms of this
MOA and the terms of any other agreement among the Parties, the terms of the
subsequent agreement shall govern.

 
16.
General Provisions:

 

 
a.
Further Cooperation. Each party shall promptly execute, acknowledge and deliver,
or promptly procure the execution, acknowledgement and delivery, of any and all
further certificates, agreements and instruments which may be necessary or
expedient to effectuate the purposes of this MOA.

 

 
b.
Indemnification: AMIC indemnifies and holds harmless SMI, MHP and their
shareholders, members, partners, directors, officers, employees, agents,
representatives, counsel and their spouses from any claims, costs, judgements,
settlements, fees, fines and expenses arising from or related to any alleged
acts or omissions to act by AMIC or its agents and representatives, any alleged
securities filing, public announcement or information allegedly provided by AMIC
or its agents and representatives and any alleged failure by AMIC or its
representatives to comply with all laws and regulations applicable to the
foregoing.

 

 
c.
Assignment. Except as set forth herein with respect to payment of amounts to
third parties in connection with performance of the services provided for herein
and as applicable to the right of SMI and its designees to transfer warrants
received as compensation in accordance with applicable securities laws, no party
shall have any right, power or ability to assign its rights or benefits or
delegate its duties or obligations under this MOA without the prior written
consent of the other party, which consent shall not be unreasonably withheld or
delayed. Notwithstanding the first sentence of this section, either party, upon
thirty (30) days prior written notice to the other, may assign its rights or
delegate its duties or any portion thereof as a matter of right without the
consent of the other party to (1) an affiliate of the assignor or (2) a Person
succeeding to substantially all of the business of the party effecting such
assignment, provided in either case that the assignee specifically assumes all
obligations of the assignor party under this MOA, and provided further that the
assignor shall continue to remain primarily liable for all obligations (monetary
and non-monetary) assumed by the assignee. No party shall have the power to make
an assignment in contradiction of this paragraph. Any purported assignment,
grant or transfer in contradiction of this MOA shall be void ab initio.

 

 
d.
No Third-Party Beneficiaries. MHP is an express intended third-party beneficiary
of the provisions hereof relating to MHP. Except as described in this MOA, no
third Person is a beneficiary of this MOA and no third Person is a guarantor of
the performance by any party, nor shall any third Person have any liability with
respect to the performance by any party. SMI is not liable for MHP and MHP is
not liable for SMI.

 

 
e.
Notices. All notices and other communications to any party under this MOA shall
be in writing and shall be given in writing and shall be given to the party at
its address or facsimile number set forth below or any other address or
facsimile number as the party may hereafter specify for the purpose of notice
hereunder.

 
 
 
 

 
 
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Each notice or other communication shall be effective (1) if delivered in
person, when so delivered, (2) if given by registered or certified (or
comparable) mail, return receipt requested, five (5) business days after deposit
in the mail with postage prepaid, (3) if sent by nationally recognized overnight
air courier (including UPS and Federal Express), on the second business day
after delivery to an overnight air courier service, carriage prepaid, or (4) if
given by facsimile, at the moment of transmission by facsimile if the party
sending the facsimile has telephonically confirmed its successful transmission.
 
Notices to AMIC shall be given to:
 
Advanced Medical Isotope Corporation
Attention: James Katzaroff
6208 W. Okanogan Ave.
Kennewick, Wa. 99336
Fax: +1 (509) 736-4007
Email: jkatzaroff@isotopeworld.com
 
Notices to SMI shall be given to:
 
Spivak Management Inc.
Attn: Kenin M. Spivak
450 North Roxbury Drive, 7th Floor
Beverly Hills, California 90210
Fax: +1 (310) 691-5809
Email: kspivak@SMImanagement.com
 
With a copy to:
 
SML LLP
Attention: Ted Maloney
450 North Roxbury Drive, 7th Floor
Beverly Hills, California 90210
Fax: +1 (424) 238-2162
Email: tmaloney@SML-LLP.com
 

 
f.
Governing Law. This MOA will be governed by and interpreted in accordance with
the law of the State of California, without regard to conflicts of law
provisions thereof.

 
 
 
 
 
 
 
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g.
Dispute Resolution. Any controversy or claim arising out of or relating to this
MOA, or any breach hereof, shall be submitted to JAMS and settled by
confidential arbitration in accordance with the commercial arbitration rules of
JAMS (the "JAMS Rules"), which JAMS Rules are deemed to be incorporated by
reference into this paragraph. THE PARTIES EACH HEREBY WAIVE THE RIGHT TO TRIAL
BY JURY IN CONNECTION WITH ANY CONTROVERSY OR CLAIM ARISING OUT OF THIS
AGREEMENT OR THE BREACH HEREOF. Arbitration will be conducted by a single
arbitrator, unless the parties agree otherwise. The language of arbitration
shall be in English and the arbitral award shall be final and binding on the
parties. The arbitrator(s) shall apply the rules of evidence under California
law. The decision reached by the arbitrator may be entered as a judgment of any
court whose jurisdiction covers the venue of the arbitration proceeding. The
place of the arbitration shall be Beverly Hills, California, or such other
mutually convenient location as agreed by the parties. The parties waive any and
all objections based on the jurisdiction, venue or proceedings set forth in this
paragraph. All fees and expenses of the arbitrator(s) shall be initially borne
on a pro rata basis by the parties, but shall be recoverable by the prevailing
party. If any party fails to pay its share of the fees and expenses of the
arbitrator(s) when and as due then the other party may request upon ten (10)
days written notice to all parties, and the arbitrator(s) shall enter, an award
by default against the non-paying party, unless such fees are paid within such
ten-day (10-day) period. All fees and expenses of counsel to each party shall be
initially borne by such party, but the arbitrator(s) shall award the prevailing
party reasonable costs and expenses, including reasonable attorneys' fees and
expert witness fees, to resolve the dispute and to enforce the final judgment.

 

 
h.
Waiver. Any waiver of the provisions of this MOA or of a party's rights or
remedies under this MOA must be in writing to be effective. Failure, neglect or
delay by a party to enforce the provisions of this MOA or its rights or remedies
at any time will not be construed to be deemed a waiver of such party's rights
under this MOA and will not in any way affect the validity of the whole or any
part of this MOA or prejudice such party's right to take subsequent action.

 

 
i.
Attorneys’ Fees and Litigation Costs. In any arbitration or other proceeding by
which one party either seeks to enforce its rights under this MOA (whether in
contract, tort, or otherwise) or seeks a declaration of any rights or
obligations under this MOA, the prevailing party shall be awarded reasonable
costs and expenses, including reasonable attorneys' fees and expert witness
fees, to resolve the dispute and to enforce the final judgment.

 

 
j.
Severability. If a court or an arbitrator of competent jurisdiction holds any
provision of this MOA to be illegal, unenforceable or invalid in whole or in
part for any reason: (1) such provision shall be in good faith adjusted rather
than voided, if possible, to achieve the intent of the parties, (2) this MOA
shall be read as if the invalid, illegal or unenforceable words or provisions
had to that extent been deleted, and (3) the validity of the remainder of this
MOA shall not be affected thereby unless an essential purpose of this MOA would
be defeated by the loss of the illegal, unenforceable, or invalid provisions.

 

 
k.
Entire Agreement. This MOA, including the agreements referenced herein,
expresses the entire understanding of the parties with respect to the subject
matter hereof. This MOA supersedes any terms or conditions contained on printed
forms submitted with purchase orders, sales acknowledgments or invoices or any
other form. This MOA also supersedes all previous agreements, representations or
other communications (whether written or oral) between the parties relating to
the subject matter hereof, but not as to any other agreement pertaining to AMIC,
SMI or Persons related thereto. There are no representations, warranties or
other agreements between the parties (whether express or implied) in connection
with the subject matter of this MOA except as specifically set forth herein.

 
 
 
 
 
 
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l.
Modifications. This MOA may not be modified, amended or waived, except by a
writing executed by both of the parties hereto. Under no circumstance or
conditions shall any other conduct be relied upon by the parties.

 

 
m.
Force Majeure. No party shall be liable for any delays or failures in
performance due to circumstances beyond its reasonable control. In the event of
the happening of such a cause, the party whose performance is so affected will
give prompt, written notice to the other party, stating the period of time the
same is expected to continue.

 

 
n.
Representation by Legal Counsel. Each party has had access to legal counsel
prior to the execution of this MOA. AMIC acknowledges that the law firm of SML
LLP has represented SMI in the preparation and negotiation of this MOA. Certain
individuals who are partners of SML LLP are principals in SMI or MHP and will
separately provide services in such capacities to AMIC pursuant to the
provisions hereof and the related consulting agreements. AMIC waives any
objection based upon conflict of interest, or otherwise, as to the foregoing
engagements, activities and financial arrangements. AMIC further understands
that SML LLP does not represent AMIC in connection with the negotiation of this
MOA but will represent AMIC in the future on other matters and AMIC consents
thereto.

 

 
o.
Counterparts and Signature Validity. This MOA may be executed in several
counterparts and all counterparts so executed shall constitute one agreement
that is binding on all parties, notwithstanding that all parties are not
signatories to the original or the same counterpart. Facsimile and PDF
signatures shall be acceptable as if original signatures had been exchanged.

 
 
 
 
 
 

 
 
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IN WITNESS WHEREOF, the parties have executed this Memorandum of MOA by their
duly authorized representatives.
 

 
ADVANCED MEDICAL ISOTOPE CORPORATION
         
 
By
/s/ James C. Katzaroff       Name: James C. Katzaroff       Title: CEO          

 
 

 
SPIVAK MANAGEMENT INC.
         
 
By
/s/ Kenin M. Spivak       Name: Kenin M. Spivak       Title: President          

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11

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APPENDIX - STANDARD & GENERAL TERMS & CONDITIONS ("STANDARD TERMS")
 
1.           Applicability of Standard Terms. Except as expressly set forth in
these Standard Terms pertaining to choice of law, dispute resolution and related
matters, including damage limitations and representations and notice, these
Standard Terms govern only the relationship between Consultant and Client as to
Consultant's consulting engagement by Client as set forth in Section 10 of the
MOA (as defined below) to which these Standard Terms are attached or into which
they are incorporated. Except with respect to the consulting engagement and the
foregoing provisions, no definitions or other provisions of these Standard Terms
are intended to be read into or integrated with any Party Agreement for any
purpose.
 
2.             Certain Definitions.
 
As used in these Standard Terms, the following terms have the following
meanings:
 
"Applicable Law" means the law set forth in Section 13 below as the governing
law of this Agreement.
 
"Agreement" means the MOA and these Standard Terms.
 
"Client" means the Person with whom Consultant is contracting in the Agreement.
 
"Consultant" means Spivak Management Inc., a California corporation.
 
"Intellectual Property Rights" means intellectual property rights recognized in
any country or jurisdiction in the world, including (1) patents, patent
applications, patent disclosures, and rights of priority; (2) trademarks,
service marks, trade dress, trade names, Internet domain names, slogans, logos,
and corporate names and registrations and applications for registration together
with all the goodwill associated therewith; (3) copyrights (registered or
unregistered), moral rights, and copyrightable works and registrations and
applications for registration thereof; (4) computer software, data, databases,
and related documentation; (5) trade secrets and other confidential information
including ideas, inventions (whether or not patentable and whether or not
reduced to practice), know-how, negative know-how, research information,
drawings, specifications, designs, plans, proposals, financial and marketing
plans, employee information, customer lists, supplier lists, and related
information and marketing materials; and (6) other intellectual property rights.
 
"MOA" means the Memorandum of Agreement for Strategic Relationship dated as of
August 19, 2011 and by and between Advanced Medical Isotope Corporation, a
Delaware corporation and Spivak Management Inc., a California corporation to
which these Standard Terms are an attachment or is otherwise incorporated by
reference, excluding these Standard Terms.
 
"Party" shall refer to Client and Consultant, as applicable, and "Parties" shall
include each Party that is signatory to the Party Agreement involved.
 
"Party Agreements" means and includes this Agreement and any related agreements
to all or any of the foregoing entered into by or among the Parties and relating
to the same subject matter as the Agreement or that are referred to herein and
that survive the execution and delivery of the Agreement by the Parties.
 
"Person" means any natural individual, legal person, firm, corporation, limited
liability company, limited partnership, association, trust, charity, government
department, agency, unit or other entity, or any other group or entity.

 
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"Responsible Officer" means the most senior executive officer of Client.
 
"Rule" means any applicable law, rule, regulation or other provision with the
force of law.
 
3.            Authority. Except as otherwise expressly provided in a Party
Agreement, Consultant is an independent consultant and contractor to Client; and
neither Consultant nor any of its representatives has any authority with respect
to Client or its business and do not participate as decision-makers with respect
thereto. Except as otherwise expressly provided in a Party Agreement, as between
Consultant and its representatives on one part and Client on the other part,
Client will be the decision-maker in all instances with respect to Client and
its business.
 
4.             Limitation of Role; Devotion of Time.
 
a.
The Parties acknowledge that Consultant has not been engaged as a manager,
agent, attorney, accountant, business manager, personal manager, financial
advisor or any other position for which a professional license is required.
Rather, Consultant has been engaged as a key, senior business consultant.
Although Consultant may express views that affect legal or financial matters,
all such views are expressed hereunder as a businessperson. Client acknowledges
that it will require an attorney to assist in deal structuring and contract
negotiations and that except as set forth in the Party Agreements or agreements
with third Persons, it will retain counsel of its choosing for that purpose.

 
b.
One or more owners, officers or representatives of Consultant may be partners or
otherwise affiliated with the law firm of SML LLP. Client may previously have
engaged or may hereafter engage SML LLP. Any such engagement is entirely
separate from this engagement. SML LLP is not liable for the performance by
Consultant and Consultant is not liable for the performance of SML LLP. No rules
of professional conduct applicable to SML LLP shall be applicable to Consultant.
The financial terms on which each of SML LLP and Consultant are engaged have
been or will be separately negotiated. Client is responsible for separately
determining that the respective financial terms are fair and reasonable to
Client and Client hereby represents and warrants that Client has not and will
not engage Consultant and/or SML LLP unless Client determines that the financial
terms and conditions upon which each such Person is engaged are fair and
reasonable to Client.

 
c.
Client acknowledges that except as expressly set forth in these Standard Terms,
no Party Agreement restricts the activities of Consultant, its affiliates or its
representatives. Consultant's engagement hereunder is non-exclusive, meaning
that Consultant's availability hereunder is subject to Consultant's conflicting
commitments. Without limitation of the foregoing, Consultant may represent or
otherwise act for itself or others, including Persons competitive with Client
and projects that may be competitive with Client's business, during or after the
Term. Client acknowledges that Consultant may have advised and has the right to
continue to advise other Persons who have interests in Client's industry,
including competitive or adverse interests.

 
d.
None of the Party Agreements individually or in the aggregate constitutes a
partnership or joint venture between Consultant and Client, nor do any such
agreements, individually or in the aggregate, impose any fiduciary duties on
Consultant or its representatives. Consultant will determine, in its sole and
absolute discretion, which of its representatives, if any, will perform services
under this Agreement and the amount of time Consultant and/or its
representatives will devote to performing such services, which time likely will
vary over time and from time to time. In performing the services, Consultant
shall solely report to and take instruction from the Responsible Officer.

 
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e.
In the event that any third Person fails for any reason whatsoever to comply
with its representations, warranties, covenants and/or obligations to Client,
Consultant shall not be liable as a result thereof and, without limitation,
Consultant shall not be deemed a party to any agreement between Client and any
third Person.

 
 
f.
No Party Agreement conveys or transfers any Intellectual Property Rights or any
other rights in any invention developed, created or acquired by Consultant or
any representative thereof to Client. In the event Client and Consultant jointly
create, develop or acquire any invention, no exploitation will be made thereof
unless and until the Parties enter into a written agreement setting forth the
terms and conditions thereof.

 
 
g.
As between Client and Consultant, Consultant exclusively owns the copyright and
all other rights therein in any writings of Consultant or any representative
thereof and except as expressly prohibited by the confidentiality provisions of
a Party Agreement, as between Consultant and Client, Consultant has the
exclusive right, power and authority to publish or otherwise use such writings
as elected by Consultant in Consultant's sole discretion and without any
obligation to Client pertaining thereto.

 
5.         No Solicitation; Non-Circumvention:
 
 
a.
During the Term, neither Party will solicit for employment or engagement as an
independent contractor any Person at the time employed by and/or otherwise
working on behalf of the other Party. The foregoing prohibition does not pertain
to engagements of the law firm SML LLP.

 
 
b.
As between Client and Consultant, the identities of Persons, if any, and the
business opportunities, if any, introduced by Consultant to Client are the
exclusive property of Consultant. Client, its officers, and representatives will
not make any contact, deal with, or otherwise become involved with any such
Person or business opportunity, unless Consultant is notified in writing and
compensated as provided for in any applicable Party Agreement. Client
acknowledges and agrees that unauthorized contact without the express written
consent of Consultant with any such Person or business opportunity may cause
harm and/or financial detriment to Consultant. Client further acknowledges the
confidential nature of the introduced Persons and business opportunities and
agrees not to disclose these sources to anyone without the express written
permission of Consultant.

 
6.         Compensation, Expenses and Other Payments.
 
 
a.
It is understood and acknowledged by the Parties that the value of Consultant's
advice is not measurable in any quantitative manner, and that the amount of time
spent rendering consulting advice shall be determined in Consultant's
discretion.

 
 
b.
Except as described in the Party Agreements, Client shall be responsible for
advancing or reimbursing (as elected by Consultant) all costs and expenses
incurred or advanced by Consultant in connection with Consultant's services
hereunder, other than Consultant's general overhead expenses such as
Consultant's rent, domestic telephone service and regular secretarial
assistance. Without limitation of the foregoing, Client will reimburse
Consultant, or at Consultant's request, advance, any costs or expenses incurred
or advanced by Consultant for international telephone, postage, travel expenses,
duplication expenses, binders, special supplies, messenger, courier, attorneys'
fees, and all other expenses incurred directly in connection with Consultant's
activities hereunder. Consultant will not incur any expenses in excess of two
thousand dollars ($2,000) without Client's prior written approval. Travel
expenses will be advanced or promptly reimbursed.

 
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c.
Except as described in the Party Agreements, all amounts payable to Consultant
will be paid by wire transfer to the account designated in writing from time to
time by Consultant. If any payment is not received by Consultant within fifteen
(15) days after it is due, Consultant may suspend services to Client and may
further deem the failure to be a material breach of the Parties' agreement. In
addition to Consultant's other remedies, regardless of whether Consultant
asserts the failure to timely pay to be a breach, Client shall pay to Consultant
interest on the outstanding and unpaid amount, from the date due until paid at
the rate of .75% per month and any courtesy discounts that might be granted in
any invoice will be revoked.

 
7.         Disclosure; Publicity. Both Parties agree that the details connected
with the transactions between the Parties will not be published or disclosed
without the other Party's written permission, provided that this Section will
not prohibit the following disclosures: (1) disclosures required by applicable
Rules; (2) disclosures by Consultant that it has been engaged by Client and the
general nature of the engagement; (3) disclosures by Client that it has engaged
Consultant and the general nature of the engagement; (4) Consultant's disclosure
of information previously disclosed by Client; and (5) disclosures by Consultant
that it deems necessary or appropriate in furtherance of the performance of its
services under this Agreement. Notwithstanding the foregoing, except as required
by applicable Rules, in any press releases, filings or other publicly
disseminated communications pertaining to or concerning this engagement or the
services performed hereunder, the Parties shall consult and mutually approve of
such communications and in any such communications suitable statements will be
made or credit given that Consultant or its designated principals advised
Client.
 
8.         Term and Termination:
 
 
a.
All references in these Standard Terms refer only to the Term of Consultant's
services to Client. Nothing in these Standard Terms governs any other aspects of
the "term" or "period" of the Party Agreements, if any.

 
 
b.
Except as described in this Section 8, the "Term" of Consultant's services shall
be for the period specified in the relevant Party Agreement. At the conclusion
of the Term, Consultant will have no further obligations to render services to
Client. The conclusion of the Term does not affect the parties' indemnification
obligations or the choice of law, dispute resolution, integration, damage
limitation, notice provisions or other similar provisions of these Standard
Terms nor any aspect of the Party Agreements, other than Consultant's
engagement.

 
 
c.
Subject to any specific contrary provision in this Agreement, in the event any
material breach of a Party Agreement by either Party is not corrected within
sixty (60) days after delivery of written notice to the breaching Party
describing such breach, the other Party may terminate the Term of the consulting
engagement under this Agreement.

 
 
d.
If Client terminates the consulting engagement for cause, Client will be
relieved of any further obligation to pay compensation to Consultant. If
Consultant terminates the Consulting engagement for cause, Client will not be
relieved of any obligations to Consultant, Consultant will not have any duty to
mitigate damages and Client will not have any right of set-off should Consultant
nonetheless do so.

 
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9.           Exports of Technology: No products, items, commodities or technical
data or information obtained from a Party nor any direct product of such
technical data or information is intended to be, nor shall be, exported or
re-exported, directly or indirectly, to any destination restricted or prohibited
by applicable Rules without necessary authorization. Notwithstanding anything to
the contrary, no Party will disclose to another Party any information concerning
processing, fabrication and/or equipment which is subject to any applicable
export restrictions without first notifying the Party of these restrictions, and
securing written consent from an officer of the Party to the disclosure.
 
10.         Certain Representations, Acknowledgements and Agreements of Client.
 
 
a.
Except as set forth in the Party Agreements, there are no actions, suits or
proceedings pending or, to the knowledge of Client, threatened against Client or
any of its subsidiaries or any of their respective properties, at law or in
equity, or before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency that are likely to
result in a judgment, decree or order having a material adverse effect on the
business, condition (financial or otherwise) or property of Client and its
subsidiaries, taken as a whole.

 
 
b.
Except where the effect is not likely to have a material adverse effect on the
properties, assets, operations, business or financial condition of Client and
its subsidiaries, taken as a whole, neither Client nor any of its subsidiaries
is in breach of, or in default under (nor has any event occurred which with
notice, lapse of time, or both would constitute a breach of, or default under)
its respective charter, by-laws, or partnership agreement, as applicable, or in
the performance or observance of any obligation, agreement, covenant or
condition contained in any license, indenture, mortgage, deed of trust, bank
loan or credit agreement or any other agreement or instrument to which Client or
any of its subsidiaries is a party or by which any of them or their respective
properties are bound. Each of Client and its subsidiaries has all governmental
licenses, permits, consents, orders, approvals and other authorizations
necessary to conduct its business (collectively, "Licenses"), other than those
Licenses the absence of which is not likely to have a material adverse effect on
the properties, assets, operations, business or financial condition of Client
and its subsidiaries, taken as a whole. Client and each of its subsidiaries are
in compliance in all material respects with all applicable laws, orders, rules,
regulations and directives except where failure to be in compliance is not
likely to have a material adverse effect on the properties, assets, operations,
business or financial condition of Client and its subsidiaries, taken as a
whole.

 
 
c.
Client acknowledges and agrees that Consultant may rely upon and use the data,
material and other information supplied by Client without independently
verifying the accuracy, completeness or veracity of same. Consultant also may
look to others for factual information, economic advice and/or research upon
which to base its advice to Client hereunder as Consultant shall in good faith
deem appropriate. Consultant undertakes no responsibility for the accuracy of
any statements to be made by Client contained in press releases or other
communications, including filings with any regulatory authorities or
governmental agencies. Client will keep Consultant informed of all material
information and developments pertaining to Client's business, finances, legal
issues and capitalization. All information with respect to Client or its
business opportunities provided by or on behalf of Client (including through
counsel) does not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading.

 
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11.          Limitations on Representations and Warranties: Except as expressly
stated in the Party Agreements, no Party makes any warranties or representations
(express, implied or statutory). THE PARTIES EXPRESSLY DISCLAIM ALL SUCH OTHER
WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
PARTICULAR PURPOSE. Notwithstanding anything to the contrary (whether in the
Party Agreements or elsewhere), nothing contained in the Party Agreements shall
be or be construed as a representation, warranty, covenant, or guarantee that:
(1) the result of Consultant's services will be beneficial for Client or that
Client's business will be successful, or (2) that Consultant is conveying any
Intellectual Property Rights to Client.
 
12.         Indemnification:
 

 
a.
To the fullest extent permitted by law, Client shall indemnify and hold
Consultant, its shareholders, directors, officers, employees, agents and
representatives and all those claiming through the foregoing (collectively, the
"Indemnities") harmless from and against all losses, claims, damages,
liabilities or expenses (or actions in respect thereof), including fees, costs,
penalties, judgments, damages and any other amounts of any kind or character,
including counsel, expert, and investigatory fees and costs, arising out of or
related to Client and/or Consultant's engagement, other than as described in
Section c below (collectively, "Losses"). Client shall promptly advance and
shall directly pay all such Losses, as invoiced. Consultant shall have the right
to select counsel and to direct any defense related to the foregoing claims. If
the indemnification provided for in this Section 12 is unavailable or
insufficient to hold harmless an Indemnities in respect of all Losses, then
Client shall contribute to the amount paid or payable by such Indemnities as a
result of such Losses in such proportion as is appropriate to reflect the
relative benefits received by Client and the Indemnities from the transactions
contemplated by the Party Agreements. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law, then
Client shall contribute to such amount paid or payable by Client in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of Client and the Indemnitee in connection with the actions,
inactions, statements or omissions that resulted in such Losses, as well as any
other relevant equitable considerations. The relative benefits received by
Client and the Indemnitees shall be deemed to be in the same proportion as the
total net proceeds from the transactions contemplated by the Party Agreements
(before deducting expenses) received by Client bear to the total compensation
received by Indemnitees. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged act or inaction, untrue
statement of a material fact or the omission or alleged omission to state a
material fact is the responsibility of the respective Party or relates to
information supplied by Client or the Indemnitees and the Parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such act, inaction, statement or omission. The Parties agree that it would not
be just and equitable if contribution were determined by pro rata allocation
(even if the Indemnitees were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above. If any claim is made that, if true, would
prohibit Client from indemnifying any Indemnitee, Client shall nonetheless
provide the indemnification provided for by this Section 12 unless and until a
non-appealable court judgment is entered establishing that such indemnification
or contribution was improper and in such event, the Indemnitee shall reimburse
the amounts improperly indemnified or contributed.

 
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b.
Client will be entitled to participate at its own expense in the defense, or, if
it so elects, to assume the defense of any suit brought to enforce any such
liability, but, if Client elects to assume the defense, such defense shall be
conducted by counsel chosen by Consultant. If Client elects to assume the
defense of any such suit and retain such counsel, the Indemnitee(s), defendant
or defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) Client shall have specifically
authorized the retaining of such counsel or (ii) the parties to such suit
include such Indemnitee(s) and Client, and an Indemnitee has been advised by
counsel that one or more legal defenses may be available it which may not be
available to Client, in which case Client shall not be entitled to assume the
defense of such suit notwithstanding its obligation to bear the fees and
expenses of such counsel.

 

 
c.
Notwithstanding Section a above, Consultant will indemnify Client for direct
Losses arising solely from Consultant's intentional execution, without
authority, of contracts or contract amendments purporting to bind Client once
established by a non-appealable court judgment or a settlement of which
Consultant has approved. The amount to be indemnified will be limited to the
total amount of all fees paid or payable to Consultant under this Agreement.

 

 
d.
This indemnity agreement will be in addition to any liability that Client might
otherwise have to Consultant to any other Person.

 

 
e.
Client shall cause Consultant and any of its designated representatives to be
added as named or additional insured under all errors and omissions insurance
policies, officers and directors insurance policies, general liability insurance
policies and the like obtained by Client or any Person with respect to Client's
business. Consultant and its designated representatives will cooperate in
providing information necessary for the application and issuance of such
insurance policies.

 
13.        Disputes. Except as provided for in a Party Agreement, any dispute
involving the interpretation or application of any Party Agreement, and any
controversy or claim arising out of or relating in any way to any Party
Agreement, or the breach thereof (including as to the validity, scope and
enforceability of this agreement to arbitrate), which has not been resolved
within thirty (30) days after either party has notified the other in writing of
the controversy, shall be finally determined by arbitration in Los Angeles
County, California in accordance with the Commercial Arbitration Rules of JAMS
(the "JAMS Rules") then in effect, except as those JAMS Rules are amended by
this Section. There shall be a single arbitrator who shall be a retired federal
judge. The decision of the arbitrator shall be consistent with applicable law
and shall include written findings of fact and conclusions of law. The standard
of proof in such arbitration shall be clear and convincing evidence and the
burden of proof shall be on the party seeking relief. THE PARTIES UNDERSTAND AND
ACKNOWLEDGE THAT UNDER THIS SECTION, THE PARTIES WAIVE THE RIGHT TO A TRIAL BY
JURY IN CONNECTION WITH ANY ARBITRABLE CONTROVERSY OR CLAIM. Judgment on the
award rendered by the arbitrator may be entered by any court having jurisdiction
thereof. Each Party initially shall bear its own attorneys' fees and costs. IN
THE EVENT FOR ANY REASON THAT THIS SECTION SHALL NOT BE SUFFICIENT OR
ENFORCEABLE AS THE EXCLUSIVE MEANS OF RESOLVING ANY AND ALL DISPUTES RELATING TO
THE PARTY AGREEMENTS OR ANY RIGHTS CREATED HEREBY SHALL BE INSTITUTED IN LOS
ANGELES COUNTY, STATE OF CALIFORNIA. EACH PARTY AGREES TO SUBMIT TO THE
JURISDICTION OF, AND AGREES THAT VENUE IS PROPER IN, LOS ANGELES COUNTY FOR ANY
SUCH LEGAL ACTION OR PROCEEDING.

 
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14.         Applicable Law: Except as provided for in a Party Agreement, the
Party Agreements shall be governed by, construed, enforced and interpreted in
accordance with the internal substantive law of the State of California
applicable to agreements to be made and to be performed solely within such
State, without giving effect to any conflicts or choice of laws principles which
otherwise might be applicable and excluding the United Nations Convention on
Contracts for the Sale of Goods; provided, however, that matters relating to
corporate formalities or other corporate governance issues of Client shall be
governed by the law of its jurisdiction of incorporation or formation.
 
15.         Interim Relief: Nothing in these Standard Terms shall be construed
to preclude any Party from seeking injunctive or other provisional relief in
order to prevent irreparable harm pending mediation or arbitration, provided,
however, that such relief may only be sought within the appropriate judicial
forum as provided in Section 13 above.
 
16.        Legal Fees and Costs: Except as provided for in a Party Agreement,
the substantially prevailing party in any proceeding shall be entitled, in
addition to any other rights and remedies it may have, to reimbursement for the
expenses reasonably incurred by it in such proceeding, including reasonable
attorneys' fees, reasonable costs, reasonable expenses of expert witnesses,
reasonable costs of appeal, and any other reasonable out-of-pocket expenses.
 
17.         Limitations: EXCEPT ONLY AS TO INDEMNIFICATION REGARDING LOSSES PAID
TO UNRELATED THIRD PERSONS, IN NO EVENT WILL ANY PARTY BE LIABLE TO THE OTHER
(1) FOR COSTS OF SUBSTITUTE GOODS, (2) FOR ANY SPECIAL, CONSEQUENTIAL,
INCIDENTAL OR INDIRECT DAMAGES, OR (3) FOR LOSS OF USE, OPPORTUNITY, MARKET
POTENTIAL, GOODWILL AND/OR PROFIT ON ANY THEORY (CONTRACT, TORT, FROM THIRD
PARTY CLAIMS OR OTHERWISE). THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY
FAILURE OF ESSENTIAL PURPOSE OR OF ANY FAILURE OR INADEQUACY OF ANY REMEDY.
 
18.        Force Majeure: Neither Party shall be liable for failure to perform,
in whole or in part, its obligations under this Agreement if such failure is
caused by any event or condition not reasonably within the control of the
affected Party, including by events of nature, fire, flood, typhoon, earthquake,
explosion, strikes, labor troubles or other industrial disturbances, unavoidable
accidents, war (declared or undeclared), acts of terrorism, sabotage, embargoes,
blockage, acts of governmental, judicial, administrative, military or other
authorities, riots, insurrections, or any other cause beyond the control of the
Parties; provided, that the affected Party promptly notifies the other Party of
the occurrence of the event of force majeure and takes all reasonable steps
necessary to minimize the disruption to the other Party and to resume
performance of its obligations so interfered with.
 
19.         Notices: All notices required or permitted to be given under the
Party Agreements shall be in writing and delivered in person, by first class
certified or registered priority mail, postage prepaid, by recognized overnight
courier service for next-day delivery, carriage prepaid, or by telex, electronic
facsimile transmission or electronic mail, if concurrently confirmed or
acknowledged and with a concurrent copy by another permitted means (such as mail
or courier), to the address specified in this Agreement or to such other address
as may be specified in writing by the addressed Party to the other Party in
accordance herewith. Each such notice or other communication shall for all
purposes be treated as effective or as having been given as follows: (1) if
delivered in person, when delivered; (2) if delivered by mail, at the earlier of
its receipt or at 5 p.m., local time of the recipient, or on the seventh day
after deposit in a regularly maintained receptacle for the deposition of mail,
as the case may be; (3) if delivered by courier, on the date shown in the
written confirmation of delivery issued by such courier service; and (iv) if
sent by confirmed telex, electronic facsimile transmission or electronic mail,
at 5 p.m., local time of the recipient on the first business day after confirmed
transmission and proper tender of concurrent delivery. Either Party may change
the address and/or addressee(s) to whom notice must be given by giving
appropriate written notice at least seven (7) days prior to the date the change
becomes effective.

 
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20.          Assignment and Delegation: Except as provided for in a Party
Agreement, none of the Party Agreements nor any of the rights and obligations
created hereunder may be assigned, transferred, pledged, delegated or otherwise
encumbered or disposed of, in whole or in part, whether voluntarily or by
operation of law or otherwise, by any Party without the prior written consent of
the other Party, which consent shall not unreasonably be withheld; provided,
however, that the foregoing shall not restrict or limit the assignment by
Consultant of its rights and delegation of its duties under any Party Agreement
to a company owned or controlled by a constituent of Consultant, subject to the
assumption by such assignee company of all of the obligations of the respective
Consultant company under the assigned Party Agreement. In the event of any such
assignment, the assignee company shall be deemed to be the "Consultant" for all
purposes and intents under the assigned Party Agreement.
 
21.       Certain Rules of Construction.
 

 
a.
Accounting Terms. Unless otherwise indicated in a Party Agreement, all
accounting terms used in these Standard Terms or in the Party Agreements related
to Consultant's engagement shall be construed, and all accounting and financial
computations hereunder or thereunder shall be computed, in accordance with
United States generally accepted accounting principles, applied in a consistent
manner.

 

 
b.
Captions and Section Headings. The captions and section headings appearing in
these Standard Terms or in the Party Agreements related to Consultant's
engagement are included solely for convenience of reference and are not intended
to affect the interpretation of any provision of any Party Agreement.

 

 
c.
Singular and Plural. All terms defined in these Standard Terms or in the Party
Agreements related to Consultant's engagement in the singular form shall have
comparable meanings when used in the plural form and vice versa.

 

 
d.
Time and Date. All references in these Standard Terms or in the Party Agreements
related to Consultant's engagement to a time of day shall mean Pacific Time,
unless otherwise indicated.

 

 
e.
No Interpretation Against a Party. In these Standard Terms and in the Party
Agreements related to Consultant's engagement, no uncertainty or ambiguity shall
be construed or resolved using any presumption against any Party. On the
contrary, each Party acknowledges that each Party Agreement has been reviewed by
its legal counsel and, in the case of any ambiguity or uncertainty, shall be
construed and interpreted according to the ordinary meaning of the words used so
as to fairly accomplish the purposes and intention of the Parties.

 

 
f.
Other References. References in these Standard Terms or in the Party Agreements
related to Consultant's engagement to "Recitals," "Sections," "Exhibits,"
"Schedules," "Appendices," "Annexes," "Attachments" and similar ancillary
materials are to recitals, sections, exhibits, schedules, appendices, annexes,
attachments and similar ancillary materials therein and thereto ("Exhibits")
unless otherwise indicated. References in these Standard Terms or in the Party
Agreements related to Consultant's engagement to any document, instrument or
agreement (including any Party Agreement) (1) shall include all Exhibits
thereto, (2) shall include all documents, instruments or agreements issued or
executed in replacement thereof if such replacement is permitted thereby, and
(iii) shall mean such document, instrument or agreement, or replacement or
predecessor thereto, as amended, modified and supplemented from time to time and
in effect at any given time if such amendment, modification or supplement is
permitted thereby.

 
 
 

 
 
Appendix - Page 9 of 11

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g.
Additional Rules of Construction. The words "hereof," "herein" and "hereunder"
and words of similar import when used in any Party Agreement related to
Consultant's engagement shall refer to the Party Agreement as a whole and not to
any particular provision of the Party Agreement. Unless the context clearly
requires otherwise (1) the plural and singular numbers shall each be deemed to
include the other; (2) the masculine, feminine and neuter genders shall each be
deemed to include the others; (3) "shall", "will" or "agrees" are mandatory and
"may" is permissive; (4) "or" is not exclusive, and (5) "includes" and
"including" are not limiting and mean "without limitation."

 
 
h.
Other Agreements. In the event of any inconsistency between the terms of a Party
Agreement and the terms of any other agreement among the Parties, the terms of
the subsequent agreement shall govern. In the event of any inconsistency between
the terms of these Standard Terms and the terms of the MOA, the terms of the MOA
shall govern.

 
22.          Miscellaneous:
 
Except as expressly set forth in this Section, all references to the Party
Agreements mean and refer to these Standard Terms and those provisions of the
Party Agreements relating to Consultant's engagement by Client.
 
 
a.
Except as described in a Party Agreement, no third Person is a beneficiary of
Consultant's engagement and no third Person is a guarantor of the performance by
any Party, nor shall any third Person have any liability with respect to the
performance by any Party.

 
 
b.
The Party Agreements and their Exhibits, all of which are incorporated herein by
reference, set forth the entire understanding between the Parties with respect
to the subject matter hereof and thereof and merge all prior agreements,
dealings, negotiations, promises, representations and communications. The terms
of the Party Agreements shall govern any and all exchanges of confidential
information regardless of any other document signed and/or executed or agreement
made prior to the date hereof.

 
 
c.
Each Party expressly represents and warrants that it is free to enter into the
Party Agreements as it relates to Consultant's engagement and that it has not
made and will not make any creations or commitments in conflict with the
provisions of the Party Agreements as it relates to Consultant's engagement, or
which reasonably might interfere with the full and complete performance of its
obligations under the Party Agreements as it relates to Consultant's engagement.
As it relates to Consultant's engagement, each Party further represents and
warrants that the Party Agreements, and the performance of its respective
obligations under the Party Agreements, and the consummation of the transactions
contemplated under the Party Agreements have been duly authorized and approved
by all necessary action, and all necessary consents or permits have been
obtained, and neither the execution of the Party Agreements nor the performance
of the Party's obligations under the Party Agreements will violate any term or
provision of any valid contract or agreement to which such Party is subject
and/or by which such Party is bound. For all purposes, no further actions or
consents are necessary to make the Party Agreements valid and binding contract,
enforceable against the respective Parties in accordance with their terms.

 
Appendix - Page 10 of 11

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d.
No Party shall be entitled to act on behalf of and/or to bind any other Party.

 

 
e.
No provision of any Party Agreement may be modified, amended or waived, and no
Party's rights or remedies under ant Party Agreement may be waived, except by a
writing executed by authorized representatives of the Parties. Under no
circumstance or conditions shall any other conduct be relied upon by the
Parties. Failure, neglect or delay by a Party to enforce the provisions of this
Agreement or its rights or remedies at any time will not be construed to be
deemed a waiver of such Party's rights under a Party Agreement and will not in
any way affect the validity of the whole or any part of the Party Agreement or
prejudice such Party's right to take subsequent action.

 

 
f.
If a court or an arbitrator of competent jurisdiction holds any provision of any
Party Agreement to be illegal, unenforceable or invalid in whole or in part for
any reason: (1) such provision shall be in good faith adjusted rather than
voided, if possible, to achieve the intent of the Parties, (2) the Party
Agreement shall be read as if the invalid, illegal or unenforceable words or
provisions had to that extent been deleted, and (3) the validity of the
remainder of the Party Agreement shall not be affected thereby unless an
essential purpose of the Party Agreement would be defeated by the loss of the
illegal, unenforceable, or invalid provisions.

 

 
g. 
This Agreement may be executed in several counterparts and all counterparts so
executed shall constitute one agreement that is binding on all Parties,
notwithstanding that all Parties are not signatories to the original or the same
counterpart. Facsimile and PDF signatures shall be acceptable as if original
signatures had been exchanged.

 
 
 

 
 
 
 
 
 
 
 
 
Appendix - Page 11 of 11

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