Document:

ex10-1.htm

Exhibit 10.1

 

 

EMPLOYMENT AGREEMENT

 

 

This Employment Agreement (“Agreement”), dated as of July   , 2012, (the “Effective Date”) is made and entered into by and between SeaBright Insurance Company an Illinois domiciled insurance company and wholly-owned subsidiary of SeaBright Holdings, Inc. (collectively, “Employer”), and Neal A. Fuller (“Executive”).

WHEREAS, Employer and Executive entered into a Revised Offer Letter (“Offer Letter”) on August 25, 2011, through which Executive agreed to certain terms in exchange for a position of employment with Employer as Senior Vice President Chief Financial Officer and Assistant Secretary, a copy of which Offer Letter is attached hereto as Exhibit “A”;

WHEREAS, Employer and Executive entered into an Amendment to Employment Offer Letter Agreement (“Offer Letter Amendment”) on February 21, 2012, a copy of which Offer Letter Amendment is attached hereto as Exhibit “B”;

WHEREAS, Employer and its parent company, SeaBright Holdings, Inc., a Delaware Corporation and all of its subsidiary companies on the one hand, and Executive on the other hand entered into a Confidentiality and Nonuse Agreement on August 11, 2011 through which Executive agreed to maintain the confidentiality of Employer’s Proprietary Information and through which Executive acknowledged Employer’s ownership of certain intellectual property, a copy of which Confidentiality and Nonuse Agreement is attached hereto as Exhibit “C”;

WHEREAS, Executive continues in his position of Senior Vice President, Chief Financial Officer and Assistant Secretary without change or interruption; and

WHEREAS, Executive and Employer now wish to terminate and supersede their respective obligations under the August 25, 2012 Offer Letter and the February 21, 2012 Offer Letter Amendment, and to be bound by the terms of this Agreement.

NOW THEREFORE, in consideration of the foregoing recitals, which shall constitute a part of this Agreement, and of the mutual promises contained herein, and intending to be legally bound, the parties agree as follows:

1.           PERIOD OF EMPLOYMENT.  Executive will be employed by Employer on an at will basis subject to the provisions of Section 4.

2.           POSITION AND RESPONSIBILITIES.

(a)           Position.  Executive accepts continued employment with Employer as Senior Vice President, Chief Financial Officer and Assistant Secretary and shall perform all services appropriate to that position, as well as such other services as may be assigned by Employer.  Executive shall devote his best efforts and full-time attention to the performance of his duties.  Executive shall be subject to the direction of Employer, which shall retain full control of the means and methods by which he performs the above services and of the place(s) at which all services are rendered.  Executive shall be expected to travel if necessary or advisable in order to meet the obligations of his position.

 

  

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(b)           Other Activity.  Except upon the prior written consent of Employer, Executive (during the Period of Employment) shall not (i) accept any other employment; or (ii) engage, directly or indirectly, in any other business, commercial, or professional activity (whether or not pursued for pecuniary advantage) that is competitive with Employer, creates a conflict of interest with Employer, or otherwise interferes with the business of Employer or any Affiliate (and shall immediately cease any such ongoing activity that becomes so competitive, begins to create such a conflict or begins to interfere with the business of Employer or any Affiliate).  An “Affiliate” shall mean any person or entity that directly or indirectly controls, is controlled by, or is under common control with Employer.

3.             COMPENSATION AND BENEFITS.

(a)           Salary.  In consideration of the services to be rendered under this Agreement, Employer shall pay Executive per year (“Base Salary”) of $350,000, payable in regular installments in accordance with Employer’s general payroll policies for salaried employees, in effect from time to time.  All compensation and comparable payments to be paid to Executive under this Agreement shall be less all applicable withholdings required by law.  Executive’s Base Salary will be reviewed for market and performance adjustments within ninety (90) days of the beginning of each calendar year during the Period of Employment by Employer’s Board of Directors (the “Board”) and may be adjusted after such review in the Board’s sole discretion.

(b)           Sign-on Bonus.  Executive received a sign on bonus of $65,000 on September 15, 2011.  This bonus is subject to 100% recapture should Executive not be employed by Employer or not be an employee in good standing twelve (12) months from the bonus payment date.  This recapture provision will not apply if Employer experiences a material change in control and, as a result, Executive’s position is eliminated or Executive’s compensation package is substantially reduced.

(c)           Bonus.  Executive will be eligible to receive an annual bonus in a target amount equal to 65% of Executive’s Base Salary, earned as of December 31st of each year, based upon achievement by Executive and achievement by Employer of performance criteria and other goals established by the Board (after consultation with Employer) on an annual basis prior to the commencement of each calendar year or as soon as reasonably practicable thereafter.  The bonus payable in respect of any given year during the Period of Employment shall be paid within thirty (30) days following the delivery of Employer’s annual audited statutory financial statements for such year.  Executive must be employed by Employer on the last day of the calendar year for which any bonus relates in order to receive any such bonus hereunder.  The target amount of Executive’s bonus as set forth above will be reviewed for market and performance adjustments within sixty-five (65) days of the beginning of each calendar year during the Period of Employment by the Board and may be adjusted after such review in the Board’s sole discretion.

 

  

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(d)           Benefits.  Executive shall be entitled to vacation leave in accordance with Employer’s standard policies for salaried employees, in effect from time to time.  Effective upon hire, Executive is entitled to an amount equal to four weeks vacation annually, plus floating holidays as provided in Employer’s vacation policy and holiday schedule.  Executive's vacation allowance accrues based on date of hire.  As Executive becomes eligible, he shall have the right to participate in and to receive benefits from all present and future benefit plans specified in Employer’s policies and generally made available to salaried employees of Employer from time to time.  The amount and extent of benefits to which Executive is entitled shall be governed by the specific benefit plan, as amended.  Executive also shall be entitled to any benefits or compensation tied to termination as described in Section 4.  Employer reserves the ability, in its sole discretion, to adjust benefits provided to Executive in connection with the adjustment of benefits to salaried employees.  No statement concerning benefits or compensation to which Executive is entitled shall alter in any way the term of this Agreement, any renewal thereof, or its termination.

(e)           Expenses.  Employer shall reimburse Executive for reasonable travel and other business expenses incurred by Executive in the performance of his duties, subject to reasonable documentation thereof and in accordance with Employer’s policies in effect from time to time.

(f)           Sign-On Restricted Stock.  Effective October 19, 2011 (the date of grant), Employer granted Executive 75,076 shares of restricted stock equaling $500,006 on the date of grant, awarded pursuant to SeaBright Holdings, Inc.’s Amended and Restated 2005 Long-Term Equity Incentive Plan (the “2005 Plan”) as amended and restated as of April 4, 2012.  This grant made in connection with Executive’s sign-on is subject to Employer’s customary vesting schedule which is three year “cliff vesting.”  Upon the third anniversary of the date of the grant, the restricted stock shall vest 100%.  Prior to vesting, restricted stock may not be sold, pledged or transferred and is subject to other conditions and restrictions more fully described in the Plan.

(g)           Restricted Stock and Incentive Stock Option Guarantee.  For the 2012 performance year only, Executive is also entitled to a restricted stock and an incentive stock option award guarantee with a total value of $350,000, such award to be 75% restricted stock and 25% incentive stock options.  This Agreement contemplates that the foregoing restricted stock and incentive stock option awards totaling $350,000 will be made in the first quarter of calendar year 2013, subject to the approval of the Compensation Committee, with the restricted stock cliff vesting in 2016 and the incentive stock options vesting ratably over 4 years.   All shares of restricted stock and incentive stock options are granted on the terms and conditions pursuant to the 2005 Plan, attached to and incorporated into this Agreement as Exhibit D.

 

  

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(h)           Withholding.  Any and all payments made pursuant to this Agreement shall be subject to all withholding required in accordance with applicable federal, state or local law.

4.             TERMINATION OF EMPLOYMENT.

(a)           By Employer Without Cause.  At any time, Employer may terminate Executive without Cause (as defined below), effective as of the date specified in a written notice from Employer to Executive.  Employer may discipline or demote Executive with or without Cause and with or without prior notice.  Employer may discipline, demote, or dismiss Executive as provided in this Section 4 notwithstanding anything to the contrary contained in or arising from any statements, policies or practices of Employer relating to the employment, discipline, or termination of its employees.  If Executive’s employment with Employer is terminated by Employer without Cause, Executive shall be entitled to continue to receive his Base Salary payable in regular installments as special severance payments from the date of termination for a period of twelve (12) months thereafter, or until Executive obtains other employment (but with it being understood that Executive shall be under no duty to seek alternative employment during the Severance Period), whichever first occurs (the “Severance Period”), if and only if Executive has executed and delivered to Employer the General Release substantially in form and substance as set forth in Exhibit E attached hereto and only so long as Executive has not revoked or breached the provisions of the General Release or breached the provisions of this Agreement or any ancillary agreement and does not apply for unemployment compensation chargeable to Employer during the Severance Period, and Executive shall not be entitled to any other salary, compensation or benefits after termination of the Period of Employment, except as specifically provided for in Employer’s employee benefit plans or as otherwise expressly required by applicable law (such as COBRA).  Notwithstanding anything to the contrary contained in this Section 4(a), in the event Executive breaches the provisions of this Agreement or any ancillary agreement, the severance amounts payable by Employer under this Section 4(a) shall not terminate unless and until more than ten (10) days have elapsed from and after the date written notice of such breach has been delivered to Executive without such breach having been cured during such 10-day period.

 

  

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(b)           By Employer For Cause.  At any time, and without prior notice (except as otherwise provided in the definition of Cause set forth below), Employer may terminate Executive for Cause.  Employer shall pay Executive all compensation then due and owing; thereafter, all of Employer’s obligations under this Agreement shall cease.  Termination shall be for “Cause” if Executive: (i) is inattentive to his lawful duties after at least one written notice has been provided to Executive and Executive has failed to cure the same within a 30-day period thereafter; (ii) reports to work under the influence of alcohol or illegal drugs, or uses illegal drugs (whether or not at the workplace); (iii) engages in  conduct causing the Employer  public disgrace or disrepute or economic harm; (iv) breaches his duty of loyalty to Employer or engages in any acts of dishonesty or fraud with respect to Employer or any of its business relations; (v) is convicted of a felony or any crime involving dishonesty, breach of trust, or physical or emotional harm to any person (or enters a plea of guilty or nolo contendere with respect thereto); (vi) breaches any material term of this Agreement, any ancillary agreement or any other agreement between Executive and Employer or any of Employer's Affiliates and such breach (if capable of cure) is not cured within thirty (30) days following written notice thereof from Employer, except that Executive acknowledges that a breach of his obligations under Section 2(b) of this Agreement cannot be cured; (vii) is insubordinate; (viii) engages in improper conduct towards any employee or agent of Employer or Employer's Affiliates; or (ix) is terminated for substandard performance.  For purposes of this Agreement, “substandard performance” shall be defined as willful refusal to perform or substantial disregard of duties properly assigned by Employer or their Affiliates.  The Board shall give Executive written notice of the Board’s concern over Executive’s performance, and Executive shall have thirty (30) days to prepare for a meeting with the Board, at which time Executive may present any information on market competitive conditions and any other factors bearing on his and Employer’s performance.  After consideration of these and such other factors as the Board may deem relevant, if a majority of the Board determines in good faith that Employer’s future performance would be best served by a change in management, the Board may terminate Executive’s employment for “substandard performance” following the expiration of such 30-day period.

(c)           Voluntary Termination by Executive.  At any time, Executive may terminate his employment for any reason, with or without cause, by providing Employer at least thirty (30) days’ advance written notice.  Employer shall have the option, in its complete discretion, to make Executive’s termination effective at any time prior to the end of such notice period.  On the date of such termination, Employer shall pay Executive all compensation then due and owing through such date; and, thereafter, all of Employer’s obligations under this Agreement shall cease.

(d)           Termination Upon Death or Permanent Disability.  Executive’s employment with Employer shall also terminate upon Executive’s death or permanent mental or physical disability or other incapacity (as determined by the Board in its good faith judgment).  Upon any such termination, Employer shall pay Executive (or Executive’s estate or legal representative or guardian) all compensation then due and owing; thereafter, all of Employer’s obligations under this Agreement shall cease.

(e)           Termination of Compensation.  Except as otherwise expressly provided herein, all of Executive’s rights to salary, bonuses, employee benefits and other compensation hereunder which would have accrued or become payable after the termination or expiration of the Period of Employment shall cease upon such termination or expiration, other than those expressly required under applicable law (such as COBRA).

 

  

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(f)           Termination Obligations.

(i)           Executive agrees that all property, including, without limitation, all equipment, tangible Proprietary Information (as defined below), documents, books, records, reports, notes, contracts, lists, computer disks (and other computer-generated files and data), and copies thereof, created on any medium and furnished to, obtained by, or prepared by Executive in the course of or incident to his employment, belongs to Employer and shall be returned promptly to Employer upon termination of the Period of Employment.

(ii)         All employee and other benefits to which Executive is otherwise entitled shall cease upon Executive’s termination, unless explicitly continued either under this Agreement or under any specific written policy or benefit plan of Employer.

(iii)        Upon termination of the Period of Employment, Executive shall be deemed to have resigned from all offices and directorships then held with Employer or any Affiliate.

(iv)         The representations and warranties contained in this Agreement and Executive’s obligations under this Section 4(f) shall survive the termination of the Period of Employment and the expiration of this Agreement.

(g)           For sixty (60) days following any termination of the Period of Employment, Executive shall cooperate in a reasonable manner with Employer in all matters relating to the winding up of pending work on behalf of Employer and the orderly transfer of work to other employees of Employer.  At all times following any termination of the Period of Employment, Executive shall also cooperate in the defense of any action brought by any third party against Employer that relates in any way to Executive’s acts or omissions while employed by Employer; provided that Employer shall reimburse Executive for his reasonable out-of-pocket expenses after being provided with reasonable documentation of such expenses.

5.           NONCOMPETITION.  Executive acknowledges and agrees with Employer that Executive’s services to Employer are unique in nature and that Employer’s goodwill would be irreparably damaged if Executive were to provide similar services to any person or entity competing with Employer or engaged in a similar business.  Executive accordingly covenants and agrees with Employer that:

(a)           Commencing with the termination of Executive’s employment with Employer for any reason and continuing for 1 year from said termination date (the “Non-Competition Period”), Executive shall not directly or indirectly, either for himself or for any other individual, corporation, partnership, joint venture or other entity, participate in any business (including, without limitation, any division, group or franchise of a larger organization) anywhere in the world which engages or which proposes to engage in the promotion, service, underwriting, issuance or sale of insurance policies providing United States Longshoremen and Harbor Worker’s coverage,  other coverage under the Jones Act,  State Act workers’ compensation insurance, related workers’ compensation or similar insurance or reinsurance, or any alternative dispute resolution insurance or which engages in or proposes to engage in  any other business hereafter conducted by Employer or its Affiliates prior to Executive’s termination (collectively, the “USL&H Business”).  For purposes of this Agreement, the term “participate in” shall include, without limitation, having any direct or indirect interest in any corporation, partnership, joint venture or other entity, whether as a sole proprietor, owner, stockholder, partner, joint venturer, creditor or otherwise, or rendering any direct or indirect service or assistance to any individual, corporation, partnership, joint venture and other business entity (whether as a director, officer, manager, supervisor, employee, agent, consultant or otherwise).  Without limiting the generality of the foregoing, Executive agrees that during the Non-Competition Period he will not, directly or indirectly, either for himself or for any other individual, corporation, partnership, joint venture or other entity, form or acquire any insurance company licensed to write or service USL&H Business.

 

  

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(b)           If, at any time of enforcement of this Agreement, a court or arbitrator shall hold that the duration, scope or area restrictions, stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographic area reasonable under such circumstances shall be substituted for the stated period, scope or geographic area reasonable under such circumstances and that the court shall be allowed and directed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law.

(c)           In the event of an alleged breach or violation by Executive of Section 5 of this Agreement during the 1 year Non-Competition Period beginning on the date of Executive’s termination and continuing for 1 year thereafter, the period of Executive’s non-competition shall be tolled until such alleged breach or violation has been duly cured.

(d)           Executive agrees that the restrictions contained in this Section 5 are reasonable and that Executive has received adequate and valuable consideration in exchange therefore.

6.             NONSOLICITATION.  Commencing with the termination of Executive’s employment with Employer for any reason, and continuing for 1 year from said termination date, Executive shall not directly or indirectly induce or attempt to induce any employee of Employer to leave the employ of Employer or their Affiliates, or in any way interfere with the relationship between Employer or their Affiliates and any employee thereof (other than through general advertisements for employment not directed at employees of Employer).

7.             NONDISCLOSURE AND NONUSE OF PROPRIETARY INFORMATION.

(a)           Executive shall not disclose or use at any time, either during his employment with Employer or thereafter, any Proprietary Information (as defined below) of which Executive is or becomes aware, whether or not such information is developed by him, except to the extent that such disclosure or use is directly related to and required by Executive’s performance of duties assigned to Executive by Employer.  Executive shall take all appropriate steps to safeguard Proprietary Information and to protect it against disclosure, misuse, espionage, loss and theft.  The foregoing shall not, however, prohibit disclosure by Executive of Proprietary Information that has been published in a form generally available to the public prior to the date Executive proposes to disclose such information.  Information shall not be deemed to have been published merely because individual portions of the information have been separately published, but only if all material features comprising such information have been published in combination.

 

  

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(b)           As used in this Agreement, the term “Proprietary Information” means all information of a confidential or proprietary nature (whether or not specifically labeled or identified as “confidential”), in any form or medium, that relates to or results from the business, historical or projected financial results, products, services or research or development of Employer or their Affiliates or their respective suppliers, distributors, customers, independent contractors or other business relations.  Proprietary Information includes, but is not limited to, the following:  (i) internal business information (including, without limitation, historical and projected financial information and budgets and information relating to strategic and staffing plans and practices, business, training, marketing, promotional and sales plans and practices, cost, rate and pricing structures and accounting and business  methods); (ii) identities of, individual requirements of, specific contractual arrangements with, and information about, Employer’s and their Affiliates’ suppliers, distributors, customers, independent contractors or other business relations and their confidential information; (iii) trade secrets, technology, know-how, compilations of data and analyses, techniques, systems, formulae, research, records, reports, manuals, flow charts, documentation, models, data and data bases relating thereto; (iv) computer software, including, without limitation, operating systems, applications and program listings; (v) inventions, innovations, ideas, devices, improvements, developments, methods, processes, designs, analyses, drawings, photographs, reports and all similar or related information (whether or not patentable and whether or not reduced to practice); (vi) copyrightable works; (vii) intellectual property of every kind and description; and (viii) all similar and related information in whatever form.

8.             EMPLOYER’S OWNERSHIP OF INTELLECTUAL PROPERTY.

(a)           In the event that Executive at any time during the term of his employment, and at anytime during said term including during non-working hours and when Executive is engaged in activity outside the course and scope of his employment with Employer, generates, authors, conceives, develops, acquires, makes, reduces to practice or contributes to any idea, discovery, trade secret, invention, innovation, improvement, development, method of doing business, process, program, design, analysis, drawing, report, data, software, firmware, logo, device, method, product or any similar or related information (whether or not patentable or reduced to practice or comprising Proprietary Information), any copyrightable work (whether or not comprising Proprietary Information) or any other form of Proprietary Information which is related to Employer’s business or actual or demonstrably anticipated research or development (collectively, “Intellectual Property”), Executive acknowledges that such Intellectual Property is and shall be the exclusive property of Employer.  Any copyrightable work prepared in whole or in part by Executive shall be deemed “a work made for hire” to the maximum extent permitted under Section 201(b) of the 1976 Copyright Act as amended, and Employer shall own all of the rights comprised in the copyright therein.  Without limiting the generality of the foregoing, Executive hereby assigns his entire right, title and interest in and to all Intellectual Property to Employer.  Executive shall promptly and fully disclose all Intellectual Property to Employer and shall cooperate with Employer to protect Employer’s interests in and rights to such Intellectual Property (including, without limitation, providing reasonable assistance in securing patent protection and copyright registrations and executing all documents as reasonably requested by Employer, whether such requests occur prior to or after termination of Executive’s employment with Employer).

 

  

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(b)          Notwithstanding the foregoing, however, Employer shall not own and Executive shall have no obligation to assign to Employer any invention otherwise falling within the definition of Intellectual Property for which no equipment, supplies, facility, or trade secret information of Employer was used and that was developed entirely on Executive’s own time, unless:  (i) such Intellectual Property relates (A) to Employer’s business or (B) to their actual or demonstrably anticipated research or development, or (ii) the Intellectual Property results from any work performed by him for them under this Agreement.  Executive has identified and described in detail on an attachment hereto initialed by each of the undersigned party’s or their authorized representatives, all Intellectual Property that is or was owned by him or was written, discovered, made, conceived or first reduced to practice by him alone or jointly with another person prior to his employment under this Agreement.  If no such Intellectual Property is listed, Executive represents to Employer that he does not now nor has he ever owned, nor has he made, any such Intellectual Property.

9.             ARBITRATION.

(a)           Arbitrable Claims.  To the fullest extent permitted by law, all disputes between Executive (and his attorneys, successors, and assigns) and Employer (and their Affiliates, shareholders, directors, officers, employees, agents, successors, attorneys, and assigns) of any kind whatsoever, including, without limitation, all disputes relating in any manner to the employment or termination of Executive, and all disputes arising under this Agreement (“Arbitrable Claims”) shall be resolved by arbitration.  All persons and entities specified in the preceding sentence (other than Employer and Executive) shall be considered third-party beneficiaries of the rights and obligations created by this Section on Arbitration.  Arbitrable Claims shall include, but are not limited to, contract (express or implied) and tort claims of all kinds, as well as all claims based on any federal, state, or local law, statute, or regulation, excepting only claims under applicable workers’ compensation law and unemployment insurance claims.  By way of example and not in limitation of the foregoing, Arbitrable Claims shall include (to the fullest extent permitted by law) any claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Rev. Code of Washington Sections 49.45.010 et seq. and 49.60.010 et seq., as well as any claims asserting wrongful termination, harassment, breach of contract, breach of the covenant of good faith and fair dealing, negligent or intentional infliction of emotional distress, negligent or intentional misrepresentation, negligent or intentional interference with contract or prospective economic advantage, defamation, invasion of privacy, and claims related to disability.

 

  

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(b)           Procedure.  Arbitration of Arbitrable Claims shall be in accordance with the National Rules for the Resolution of Employment Disputes of the “American Arbitration Association, as amended (“AAA Employment Rules”), as augmented in this Agreement.  Arbitration shall be initiated by providing notice to the other party in accordance with the notice provisions included in Paragraph 11.  The notice of initiating arbitration shall also include a statement of the claim(s) asserted and the facts upon which the claim(s) are based.  Arbitration shall be final and binding upon the parties and shall be the exclusive remedy for all Arbitrable Claims.  Either party may bring an action in court to compel arbitration under this Agreement and to enforce an arbitration award.  Otherwise, neither party shall initiate or prosecute any lawsuit or administrative action in any way related to any Arbitrable Claim.  Notwithstanding the foregoing, either party may, at its option, seek injunctive relief with a federal court in the State of Washington or state court in King County, Washington.  All arbitration hearings under this Agreement shall be conducted in King County, Washington.  The decision of the arbitrator shall be in writing and shall include a statement of the essential conclusions and findings upon which the decision is based.  THE PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS, INCLUDING WITHOUT LIMITATION ANY RIGHT TO TRIAL BY JURY AS TO THE MAKING, EXISTENCE, VALIDITY, OR ENFORCEABILITY OF THE AGREEMENT TO ARBITRATE.

(c)           Arbitrator Selection and Authority.  All disputes involving Arbitrable Claims shall be decided by a single arbitrator.  The arbitrator shall be selected by mutual agreement of the parties within thirty (30) days of the effective date of the notice initiating the arbitration.  If the parties cannot agree on an arbitrator, then at each party’s own expense, each party shall select an interim arbitrator and those two interim arbitrators will collaborate to select one arbitrator who will hear the claim.  The arbitrator who will hear the claim must have at least ten (10) years of experience with the subject matter at issue (i.e., employment law), be a member of the State Bar of Washington, actively engaged in the practice of law or arbitration or a retired Judge from the State of Washington.  The interim arbitrators shall select the arbitrator within thirty (30) days from the date of the notice that the parties were unable to agree upon an arbitrator.  The interim arbitrators shall thereafter have no further jurisdiction over the matter.  The arbitrator shall have only such authority to award equitable relief, damages, costs, and fees as a court would have for the particular claim(s) asserted.  The fees of the arbitrator shall be paid by the non-prevailing party.  If the allocation of responsibility for payment of the arbitrator’s fees would render the obligation to arbitrate unenforceable, the parties authorize the arbitrator to modify the allocation as necessary to preserve enforceability.  The arbitrator shall have exclusive authority to resolve all Arbitrable Claims, including, but not limited to, whether any particular claim is arbitrable and whether all or any part of this Agreement is void or unenforceable.

 

  

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(d)           Confidentiality.  All proceedings and all documents prepared in connection with any Arbitrable Claim shall be confidential and, unless otherwise required by law, the subject matter thereof shall not be disclosed to any person other than the parties to the proceedings, their counsel, witnesses and experts, the arbitrator, and, if involved, the court and court staff.  All documents filed with the arbitrator or with a court shall be filed under seal.  The parties shall stipulate to all arbitration and court orders necessary to effectuate fully the provisions of this subsection concerning confidentiality.

(e)           Continuing Obligation.  The rights and obligations of Executive and Employer set forth in this Section 9 shall survive the termination of Executive’s employment and the expiration of this Agreement.

10.           EXECUTIVE’S REPRESENTATIONS.  Executive hereby represents and warrants to Employer that (i) the execution, delivery and performance of this Agreement by Executive does not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound, (ii) Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity and (iii) upon the execution and delivery of this Agreement by Employer, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms.

11.           NOTICES.  Any notice or other communication under this Agreement must be in writing and shall be effective upon delivery by hand, or three (3) business days after deposit in the United States mail, postage prepaid, certified or registered, and addressed to the Employer or to Executive at he corresponding address below.  Executive shall be obligated to notify Employer in writing of any change in his address.  Notice of change of address shall be effective only when done in accordance with this Section.

Employer’s Notice Address:

SeaBright Insurance Company

1501 4th Avenue, Suite 2600

Seattle, WA  98101

Attn:  Chief Executive Officer

Facsimile:  (206) 269-8901

Executive’s Notice Address:

Neal A. Fuller

1141 Edmonds Street

Edmonds, WA 98020

12.           ACTION BY EMPLOYER.  All actions required or permitted to be taken under this Agreement by Employer, including, without limitation, exercise of discretion, consents, waivers, and amendments to this Agreement, shall be made and authorized only by the chief executive officer of Employer.

 

  

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13.           INTEGRATION.  This Agreement is intended to be the final, complete, and exclusive statement of the terms of Executive’s employment by Employer.  This Agreement supersedes all other prior and contemporaneous agreements and statements, whether written or oral, express or implied, pertaining in any manner to the employment of Executive, and it may not be contradicted by evidence of any prior or contemporaneous statements or agreements.  To the extent that the practices, policies, or procedures of Employer, now or in the future, apply to Executive and are consistent with the terms of this Agreement, the provisions of this Agreement shall control.

14.           AMENDMENTS; WAIVERS.  This Agreement may not be amended except by an instrument in writing, signed by each of the parties.  No failure to exercise and no delay in exercising any right, remedy, or power under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, or power under this Agreement preclude any other or further exercise thereof, or the exercise of any other right, remedy, or power provided herein or by law or in equity.

15.           ASSIGNMENT; SUCCESSORS AND ASSIGNS.  Executive agrees that he will not assign, sell, transfer, delegate, or otherwise dispose of, whether voluntarily or involuntarily, or by operation of law, any rights or obligations under this Agreement.  Any such purported assignment, transfer, or delegation shall be null and void.  Nothing in this Agreement shall prevent the consolidation of Employer with, or its merger into, any other entity, or the sale by Employer of all or substantially all of its assets, or the assignment by Employer of any rights or obligations under this Agreement.  Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the parties and their respective heirs, legal representatives, successors, and permitted assigns, and shall not benefit any person or entity other than those specifically enumerated in this Agreement.

16.           SEVERABILITY.  If any provision of this Agreement is held by an arbitrator or a court of competent jurisdiction to be invalid, unenforceable, or void, the remaining provisions of this Addendum and the Employment Agreement shall remain in full force and effect.

17.           ATTORNEYS’ FEES.  In any legal action, arbitration, or other proceeding brought to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys’ fees and costs.

18.           GOVERNING LAW.  This Agreement shall be governed by and construed in accordance with the law of the State of Washington.

19.           INTERPRETATION.  This Agreement shall be construed as a whole, according to its fair meaning, and not in favor of or against any party.  By way of example and not in limitation, this Agreement shall not be construed in favor of the party receiving a benefit nor against the party responsible for any particular language in this Agreement.  Captions are used for reference purposes only and should be ignored in the interpretation of this Agreement.

 

  

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20.           EMPLOYEE ACKNOWLEDGMENT.  Executive acknowledges that he has had the opportunity to consult legal counsel in regard to this Agreement, that he has read and understands this Agreement, that he is fully aware of its legal effect, and that he has entered into it freely and voluntarily and based on his own judgment and not on any representations or promises other than those contained in this Agreement.  Executive acknowledges and agrees that the restrictions contained in Section 5 of this Agreement are reasonable and that Executive has received adequate and valuable consideration in exchange therefore.

21.           CODE SECTION 409A COMPLIANCE.

(a)           The intent of the parties is that payments and benefits under this Agreement comply with Internal Revenue Code Section 409A and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.  To the extent that any provision hereof is modified in order to comply with Code Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to Executive and Employer of the applicable provision without violating the provisions of Code Section 409A.  In no event whatsoever shall Employer be liable for any additional tax, interest or penalty that may be imposed on Executive by Code Section 409A or damages for failing to comply with Code Section 409A.

(b)           A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amount or benefit upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”  Notwithstanding any other payment schedule provided herein to the contrary, if Executive is deemed on the date of termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is considered “nonqualified deferred compensation” under Code Section 409A payable on account of a “separation from service,” such payment or benefit shall be made on the date which is the earlier of (i) the expiration of the six (6)-month period measured from the date of Executive’s “separation from service,” and (B) the date of Executive’s death, to the extent required under Code Section 409A.  Upon the expiration of the foregoing delay period, all payments and benefits delayed pursuant to this Section (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to Executive in a lump sum, and all remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

 

  

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(c)           To the extent that severance payments or benefits pursuant to this Agreement are conditioned upon the execution and delivery by Executive of a release of claims, Executive shall forfeit all rights to such payments and benefits unless such release is signed and delivered (and no longer subject to revocation, if applicable) within sixty (60) days following the date of Executive’s termination of employment.  If the foregoing release is executed and delivered and no longer subject to revocation as provided in the preceding sentence, then the following shall apply:

(i)           To the extent that any such cash payment or continuing benefit to be provided is not “nonqualified deferred compensation” for purposes of Code Section 409A, then such payment or benefit shall commence upon the first scheduled payment date immediately following the date that the release is executed, delivered and no longer subject to revocation (the “Release Effective Date”).  The first such cash payment shall include payment of all amounts that otherwise would have been due prior to the Release Effective Date under the terms of this Agreement applied as though such payments commenced immediately upon Executive’s termination of employment, and any payment made thereafter shall continue as provided herein.

(ii)          To the extent that any such cash payment or continuing benefit to be provided is “nonqualified deferred compensation” for purposes of Code Section 409A, then such payments or benefits shall be made or commence upon the sixtieth (60th) day following Executive’s termination of employment.  The first such cash payment shall include payment of all amounts that otherwise would have been due prior thereto under the terms of this Agreement had such payments commenced immediately upon Executive’s termination of employment, and any payment made thereafter shall continue as provided herein.

(d)           To the extent that any expense reimbursement or in-kind benefit under this Agreement constitutes “non-qualified deferred compensation” for purposes of Code Section 409A, (i) such expense or other reimbursement hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by Executive, (ii) any right to reimbursement or in-kind benefits will not be subject to liquidation or exchange for another benefit, and (iii) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

(e)           For purposes of Code Section 409A, Executive’s right to receive installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.  Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of Employer.

(f)           Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement  that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless otherwise permitted by Code Section 409A.

 

  

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(g)           Unless this Agreement provides a specified and objectively determinable payment schedule to the contrary, to the extent that any payment of base salary or other compensation is to be paid for a specified continuing period of time beyond the date of Executive’s termination of employment in accordance with Employer’s payroll practices (or other similar term), the payments of such base salary or other compensation shall be made upon such schedule as in effect upon the date of termination, but no less frequently than monthly.

(h)           Any annual bonus payable to Executive in accordance with the provisions of Section 3(b) hereof shall be paid in the calendar year following the calendar year to which such bonus relates at the same time bonuses are paid to other senior executive officers of Employer generally.”

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The parties have duly executed this Agreement as of the date first written above.

 

 

	 	EXECUTIVE	 
	 	 	 
	 	 	 
	 	 	 
	
 

	
By: 

	 	 
	 	 	Neal A. Fuller	 

 

 

	 	
SEABRIGHT INSURANCE COMPANY

	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	John G. Pasqualetto	 
	 	 	Its: Chief Executive Officer	 

 

  

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EXHIBIT A

  

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EXHIBIT B

 

  

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EXHIBIT C

 

  

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EXHIBIT D

SeaBright Holdings, Inc.

Amended and Restated 2005 Long-Term Equity Incentive Plan

 

	  	  
	
1.  

	
Purpose

 

 

This plan shall be known as the SeaBright Insurance Holdings, Inc. Amended and Restated 2005 Long-Term Equity Incentive Plan (the “Plan”). The purpose of the Plan shall be to promote the long-term growth and profitability of SeaBright Insurance Holdings, Inc. (the “Company”) and its Subsidiaries by (i) providing certain directors, officers and employees of, and certain other individuals who perform services for, the Company and its Subsidiaries with incentives to maximize stockholder value and otherwise contribute to the success of the Company and (ii) enabling the Company to attract, retain and reward the best available persons for positions of responsibility. Grants of incentive or non-qualified stock options, restricted stock, restricted stock units, deferred stock units, performance awards, Section 162(m) Awards or any combination of the foregoing may be made under the Plan.

 

	  	  
	
2.  

	
Definitions

 

(a)  “Board of Directors” and “Board” mean the board of directors of the Company.

 

(b)  “Cause” means, unless otherwise determined by the Committee at the time of grant of an award, the occurrence of one or more of the following events:

 

(i) Conviction of a felony or any crime or offense lesser than a felony involving the property of the Company or a Subsidiary; or

 

(ii) Conduct that has caused demonstrable and serious injury to the Company or a Subsidiary, monetary or otherwise; or

 

(iii) Willful refusal to perform or substantial disregard of duties properly assigned, as determined by the Company or a Subsidiary, as the case may be; or

 

(iv) Breach of duty of loyalty to the Company or a Subsidiary or other act of fraud or dishonesty with respect to the Company or a Subsidiary.

 

(c)  “Change in Control” means, unless otherwise determined by the Committee at the time of grant of an award, the occurrence of one of the following events:

 

(i) if any “person” or “group” as those terms are used in Sections 13(d) and 14(d) of the Exchange Act or any successors thereto, other than an Exempt Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act or any successor thereto), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities; or

 

(ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board and any new directors whose election by the Board or nomination for election by the Company’s stockholders was approved by at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election was previously so approved, cease for any reason to constitute a majority thereof; or

 

  

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(iii) consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation (A) which would result in all or a portion of the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (B) by which the corporate existence of the Company is not affected and following which the Company’s chief executive officer and directors retain their positions with the Company (and constitute at least a majority of the Board); or

 

(iv) consummation of a plan of complete liquidation of the Company or a sale or disposition by the Company of all or substantially all the Company’s assets, other than a sale to an Exempt Person.

 

(d)  “Code” means the Internal Revenue Code of 1986, as amended.

 

(e)  “Committee” means the Compensation Committee of the Board, which shall consist solely of two or more members of the Board.

 

(f)  “Common Stock” means the Common Stock, par value $0.01 per share, of the Company, and any other shares into which such stock may be changed by reason of a recapitalization, reorganization, merger, consolidation or any other change in the corporate structure or capital stock of the Company.

 

(g)  “Competition ” is deemed to occur if a person whose employment with the Company or its Subsidiaries has terminated obtains a position as a full-time or part-time employee of, as a member of the board of directors of, or as a consultant or advisor with or to, or acquires an ownership interest in excess of 5% of, a corporation, partnership, firm or other entity that engages in any of the businesses of the Company or any Subsidiary with which the person was involved in a management role at any time during his or her last five years of employment with or other service for the Company or any Subsidiaries.

 

(h)  “Disability” means a disability that would entitle an eligible participant to payment of monthly disability payments under any Company disability plan or as otherwise determined by the Committee. Notwithstanding the foregoing, for purposes of the grant of an award subject to Section 409A of the Code that is settled or distributed upon a “Disability,” “Disability” means for that purpose that a participant is disabled under Sections 409A(a)(2)(C)(i) or (ii) of the Code.

 

(i)  “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(j)  “Exempt Person” means (i) Summit Master Company, LLC, Summit Partners, LLC, Summit Partners, L.P. or any of their affiliates, (ii) any person, entity or group under the control of any party included in clause (i), or (iii) any employee benefit plan of the Company or a trustee or other administrator or fiduciary holding securities under an employee benefit plan of the Company.

 

(k)  “Family Member ” has the meaning given to such term in General Instructions A.1(a)(5) to Form S-8 under the Securities Act of 1933, as amended, and any successor thereto.

 

  

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(l)  “Fair Market Value ” of a share of Common Stock of the Company means, as of the date in question, the officially-quoted closing selling price of the stock (or if no selling price is quoted, the bid price) on the principal securities exchange on which the Common Stock is then listed for trading (including for this purpose the Nasdaq National Market) (the “Market”) for the applicable trading day or, if the Common Stock is not then listed or quoted in the Market, the Fair Market Value shall be the fair value of the Common Stock determined in good faith by the Board taking into account the requirements of Section 409A of the Code; provided, however, that when shares received upon exercise of an option are immediately sold in the open market, the net sale price received may be used to determine the Fair Market Value of any shares used to pay the exercise price or applicable withholding taxes and to compute the withholding taxes. For purposes of the grant of any stock option under the Plan that is intended to be exempt from the requirements of Section 409A of the Code, Fair Markey Value may be determined in any manner permitted under Section 409A of the Code.

 

(m)  “Incentive Stock Option” means an option conforming to the requirements of Section 422 of the Code and any successor thereto.

 

(n)  “Involuntary Termination ” means, unless otherwise determined by the Committee at the time of grant of an award, (i) the participant’s involuntary dismissal or discharge by the Company or a Subsidiary or by its or their successor for reasons other than Cause or (ii) such individual’s voluntary resignation following (A) a change in his or her position with the Company which materially reduces his or her level of responsibility, (B) a reduction in his or her level of compensation (base salary or any target incentive compensation) by more than ten percent or (C) a relocation of such individual’s place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected by the Company or a Subsidiary or by its or their successor without the participant’s written consent.

 

(o)  “Non-Employee Director” has the meaning given to such term in Rule 16b-3 under the Exchange Act and any successor thereto.

 

(p)  “Non-qualified Stock Option” means any stock option other than an Incentive Stock Option.

 

(q)  “Other Company Securities ” mean securities of the Company other than Common Stock, which may include, without limitation, unbundled stock units or components thereof, debentures, preferred stock, warrants and securities convertible into or exchangeable for Common Stock or other property.

 

(r)  “Performance Goals” has the meaning set forth on Exhibit A.

 

(s)  “Retirement” means, unless otherwise determined by the Committee at the time of grant of an award, retirement as defined under any Company pension plan or retirement program or termination of one’s employment on retirement with the approval of the Committee.

 

(t)  “Section 162(m) Award” means any award under the Plan that is intended to qualify for the “performance-based” compensation exception under Section 162(m) of the Code and the treasury regulations and other official guidance promulgated thereunder.

 

(u)  “Subsidiary ” means a corporation or other entity of which outstanding shares or ownership interests representing 50% or more of the combined voting power of such corporation or other entity entitled to elect the management thereof, or such lesser percentage as may be approved by the Committee, are owned directly or indirectly by the Company. Notwithstanding the foregoing, for purposes of the grant of any Incentive Stock Option, “Subsidiary” means any subsidiary corporation of the Company within the meaning of Section 424(f) of the Code.

 

  

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3.  

	
Administration

 

The Plan shall be administered by the Committee; provided that the Board may, in its discretion, at any time and from time to time, resolve to administer the Plan, in which case the term “Committee” shall be deemed to mean the Board for all purposes herein. Subject to the provisions of the Plan, the Committee shall be authorized to (i) select persons to participate in the Plan, (ii) determine the form and substance of grants made under the Plan to each participant, and the conditions and restrictions, if any, subject to which such grants will be made, (iii) certify that the conditions and restrictions applicable to any grant have been met, (iv) modify the terms of grants made under the Plan, (v) interpret the Plan and grants made thereunder, (vi) make any adjustments necessary or desirable in connection with grants made under the Plan to eligible participants located outside the United States and (vii) adopt, amend, or rescind such rules and regulations, and make such other determinations, for carrying out the Plan as it may deem appropriate. Decisions of the Committee on all matters relating to the Plan shall be in the Committee’s sole discretion and shall be conclusive and binding on all parties. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with applicable federal and state laws and rules and regulations promulgated pursuant thereto and the rules and regulations of the principal securities exchange on which the Common Stock is then listed for trading. No member of the Committee and no officer of the Company shall be liable for any action taken or omitted to be taken by such member, by any other member of the Committee or by any officer of the Company in connection with the performance of duties under the Plan, except for such person’s own willful misconduct or as expressly provided by statute.

 

The expenses of the Plan shall be borne by the Company. The Plan shall not be required to establish any special or separate fund or make any other segregation of assets to assume the payment of any award under the Plan, and rights to the payment of such awards shall be no greater than the rights of the Company’s general creditors.

 

 

	
4.  

	
Shares Available for the Plan.

 

Subject to adjustments as provided in Section 16 hereof, an aggregate of three million sixty-five thousand forty-one (3,065,041) Shares of Common Stock may be issued pursuant to the Plan, plus an automatic annual increase on the first day of each of the Company’s fiscal years beginning in 2011 and ending in 2015 equal to the lesser of (i) two percent (2%) of the shares of Common Stock outstanding on the last day of the immediately preceding fiscal year, and (ii) 750,000 such (collectively, the “Shares”). Notwithstanding the foregoing, the maximum aggregate number of Shares that may be issued pursuant to Incentive Stock Options under the Plan shall not exceed three million sixty-five thousand forty-one (3,065,041) Shares (subject to adjustments as provided in Section 16 hereof), and such number shall not be subject to annual adjustment as described in the preceding sentence.

 

Such Shares may be in whole or in part authorized and unissued or held by the Company as treasury shares. If any grant under the Plan expires or terminates unexercised, becomes unexercisable or is forfeited as to any Shares, then such unpurchased or forfeited Shares shall thereafter be available for further grants under the Plan.

 

  

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Without limiting the generality of the foregoing provisions of this Section 4 or the generality of the provisions of Sections 3, 6 or 18 or any other section of this Plan, the Committee may, at any time or from time to time, and on such terms and conditions (that are consistent with and not in contravention of the other provisions of this Plan) as the Committee may, in its sole discretion, determine, enter into agreements (or take other actions with respect to the options) for new options containing terms (including exercise prices) more (or less) favorable than the outstanding options.

 

The maximum number of Shares of Common Stock subject to any award of Incentive Stock Options, Non-qualified Stock Options, or other types of award under the Plan for which the grant of such award or the lapse of the relevant restriction period is subject to the attainment of Performance Goals, which may be granted under the Plan during any calendar year of the Company to any eligible participant in the Plan shall be 300,000 Shares per type of award (which shall be subject to any further increase or decrease pursuant to Section 16). Each performance award to be paid in Shares shall be referenced to one share of Common Stock and shall be charged against the available Shares under this Plan at the time the unit value measurement is converted to a referenced number of Shares of Common Stock in accordance with Section 10. There are no annual individual share limitations on awards of restricted stock, restricted stock units, deferred stock units or performance awards that are not intended to be Section 162(m) Awards. The maximum cash payment under any performance award payable in cash to any eligible participant in the Plan with respect to any calendar year and for which the payment of such award is subject to the attainment of Performance Goals shall be $5,000,000. The foregoing individual participant limitations shall be cumulative; that is, to the extent that Shares of Common Stock for which awards are permitted to be granted to an eligible participant during a calendar year are not covered by an award to such eligible participant in a calendar year, the number of Shares of Common Stock available for awards to such eligible participant shall automatically increase in the subsequent calendar years during the term of the Plan until used.

 

	  	  
	
5.  

	
Participation

 

Participation in the Plan shall be limited to those directors (including Non-Employee Directors), officers (including non-employee officers) and employees of, and other individuals performing services for, the Company and its Subsidiaries selected by the Committee (including participants located outside the United States). Nothing in the Plan or in any grant thereunder shall confer any right on a participant to continue in the service or employ as a director or officer of or in the performance of services for the Company or a Subsidiary or shall interfere in any way with the right of the Company or a Subsidiary to terminate the employment or performance of services or to reduce the compensation or responsibilities of a participant at any time. By accepting any award under the Plan, each participant and each person claiming under or through him or her shall be conclusively deemed to have indicated his or her acceptance and ratification of, and consent to, any action taken under the Plan by the Company, the Board or the Committee.

 

 

Incentive Stock Options or Non-qualified Stock Options, restricted stock awards, restricted stock unit or deferred stock unit awards, performance awards, or any combination thereof, may be granted to such persons and for such number of Shares as the Committee shall determine (such individuals to whom grants are made being sometimes herein called “optionees” or “grantees,” as the case may be). Determinations made by the Committee under the Plan need not be uniform and may be made selectively among eligible individuals under the Plan, whether or not such individuals are similarly situated. A grant of any type made hereunder in any one year to an eligible participant shall neither guarantee nor preclude a further grant of that or any other type to such participant in that year or subsequent years.

 

  

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6.  

	
Incentive and Non-qualified Options

 

The Committee may from time to time grant to eligible participants Incentive Stock Options, Non-qualified Stock Options, or any combination thereof; provided that the Committee may grant Incentive Stock Options only to eligible employees of the Company or its Subsidiaries. The options granted shall take such form as the Committee shall determine, subject to the following terms and conditions.

 

It is the Company’s intent that Non-qualified Stock Options granted under the Plan not be classified as Incentive Stock Options, that Incentive Stock Options be consistent with and contain or be deemed to contain all provisions required under Section 422 of the Code and any successor thereto, and that any ambiguities in construction be interpreted in order to effectuate such intent. If an Incentive Stock Option granted under the Plan does not qualify as such for any reason, then to the extent of such non-qualification, the stock option represented thereby shall be regarded as a Non-qualified Stock Option duly granted under the Plan, provided that such stock option otherwise meets the Plan’s requirements for Non-qualified Stock Options.

 

(a)  Price

 

The price per Share deliverable upon the exercise of each option (“exercise price”) may not be less than 100% of the Fair Market Value of a share of Common Stock as of the date of grant of the option, and in the case of the grant of any Incentive Stock Option to an employee who, at the time of the grant, owns more than 10% of the total combined voting power of all classes of stock of the Company or any of its Subsidiaries, the exercise price may not be less than 110% of the Fair Market Value of a share of Common Stock as of the date of grant of the option, in each case unless otherwise permitted by Section 422 of the Code or any successor thereto.

 

(b)  Payment

 

Options may be exercised, in whole or in part, upon payment of the exercise price of the Shares to be acquired. Unless otherwise determined by the Committee, payment shall be made (i) in cash (including check, bank draft, money order or wire transfer of immediately available funds), (ii) by delivery of outstanding shares of Common Stock with a Fair Market Value on the date of exercise equal to the aggregate exercise price payable with respect to the options’ exercise, (iii) by simultaneous sale through a broker reasonably acceptable to the Committee of Shares acquired on exercise, as permitted under Regulation T of the Federal Reserve Board or (iv) by any combination of the foregoing.

 

In the event a grantee elects to pay the exercise price payable with respect to an option pursuant to clause (ii) above, (A) only a whole number of share(s) of Common Stock (and not fractional shares of Common Stock) may be tendered in payment, (B) such grantee must present evidence acceptable to the Company that he or she has owns any such shares of Common Stock tendered in payment of the exercise price prior to the date of exercise, and (C) Common Stock must be delivered to the Company. Delivery for this purpose may, at the election of the grantee, be made either by (1) physical delivery of the certificate(s) for all such shares of Common Stock tendered in payment of the price, accompanied by duly executed instruments of transfer in a form acceptable to the Company, or (2) direction to the grantee’s broker to transfer, by book entry, such shares of Common Stock from a brokerage account of the grantee to a brokerage account specified by the Company. When payment of the exercise price is made by delivery of Common Stock, the difference, if any, between the aggregate exercise price payable with respect to the option being exercised and the Fair Market Value of the shares of Common Stock tendered in payment (plus any applicable taxes) shall be paid in cash. No grantee may tender shares of Common Stock having a Fair Market Value exceeding the aggregate exercise price payable with respect to the option being exercised (plus any applicable taxes).

 

  

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(c)  Terms of Options

 

The term during which each option may be exercised shall be determined by the Committee, but if required by the Code and except as otherwise provided herein, no option shall be exercisable in whole or in part more than ten years from the date it is granted, and no Incentive Stock Option granted to an employee who at the time of the grant owns more than 10% of the total combined voting power of all classes of stock of the Company or any of its Subsidiaries shall be exercisable more than five years from the date it is granted. All rights to purchase Shares pursuant to an option shall, unless sooner terminated, expire at the date designated by the Committee. The

 

Committee shall determine the date on which each option shall become exercisable and may provide that an option shall become exercisable in installments. The Shares constituting each installment may be purchased in whole or in part at any time after such installment becomes exercisable, subject to such minimum exercise requirements as may be designated by the Committee. Prior to the exercise of an option and delivery of the Shares represented thereby, the optionee shall have no rights as a stockholder with respect to any Shares covered by such outstanding option (including any dividend or voting rights).

 

(d)  Limitations on Grants

 

If required by the Code, the aggregate Fair Market Value (determined as of the grant date) of Shares for which an Incentive Stock Option is exercisable for the first time during any calendar year under all equity incentive plans of the Company and its Subsidiaries (as defined in Section 422 of the Code or any successor thereto) may not exceed $100,000.

 

(e)  Termination; Forfeiture

 

(i)  Death or Disability

 

Unless otherwise determined by the Committee at the time of grant of an award, if a participant ceases to be a director, officer or employee of, or to perform other services for, the Company or any Subsidiary due to death or Disability, all of the participant’s options shall become fully vested and exercisable and shall remain so for a period of 180 days from the date of such death or Disability, but in no event after the expiration date of the options; provided that the participant does not engage in Competition during such 180-day period unless he or she received written consent to do so from the Board or the Committee; provided further that the Board or Committee may extend such exercise period (and related non-competition period) in its discretion, but in no event may such extended exercise period extend beyond the expiration date of the options. Notwithstanding the foregoing, if the Disability giving rise to the termination of employment is not within the meaning of Section 22(e)(3) of the Code or any successor thereto, Incentive Stock Options not exercised by such participant within 90 days after the date of termination of employment will cease to qualify as Incentive Stock Options and will be treated as Non-qualified Stock Options under the Plan if required to be so treated under the Code.

 

  

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(ii)  Retirement

 

Unless otherwise determined by the Committee at the time of grant of an award, if a participant ceases to be a director, officer or employee of, or to perform other services for, the Company or any Subsidiary upon the occurrence of his or her Retirement, (A) all of the participant’s options that were exercisable on the date of Retirement shall remain exercisable for, and shall otherwise terminate at the end of, a period of 90 days after the date of Retirement, but in no event after the expiration date of the options; provided that the participant does not engage in Competition during such 90 day period unless he or she receives written consent to do so from the Board or the Committee; provided further that the Board or Committee may extend such exercise period (and related non-competition period) in its discretion, but in no event may such extended exercise period extend beyond the expiration date of the options, and (B) all of the participant’s options that were not exercisable on the date of Retirement shall be forfeited immediately upon such Retirement; provided, however, that such options may become fully vested and exercisable in the discretion of the Committee. Notwithstanding the foregoing, Incentive Stock Options not exercised by such participant within 90 days after Retirement will cease to qualify as Incentive Stock Options and will be treated as Non-qualified Stock Options under the Plan if required to be so treated under the Code.

 

(iii)  Discharge for Cause

 

Unless otherwise determined by the Committee, if a participant ceases to be a director, officer or employee of , or to perform other services for, the Company or a Subsidiary due to Cause, all of the participant’s options shall expire and be forfeited immediately upon such cessation, whether or not then exercisable.

 

(iv)  Other Termination

 

Unless otherwise determined by the Committee, if a participant ceases to be a director, officer or employee of, or to otherwise perform services for, the Company or a Subsidiary for any reason other than death, Disability,

 

 

Retirement or Cause, (A) all of the participant’s options that were exercisable on the date of such cessation shall remain exercisable for, and shall otherwise terminate at the end of, a period of 30 days after the date of such cessation, but in no event after the expiration date of the options; provided that the participant does not engage in Competition during such 30-day period unless he or she receives written consent to do so from the Board or the Committee; provided further that the Board or Committee may extend such exercise period (and related non-competition period) in its discretion, but in no event may such extended exercise period extend beyond the expiration date of the options, and (B) all of the participant’s options that were not exercisable on the date of such cessation shall be forfeited immediately upon such cessation.

 

(v)  Change in Control

 

Unless otherwise determined by the Committee at the time of grant of an award, if there is a Change in Control of the Company and a participant is terminated from being a director, officer or employee of, or from performing other services for the Company or a Subsidiary through an “Involuntary Termination” effected within forty-eight (48) months following the effective date of such Change in Control, all of participant’s options shall automatically accelerate and become fully vested and exercisable. Any option so accelerated will remain exercisable until the earlier of (i) the expiration of the option term or (ii) the end of a one- year period measured from the date of the Involuntary Termination as defined herein. In addition, the Committee shall have the authority to grant options that become fully vested and exercisable automatically upon a Change in Control, whether or not the grantee is subsequently terminated.

 

  

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(f)  Forfeiture

 

If a participant exercises any of his or her options and, within one year thereafter, either (i) is terminated from the Company or a Subsidiary for any of the reasons specified in the definition of “Cause” set forth in Section 2(b), or (ii) engages in Competition without having received written consent to do so from the Board or the Committee, then the participant may, in the discretion of the Committee, be required to pay the Company the gain represented by the difference between the aggregate selling price of the Shares acquired upon the options’ exercise (or, if the Shares were not then sold, their aggregate Fair Market Value on the date of exercise) and the aggregate exercise price of the options exercised (the “Option Gain”), without regard to any subsequent increase or decrease in the Fair Market Value of the Common Stock. In addition, the Company may, in its discretion, deduct from any payment of any kind (including salary or bonus) otherwise due to any such participant an amount equal to the Option Gain, provided, however, that no such deduction may occur from any payment that is characterized as “nonqualified deferred compensation” to the extent that such deduction would result in adverse tax consequences under Section 409A of the Code.

 

(g)  Repricings of Options Prohibited.

 

Notwithstanding any other provision of the Plan to the contrary, outstanding Incentive Stock Options and Non-qualified Stock Options may not be modified to reduce the exercise price thereof nor may a new stock option with a lower exercise price be substituted for a surrendered stock option nor, subject to the provisions of Section 16 of the Plan, may a stock option be cancelled for cash or another award, unless such action is approved by the stockholders of the Company.

 

	  	  
	
7.  

	
Section 162(m) Awards

 

Awards of Incentive Stock Options and Non-qualified Stock Options granted under the Plan are intended by their terms to qualify as Section 162(m) Awards. Awards of restricted stock, restricted stock units, deferred stock units and performance awards granted under the Plan may qualify as Section 162(m) Awards if the awards are granted or become payable or vested based upon the achievement of Performance Goals in accordance with this Section 7.

 

In the case of an award of restricted stock, restricted stock units, deferred stock units or a performance award that is intended to be a Section 162(m) Award, the Committee shall make such determinations with respect to such an award and shall establish the objective performance criteria and the individual target award (if any) applicable to each participant or class of participants in writing within ninety (90) days after the beginning of the applicable performance period (or such other time period as is required under Section 162(m) of the Code) and while the outcome of the Performance Goals is substantially uncertain. The applicable performance criteria shall be based on one or more of the Performance Goals set forth in Exhibit A hereto.

 

  

36

  

 

Subject to the provisions of the Plan, the Committee shall, in its sole discretion, have authority to determine the eligible participants to whom, and the time or times at which, Section 162(m) Awards shall be made, the vesting and payment provisions applicable to such awards, and all other terms and conditions of such awards. As and to the extent required by Section 162(m) of the Code, the terms of an award that is a Section 162(m) Award must state, in terms of an objective formula or standard, the method of computing the amount of compensation payable under the award, and must preclude discretion to increase the amount of compensation payable under the terms of the award (but may allow the Committee discretion to decrease the amount of compensation payable).

 

For each participant, the Committee may specify a targeted performance award. The individual target award may be expressed, at the Committee’s discretion, as a fixed dollar amount, a percentage of base pay or total pay (excluding payments made under the Plan), or an amount determined pursuant to an objective formula or standard. Establishment of an individual target award for a participant for a calendar year shall not imply or require that the same level individual target award (if any such award is established by the Committee for the relevant participant) be set for any subsequent calendar year. At the time the Performance Goals are established, the Committee shall prescribe a formula to determine the percentages (which may be greater than 100%) of the individual target award which may be payable based upon the degree of attainment of the Performance Goals during the calendar year.

 

The measurements used in Performance Goals set under the Plan shall be determined in accordance with generally accepted accounting principles, except, to the extent that any objective Performance Goals are used, if any measurements require deviation from generally accepted accounting principles, such deviation shall be at the discretion of the Committee at the time the Performance Goals are set or at such later time to the extent permitted under Section 162(m) of the Code.

 

At the expiration of the applicable performance period, the Committee shall determine and certify in writing the extent to which the Performance Goals established pursuant to this Section 11 have been achieved and the percentage of the participant’s individual target award that has been vested and earned. Following the Committee’s determination and certification in accordance with the foregoing, the Section 162(m) Award shall become vested and payable (or deferred, in the case of deferred stock units) in accordance with the terms and conditions of the applicable award agreement.

 

	  	  
	
8.  

	
Restricted Stock

 

The Committee may at any time and from time to time grant Shares of restricted stock under the Plan to such participants and in such amounts as it determines. Each grant of Shares of restricted stock shall specify the applicable restrictions on such Shares, the duration of such restrictions (which shall be at least six months except as otherwise determined by the Committee or provided in the third paragraph of this Section 8), and the time or times at which such restrictions shall lapse with respect to all or a specified number of Shares that are part of the grant.

 

The participant will be required to pay the Company the aggregate par value of any Shares of restricted stock (or such larger amount as the Board may determine to constitute capital under Section 154 of the Delaware General Corporation Law, as amended, or any successor thereto) within ten days of the date of grant, unless such Shares of restricted stock are treasury shares. Unless otherwise determined by the Committee, certificates representing Shares of restricted stock granted under the Plan will be held in escrow by the Company on the participant’s behalf during any period of restriction thereon and will bear an appropriate legend specifying the applicable restrictions thereon, and the participant will be required to execute a blank stock power therefor. Except as otherwise provided by the Committee, during such period of restriction the participant shall have all of the rights of a holder of Common Stock, including but not limited to the rights to receive dividends and to vote, and any stock or other securities received as a distribution with respect to such participant’s restricted stock shall be subject to the same restrictions as then in effect for the restricted stock.

 

  

37

  

 

Except as otherwise provided by the Committee, if a participant ceases to be a director, officer or employee of, or to otherwise perform services for, the Company and its Subsidiaries due to death, Disability or Retirement during any period of restriction, all restrictions on Shares of restricted stock granted to such participant shall lapse. At such time as a participant ceases to be a director, officer or employee of, or otherwise performing services for, the Company or its Subsidiaries for any other reason, all Shares of restricted stock granted to such participant on which the restrictions have not lapsed shall be immediately forfeited to the Company.

 

Unless otherwise determined by the Committee at the time of grant of an award, if there is a Change in Control of the Company and a participant is terminated from being a director, officer or employee of, or from performing other services for the Company or a Subsidiary through an Involuntary Termination effected within forty-eight (48) months following the effective date of such Change in Control, all restrictions on Shares of restricted stock granted to such participant shall automatically lapse. In addition, the Committee shall have the authority to grant shares of restricted stock with respect to which all restrictions shall lapse automatically upon a Change in Control, whether or not the grantee is subsequently terminated.

 

	  	  
	
9.  

	
Restricted Stock Units; Deferred Stock Units

 

The Committee may at any time and from time to time grant restricted stock units under the Plan to such participants and in such amounts as it determines. Each grant of restricted stock units shall specify the applicable restrictions on such units, the duration of such restrictions (which shall be at least six months except as otherwise determined by the Committee or provided in the third paragraph of this Section 9), and the time or times at which such restrictions shall lapse with respect to all or a specified number of units that are part of the grant.

 

Each restricted stock unit shall be equivalent in value to one share of Common Stock and shall entitle the participant to receive from the Company at the end of the vesting period (the “Vesting Period”) applicable to such unit one Share, unless the participant elects in a timely fashion to defer the receipt of such Shares, as provided below. Restricted stock units may be granted without payment of cash or consideration to the Company; provided that participants shall be required to pay to the Company the aggregate par value of the Shares received from the Company within ten days of the issuance of such Shares unless such Shares are treasury shares.

 

Except as otherwise provided by the Committee, during the restriction period the participant shall not have any rights as a shareholder of the Company; provided that the participant shall have the right to receive accumulated dividends or distributions with respect to the corresponding number of shares of Common Stock underlying each restricted stock unit at the end of the Vesting Period, unless such restricted stock units are converted into deferred stock units, in which case such accumulated dividends or distributions shall be paid by the Company to the participant at such time as the deferred stock units are converted into Shares.

 

Except as otherwise provided by the Committee, if a participant ceases to be a director, officer or employee of, or to otherwise perform services for, the Company or any Subsidiary due to death, Disability or Retirement during any period of restriction, all restrictions on restricted stock units granted to such participant shall lapse. At such time as a participant ceases to be a director, officer or employee of, or otherwise performing services for, the Company or any Subsidiary for any other reason, all restricted stock units granted to such participant on which the restrictions have not lapsed shall be immediately forfeited to the Company.

 

  

38

  

 

Except as otherwise provided by the Committee at the time of grant of an award, if there is a Change in Control of the Company and a participant is terminated from being a director, officer or employee of, or from performing other services for the Company or a Subsidiary through an Involuntary Termination effected within forty-eight (48) months following the effective date of such Change in Control, all restrictions on restricted stock units granted to such participant shall automatically lapse. In addition, the Committee shall have the authority to grant restricted stock units with respect to which all restrictions shall lapse automatically upon a Change in Control, whether or not the grantee is subsequently terminated.

 

A participant may elect by written notice to the Company, which notice must be made before the later of (i) the close of the tax year preceding the year in which the restricted stock units are granted or (ii) 30 days of first becoming eligible to participate in the Plan (or, if earlier, the last day of the tax year in which the participant first becomes eligible to participate in the plan) and on or prior to the date the restricted stock units are granted, to defer the receipt of all or a portion of the Shares due with respect to the vesting of such restricted stock units; provided that the Committee may impose such additional restrictions with respect to the time at which a participant may elect to defer receipt of Shares subject to the deferral election, and any other terms with respect to a grant of restricted stock units to the extent the Committee deems necessary to enable the participant to defer recognition of income with respect to such units until the Shares underlying such units are issued or distributed to the participant. Upon such deferral, the restricted stock units so deferred shall be converted into deferred stock units. Except as provided below, delivery of Shares with respect to deferred stock units shall be made at the end of the deferral period set forth in the participant’s deferral election notice (the “Deferral Period”). Deferral Periods shall be no less than one year after the vesting date of the applicable restricted stock units.

 

Except as otherwise provided by the Committee, during such Deferral Period the participant shall not have any rights as a shareholder of the Company; provided that, the participant shall have the right to receive accumulated dividends or distributions with respect to the corresponding number of shares of Common Stock underlying each deferred stock unit at the end of the Deferral Period when such deferred stock units are converted into Shares.

 

Except as otherwise provided by the Committee, if a Participant ceases to be a director, officer or employee of, or to otherwise perform services for, the Company or any Subsidiary upon his or her death prior to the end of the Deferral Period, the participant shall receive payment in Shares in respect of such participant’s deferred stock units which would have matured or been earned at the end of such Deferral Period as if the applicable Deferral Period had ended as of the date of such participant’s death.

 

Except as otherwise provided by the Committee, if a participant ceases to be a director, officer or employee of, or to otherwise perform services for, the Company or any Subsidiary upon becoming disabled (as defined under Section 409A(a)(2)(C) of the Code) or Retirement or for any other reason except termination for Cause prior to the end of the Deferral Period, the participant shall receive payment in Shares in respect of such participant’s deferred stock units at the end of the applicable Deferral Period or on such accelerated basis as the Committee may determine, to the extent permitted by, and subject to the limitations of, Section 409A of the Code and regulations promulgated thereunder.

 

  

39

  

 

Except as otherwise provided by the Committee, if a participant ceases to be a director, officer or employee of, or to otherwise perform services for, the Company or any Subsidiary due to termination for Cause such participant shall immediately forfeit any deferred stock units which would have matured or been earned at the end of the applicable Deferral Period.

 

Except as otherwise provided by the Committee, in the event of a Change in Control that also constitutes a “change in the ownership or effective control of” the Company, or a change in the ownership of a substantial portion of the Company’s assets (in each case as determined under Section 409A of the Code), a participant shall receive payment in Shares in respect of such participant’s deferred stock units which would have matured or been earned at the end of the applicable Deferral Period as if such Deferral Period had ended immediately prior to the Change in Control; provided, however, that if an event that constitutes a Change in Control hereunder does not constitute a “change in control” under Section 409A of the Code (or the regulations promulgated thereunder), no payments with respect to the deferred stock units shall be made under this paragraph to the extent such payments would constitute an impermissible acceleration under Section 409A of the Code.

 

	  	  
	
10.  

	
Performance Awards

 

Performance awards may be granted to participants at any time and from time to time as determined by the Committee. The Committee shall have complete discretion in determining the size and composition of performance awards granted to a participant. The period over which performance is to be measured (a “performance cycle”) shall commence on the date specified by the Committee and shall end on the last day of a fiscal year specified by the Committee. Unless otherwise determined by the Committee at the time of grant of an award, a performance award shall be paid no later than the 15th day of the third month following the completion of a performance cycle. Performance awards may include (i) specific dollar-value target awards (ii) performance units, the value of each such unit being determined by the Committee at the time of issuance, and/or (iii) performance Shares, the value of each such Share being equal to the Fair Market Value of a share of Common Stock.

 

The value of each performance award may be fixed or it may be permitted to fluctuate based on a performance factor (e.g., return on equity) selected by the Committee.

 

The Committee shall establish performance goals and objectives for each performance cycle on the basis of such criteria and objectives as the Committee may select from time to time, including, without limitation, the performance of the participant, the Company, one or more of its Subsidiaries or divisions or any combination of the foregoing. During any performance cycle, the Committee shall have the authority to adjust the performance goals and objectives for such cycle for such reasons as it deems equitable.

 

The Committee shall determine the portion of each performance award that is earned by a participant on the basis of the Company’s performance over the performance cycle in relation to the performance goals for such cycle. The earned portion of a performance award may be paid out in Shares, cash, Other Company Securities, or any combination thereof, as the Committee may determine.

 

  

40

  

 

A participant must be a director, officer or employee of, or otherwise perform services for, the Company or its Subsidiaries at the end of the performance cycle in order to be entitled to payment of a performance award issued in respect of such cycle; provided, however, that except as otherwise determined by the Committee, if a participant ceases to be a director, officer or employee of, or to otherwise perform services for, the Company and its Subsidiaries upon his or her death, Retirement, or Disability prior to the end of the performance cycle, the participant shall earn a proportionate portion of the performance award based upon the elapsed portion of the performance cycle and the Company’s performance over that portion of such cycle.

 

In the event of a Change in Control, a participant shall earn no less than the portion of the performance award that the participant would have earned if the applicable performance cycle(s) had terminated as of the date of the Change in Control.

 

	  	  
	
11.  

	
Withholding Taxes

 

(a)  Participant Election

 

Unless otherwise determined by the Committee, a participant may elect to deliver shares of Common Stock (or have the Company withhold shares acquired upon exercise of an option or deliverable upon grant or vesting of restricted stock, as the case may be) to satisfy, in whole or in part, the amount the Company is required to withhold for taxes in connection with the exercise of an option or the delivery of restricted stock upon grant or vesting, as the case may be. Such election must be made on or before the date the amount of tax to be withheld is determined. Once made, the election shall be irrevocable. The fair market value of the shares to be withheld or delivered will be the Fair Market Value as of the date the amount of tax to be withheld is determined. In the event a participant elects to deliver or have the Company withhold shares of Common Stock pursuant to this Section 11(a), such delivery or withholding must be made subject to the conditions and pursuant to the procedures set forth in Section 6(b) with respect to the delivery or withholding of Common Stock in payment of the exercise price of options. Shares withheld to pay withholding taxes may not exceed the minimum statutory withholding rate.

 

(b)  Company Requirement

 

The Company may require, as a condition to any grant or exercise under the Plan or to the delivery of certificates for Shares issued hereunder, that the grantee make provision for the payment to the Company, either pursuant to Section 11(a) or this Section 11(b), of federal, state or local taxes of any kind required by law to be withheld with respect to any grant or delivery of Shares. The Company, to the extent permitted or required by law, shall have the right to deduct from any payment of any kind (including salary or bonus) otherwise due to a grantee, an amount equal to any federal, state or local taxes of any kind required by law to be withheld with respect to any grant or delivery of Shares under the Plan. Shares withheld to pay withholding taxes may not exceed the minimum statutory withholding rate; provided, however, that no such deduction may occur from any payment that is characterized as “nonqualified deferred compensation” to the extent that such deduction would result in adverse tax consequences under Section 409A of the Code.

 

	  	  
	
12.  

	
Written Agreement; Vesting

 

Unless the Committee determines otherwise, each employee to whom a grant is made under the Plan shall enter into a written agreement with the Company that shall contain such provisions, including without limitation vesting requirements, consistent with the provisions of the Plan, as may be approved by the Committee. Unless the

  

41

  

 

Committee determines otherwise and except as otherwise provided in Sections 6, 7, 8, 9 and 10 in connection with a Change in Control or certain occurrences of termination, no grant under this Plan may be exercised, and no restrictions relating thereto may lapse, within six months of the date such grant is made.

 

	  	  
	
13.  

	
Transferability

 

Unless the Committee determines otherwise, no award granted under the Plan shall be transferable by a participant other than by will or the laws of descent and distribution or to a participant’s Family Member by gift or a qualified domestic relations order as defined by the Code. Unless the Committee determines otherwise, an option may be exercised only by the optionee or grantee thereof; by his or her Family Member if such person has acquired the option by gift or qualified domestic relations order; by the executor or administrator of the estate of any of the foregoing or any person to whom the option is transferred by will or the laws of descent and distribution; or by the guardian or legal representative of any of the foregoing; provided that Incentive Stock Options may be exercised by any Family Member, guardian or legal representative only if permitted by the Code and any regulations thereunder. All provisions of this Plan shall in any event continue to apply to any award granted under the Plan and transferred as permitted by this Section 13, and any transferee of any such award shall be bound by all provisions of this Plan as and to the same extent as the applicable original grantee.

 

	  	  
	
14.  

	
Listing, Registration and Qualification

 

If the Committee determines that the listing, registration or qualification upon any securities exchange or under any law of Shares subject to any option, performance award, restricted stock unit, deferred stock unit or restricted stock grant is necessary or desirable as a condition of, or in connection with, the granting of same or the issue or purchase of Shares thereunder, no such option may be exercised in whole or in part, no such performance award may be paid out, and no Shares may be issued, unless such listing, registration or qualification is effected free of any conditions not acceptable to the Committee.

 

	  	  
	
15.  

	
Transfer of Employee

 

The transfer of an employee from the Company to a Subsidiary, from a Subsidiary to the Company, or from one Subsidiary to another shall not be considered a termination of employment; nor shall it be considered a termination of employment if an employee is placed on military or sick leave or such other leave of absence which is considered by the Committee as continuing intact the employment relationship.

 

	  	  
	
16.  

	
Adjustments

 

In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, distribution of assets, or any other change in the corporate structure or shares of the Company, the Committee shall make such adjustment as it deems appropriate in the number and kind of Shares or other property available for issuance under the Plan (including, without limitation, the total number of Shares available for issuance under the Plan pursuant to Section 4), in the number and kind of options, Shares, restricted stock units, deferred stock units or other property covered by grants previously made under the Plan, and in the exercise price of outstanding options. Any such adjustment shall be final, conclusive and binding for all purposes of the Plan and shall take into account the applicable requirements of Section 409A of the Code. In the event of any merger, consolidation or other reorganization in which the Company is not the surviving or continuing corporation or in which a Change in Control is to occur, all of the Company’s obligations regarding awards that were granted hereunder and that are outstanding on the date of such event shall, on such terms as may be approved by the Committee prior to such event, be (a) canceled in exchange for cash or other property taking into account the requirements of Section 409A of the Code, or (b) assumed by the surviving or continuing corporation.

 

  

42

  

 

Without limitation of the foregoing, in connection with any transaction of the type specified by clause (iii) of the definition of a Change in Control in Section 2(c), the Committee may, in its discretion, (i) cancel any or all outstanding options under the Plan in consideration for payment to the holders thereof of an amount equal to the portion of the consideration that would have been payable to such holders pursuant to such transaction if their options had been fully exercised immediately prior to such transaction, less the aggregate exercise price that would have been payable therefor, or (ii) if the amount that would have been payable to the option holders pursuant to such transaction if their options had been fully exercised immediately prior thereto would be equal to or less than the aggregate exercise price that would have been payable therefor, cancel any or all of such options for no consideration or payment of any kind. Payment of any amount payable pursuant to the preceding sentence may be made in cash or, in the event that the consideration to be received in such transaction includes securities or other property, in cash and/or securities or other property in the Committee’s discretion.

 

	  	  
	
17.  

	
Amendment and Termination of the Plan

 

The Board of Directors or the Committee, without approval of the stockholders, may amend or terminate the Plan, except that no amendment shall become effective without prior approval of the stockholders of the Company if stockholder approval would be required by applicable law or regulations or by any listing requirement of the principal stock exchange on which the Common Stock is then listed.

 

	  	  
	
18.  

	
Amendment or Substitution of Awards under the Plan.

 

The terms of any outstanding award under the Plan may be amended from time to time by the Committee in its discretion in any manner that it deems appropriate, including, but not limited to, acceleration of the date of exercise of any award and/or payments thereunder or of the date of lapse of restrictions on Shares (but only to the extent permitted by Section 409A of the Code); provided that, except as otherwise provided in Section 16, no such amendment shall adversely affect in a material manner any right of a participant under the award without his or her written consent, and provided further that the Committee shall not reduce the exercise price of any options awarded under the Plan or take any other action that would constitute a repricing under Section 6(g) without approval of the stockholders of the Company.

 

 

	  	  
	
19.  

	
Commencement Date; Termination Date.

 

The date of commencement of the Plan shall be the date on which the Company’s Registration Statement on Form S-1 (File No. 333-119111) is declared effective by the Securities and Exchange Commission.

 

  

43

  

 

Unless previously terminated upon the adoption of a resolution of the Board terminating the Plan, the Plan shall terminate at the close of business on the ten year anniversary of the date on which the Company’s Registration Statement on Form S-1 (File No. 333-119111) is declared effective by the Securities and Exchange Commission. No termination of the Plan shall materially and adversely affect any of the rights or obligations of any person, without his or her written consent, under any grant of options or other incentives theretofore granted under the Plan.

 

No award shall be granted pursuant to the Plan following the date of the Plan’s termination, but awards granted prior to such date may extend beyond that date; provided that no Section 162(m) Award (other than an Incentive Stock Option or Non-qualified Stock Option) shall be granted on or after the fifth anniversary of the stockholder approval of the Plan unless the Performance Goals set forth on Exhibit A are reapproved (or other designated performance goals are approved) by the stockholders no later than the first stockholder meeting that occurs in the fifth year following the year in which stockholders approve the Performance Goals set forth on Exhibit A.

 

	
20.  

	
Severability

 

      Whenever possible, each provision of the Plan shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of the Plan is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of the Plan.

	  	  
	
21.  

	
Governing Law

 

The Plan shall be governed by the corporate laws of the State of Delaware, without giving effect to any choice of law provisions that might otherwise refer construction or interpretation of the Plan to the substantive law of another jurisdiction.

 

	  	  
	
22.  

	
Section 409A of the Code

 

The Plan is intended to comply with the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent. To the extent that any award under the Plan is subject to Section 409A of the Code, it shall be paid in a manner that will comply with Section 409A of the Code, including proposed, temporary or final regulations or any other guidance issued by the Secretary of the Treasury and the Internal Revenue Service with respect thereto. Notwithstanding anything herein to the contrary, any provision in the Plan or any award agreement that is inconsistent with Section 409A of the Code shall be deemed to be amended to comply with Section 409A of the Code and shall not require the consent of the affected participants or their beneficiaries, and to the extent that such provision cannot be amended to comply therewith, such provision shall be null and void.

 

  

44

  

 

EXHIBIT A

 

PERFORMANCE GOALS

 

To the extent permitted under Section 162(m) of the Code, performance goals established for purposes of the grant or vesting of awards of restricted stock, restricted stock units, deferred stock units, and/or performance awards, each intended to be “performance-based” under Section 162(m) of the Code, shall be based on the attainment of certain target levels of, or a specified increase or decrease (as applicable) in one or more of the following performance goals (“ Performance Goals ”):

 

	  	  	  
	  	
• 

	
earnings per share;

	  	  
	  	
• 

	
operating income;

	  	  
	  	
• 

	
net income (before or after taxes);

	  	  
	  	
• 

	
growth in book value;

	  	  
	  	
• 

	
growth in tangible book value;

	  	  
	  	
• 

	
relative combined ratio performance compared to industry;

	  	  
	  	
• 

	
earnings before interest, tax, depreciation and amortization;

	  	  
	  	
• 

	
return on equity;

	  	  
	  	
• 

	
return on assets;

	  	  
	  	
• 

	
net revenues;

	  	  
	  	
• 

	
gross revenues;

	  	  
	  	
• 

	
revenue growth;

	  	  
	  	
• 

	
service revenues;

	  	  
	  	
• 

	
market share;

	  	  
	  	
• 

	
reduction in operating expenses;

	  	  
	  	
• 

	
direct premiums written adjusted to exclude assigned premiums;

	  	  
	  	
• 

	
combined ratio adjusted to exclude reserve additions and releases.

 

The Compensation Committee may designate additional business criteria on which the performance goals may be based or adjust, modify or amend those criteria.

 

  

45

  

 

To the extent permitted under Section 162(m) of the Code, the Committee may, in its sole discretion, also exclude, or adjust to reflect, the impact of an event or occurrence that the Committee determines should be appropriately excluded or adjusted, including:

 

(a) restructurings, discontinued operations, extraordinary items or events, and other unusual or non-recurring charges as described in Accounting Principles Board Opinion No. 30 and/or management’s discussion and analysis of financial condition and results of operations appearing or incorporated by reference in the Company’s Form 10-K for the applicable year;

 

(b) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management; or

 

(c) a change in tax law or accounting standards required by generally accepted accounting principles.

 

Performance Goals may also be based upon individual participant performance goals, as determined by the Committee, in its sole discretion.

 

In addition, such Performance Goals may be based upon the attainment of specified levels of Company (or subsidiary, division, other operational unit or administrative department of the Company) performance under one or more of the measures described above relative to the performance of other corporations. To the extent permitted under Section 162(m) of the Code, but only to the extent permitted under Section 162(m) of the Code (including, without limitation, compliance with any requirements for stockholder approval), the Committee may also:

 

(a) designate additional business criteria on which the performance goals may be based; or

 

(b) adjust, modify or amend the aforementioned business criteria.

 

  

46

  

EXHIBIT E

 

GENERAL RELEASE

 

1.           I, __________________________, in consideration of and subject to the performance by SeaBright Insurance Company, an Illinois domiciled company (together with its subsidiaries, the “Company”), of its obligations under the Amended Employment Agreement, dated as of ___, 2011 (the “Agreement”), do hereby release and forever discharge as of the date hereof the Company and their Affiliates and all present and former directors, officers, agents, representatives, employees, successors and assigns of the Company and its affiliates and the Company’s direct or indirect owners (collectively, the “Released Parties”) to the extent provided below.

 

	
1.

	
I understand that any payments or benefits paid or granted to me under Section 4(a) of the Agreement represent, in part, consideration for signing this General Release and are not salary, wages or benefits to which I was already entitled.  I understand and agree that I will not receive the payments and benefits specified in Section 4(a) of the Agreement unless I execute this General Release and do not revoke this General Release within the time period permitted hereafter or breach this General Release.  Such payments and benefits will not be considered compensation for purposes of any employee benefit plan, program, policy or arrangement maintained or hereafter established by the Company or its affiliates.  I also acknowledge and represent that I have received all payments and benefits that I am entitled to receive (as of the date hereof) by virtue of any employment by the Company.

 

	
2.

	
Except as provided in Paragraph 4 below and except for the provisions of my Employment Agreement which expressly survive the termination of my employment with the Company, I knowingly and voluntarily (for myself, my heirs, executors, administrators and assigns) release and forever discharge the Company and the other Released Parties from any and all claims, suits, controversies, actions, causes of action, cross-claims, counterclaims, demands, debts, compensatory damages, liquidated damages, punitive or exemplary damages, other damages, claims for costs and attorneys’ fees, or liabilities of any nature whatsoever in law and in equity, both past and present (through the date this General Release becomes effective and enforceable) and whether known or unknown, suspected, or claimed against the Company or any of the Released Parties which I, my spouse, or any of my heirs, executors, administrators or assigns, may have, which arise out of or are connected with my employment with, or my separation or termination from, the Company (including, but not limited to, any allegation, claim or violation, arising under:  Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended (including, without limitation, the Older Workers Benefit Protection Act); the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Worker Adjustment Retraining and Notification Act; the Employee Retirement Income Security Act of 1974; any applicable Executive Order Programs; the Fair Labor Standards Act; or their state and local counterparts; or under any other federal, state or local civil or human rights law, or under any other local, state, or federal law, regulation or ordinance; or under any public policy, contract or tort, or under common law; or arising under any policies, practices or procedures of Employer; or any claim for wrongful discharge, breach of contract, infliction of emotional distress, or defamation; or any claim for costs, fees, or other expenses, included (without limitation) attorneys’ fees incurred in these matters) (all of the foregoing collectively referred to herein as the “Claims”).

 

  

47

  

 

	
3.

	
I represent that I have made no assignment or transfer of any right, claim, demand, cause of action, or other matter covered by Paragraph 2 above.

 

	
4.

	
I agree that this General Release does not waive or release any rights or claims that I may have under the Age Discrimination in Employment Act of 1967 which arise after the date I execute this General Release.  I acknowledge and agree that my separation from employment with the Company in compliance with the terms of the Agreement shall not serve as the basis for any claim or action (including, without limitation, any claim under the Age Discrimination in Employment Act of 1967).

 

	
5.

	
In signing this General Release, I acknowledge and intend that it shall be effective as a bar to each and every one of the Claims hereinabove mentioned or implied.  I expressly consent that this General Release shall be given full force and effect according to each and all of its express terms and provisions, including, without limitation, those relating to unknown and unsuspected Claims (notwithstanding any state statute that expressly limits the effectiveness of a general release of unknown, unsuspected and unanticipated Claims), if any, as well as those relating to any other Claims hereinabove mentioned or implied.  I acknowledge and agree that this waiver is an essential and material term of this General Release and that without such waiver the Company would not have agreed to the terms of the Agreement.  I further agree that in the event I should bring a Claim seeking damages against the Company, or in the event I should seek to recover against the Company in any Claim brought by a governmental agency on my behalf, this General Release shall serve as a complete defense to such Claims.  I further agree that I am not aware of any pending charge or complaint of the type described in Paragraph 2 as of the execution of this General Release.

 

	
6.

	
I represent that I am not aware of any claim by me other than the claims that are released by this Agreement.

 

	
7.

	
I agree that neither this General Release, nor the furnishing of the consideration for this General Release, shall be deemed or construed at any time to be an admission by the Company, any Released Party or myself of any improper or unlawful conduct.

 

	
8.

	
I agree that I will forfeit all amounts payable by the Company pursuant to the Agreement if I challenge the validity of this General Release.  I also agree that if I violate this General Release by suing the Company or the other Released Parties, I will pay all costs and expenses of defending against the suit incurred by the Released Parties, including (without limitation) reasonable attorneys’ fees, and return all payments received by me pursuant to the Agreement.

 

  

48

  

 

	
9.

	
I agree that this General Release is confidential and agree not to disclose any information regarding the terms of this General Release, except to my immediate family and any tax, legal or other counsel I have consulted regarding the meaning or effect hereof or as required by law, and I will instruct each of the foregoing not to disclose the same to anyone.

 

	
10.

	
Any non-disclosure provision in this General Release does not prohibit or restrict me (or my attorney) from responding to any inquiry about this General Release or its underlying facts and circumstances by the Securities and Exchange Commission (SEC), the National Association of Securities Dealers, Inc. (NASD), any other self-regulatory organization or governmental entity.

 

	
11.

	
I agree to reasonably cooperate with the Company in any internal investigation or administrative, regulatory, or judicial proceeding.  I understand and agree that my cooperation may include, but not be limited to, making myself available to the Company upon reasonable notice for interviews and factual investigations; appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process; volunteering to the Company pertinent information; and turning over to the Company all relevant documents which are or may come into my possession all at times and on schedules that are reasonably consistent with my other permitted activities and commitments.  I understand that in the event the Company asks for my cooperation in accordance with this provision, the Company will reimburse me solely for reasonable travel expenses, including, without limitation, lodging and meals, upon my submission of receipts.

 

	
12.

	
I agree not to disparage the Company, its past and present investors, officers, directors or employers or its affiliates and to keep all confidential and proprietary information about the past or present business affairs of the Company and its affiliates confidential unless a prior written release from the Company is obtained.  I further agree that as of the date hereof, I have returned to the Company any and all property, tangible or intangible, relating to its business, which I possessed or had control over at any time (including, but not limited to, company-provided credit cards, building or office access cards, keys, computer equipment, manuals, files, documents, records, software, customer database and other data) and that I shall not retain any copies, compilations, extracts, excerpts, summaries or other notes of any such manuals, files, documents, records, software, customer database or other data.

 

	
13.

	
Notwithstanding anything in this General Release to the contrary, this General Release shall not relinquish, diminish, or in any way affect any rights or claims (i) arising out of any breach by the Company or by any Released Party of the Agreement after the date hereof (ii) to indemnification for which I may be entitled to as a former officer or director of the Company under their respective charter and/or bylaws and/or other constituent documents so long as I am otherwise entitled to be indemnified as authorized thereunder.

 

  

49

  

 

	
14.

	
Whenever possible, each provision of this General Release shall be interpreted in, such manner as to be effective and valid under applicable law, but if any provision of this General Release 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 shall not affect any other provision or any other jurisdiction, but this General Release shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

 

	
  

	
[Remainder of page intentionally left blank.]

 

  

50

  

 

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

 

	
  

	
(i)

	
I HAVE READ IT CAREFULLY;

 

	
  

	
(ii)

	
I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963; THE AMERICANS WITH DISABILITIES ACT OF 1990; AND THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;

 

	
  

	
(iii)

	
I VOLUNTARILY CONSENT TO EVERYTHING IN IT;

 

	
  

	
(iv)

	
I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I HAVE DONE SO OR, AFTER CAREFUL READING AND CONSIDERATION, I HAVE CHOSEN NOT TO DO SO OF MY OWN VOLITION;

 

	
  

	
(v)

	
I HAVE HAD AT LEAST TWENTY-ONE (21) DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE SUBSTANTIALLY IN ITS FINAL FORM ON ________________, 20__, TO CONSIDER IT AND THE CHANGES MADE SINCE THE ________________, 20__ VERSION OF THIS RELEASE ARE NOT MATERIAL AND WILL NOT RESTART THE REQUIRED 21-DAY PERIOD;

 

	
  

	
(vi)

	
THE CHANGES TO THE AGREEMENT SINCE ________________, 20__ EITHER ARE NOT MATERIAL OR WERE MADE AT MY REQUEST.

 

	
  

	
(vii)

	
I UNDERSTAND THAT I HAVE SEVEN (7) DAYS AFTER THE EXECUTION OF THIS RELEASE TO REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED;

 

	
  

	
(viii)

	
I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

 

	
  

	
(ix)

	
I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.

 

 

 

	
Signature:

	 	 	Date:	 
	 	NEAL A. FULLER	 	 	 

 

 

 

51Filed by Avantafile.com - I-Level Media Group Inc. - Exhibit 10.7

 

     

I-LEVEL MEDIA GROUP INCORPORATED
902, B1, KangBao
  Huayuan, #8 Gongran Tiyuchang Donglu,

Chaoyand District, Beijing, PRC, 100020

	July 9, 2012 	Private and Confidential 

To:
The Board of Directors of:
Telupay PLC
First Island House, Peter Street St. Helier

Jersey Channel Islands, JE4 8SG

Dear Sirs/Mesdames:

Re:

Offer to purchase all of the shares of Telupay
PLC (the “Company”) from each of the shareholders of the Company
(each a “Vendor”) by I-Level Media Group Incorporated (the “Purchaser”;
and the Company, the within Vendor and the Purchaser being, individually and/or
collectively, as the context so requires, a “Party” and the “Parties”
herein)

AGREEMENT IN PRINCIPLE

                        This letter will
confirm our recent discussions and the intention of each of the Parties to
enter into the basic terms of an agreement (herein the “Agreement”) for
the proposed acquisition by the above-referenced Purchaser from the
above-referenced Vendors of all of issued and outstanding shares (each a “Purchased
Share”) of the above-referenced Company.

                        We understand and confirm
that the Company is a limited liability company subsisting under and registered
pursuant to the laws of Jersey Channel Islands, that the Company is presently
engaged in the business of mobile banking and payment applications and systems
and all matters and businesses necessarily incidental thereto, and that the
Company now wish to raise additional external capital in order to fully develop
and realize the potential of its existing business (collectively, the “Company’s
Business”).

                        We also understand
and confirm that, by entering into this Agreement, the undersigned authorized
signatories for each of the Company and the within Vendor herein intend to move
forward toward entering into a more formal agreement or takeover bid (the “Formal
Agreement”) pursuant to which the Vendor, and all remaining Vendors of the
Company, will agree to sell and the Purchaser will agree to purchase all of the
Purchased Shares of the Company from the Vendors upon terms and conditions
similar to those as set forth hereinbelow.  At all times the undersigned
hereto acknowledge and agree that the completion of any such Formal Agreement
is subject to the prior ratification and approval of the terms and conditions
of any such Formal Agreement by the Board of Directors and, if applicable,
shareholders of the Purchaser, the Company, the Vendors and such securities
regulatory authorities as may have jurisdiction over the Purchaser, the Company
and the Vendors (collectively, the “Regulatory Authorities”).

                        In connection with
the foregoing, therefore, the undersigned hereby acknowledge and agree that the
following will represent the basic terms of a Formal Agreement for the
acquisition by the Purchaser of all of the Purchased Shares from the Vendors.

--  Agreement In  Principle  --

  --  I-Level Media  Group Incorporated  -

 
I-Level Media Group Incorporated

July 9, 2012

 - 2 -

Article 1
PURCHASE AND SALE ACQUISITION OF ALL OF THE
PURCHASED SHARES

1.1                   Purchase and
sale Acquisition.   Subject to the terms and conditions hereof and
based upon the representations and warranties contained in Articles “2” and “3”
hereinbelow, together with such other terms and conditions and representations
and warranties as are standard in similar share purchase transactions of this
type and as may be evidenced by the final form of Formal Agreement which
replaces this Agreement, and the prior satisfaction of the conditions precedent
which are set forth in Article “4” hereinbelow, the Vendor, and the remaining
Vendors by virtue of the Formal Agreement thereby, agree to assign, sell and
transfer at the closing date (the “Closing Date”) all of their
respective right, entitlement and interest in and to the Purchased Shares to
the Purchaser, and the Purchaser agrees to purchase all of the Purchased Shares
from the Vendors, on the terms and subject to the conditions contained in this
Agreement (collectively, the “Acquisition” herein).

1.2                   Purchase Price
for the Vendors.   The total purchase price (the “Purchase Price”)
for all of the Purchased Shares on Acquisition will be paid by the Purchaser’s
issuance and delivery to the Vendors, in the manner set forth hereinbelow, of
an aggregate of 48,839,301 restricted common shares in the capital of
the Purchaser (each an “Acquisition Share”); together with such
additional number of additional Acquisition Shares as will equate to an
equivalent number of shares of the Company issued for financing purposes and
for cash consideration to the Company after the acceptance date of this
Agreement by the Parties; at the closing (the “Closing”) on the Closing
Date subject to the terms and conditions of the Formal Agreement, at a deemed
issuance price of U.S. $0.001 per Acquisition Share of the Purchaser.

                        Unless otherwise
directed by the Vendors under the proposed Formal Agreement prior to Closing,
the Purchaser is expected to issue the Acquisition Shares to the Vendors pro
rata in accordance with the each Vendor’s respective Purchased Share
shareholding in and to the Company and outstanding as at the Closing Date; with
all fractions greater than or equal to one-half being rounded up and all
fractions less than one-half being rounded down.

1.3                   Cancellation of
Founder’s Shares.   In addition to the Purchase Price Shares to be
issued by the Purchaser to the Vendors at Closing and in the manner as set
forth in section “1.2” hereinabove, and subject to the remaining terms and
conditions hereof and based upon the representations and warranties contained
in Articles “2” and “3” hereinbelow, together with such other terms and
conditions and representations and warranties as are standard in similar share
purchase transactions of this type and as may be evidenced by the final form of
Formal Agreement which replaces this Agreement, at Closing a current
shareholder of the Purchaser, Francis Chiew (the “Founder”), the
Purchaser’s present Chief Executive Officer, will be required to tender back to
the treasury of the Company for cancellation (the “Cancellation”) an
aggregate of 45,000,000 restricted common shares of the Company from the
present holdings of the Founder (each a “Founder’s Share”); it being
acknowledged and agreed by the Parties and the Founder that the proposed
Cancellation of the Founder’s Shares is essential to the resulting
post-Acquisition capitalization and liquidity of the Company (collectively, the
“Cancellation of the Founder’s Shares” herein).

1.4                   Resale
restrictions and legending of Acquisition Share certificates.   The
Vendor, and the remaining Vendors by virtue of the Formal Agreement thereby,
hereby acknowledge and agree that the Purchaser makes no representations as to
any resale or other restriction affecting the Acquisition Shares and that it is
presently contemplated that the Acquisition Shares will be issued by the
Purchaser to the Vendors in reliance upon the exemptions contained in certain
sections of the United States Securities Act of 1933, as amended (the “Securities
Act”), or “Regulation S” promulgated under the Securities Act, which
will impose a trading restriction in the United States on the Acquisition
Shares for a period of at least 

--  Agreement In  Principle  --

  --  I-Level Media  Group Incorporated  -

 
I-Level Media Group Incorporated

  July 9, 2012

 - 3 -

12 months from the Closing Date.  In addition,
  the Vendor, and the remaining Vendors by virtue of the Formal Agreement
  thereby, hereby also acknowledge and agree that the within obligation of the
  Purchaser to issue the Acquisition Shares pursuant to section “1.2” hereinabove
  will be subject to the Purchaser being satisfied that an exemption from
  applicable registration and prospectus requirements is available under the
  Securities Act and all applicable securities laws in respect of each of the
  Vendors, the Purchased Shares and the Acquisition Shares.

                        The Vendor, and the remaining Vendors by virtue
of the Formal Agreement thereby, hereby
also acknowledge and understand that neither the sale of the Acquisition Shares
which the Vendors are acquiring nor any of the Acquisition Shares themselves
have been registered under the Securities Act or any state securities laws,
and, furthermore, that the Acquisition Shares must be held indefinitely unless
subsequently registered under the Securities Act or an exemption from such
registration is available.  The Vendor,
and the remaining Vendors by virtue of the Formal Agreement thereby, also acknowledge and understand that the
certificates representing the Acquisition Shares will be stamped with the
following legend (or substantially equivalent language) restricting transfer in
the following manner if such restriction is required by the Regulatory
Authorities:

	 	“The securities represented hereby have
not been registered under the United States Securities Act of 1933, as amended
(the “1933 Act”) or applicable state securities laws.  These securities may not
be offered, sold, pledged or otherwise transferred except (a) pursuant to an
effective registration statement under the 1933 Act, (b) to the corporation,
(c) in accordance with Rule 144 under the 1933 Act, if available, and in
compliance with applicable state securities laws, (d) in accordance with the
provisions of Regulation S, if available, or (e) in a transaction that does not
otherwise require registration under the 1933 Act or any applicable state
securities laws if an opinion of counsel, of recognized standing reasonably
satisfactory to the corporation, has been provided to the corporation to that
effect.  The securities represented by the certificate cannot be the subject of
hedging transactions unless such transactions are conducted in compliance with
the 1933 Act and other applicable securities laws.”;

and the Vendor, and the remaining Vendors
by virtue of the Formal Agreement thereby, hereby consent to the Purchaser
making a notation on its records or giving instructions to any transfer agent
of the Purchaser (the “Transfer Agent”) in order to implement the
restrictions on transfer set forth and described hereinabove.

                        The Vendor hereby, and the remaining Vendors by
virtue of the Formal Agreement thereby, also
acknowledge and understand that:

	 	(a)	the Acquisition Shares are restricted
securities within the meaning of “Rule 144” promulgated under the
Securities Act;

	 	(b)	the exemption from registration under Rule
144 will not be available in any event for at least one year from the date of
issuance and transfer of the Acquisition Shares to the Vendors, and even then
will not be available unless (i) a public trading market then exists for the
common stock of the Purchaser, (ii) adequate information concerning the Purchaser
is then available to the public; (iii) all
periodic reports required to be filed by the Purchaser have been filed; and (iv)
other terms and conditions of Rule 144 are complied with; and

	 	(c)	any sale of the Acquisition Shares may be
made by the Vendors only in limited amounts in accordance with such terms and
conditions.

--  Agreement In  Principle  --

  --  I-Level Media  Group Incorporated  -

 
I-Level Media Group Incorporated

  July 9, 2012

 - 4 -

1.5                   Standstill
provisions.   In consideration of the Parties’ within agreement to
purchase and sell the Purchased Shares and to enter into the terms and
conditions of this Agreement, each of the Parties hereby undertake for
themselves, and for each of their respective agents and advisors, that they
will not until the earlier of the Closing Date or the termination of this
Agreement approach or consider any other potential Purchasers, or make, invite,
entertain or accept any offer or proposal for the proposed sale of any interest
in and to any of the Purchased Shares or the assets or the respective business
interests of the Company or the Purchaser, as the case may be, or, for that matter,
disclose any of the terms of this Agreement, without the Parties’ prior written
consent.  In this regard each of the Parties hereby acknowledges that the
foregoing restrictions are important to the respective businesses of the
Parties and that a breach by any of the Parties of any of the covenants herein
contained would result in irreparable harm and significant damage to each
affected Party that would not be adequately compensated for by monetary award. 
Accordingly, the Parties hereby agree that, in the event of any such breach, in
addition to being entitled as a matter of right to apply to a Court of
competent equitable jurisdiction for relief by way of restraining order,
injunction, decree or otherwise as may be appropriate to ensure compliance with
the provisions hereof, any such Party will also be liable to the other Parties,
as liquidated damages, for an amount equal to the amount received and earned by
such Party as a result of and with respect to any such breach.  The Parties
hereby also acknowledge and agree that if any of the aforesaid restrictions,
activities, obligations or periods are considered by a Court of competent
jurisdiction as being unreasonable, they agree that said Court shall have
authority to limit such restrictions, activities or periods as the Court deems
proper in the circumstances.

Article 2
WARRANTIES,
REPRESENTATIONS AND COVENANTS
BY THE
COMPANY AND BY THE VENDORS

2.1                   Warranties,
representations and covenants by the Company and by the Vendors.   In
order to induce the Purchaser to enter into this Agreement and to enter into
and consummate any Formal Agreement, each of the Company and the Vendor hereby,
and each of the Company and the Vendors by virtue of any Formal Agreement will,
respectively, thereby, warrant to, represent to and covenant with the Purchaser
in this Agreement, and in any Formal Agreement as at the Closing Date, that, to
the best of the knowledge, information and belief of each of the Company and
the Vendor herein, and to the best of the knowledge, information and belief of
each of the Company and the Vendors, respectively, in any Formal Agreement,
after making due inquiry and where appropriate and applicable (and for the
purposes of the following warranties, representations and covenants “Company”
shall mean the Company and any and all subsidiaries of the Company, if any, as
the context so requires):

	 	(a)	each
of the Company and, where applicable, the Vendors, are duly incorporated under
the laws of their respective jurisdictions of incorporation, are validly
existing and are in good standing with respect to all statutory filings
required by the applicable corporate laws, and each of the Company and, where
applicable, the Vendors, has the requisite power, authority and capacity to own
and use all of its respective business assets and to carry on the Company’s
Business as presently conducted by them;

	 	(b)	save
and except as set forth in the “Company’s Disclosure Schedule”; a copy of such
Company’s Disclosure Schedule accompanying the Company’s delivery of this
Agreement; and as will be set
forth in any Formal Agreement as contemplated herein, the Company owns and possesses and has good and
marketable title to and possession of all of its business assets free and clear
of all actual or threatened liens, charges, options, encumbrances, voting
agreements, voting trusts, demands, limitations and restrictions of any nature
whatsoever;

--  Agreement In  Principle  --

  --  I-Level Media  Group Incorporated  -

 
I-Level Media Group Incorporated

  July 9, 2012

 - 5 -

	 	(c)	save
and except as set forth in the Company’s Disclosure Schedule and as will be set
forth in any Formal Agreement as contemplated herein, the Company holds all
licenses and permits required for the conduct in the ordinary course of its
operations of the Company’s Business and for the uses to which its business
assets have been put and are in good standing, and such conduct and uses are in
compliance with all laws, zoning and other by-laws, building and other
restrictions, rules, regulations and ordinances applicable to the Company and
its business assets, and neither the execution and delivery of this Agreement
nor the completion of the transactions contemplated hereby will give any person
the right to terminate or cancel any said license or permit or affect such
compliance;

	 	(d)	as
set forth in the Company’s Disclosure Schedule, the issued and authorized
capital of the Company is accurately disclosed therein of which, according to
the records of the Company, and as at the Closing Date, all of the Purchased
Shares will be issued and outstanding as fully paid and non-assessable as at
Closing;

	 	(e)	subject
to the prior completion of the Cancellation of the Founder’ Shares, there will
be no shares in the capital of the Company issued or allotted or agreed to be
issued or allotted to any persons or entities other than the Vendors herein;

	 	(f)	the
Vendors have good and marketable title to and are the legal, registered and beneficial
owners of all of the Purchased Shares;

	 	(g)	the
Purchased Shares are validly issued and outstanding and fully paid and
non-assessable in the capital of the Company and are free and clear of all
actual or threatened liens, charges, options, encumbrances, voting agreements,
voting trusts, demands, limitations and restrictions of any nature whatsoever;

	 	(h)	there
are no claims of any nature whatsoever affecting the rights of the Vendors to
transfer the Purchased Shares to the Purchaser and, without limiting the
generality of the foregoing, there are no claims or potential claims under any
relevant family relations legislation or other equivalent legislation affecting
the Purchased Shares;

	 	(i)	the
Vendors have the power and capacity to own and dispose of the Purchased Shares;

	 	(j)	this
Agreement and any Formal Agreement as contemplated herein will constitute a
legal, valid and binding obligation of the Company and the Vendors, enforceable
against the Company and the Vendors in accordance with its respective terms,
except as enforcement may be limited by laws of general application affecting
the rights of creditors;

	 	(k)	subject
to the prior completion of the Cancellation of the Founder’ Shares, as at the
execution date of any Formal Agreement as contemplated herein the Company will
not have committed itself to provide any person, firm or corporation with any
agreement, option or right, consensual or arising by law, present or future,
contingent or absolute, or capable of becoming an agreement, option or right:

	 	(i)	to
require it to issue any further or other shares in its share capital, or any
other security convertible or exchangeable into shares in its share capital, or
to convert or exchange any securities into or for shares in its share capital;

--  Agreement In  Principle  --

  --  I-Level Media  Group Incorporated  -

 
I-Level Media Group Incorporated

  July 9, 2012

 - 6 -

	 	(ii)	for
the issue and allotment of any of the authorized but unissued shares in its
share capital;

	 	(iii)	to
require it to purchase, redeem or otherwise acquire any of the issued and
outstanding shares in its share capital; or

	 	(iv)	to
purchase or otherwise acquire any shares in its share capital;

	 	(l)	no
other person, firm or corporation has any agreement, option or right capable of
becoming an agreement for the purchase of any of the Purchased Shares;

	 	(m)	save
and except as set forth in the Company’s Disclosure Schedule, and save and
except as will be provided for in the Company’s consolidated and comparative
audited financial statements for its most recently completed financial period
to be provided prior to Closing (presently expected as at March 31, 2012; and,
collectively, the “Company’s Financial Statements”) and as will be set
forth in any Formal Agreement as contemplated herein, there are no material
liabilities, contingent or otherwise, existing on the date hereof in respect of
which the Company may be liable on or after the completion of the transactions
contemplated by this Agreement other than:

	 	(i)	liabilities
disclosed or referred to in this Agreement; and

	 	(ii)	liabilities
incurred in the ordinary course of the Company’s Business, none of which are
materially adverse to the business, operations, affairs or financial conditions
of the Company;

	 	(n)	no
dividend or other distribution by the Company will be declared, paid or
authorized up to and including the Closing Date, and the Company has not and
has not committed itself to confer upon, or pay to or to the benefit of, any
entity, any benefit having monetary value, any bonus or any salary increases
except in the normal course of its business;

	 	(o)	save
and except as set forth in the Company’s Disclosure Schedule and as will be set
forth in any Formal Agreement as contemplated herein, there is no basis for and
there are no actions, suits, judgments, investigations or proceedings
outstanding or pending or, to the best of the knowledge, information and belief
of the Company and the Vendors, after making due inquiry, threatened against or
affecting the Company at law or in equity or before or by any federal, state,
municipal or other governmental department, commission, board, bureau or
agency;

	 	(p)	save
and except as set forth in the Company’s Disclosure Schedule and as will be set
forth in any Formal Agreement as contemplated herein, the Company is not in
breach of any laws, ordinances, statutes, regulations, by-laws, orders or
decrees to which it is subject or which apply to it;

	 	(q)	save
and except as set forth in the Company’s Disclosure Schedule and as will be set
forth in any Formal Agreement as contemplated herein, the Company has not
experienced, nor are the Company and the Vendors aware of, any occurrence or
event which has had, or might reasonably be expected to have, a materially
adverse affect on the Company’s Business or on the results of its operations;

--  Agreement In  Principle  --

  --  I-Level Media  Group Incorporated  -

 
I-Level Media Group Incorporated

  July 9, 2012

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	 	(r)	save
and except as set forth in the Company’s Disclosure Schedule and as will be set
forth in any Formal Agreement as contemplated herein, the Company is not, nor
until or at the Closing Date will it be, in breach of any provision or
condition of, nor has it done or omitted anything that, with or without the
giving of notice or lapse or both, would constitute a breach of any provision
or condition of, or give rise to any right to terminate or cancel or accelerate
the maturity of any payment under, any deed of trust, contract, certificate,
consent, permit, license or other instrument to which it is a party, by which
it is bound or from which it derives benefit, any judgment, decree, order, rule
or regulation of any Court or governmental authority to which it is subject, or
any statute or regulation applicable to it, to an extent that, in the
aggregate, has a material adverse affect on it;

	 	(s)	the
Company has not committed to making and until the Closing Date will not make or
commit itself to:

	 	(i)	guarantee,
or agree to guarantee, any indebtedness or other obligation of any person or
corporation; or

	 	(ii)	waive
or surrender any right of material value;

	 	(t)	until
the Closing Date the Company will:

	 	(i)	maintain
its assets in a manner consistent with and in compliance with applicable law;
and

	 	(ii)	not
enter into any material transaction or assume or incur any material liability
outside the normal course of its business without the prior written consent of
the Purchaser;

	 	(u)	the
Company and the Vendors acknowledges that the Acquisition Shares will be issued
under certain exemptions from the registration and prospectus filing
requirements otherwise applicable under the Securities Act and that, as a
result, the Vendors may be restricted from using most of the remedies that
would otherwise be available to them and will not receive information that
would otherwise be required to be provided to them, and the Purchaser is
relieved from certain obligations that would otherwise apply to it, in either
case, under applicable securities legislation;

	 	(v)	the
Company and the Vendors acknowledge and agree that the Acquisition Shares have
not been and will not be qualified or registered under the any federal or state
securities laws of the United States and, as such, the Vendors may be
restricted from selling or transferring such Acquisition Shares under
applicable law;

	 	(w)	the Vendors
realize that the sale of the Purchased Shares in exchange for the Acquisition
Shares will be a highly speculative investment and that the Vendors are able,
without impairing that Vendors’ financial condition, to hold the Acquisition
Shares for an indefinite period of time and to suffer a complete loss on the
Vendors’ investment.  In addition, the Vendors have such knowledge and
experience in financial and business matters that the Vendors are capable of
evaluating the merits and risks of the prospective investment, and the Vendors
have not received, nor have the Vendors requested or do the Vendors require to
receive, any offering memorandum or a similar document describing the business
and affairs of the Purchaser in order to assist the Vendors in entering into
this Agreement and any Formal Agreement and in consummating the transactions
contemplated herein;

--  Agreement In  Principle  --

  --  I-Level Media  Group Incorporated  -

 
I-Level Media Group Incorporated

  July 9, 2012

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	 	(x)	at
Closing each of the Company and the Vendors will have executed and provided
each other with an acceptable form of final release and indemnification
respecting any and all claims which either of such Parties had, or may have
had, against any such other Party prior to Closing (the “Release”);

	 	(y)	to
the actual knowledge, information and belief of each of the Company and the
Vendors only in each of the following instances, the making of this Agreement,
the completion of the transactions contemplated hereby pursuant to any Formal
Agreement and the performance of and compliance with the terms hereof does not
and will not:

	 	(i)	conflict
with or result in a breach of or violate any of the terms, conditions or
provisions of the constating documents of either of the Company or the Vendors;

	 	(ii)	conflict
with or result in a breach of or violate any of the terms, conditions or
provisions of any law, judgment, order, injunction, decree, regulation or
ruling of any court or governmental authority, domestic or foreign, to which
either of the Company or any of the Vendors is subject, or constitute or result
in a default under any agreement, contract or commitment to which either of the
Company or any of the Vendors is a party;

	 	(iii)	give
to any party the right of termination, cancellation or acceleration in or with
respect to any agreement, contract or commitment to which either of the Company
or any of the Vendors is a party;

	 	(iv)	give
to any government or governmental authority, or any municipality or any
subdivision thereof, including any governmental department, commission, bureau,
board or administration agency, any right of termination, cancellation or
suspension of, or constitute a breach of or result in a default under, any
permit, license, control or authority issued to either of the Company or to any
of the Vendors which is necessary or desirable in connection with the conduct
and operations of the Company’s Business and the ownership or leasing of its
business assets; or

	 	(v)	constitute
a default by either of the Company or any of the Vendors, or any event which,
with the giving of notice or lapse of time or both, might constitute an event
of default, under any agreement, contract, indenture or other instrument
relating to any indebtedness of the Company or any of the Vendors which would
give any party to that agreement, contract, indenture or other instrument the
right to accelerate the maturity for the payment of any amount payable under
that agreement, contract, indenture or other instrument; and

	 	(z)	it
is not aware of any fact or circumstance which has not been disclosed to the Purchaser
which should be disclosed in order to prevent the representations, warranties
and covenants contained in this section from being misleading or which would
likely affect the decision of the Purchaser to enter into this Agreement or any
Formal Agreement.

--  Agreement In  Principle  --

  --  I-Level Media  Group Incorporated  -

 
I-Level Media Group Incorporated

  July 9, 2012

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Article 3
WARRANTIES,
REPRESENTATIONS AND COVENANTS BY THE PURCHASER

3.1                   Warranties,
representations and covenants by the Purchaser.   In order to induce
each of the Company and the Vendor to enter into this Agreement and to enter
into and consummate any Formal Agreement, the Purchaser hereby, and by virtue
of any Formal Agreement will thereby, warrant to, represent to and covenant
with each of the Company and the Vendors that, to the best of the knowledge,
information and belief of the Purchaser herein, and to the best of the
knowledge, information and belief of the Purchaser in any Formal Agreement as
at the Closing Date, after making due inquiry and where appropriate and
applicable (and for the purposes of the following warranties, representations
and covenants “Purchaser” shall mean the Purchaser and any subsidiary of the
Purchaser, if any, as the context so requires):

	 	(a)	the
Purchaser is duly incorporated under the laws of its jurisdiction of
incorporation, is validly existing and is in good standing with respect to all
statutory filings required by the applicable corporate laws;

	 	(b)	the
Purchaser has the requisite power, authority and capacity to own and use all of
its business assets and to carry on its business as presently conducted by it;

	 	(c)	save
and except as will be set forth in the “Purchaser’s Disclosure Schedule”; a copy of such Purchaser’s Disclosure Schedule
to accompany the Purchaser’s delivery of this Agreement; and as will be
set forth in any Formal Agreement as contemplated herein, the Purchaser owns and possesses and has good and
marketable title to and possession of all of its business assets free and clear
of all actual or threatened liens, charges, options, encumbrances, voting
agreements, voting trusts, demands, limitations, contingent liabilities and
restrictions of any nature whatsoever;

	 	(d)	save and except as will be set forth in the
Purchaser’s Disclosure Schedule and as will be set forth in any Formal
Agreement as contemplated herein, the Purchaser holds all licenses and permits required for the conduct
in the ordinary course of the operations of its business and for the uses to
which its business assets have been put and are in good standing, and such
conduct and uses are in compliance with all laws, zoning and other by-laws,
building and other restrictions, rules, regulations and ordinances applicable
to the Purchaser, and neither the execution and delivery of this Agreement nor
the completion of the transactions contemplated hereby will give any person the
right to terminate or cancel any said license or permit or affect such
compliance;

	 	(e)	this
Agreement and any Formal Agreement as contemplated herein will constitute a
legal, valid and binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its respective terms, except as enforcement may be
limited by laws of general application affecting the rights of creditors;

	 	(f)	the
authorized capital of the Purchaser consists of 1,000,000,000 common shares,
with a par value of U.S. $0.001 per common share, of which, according to the
records of the Purchaser, an aggregate of approximately 75,918,825 common
shares of the Purchaser are issued and outstanding as fully paid and
non-assessable in the share capital of the Purchaser as at the date of this
Agreement;

	 	(g)	all
of the issued and outstanding shares of the Purchaser will be listed and posted
for trading on the NASD Over-the-Counter Bulletin Board (the “OTCBB”),
and the Purchaser will not in material default of any of its listing requirements
of the OTCBB or any rules or policies of the United States Securities and
Exchange Commission (the “Commission”);

--  Agreement In  Principle  --

  --  I-Level Media  Group Incorporated  -

 
I-Level Media Group Incorporated

  July 9, 2012

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	 	(h)	all
registration statements, reports and proxy statements filed by the Purchaser
with the Commission, and all registration statements, reports and proxy
statements required to be filed by the Purchaser with the Commission, will have
been filed by the Purchaser under the United StatesSecurities Act of 1934,
as amended (the “Exchange Act”), will have been filed in all material
respects in accordance with the requirements of the Exchange Act and the rules
and regulations thereunder and no such registration statements, reports or
proxy statements will have contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading;

	 	(i)	the
Purchaser will allot and issue the Acquisition Shares on the Closing Date in
accordance with section “1.2” hereinabove as fully paid and non-assessable in
the capital of the Purchaser free and clear of all actual or threatened liens,
charges, options, encumbrances, voting agreements, voting trusts, demands,
limitations and restrictions of any nature whatsoever, other than hold periods
or other restrictions imposed under applicable securities legislation and will
issue, on the Closing Date, to holders of any and all share purchase options
(each a “Company Option”) and warrants (each a “Company Warrant”)
in and to the Company outstanding immediately prior to Closing, a share
purchase option (each a “Purchaser Option”) or share purchase warrant
(each a “Purchaser Warrant”), as the case may be, on substantially the
same terms and conditions as were applicable under the particular Company
Option or Company Warrant;

	 	(j)	subject
to the prior completion of the Cancellation of the Founder’ Shares, up to and
including the Closing Date the Purchaser will not commit itself to:

	 	(i)	redeem
or acquire any shares in its share capital;

	 	(ii)	declare
or pay any dividend;

	 	(iii)	make
any reduction in or otherwise make any payment on account of its paid-up
capital; or

	 	(iv)	effect
any subdivision, consolidation (except as required by the terms of this Agreement)
or reclassification of any of its share capital;

	 	(k)	up
to and including the Closing Date the Purchaser will not commit itself to:

	 	(i)	acquire
or have the use of any property from a person, corporation or entity with whom
it was not dealing with at arm’s length; or

	 	(ii)	dispose
of anything to a person, corporation or entity with whom it was not dealing
with at arm’s length for proceeds less than the fair market value thereof;

	 	(l)	save
and except for the proposed payment and/or issuance of common shares of the
Purchaser as a finder’s fee in conjunction with the successful completion of
any Formal Agreement as
contemplated herein, and save and except for any finder’s fees or commissions
which may be payable or issuable by the Purchaser in conjunction with the
completion of its proposed Private Placement (as hereinafter defined) as set
forth hereinbelow, the
Purchaser has not retained, employed or introduced any other broker, finder or
other person who would be entitled to a brokerage commission or finder’s fee
arising out of the transactions contemplated hereby;

--  Agreement In  Principle  --

  --  I-Level Media  Group Incorporated  -

 
I-Level Media Group Incorporated

  July 9, 2012

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	 	(m)	save
and except as will be set forth in any Formal Agreement as contemplated herein, up to and including the Closing Date the Purchaser
will not commit itself to provide any person, firm or corporation with any
agreement, option or right, consensual or arising by law, present or future,
contingent or absolute, or capable of becoming an agreement, option or right:

	 	(i)	to
require it to issue any further or other shares in its share capital, or any
other security convertible or exchangeable into shares in its share capital, or
to convert or exchange any securities into or for shares in its share capital;

	 	(ii)	for
the issue and allotment of any of the authorized but unissued shares in its
share capital;

	 	(iii)	to
require it to purchase, redeem or otherwise acquire any of the issued and
outstanding shares in its share capital; or

	 	(iv)	to
purchase or otherwise acquire any shares in its share capital;

	 	(n)	save and except as will be set forth in the
Purchaser’s Disclosure Schedule and as will be set forth in any Formal
Agreement as contemplated herein, there will be no material liabilities, contingent or otherwise,
existing on the Closing Date in respect of which the Purchaser may be liable on
or after the completion of the transactions contemplated by the Formal
Agreement other than:

	 	(i)	liabilities
disclosed or referred to in the Formal Agreement; and

	 	(ii)	liabilities
incurred in the ordinary course of business, none of which are materially adverse
to the business, operations, affairs or financial conditions of the Purchaser;

	 	(o)	no
dividend or other distribution by the Purchaser will have been made, declared
or authorized since its incorporation, nor will any be declared, paid or
authorized up to and including the Closing Date, and the Purchaser will not
commit itself to confer upon, or pay to or to the benefit of, any entity, any
benefit having monetary value, any bonus or any salary increases except in the
normal course of its business;

	 	(p)	save and except as will be set forth in the
Purchaser’s Disclosure Schedule and as will be set forth in any Formal
Agreement as contemplated herein, there will be no basis for and there will be no actions, suits,
judgments, investigations or proceedings outstanding or pending or, to the best
of the knowledge, information and belief of the Purchaser under the Formal
Agreement, after making due inquiry, threatened against or affecting the
Purchaser at law or in equity or before or by any federal, state, municipal or
other governmental department, commission, board, bureau or agency;

--  Agreement In  Principle  --

  --  I-Level Media  Group Incorporated  -

 
I-Level Media Group Incorporated

  July 9, 2012

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	 	(q)	save and except as will be set forth in the
Purchaser’s Disclosure Schedule and as will be set forth in any Formal
Agreement as contemplated herein, the Purchaser will not be in breach of any laws, ordinances, statutes,
regulations, by-laws, orders or decrees to which it is subject or which apply
to it;

	 	(r)	save and except as will be set forth in the
Purchaser’s Disclosure Schedule and as will be set forth in any Formal Agreement
as contemplated herein, the
Purchaser will have not experienced, nor will the Purchaser be aware of, any
occurrence or event which has had, or might reasonably be expected to have, a
materially adverse affect on the Purchaser’s business or on the results of its
operations;

	 	(s)	up
to and including the Closing Date there has been and will be prepared and filed
on a timely basis all federal and provincial income tax returns, elections and
designations, and all other governmental returns, notices and reports of which
the Purchaser had or ought reasonably to have had knowledge, required to be or
reasonably capable of being filed up to the Closing Date, with respect to the
operations of the Purchaser, and no such returns, elections, designations,
notices or reports contain any material misstatement or omit any material
statement that should have been included, and each such return, election,
designation, notice or report, including accompanying schedules and statements,
is true, correct and complete in all material respects;

	 	(t)	save and except as will be set forth in the
Purchaser’s Disclosure Schedule and as will be set forth in any Formal
Agreement as contemplated herein, the Purchaser is not, nor until or at the Closing Date will it be, in
breach of any provision or condition of, nor has it done or omitted anything
that, with or without the giving of notice or lapse or both, would constitute a
breach of any provision or condition of, or give rise to any right to terminate
or cancel or accelerate the maturity of any payment under, any deed of trust,
contract, certificate, consent, permit, license or other instrument to which it
is a party, by which it is bound or from which it derives benefit, any
judgment, decree, order, rule or regulation of any court or governmental
authority to which it is subject, or any statute or regulation applicable to
it, to an extent that, in the aggregate, has a material adverse affect on it;

	 	(u)	save and except as will be set forth in the
Purchaser’s Disclosure Schedule and as will be set forth in any Formal
Agreement as contemplated herein, no payments of any kind will have been made or authorized by or on
behalf of the Purchaser to or on behalf of directors, officers, shareholders or
employees of the Purchaser or under any management agreements with the
Purchaser;

	 	(v)	save and except as will be set forth in the
Purchaser’s Disclosure Schedule and as will be set forth in any Formal
Agreement as contemplated herein, the Purchaser will not have any contracts, agreements, undertakings or
arrangements, whether oral, written or implied, with employees, lessees,
licensees, managers, accountants, suppliers, agents, distributors, directors,
officers, lawyers or others which cannot be terminated, without penalty, on no
more than three month’s notice;

	 	(w)	save and except as will be set forth in the
Purchaser’s Disclosure Schedule and as will be set forth in any Formal
Agreement as contemplated herein, none of directors, officers or employees of the Purchaser prior to
Closing will be indebted or under obligation to the Purchaser on any account
whatsoever;

--  Agreement In  Principle  --

  --  I-Level Media  Group Incorporated  -

 
I-Level Media Group Incorporated

  July 9, 2012

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	 	(x)	the
Purchaser will not have committed to making and until the Closing Date will not
make or commit itself to:

	 	(i)	guarantee,
or agree to guarantee, any indebtedness or other obligation of any person or
corporation; or

	 	(ii)	waive
or surrender any right of material value;

	 	(y)	until
the Closing Date the Purchaser will:

	 	(i)	maintain
its assets in a manner consistent with and in compliance with applicable law;
and

	 	(ii)	not
enter into any material transaction or assume or incur any material liability
outside the normal course of its business (except as required by the terms of
the Formal Agreement);

	 	(z)	the
shares in the capital of the Purchaser will not be subject to or affected by any
actual or, to the best of the knowledge, information and belief of the
Purchaser, after making due inquiry, pending or threatened cease trade,
compliance or denial of use of exemptions orders of, or action, investigation
or proceeding by or before, any securities regulatory authority, court,
administrative agency or other tribunal;

	 	(aa)	the
making of the Formal Agreement, the completion of the transactions contemplated
thereby and the performance of and compliance with the terms thereof will not:

	 	(i)	conflict
with or result in a breach of or violate any of the terms, conditions or
provisions of the constating documents of the Purchaser;

	 	(ii)	conflict
with or result in a breach of or violate any of the terms, conditions or
provisions of any law, judgment, order, injunction, decree, regulation or
ruling of any court or governmental authority, domestic or foreign, to which
the Purchaser is subject, or constitute or result in a default under any
agreement, contract or commitment to which the Purchaser is a party;

	 	(iii)	give
to any party the right of termination, cancellation or acceleration in or with
respect to any agreement, contract or commitment to which the Purchaser is a
party;

	 	(iv)	give
to any government or governmental authority, or any municipality or any
subdivision thereof, including any governmental department, commission, bureau,
board or administration agency, any right of termination, cancellation or
suspension of, or constitute a breach of or result in a default under, any
permit, license, control or authority issued to the Purchaser which is
necessary or desirable in connection with the conduct and operations of its
business and the ownership or leasing of its business assets; or

	 	(v)	constitute
a default by the Purchaser or any event which, with the giving of notice or
lapse of time or both, might constitute an event of default, under any
agreement, contract, indenture or other instrument relating to any indebtedness
of the Purchaser which would give any party to that agreement, contract,
indenture or other instrument the right to accelerate the maturity for the
payment of any amount payable under that agreement, contract, indenture or
other instrument;

--  Agreement In  Principle  --

  --  I-Level Media  Group Incorporated  -

 
I-Level Media Group Incorporated

  July 9, 2012

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	 	(ab)	at
or subsequent to Closing the following changes will be effected to the Board of
Directors and officers of the resulting Purchaser company (collectively, the “Change
in Board and officers”):

	 	(i)	at
Closing the sole director and officers of the Purchaser will resign and the
previous Board of Directors of the Purchaser will appoint an aggregate of up to
five directors to be comprised of nominees to be put forward by the Vendors;
and

	 	(ii)	at
Closing the resulting Board of Directors of the Purchaser will appoint such
executive officers of the resulting Purchaser as may be determined by the
Vendors prior to Closing;

	 	(ac)	the
Company and/or the Purchaser will use its best efforts to raise prior to and/or
commensurate with Closing a common share private placement funding for the
Company and/or the Purchaser, under “Rule 506” or Regulation S under the
Securities Act, of approximately U.S. $1,000,000, and at an expected
subscription price of not less than U.S. $0.35 per restricted common share
(collectively, the “Private Placement”);

	 	(ad)	commensurate
with or as soon as reasonably practicable subsequent to Closing the resulting
Purchaser company will seek the approval of its shareholders, if required, to
change the name of the resulting Purchaser company to such name as the
Purchaser’s resulting Board of Directors may determine at Closing (the “Change
in Name”); and subsequent to Closing the resulting Purchaser company shall
be in the process of preparing or filing the necessary documentation with all
Regulatory Authorities to effect the Change in Name and which shall include,
without limitation, obtaining a new trading symbol and CUSIP number for the
resulting Purchaser company; and

	 	(ae)	it
is not aware of any fact or circumstance which has not been disclosed to the
Company and the Vendors which should be disclosed in order to prevent the
representations, warranties and covenants contained in this section from being
misleading or which would likely affect the decision of the Company and the
Vendors to enter into this Agreement or any Formal Agreement.

--  Agreement In  Principle  --

  --  I-Level Media  Group Incorporated  -

 
I-Level Media Group Incorporated

  July 9, 2012

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Article 4
CONDITIONS PRECEDENT TO CLOSING

4.1                   Purchaser’s
conditions precedent.   All of the obligations of the Purchaser under
this Agreement are, and under any Formal Agreement will be, further subject to
at least the following conditions for the exclusive benefit of the Purchaser fulfilled
in all material aspects in the reasonable opinion of the Purchaser or to be
waived by the Purchaser as soon as possible but, unless specifically indicated
as otherwise, not later than five calendar days prior to the Closing Date:

	 	(a)	each
of the Company and the Vendors shall have complied with all warranties,
representations, covenants and agreements herein and under any Formal Agreement
agreed to be performed or caused to be performed by each of the Company and the
Vendors on or before the Closing Date;

	 	(b)	each
of the Company and the Vendors shall have obtained all authorizations,
approvals and other actions by, and have made all filings with, any securities
regulatory authority from whom any such authorization, approval or other action
is required to be obtained or to be made in connection with the transactions
contemplated herein, and all such authorizations, approvals and other actions
are in full force and effect and all such filings have been accepted and each
of the Company and the Vendors are in compliance with, and have not committed
any breach of, any securities laws, regulations or policies of any securities
regulatory authority to which either of the Company or the Vendors may be
subject;

	 	(c)	all
matters which, in the opinion of counsel for the Purchaser, are material in
connection with the transactions contemplated by this Agreement and by any
Formal Agreement shall be subject to the favourable opinion of such counsel,
and all relevant records and information shall be supplied to such counsel for
that purpose;

	 	(d)	no
material loss or destruction of or damage to either of the Company, any of its
assets, any of the Company’s Business or the Purchased Shares shall have
occurred;

	 	(e)	no
action or proceeding at law or in equity shall be pending or threatened by any
person, company, firm, governmental authority, regulatory body or agency to
enjoin or prohibit:

	 	(i)	 the
purchase or transfer of any of the Purchased Shares contemplated by this
Agreement and by any Formal Agreement or the right of any of the Company or the
Vendors to dispose of any of the Purchased Shares; or

	 	(ii)	the
right of the Company to conduct its operations and carry on, in the normal
course, its Company’s Business and operations as it has carried on in the past;

	 	(f)	the
delivery to the Purchaser by the Company and the Vendors, on a confidential
basis, of all remaining material documentation and information and including,
without limitation, an updated Company’s Disclosure Schedule and:

--  Agreement In  Principle  --

  --  I-Level Media  Group Incorporated  -

 
I-Level Media Group Incorporated

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	 	(i)	 a
copy of all material contracts, agreements, reports and information of any
nature respecting the Company, its assets and the Company’s Business; and

	 	(i)	details
of any lawsuits, claims or potential claims relating to either of the Company,
its assets, the Company’s Business or the Purchased Shares of which either of
the Company or the Vendors is aware and the Purchaser is unaware;

	 	(g)	the
delivery to the Purchaser by the Company and the Vendors of an acceptable form
of final Release respecting any and all claims which either of such Parties
had, or may have had, against any such other Party prior to Closing;

	 	(h)	the
Company and the Vendors will cause the Company, for a period of at least five
calendar days prior to the Closing Date, during normal business hours, to:

	 	(i)	make
available for inspection by the counsel, auditors and representatives of the
Purchaser, at such location as is appropriate, the Company’s books, records,
contracts, documents, correspondence and other written materials, and afford
such persons every reasonable opportunity to make copies thereof and take
extracts therefrom at the sole cost of the Purchaser, provided such persons do
not unduly interfere in the operations of the Company;

	 	(ii)	authorize
and permit such persons at the risk and the sole cost of the Purchaser, and
only if such persons do not unduly interfere in the operations of the Company,
to attend at all of its places of business and operations to observe the
conduct of the Company’s Business and operations, inspect its assets and, if
applicable, make physical counts of its inventories, shipments and deliveries;
and

	 	(iii)	require
each of the Company’s management personnel to respond to all reasonable
inquiries concerning the Company’s Business, its assets or the conduct of its
business relating to its liabilities and obligations;

	 	(i)	the
delivery to the Purchaser by the Company and the Vendors of an opinion of the
counsel for the Company, in a form satisfactory to the Purchaser’s counsel,
dated as at the date of delivery, to the effect that:

	 	(i)	the
Company is a corporation duly incorporated under the laws of its jurisdiction
of incorporation, is validly existing and is in good standing with respect to
all statutory filings required by the applicable corporate laws;

	 	(ii)	the
Company has the power, authority and capacity to own and use all of its assets
and to carry on its Company’s Business as presently conducted by it;

	 	(iii)	Company,
as the legal and beneficial owner of all of its assets, holds all of the assets
free and clear of all liens, charges and claims of others;

	 	(iv)	the
number of authorized and issued shares in the share capital of the Company is
as warranted by the Company and the Vendors, and all of such issued shares are
duly authorized, validly issued and outstanding as fully paid and
non-assessable;

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	 	(v)	all
necessary steps and corporate proceedings have been taken by each of the
Company and the Vendors to permit the Purchased Shares to be duly and validly
transferred to and registered in the name of the Purchaser as at the Closing
Date and to cancel any and all Company Options and Company Warrants, if any, in
consideration of and exchange for the granting of an equal number of Purchaser
Options and Purchaser Warrants as contemplated herein;

	 	(vi)	based
on actual knowledge and belief, such counsel knows of no claims, judgments,
actions, suits, litigation, proceedings or investigations, actual, pending or
threatened, against either of the Company or the Vendors which might materially
affect either of the Company, its assets or its Company’s Business or which
could result in any material liability to either of the Company, its assets or
its Company’s Business; and

	 	(vii)	as
to all other legal matters of a like nature pertaining to the Vendors, the
Company, its assets, the Company’s Business and to the transactions
contemplated hereby as the Purchaser or the Purchaser’s counsel may reasonably
require; and

	 	(j)	the
completion by the Purchaser and by the Purchaser’s professional advisors of a
thorough due diligence and operations review of both the Company’s Business and
the operations of the Company together with the transferability of the
Purchased Shares as contemplated by this Agreement and by any Formal Agreement.

4.2                   Company’s and
Vendors’ conditions precedent.   All of the obligations of the Company
and the Vendors under this Agreement are, and under any Formal Agreement will
be, further subject to at least the following conditions for the exclusive
benefit of the Company and the Vendors fulfilled in all material aspects in the
reasonable opinion of the Company and the Vendors or to be waived by the
Company and the Vendors as soon as possible but, unless specifically indicated
as otherwise, not later than five calendar days prior to the Closing Date:

	 	(a)	the
Purchaser shall have complied with all warranties, representations, covenants
and agreements herein and under any Formal Agreement agreed to be performed or
caused to be performed by the Purchaser on or before the Closing Date;

	 	(b)	all
matters which, in the opinion of counsel for the Company and the Vendors, are
material in connection with the transactions contemplated by this Agreement and
by any Formal Agreement shall be subject to the favourable opinion of such
counsel, and all relevant records and information shall be supplied to such
counsel for that purpose;

	 	(c)	no
material loss or destruction of or damage to the Purchaser shall have occurred;

	 	(d)	written
confirmation that the Purchaser has all necessary documentation in its
possession in order to irrevocably complete the proposed Cancellation of the
Founder’s Shares as required by
section “1.3” hereinabove;

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	 	(e)	written
confirmation that the Purchaser has raised into trust or otherwise sufficient
funding in order to close the minimum required Private Placement at Closing on
the terms as set forth in paragraph “3.1(ac)” hereinabove;

	 	(f)	the
delivery to the Company and the Vendors by the Purchaser, on a confidential
basis, of all remaining material documentation and information and including,
without limitation, an updated Purchaser’s Disclosure Schedule and:

	 	(i)	a
copy of all material contracts, agreements, reports and title information of
any nature respecting the Purchaser; and

	 	(ii)	details
of any lawsuits, claims or potential claims relating to the Purchaser of which
the Purchaser is aware and the Company and the Vendors are unaware;

	 	(g)	the
Purchaser will, for a period of at least five calendar days prior to the
Closing Date, during normal business hours:

	 	(i)	make
available for inspection by the solicitors, auditors and representatives of the
Company and the Vendors, at such location as is appropriate, all of the
Purchaser’s books, records, contracts, documents, correspondence and other
written materials, and afford such persons every reasonable opportunity to make
copies thereof and take extracts therefrom at the sole cost of the Company and
the Vendors, provided such persons do not unduly interfere in the operations of
the Purchaser;

	 	(ii)	authorize
and permit such persons at the risk and the sole cost of the Company and the
Vendors, and only if such persons do not unduly interfere in the operations of
the Purchaser, to attend at all of its places of business and operations to
observe the conduct of its business and operations, inspect its properties and
assets and, if applicable, make physical counts of its inventories, shipments
and deliveries; and

	 	(iii)	require
the Purchaser’s management personnel to respond to all reasonable inquiries
concerning the Purchaser’s business assets or the conduct of its business
relating to its liabilities and obligations; and

	 	(h)	the
completion by the Company and the Vendors, and by the Company’s and the
Vendors’ professional advisors, of a thorough due diligence and operations
review of both the business and operations of the Purchaser.

4.3                   Parties’
conditions precedent.   The Closing of any Formal Agreement and the
rights, obligations and duties of the Parties arising upon and prior to the
Closing Date shall also be conditional upon and subject to:

	 	(a)	the
specific ratification of the terms and conditions of this Agreement by each of
the Board of Directors of the Company and the Purchaser, together with each of
the Vendors if applicable, within five business days of the due and completion
execution of this Agreement by each of the Parties (collectively, the “Ratification”);

	 	(b)	the
completion by each of the Purchaser and the Company of an initial due diligence
and operations review of the other Party’s respective businesses and operations
within ten business days of the prior satisfaction of the Ratification (the “Initial
Due Diligence”);

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	 	(c)	the
execution of a Formal Agreement as between the Company, the Vendors and the
Purchaser, or the corresponding delivery of a takeover bid circular by the
Purchaser to the Vendors, incorporating terms and conditions similar to those
contained in this Agreement, on or before August 31, 2012;

	 	(d)	if
required under applicable corporate and securities laws, the receipt of all
necessary approvals from any Regulatory Authority having jurisdiction over the
transactions contemplated by this Agreement and by any Formal Agreement on or
before September 30, 2012;

	 	(e)	if
required under applicable corporate and securities laws, shareholders of the
Purchaser and/or the Company passing an ordinary resolution or, where required,
a special resolution, approving the terms and conditions of this Agreement and
any Formal Agreement, and all of the transactions contemplated hereby and
thereby, and the Purchaser and/or the Company sending all required notice to
the Purchaser’s and/or the Company’s shareholders in connection therewith, or,
in the alternative and if allowable in accordance with applicable corporate and
securities laws, shareholders of the Purchaser and/or the Company holding over
50% of the issued shares of the Purchaser and the Company providing written
consent resolutions evidencing their approval to the terms and conditions of
this Agreement, and any Formal Agreement, and all of the transactions
contemplated hereby and thereby, together with certification of any required
notice to all shareholders of the Purchaser and/or Company of such written
consent resolutions; and

	 	(f)	the
Board of Directors of each the Purchaser and/or the shareholders of the
Purchaser, if required, approving of the within issuance by the Purchaser to
the order and direction of the Vendors of all of the referenced Acquisition
Shares in accordance with section “1.2” hereinabove and, in addition, the Board
of Directors and/or shareholders of the Purchaser, if required, having also
approved and received any required notice of:

	 	(i)	the
proposed Cancellation of the Founder’s Shares in accordance with section “1.3” hereinabove;

	 	(ii)	the
proposed Change in Board and officers of the Purchaser in accordance with paragraph “3.1(ab)” hereinabove;

	 	(iii)	in
accordance with paragraph “3.1(ac)” hereinabove, the
proposed common share Private Placement funding for the Company and/or the Purchaser;

	 	(iv)	in
accordance with paragraph “3.1(ad)” hereinabove, if
required and possible, the proposed Change in Name of the Purchaser; and

	 	(v)	such
other matters as may be agreed to as between the Parties prior the completion
of the transactions contemplated by this Agreement.

4.4                   Company’s and
Vendors’ additional document covenants.   The Company and the Vendors
will also deliver, or caused to be delivered to the Purchaser prior to the
Closing Date, an independent assessment report and business plan respecting the
Company’s Business and assets together with such corporate and asset status
reports and/or opinions respecting the Company’s Business and assets, as may be
required by either the Purchaser or any Regulatory Authority, prepared, at a
minimum, in accordance with the applicable rules and reporting guidelines of
the appropriate Regulatory Authorities.

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Article 5
CLOSING AND EVENTS OF CLOSING

5.1                   Closing and
Closing Date.   The Closing of the within purchase and delivery of the
Purchased Shares, in conjunction with any Formal Agreement, together with all
of the transactions contemplated by this Agreement and by any Formal Agreement,
shall occur on the day which is 30 calendar days following the satisfaction of
all of the conditions precedent which are set out in Article “4” hereinabove,
or on such earlier or later Closing Date as may be agreed to in advance and in
writing by each of the Parties, and will be closed at the offices of counsel
for the Purchaser, McMillan LLP, Lawyers – Patent & Trade Mark Agents,
located at 1500 Royal Centre, 1055 West Georgia Street, Vancouver, British
Columbia, Canada, V6E 4N7, at 2:00 p.m. (Vancouver time) on the Closing Date.

5.2                   Latest Closing
Date.   If the Closing Date has not occurred by December 31, 2012 this
Agreement will be terminated and unenforceable unless the Parties agree in writing
to grant an extension of the Closing Date.

5.3                   Documents to be
delivered by the Company and the Vendors prior to the Closing Date.  
Not later than two calendar days prior to the Closing Date, and in addition to
the documentation which is required by the agreements and conditions precedent
which are set forth hereinabove, the Company and the Vendors shall also execute
and deliver or cause to be delivered all such other documents, resolutions and
instruments as may be necessary, in the opinion of counsel for the Purchaser,
acting reasonably, to transfer all of the Purchased Shares to the Purchaser
free and clear of all liens, charges and encumbrances, and in particular
including, but not being limited to:

	 	(a)	a
certified copy of an ordinary resolution of the shareholders of the Company
and, if applicable, the Vendors, approving the terms and conditions of this
Agreement, any Formal Agreement and the transactions contemplated hereby and
thereby or, in the alternative, shareholders of the Company and, if applicable,
the Vendors, holding over 50% of the issued shares of the Company and/or the
Vendors providing written consent resolutions evidencing their approval to the
terms and conditions of this Agreement, any Formal Agreement and all of the
transactions contemplated thereunder together with certification of any
required notice to all shareholders of the Company and, if applicable, the
Vendors, of such written consent resolutions;

	 	(b)	all
documentation as may be necessary and as may be required by counsel for the
Purchaser, acting reasonably, to ensure that all of the Purchased Shares have
been transferred, assigned and are registerable in the name of and for the
benefit of the Purchaser, and to ensure that all outstanding options in and to
the Company, if any, have been cancelled, under all applicable corporate and
securities laws;

	 	(c)	certificate(s)
representing the Purchased Shares registered in the name of the Vendors, duly
endorsed for transfer to the Purchaser or irrevocable stock powers transferring
the Purchased Shares to the Purchaser;

	 	(d)	a
certificate representing the Purchased Shares for each of the Company
registered in the name of the Purchaser;

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	 	(e)	written
evidence of the cancellation of all outstanding Company Options and Company Warrants
in and to the Company;

	 	(f)	written
evidence of the Release having been obtained;

	 	(g)	a
certified copy of the resolutions of the Board of Directors of each of the
Company and, if applicable, the Vendors, authorizing the transfer by the
Vendors to the Purchaser of the Purchased Shares and canceling all outstanding
Company Options and Company Warrants in and to the Company;

	 	(h)	consents
to act and similar documentation required in order to effect the proposed
Change in Board and officers of the Purchaser;

	 	(i)	a
copy of all corporate records and books of account for the Company and its
respective subsidiaries and including, without limiting the generality of the
foregoing, a copy of all minute books, share register books, share certificate
books and annual reports of the Company and its respective subsidiaries;

	 	(j)	all
necessary consents and approvals in writing to the completion of the
transactions contemplated herein;

	 	(k)	a
certificate of an officer for each of the Company and the Vendors, if applicable,
dated as of the Closing Date, acceptable in form to counsel for the Purchaser,
acting reasonably, certifying that the warranties, representations, covenants
and agreements of each of the Company and the Vendors contained in,
respectively, this Agreement and in any Formal Agreement are true and correct
in all respects and will be true and correct as of the Closing Date as if made
by the Company and the Vendors on the Closing Date;

	 	(l)	an
opinion of counsel to the Company and the Vendors, dated as at the Closing
Date, and addressed to the Purchaser and its counsel, in form and substance
satisfactory to the Purchaser’s counsel, acting reasonably, and including the
following:

	 	(i)	the
due incorporation, existence and standing of the Company and its qualification
to carry on business;

	 	(ii)	the
authorized and issued capital of the Company;

	 	(iii)	that
all Purchased Shares have been duly authorized and issued and are fully paid
and non-assessable;

	 	(iv)	all
necessary steps and proceedings have been taken in connection with the
execution, delivery and performance of this Agreement, any Formal Agreement and
the transactions contemplated herein and therein, respectively;

	 	(v)	that
the Purchased Shares have been duly issued to and registered in the name of the
Purchaser and that all outstanding Company Options and Company Warrants in and
to the Company have been cancelled in compliance with all applicable corporate
and securities laws; and

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	 	(m)	all
such other documents and instruments as the Purchaser’s counsel may reasonably
require.

5.4                   Documents to be
delivered by the Purchaser prior to the Closing Date.   Not later than
two calendar days prior to the Closing Date, and in addition to the
documentation which is required by the agreements and conditions precedent
which are set forth hereinabove, the Purchaser shall also execute and deliver
or cause to be delivered all such documents, resolutions and instruments as are
necessary, in the opinion of counsel for the Company and the Vendors, acting
reasonably, to issue to the Vendors the entire Acquisition Shares free and
clear of all liens, charges and encumbrances, however, subject to the normal
U.S. resale provisions applicable thereto, and in particular including, but not
being limited to:

	 	(a)	a
certified copy of an ordinary resolution of the shareholders of the Purchaser
approving the terms and conditions of the Formal Agreement and the transactions
contemplated hereby and thereby or, in the alternative, shareholders of the
Purchaser holding over 50% of the issued shares of the Purchaser providing
written consent resolutions evidencing their approval to the terms and
conditions of the Formal Agreement and all of the transactions contemplated
thereunder together with certification of any required notice to all
shareholders of the Purchaser of such written consent resolutions;

	 	(b)	a
certified copy of the resolutions of the sole director of the Purchaser
providing for the approval of all of the transactions contemplated hereby and
including, without limitation, each of the matters provided for in paragraph
“4.3(f)” hereinabove;

	 	(c)	share
certificates, subject to the normal U.S. resale provisions applicable thereto,
representing all of the Acquisition Shares issued and registered in the names
of the Vendors as notified by the Vendors to the Purchaser prior to Closing in
accordance with section “1.2” hereinabove;

	 	(d)	written
evidence that the Purchaser has all necessary documentation in its possession
in order to irrevocably complete the proposed Cancellation of the Founder’s
Shares as required by section “1.3” hereinabove;

	 	(e)	all
necessary consents and approvals in writing to the completion of the
transactions contemplated herein;

	 	(f)	a
certificate of an officer of the Purchaser, dated as of the Closing Date,
acceptable in form to counsel for the Company and the Vendors, acting
reasonably, certifying that the warranties, representations, covenants and
agreements of the Purchaser contained in, respectively, this Agreement and in
any Formal Agreement are true and correct and will be true and correct as of
the Closing Date as if made by the Purchaser on the Closing Date;

	 	(g)	resignations
and similar documentation required in order to effect the proposed Change in
Board and officers of the Purchaser in accordance with paragraph
“3.1(ab)” hereinabove;

	 	(h)	a
certified copy of the resolutions of the Board of Directors of the Purchaser
accepting the proposed Change in Board and officers of the Purchaser;

	 	(i)	an
opinion of counsel to the Purchaser, dated as at the Closing Date, and
addressed to the Company, the Vendors and their counsel, in form and substance
satisfactory to the Company’s and the Vendors’ counsel, acting reasonably, and
including the following:

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	 	(i)	the
due incorporation, existence and standing of the Purchaser and its
qualification to carry on business;

	 	(ii)	the
authorized and issued capital of the Purchaser (relying on a certificate of the
Transfer Agent as to the number and class of securities issued);

	 	(iii)	all
necessary steps and proceedings have been taken in connection with the
execution, delivery and performance of the Formal Agreement and the
transactions contemplated herein and therein, respectively; and

	 	(iv)	the
due issuance of the Acquisition Shares as fully paid and non-assessable and
having been issued in accordance with an applicable registration and prospectus
exemption available under the Securities Act; and

	 	(j)	all
such other documents and instruments as the Company’s and the Vendors’ counsel
may reasonably require.

Article 6
DUE DILIGENCE AND NON-DISCLOSURE

6.1                   Due Diligence.  
Each of the Parties shall forthwith conduct such further due diligence
examination of the other Parties as it deems appropriate.

6.2                   Confidentiality.  
Each Party may in a reasonable manner carry out such investigations and due
diligence as to the other Parties, at all times subject to the confidentiality
provisions hereinbelow, as each Party deems necessary.  In that regard the
Parties agree that each shall have full and complete access to the Purchaser’s
and the Company’s respective books, records, financial statements and other
documents, articles of incorporation, by-laws, minutes of Board of Directors’
meetings and their committees, investment agreements, material contracts and as
well such other documents and materials as the Vendors or the Purchaser, or
their respective counsel, may deem reasonable and necessary to conduct an
adequate due diligence investigation of each such Party, its respective
operations and financial condition prior to the Closing Date.

6.3                   Non-disclosure.  
Subject to the provisions hereinbelow, the Parties, for themselves, their
officers, directors, shareholders, consultants, employees and agents agree that
they each will not disseminate or disclose, or knowingly allow, permit or cause
others to disseminate or disclose to third parties who are not subject to
express or implied covenants of confidentiality, without the other Parties’
express written consent, either: (i) the fact or existence of this Agreement or
discussions and/or negotiations between them involving, inter alia,
possible business transactions; (ii) the possible substance or content of those
discussions; (iii) the possible terms and conditions of any proposed
transaction; (iv) any statements or representations (whether verbal or written)
made by either Party in the course of or in connection with those discussions;
or (v) any written material generated by or on behalf of any Party and such
contacts, other than such disclosure as may be required under applicable securities
legislation or regulations, pursuant to any order of a court or on a “need to
know” basis to each of the Parties respective professional advisors.

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6.4                   Public
Announcements.   Notwithstanding the provisions of this Article, the
Parties agree to make such public announcements of this Agreement promptly upon
its execution in accordance with the requirements of applicable securities
legislation and regulations.

Article 7
ASSIGNMENT AND VARIATIONS

7.1                   Assignment.  
Save and except as provided herein, no Party may sell, assign, pledge or
mortgage or otherwise encumber all or any part of its interest herein without
the prior written consent of all of the other Parties.

7.2                   Amendment.  
This Agreement and any provision thereof may only be amended in writing and
only by duly authorized signatories of each of the respective Parties.

7.3                   Variation in
the terms of this Agreement upon review.   It is hereby acknowledged
and agreed by each of the Parties that where any variation in the terms and/or
conditions of this Agreement or any Formal Agreement is reasonably required by
any of the Regulatory Authorities as a condition of their respective Regulatory
Approval to any of the terms and conditions of this Agreement, any such
reasonable variation, having first been notified to all Parties, will be deemed
to be accepted by each of the Parties and form part of the terms and conditions
of this Agreement.  If any such Party, acting reasonably, deems any such
notified variation unreasonable, that Party may, in its sole and absolute
discretion, and within a period of not greater than ten calendar days from its
original notification and at its cost, make such further applications or
submissions to the relevant Regulatory Authority as it considers necessary in
order to seek an amendment to any such variation; provided, however, that the
final determination by any such Regulatory Authority to any such application or
submission by such objecting Party will be deemed binding upon such Party who
must then provide notification to all other Parties as provided for
hereinabove.

Article 8
FORCE MAJEURE

8.1                   Events.  
If any Party is at any time prevented or delayed in complying with any
provisions of this Agreement by reason of strikes, walk-outs, labour shortages,
power shortages, fires, wars, acts of God, earthquakes, storms, floods,
explosions, accidents, protests or demonstrations by environmental lobbyists or
native rights groups, delays in transportation, breakdown of machinery,
inability to obtain necessary materials in the open market, unavailability of
equipment, governmental regulations restricting normal operations, shipping
delays or any other reason or reasons beyond the control of that Party, then
the time limited for the performance by that Party of its respective
obligations hereunder shall be extended by a period of time equal in length to
the period of each such prevention or delay.

8.2                   Notice.  
A Party shall, within seven calendar days, give notice to the other Parties of
each event of force majeure under section “8.1” hereinabove, and upon
cessation of such event shall furnish the other Parties with notice of that
event together with particulars of the number of days by which the obligations
of that Party hereunder have been extended by virtue of such event of force
majeure and all preceding events of force majeure.

Article 9
ARBITRATION

9.1                   Matters for
arbitration.   The Parties agree that all questions or matters in
dispute with respect to this Agreement shall be submitted to arbitration
pursuant to the terms hereof.

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9.2                   Notice.  
It shall be a condition precedent to the right of any Party to submit any
matter to arbitration pursuant to the provisions hereof that any Party
intending to refer any matter to arbitration shall have given not less than two
calendar days’ prior written notice of its intention to do so to the other
Parties together with particulars of the matter in dispute.  On the expiration
of such two calendar days the Party who gave such notice may proceed to refer
the dispute to arbitration as provided in section “9.3” hereinbelow.

9.3                   Appointments.  
The Party desiring arbitration shall appoint one arbitrator, and shall notify
the other Parties of such appointment, and the other Parties shall, within ten
calendar days after receiving such notice, appoint an arbitrator, and the two
arbitrators so named, before proceeding to act, shall, within five calendar
days of the appointment of the last appointed arbitrator, unanimously agree on
the appointment of a third arbitrator, to act with them and be chairperson of
the arbitration herein provided for.  If the other Parties shall fail to
appoint an arbitrator within ten calendar days after receiving notice of the
appointment of the first arbitrator, and if the two arbitrators appointed by the
Parties shall be unable to agree on the appointment of the chairperson, the
chairperson shall be appointed under the provisions of the Rules of the British
Columbia Commercial Arbitration Act (the “Arbitration Act”). 
Except as specifically otherwise provided in this section, the arbitration
herein provided for shall be conducted in accordance with the rules and
procedures promulgated under the Arbitration Act.  The chairperson, or in the
case where only one arbitrator is appointed, the single arbitrator, shall fix a
time and place in the City of Vancouver, Province of British Columbia, Canada,
for the purpose of hearing the evidence and representations of the Parties, and
he shall preside over the arbitration and determine all questions of procedure
not provided for under such Arbitration Act rules or this section.  After
hearing any evidence and representations that the Parties may submit, the
single arbitrator, or the arbitrators, as the case may be, shall make an award
and reduce the same to writing, and deliver one copy thereof to each of the
Parties.  The expense of the arbitration shall be paid as specified in the
award.

9.4                   Award.  
The Parties agree that the award of a majority of the arbitrators, or in the
case of a single arbitrator, of such arbitrator, shall be final and binding
upon each of them.

Article 10
TERMINATION

10.1                 Default.  
The Parties agree that if any Party is in default with respect to any of the
provisions of this Agreement (herein called the “Defaulting Party”), the
non-defaulting Party (herein called the “Non-Defaulting Party”) shall
give notice to the Defaulting Party designating such default, and within 14
calendar days after its receipt of such notice, the Defaulting Party shall
either:

	 	(a)	cure
such default, or commence proceedings to cure such default and prosecute the
same to completion without undue delay; or

	 	(b)	give
the Non-Defaulting Party notice that it denies that such default has occurred
and that it is submitting the question to arbitration as herein provided.

10.2                 Arbitration.  
If arbitration is sought, a Party shall not be deemed in default until the
matter shall have been determined finally by appropriate arbitration under the
provisions of Article “9” hereinabove.

10.3                 Curing the
default.   If:

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	 	(a)	the
default is not so cured or the Defaulting Party does not commence or diligently
proceed to cure the default; or

	 	(b)	arbitration
is not so sought; or

	 	(c)	the
Defaulting Party is found in arbitration proceedings to be in default, and
fails to cure it within five calendar days after the rendering of the
arbitration award,

the Non-Defaulting Parties may, by written
notice given to the Defaulting Party at any time while the default continues,
terminate the interest of the Defaulting Party in and to this Agreement.

10.4                 Termination.  
In addition to the foregoing it is hereby acknowledged and agreed by the
Parties that this Agreement will be terminated in the event that:

	 	(a)	the
entire Ratification is not received within twenty business days of the due and completion
execution of this Agreement by each of the Parties;

	 	(b)	a
Formal Agreement as between the Company, the Vendors and the Purchaser, or the
corresponding delivery of a takeover bid circular by the Purchaser to the
Vendors, incorporating terms and conditions similar to those contained in this
Agreement is not entered into or provided on or before August 31, 2012;

	 	(c)	either
of the Parties has not either satisfied or waived each of their respective
conditions precedent prior to Closing in accordance with the provisions of
Article “4” hereinabove;

	 	(d)	each
of the conditions specified in section “4.3” hereinabove have not been
satisfied in the manner and within the time periods as specified therein;

	 	(e)	either
of the Parties has failed to deliver or caused to be delivered any of their
respective documents required to be delivered by Articles “5” and “6”
hereinabove prior to the Closing Date in accordance with the provisions of
Articles “5” and “6”;

	 	(f)	the
final Closing has not occurred on or before December 31, 2012 in accordance
with section “5.2” hereinabove; or

	 	(g)	by
agreement, in writing, of each of the Parties;

and in such event, unless waived by each
Party in advance and in writing, this Agreement will be terminated and be of no
further force and effect other than the obligations under Article “6”
hereinabove.

Article 11

NOTICE

11.1                 Notice.  
Each notice, demand or other communication required or permitted to be given
under this Agreement shall be in writing and shall be sent by prepaid registered
mail deposited in a post office addressed to the Party entitled to receive the
same, or delivered to such Party, at the address for such Party specified
above.  The date of receipt of such notice, demand or other communication shall
be the date of delivery thereof if delivered, or, if given by registered mail
as aforesaid, shall be deemed conclusively to be the third calendar day after
the same shall have been so mailed, or 15 calendar days in the case of an
addressee with an address for service in a country other than a country in
which the Party giving the notice, demand or other communication resides,
except in the case of interruption of postal services for any reason
whatsoever, in which case the date of receipt shall be the date on which the notice,
demand or other communication is actually received by the addressee.

--  Agreement In  Principle  --

  --  I-Level Media  Group Incorporated  -

 
I-Level Media Group Incorporated

  July 9, 2012

 - 27 -

11.2                 Change of
address.   Either Party may at any time or from time to time notify the
other Parties in writing of a change of address and the new address to which
notice shall be given to it thereafter until further change.

Article 12

GENERAL PROVISIONS

12.1                 Entire Agreement.  
This Agreement constitutes the entire agreement to date between the Parties and
supersedes every previous agreement, communication, expectation, negotiation,
representation or understanding, whether oral or written, express or implied,
statutory or otherwise, between the Parties with respect to the subject matter
of this Agreement and including, without limitation, that certain prior Letter
of Intent, dated March 1, 2012, as entered into between the Company and FBP
Capital Corp.

12.2                 Enurement.  
This Agreement will enure to the benefit of and will be binding upon the
Parties, their respective heirs, executors, administrators and assigns.

12.3                 Time of the
essence.   Time will be of the essence of this Agreement.

12.4                 Representation
and costs.   It is hereby acknowledged by each of the Parties that
McMillan LLP, Lawyers – Patent & Trade Mark Agents, acts solely for the
Purchaser and, correspondingly, that the Company and the Vendors have been
required by each of McMillan LLP and the Purchaser to obtain independent legal
advice with respect to their respective reviews and execution of this
Agreement.  Each Party to this Agreement will also bear and pay its own costs,
legal and otherwise, in connection with its respective preparation, review and
execution of this Agreement and, in particular, that the costs involved in the
preparation of this Agreement, and all documentation necessarily incidental
thereto, by McMillan LLP shall be at the cost of the Purchaser.

12.5                 Applicable law.  
The situs of this Agreement is the City of Vancouver, Province of British
Columbia, Canada, and for all purposes this Agreement will be governed
exclusively by and construed and enforced in accordance with the laws and
Courts prevailing in the Province of British Columbia, Canada.

12.6                 Further
assurances.   The Parties hereby, jointly and severally, covenant and
agree to forthwith, upon request, execute and deliver, or cause to be executed
and delivered, such further and other deeds, documents, assurances and
instructions as may be required by the Parties or their respective counsel in
order to carry out the true nature and intent of this Agreement.

12.7                 Severability and
construction.   Each Article, section, paragraph, term and provision of
this Agreement, and any portion thereof, shall be considered severable, and if,
for any reason, any portion of this Agreement is determined to be invalid,
contrary to or in conflict with any applicable present or future law, rule or
regulation in a final unappealable ruling issued by any court, agency or
tribunal with valid jurisdiction in a proceeding to any of the Parties is a
party, that ruling shall not impair the operation of, or have any other effect
upon, such other portions of this Agreement as may remain otherwise
intelligible (all of which shall remain binding on the Parties and continue to
be given full force and agreement as of the date upon which the ruling becomes
final).

--  Agreement In  Principle  --

  --  I-Level Media  Group Incorporated  -

 
I-Level Media Group Incorporated

  July 9, 2012

 - 28 -

12.8                 Captions.  
The captions, section numbers and Article numbers appearing in this Agreement
are inserted for convenience of reference only and shall in no way define,
limit, construe or describe the scope or intent of this Agreement nor in any
way affect this Agreement.

12.9                 Currency.  
Unless otherwise stipulated, all references to money amounts hereunder shall be
in lawful money of the United States.

12.10               Counterparts.  
This Agreement may be signed by the Parties in as many counterparts as may be
necessary, and via facsimile if necessary, each of which so signed being deemed
to be an original and such counterparts together constituting one and the same
instrument and, notwithstanding the date of execution, being deemed to bear the
effective execution date as set forth on the front page of this Agreement.

12.11               No partnership or
agency.   The Parties have not created a partnership and nothing
contained in this Agreement shall in any manner whatsoever constitute any Party
the partner, agent or legal representative of any other Party, nor create any
fiduciary relationship between them for any purpose whatsoever.  No Party shall
have any authority to act for, or to assume any obligations or responsibility
on behalf of, any other party except as may be, from time to time, agreed upon
in writing between the Parties or as otherwise expressly provided.

12.12               Consents and
waivers.   No consent or waiver expressed or implied by either Party in
respect of any breach or default by the other in the performance by such other
of its obligations hereunder shall:

	 	(a)	be
valid unless it is in writing and stated to be a consent or waiver pursuant to
this section;

	 	(b)	be
relied upon as a consent to or waiver of any other breach or default of the
same or any other obligation;

	 	(c)	constitute
a general waiver under this Agreement; or

	 	(d)	eliminate
or modify the need for a specific consent or waiver pursuant to this section in
any other or subsequent instance.

ACCEPTANCE AND EXECUTION

                        It is expressly
understood and agreed that as soon as practicable after the execution of this
Agreement the undersigned will use their best efforts to enter into a Formal
Agreement or takeover bid incorporating the terms and conditions hereof, in
addition to normal share purchase terms and conditions, and the undersigned
hereto hereby, jointly and severally, covenant and agree to forthwith, upon
request, execute and deliver, or cause to be executed and delivered, such
further and other deeds, documents, assurances and instructions as may be
required by the undersigned hereto or their respective counsel in order to
carry out the true nature and intent of this Agreement and any such any Formal
Agreement.  At all times the undersigned hereto acknowledge and agree
that the completion of any such Formal Agreement is subject to the prior
ratification and approval of the terms and conditions of any such Formal
Agreement by the Board of Directors and, if applicable, shareholders of the
Purchaser, the Vendors, the Company and such Regulatory Authorities as may have
jurisdiction over the Purchaser, the Company and the Vendors.

--  Agreement In  Principle  --

  --  I-Level Media  Group Incorporated  -

 
I-Level Media Group Incorporated

  July 9, 2012

 - 29 -

                        Please acknowledge
your acceptance of the general terms of this Agreement by kindly executing the
same in the space provided hereinbelow.  This offer is only open for acceptance
until 5:00 p.m. (Beijing, PRC, time) on July 31, 2012.

                        Yours very truly,

                        I-Level Media Group Incorporated

                        Per:

                        “Francis Chiew”

                          Francis Chiew,
Authorized Signatory for the Purchaser

                        The within
offer and terms of Agreement are hereby accepted by each of the Company and the
within Vendor effective on this 9th day of July, 2012:

                        Telupay PLC

                        Per:

                        “Adrian  C. Ansell”

                          Adrian C. Ansell, Authorized
Signatory for the Company and a Vendor

__________

--  Agreement In  Principle  --

--  I-Level Media  Group Incorporated  -

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