Document:

exv10w26

Exhibit 10.26

EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT (the “Agreement”), dated as of August 1, 2009, between True North Finance
Corporation, a Delaware corporation (“Company”), its successors and assigns, and Christopher E.
Clouser (“Employee”).

WITNESSETH:

     WHEREAS, Company desires to retain Employee and Employee desires to be retained by Company, on
the terms and subject to the conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and for good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby
agreed as follows:

	1.	 	Duties and Responsibilities. Company hereby retains Employee and Employee hereby
accepts such position for the term and upon the conditions hereinafter set forth. In such
capacity, Employee’s duties shall include acting as Chairman of the Company’s advisory,
investment and corporate Boards, assisting the Company with networking and fundraising,
identifying and recruiting new Company personnel, tactical planning, participating in digital
and brand marketing and public relations efforts as needed, chairing a nominating committee of
the Board of Directors, and such other business opportunities as are determined from time to
time by the Company. Employee hereby accepts the above position and conditions thereto and
agrees to devote substantial efforts to the performance of his duties hereunder and devote at
least 60% of his working time and attention over the course of this Agreement to such duties
and other activities as he may be assigned by Company from time to time.
	 
	2.	 	Term of Agreement. Company hereby agrees to retain Employee and Employee hereby
agrees to serve Company as an Employee on the terms and subject to the conditions set forth
herein for the period commencing on the effective date of this Agreement and continuing in
effect for four (4) years from the date hereof.
	 
	3.	 	Compensation.

	 	a.	 	Base Compensation. Subject to the provisions of this Agreement and Paragraph
3(d), Company shall agree to pay to Employee during the term of this Agreement base
compensation at a rate of not less than $350,000 per annum (the “Base Compensation”),
payable in equal monthly installments. During the term of this Agreement, Base Compensation
shall be increased by a minimum of $50,000 per annum commencing on the 1st
anniversary date hereof.
	 
	 	b.	 	Additional Compensation. Employee may earn additional incentive compensation
during the term of this Agreement at the discretion of the

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	 	 	 	Company’s Board. Employee will
also be eligible to participate in any benefits program offered to any other similarly
situated employee.
	 
	 	c.	 	Option to Purchase Company Stock. Employee shall be granted non statutory stock
options. A copy of the stock option agreement is attached hereto as
Exhibit A. Employee will also be eligible to be granted stock options which may be granted
to other Board members.
	 
	 	d.	 	Compensation Reduction. To the extent the Company is unable to secure an
additional $250,000,000 in debt or equity financing by the 1st anniversary date
hereof, Employee’s Base Compensation hereunder shall be reduced by 5% for each $10,000,000
the Company is short of $250,000,000 but, no event, shall Employee’s Base Compensation be
reduced by more than 50%. For example, if the Company secures $200,000,000 in financing by
the 1st anniversary date hereof, Employee’s Base Compensation shall be reduced by
25%.

	4.	 	Expenses. Company will reimburse Employee in accordance with its written policies for
all reasonable business-related expenses incurred in the performance of his duties hereunder,
including his expenses for business entertainment, travel and similar items, upon presentation
by Employee to Company of reasonable documented itemized accounts of such expenditures in a
form consistent with Internal Revenue Service regulations.
	 
	5.	 	Confidential Information and Trade Secrets.

	 	a.	 	Definition. The term “Confidential Information and Trade Secrets” means all
information or compilations of information pertaining to Company that is kept and marked as
confidential by the Company includes, without limitation, information whether it is marked
confidential or not that derives independent economic value from not being generally known
to and not being readily ascertainable by proper means by other persons who can obtain
economic value from its disclosure or use, excluding any such information that is (a) known
to the general public, (b) in Employee’s possession prior to the commencement of this
Agreement and (c) known to Employee from sources other than the Company.
	 
	 	b.	 	No Use or Disclosure. Employee acknowledges that during the term of this
Agreement, Employee has been and may in the future be given access to or may become
acquainted with, or develop Confidential Information and Trade Secrets. Employee agrees not
to use or disclose (directly or indirectly) any Confidential Information and Trade Secrets
of Company at any time or in any manner, except as required in the course of performing
duties under this Agreement with Company. It is specifically agreed that Employee may not
use or disclose Employee’s knowledge of Company’s past, present, and potential customer
identities, customer demands, customer specifications, and other customer

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	 	 	 	information to solicit, contract with, or perform work for those customers on behalf
of Employee or another party.
	 
	 	 	 	Employee shall also take all steps necessary to ensure that it, its employees, and
any other party working on its behalf, shall abide by the requirements of this
paragraph of the Agreement.
	 
	 	c.	 	Restrictions on Documents and Equipment. All Confidential Information and Trade
Secrets, documents, property, and equipment relating to the business of Company, whether
prepared by Employee or otherwise coming into Employee’s possession, are the exclusive
property of Company, and must not be removed from its premises except as required in the
course of Employee’s performing its duties hereunder. All such Confidential Information and
Trade Secrets, documents,
property, and equipment must be returned to Company upon termination of this Agreement.
	 
	 	d.	 	No Use or Disclosure from Others. Employee agrees that Employee has not brought
and will not bring with Employee to Company or use in the performance of Employee’s
responsibilities at Company any materials or documents of a former employer or other third
party that are not generally available to the public, unless Employee or Company has
obtained written authorization from the former employer or third party for their possession
and use.

	6.	 	Covenants Not to Compete or Solicit.

	 	a.	 	No Solicitation of Customers, Suppliers, Vendors. During the term of this
Agreement and for a period of one (1) year after its termination for any reason, Employee
agrees not to in any manner, whether directly or indirectly, solicit, contact, or initiate
communications with customers, prospective customers, suppliers, or vendors of Company, or
request, advise, or entice any such individual to cease doing business with Company, except
in the performance of Employee’s duties under this Agreement. Notwithstanding the
foregoing, Employee shall be permitted to solicit or contact such customers, suppliers or
vendors of the Company with whom Employee had a pre-existing relationship with prior to the
date of this Agreement, or whom Employee became acquainted with during the term of this
Agreement other than as a result of Employee’s relationship with the Company; further
provided, that Employee shall in no event be permitted to entice any such individual to
cease doing business with the Company.
	 
	 	b.	 	No Hiring of Other Employees. During the term of this Agreement and for a period
of one (1) year after its termination for any reason, Employee agrees not to employ, retain,
or attempt to employ or retain (whether as an employee, Employee or otherwise), on
Employee’s behalf or on behalf of others, any of Company’s other employees, Employees, or
independent contractors, or

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	 	 	 	request, advise, or entice any such individual to leave the employment of or
association with Company.

	7.	 	Termination.

	 	a.	 	Termination With Cause.

	 	i.	 	With Cause. Either Employee or Company may terminate this Agreement
immediately for Cause upon written notice to the other party, stating the grounds
therefore. For purposes of this Paragraph, “Cause” shall mean:

	 	(a)	 	Employee’s or Company’s breach of a material term of this Agreement,
which is not cured by Employee or Company within the thirty (30) day period
prior to the proposed date of termination; or
	 
	 	(b)	 	Employee’s diversion of corporate opportunity, self-dealing, theft or
embezzlement of Company assets, or intentional violations of law, as
determined by the Board of Directors.

	 	b.	 	Termination Upon Death or Disability. This Agreement shall be terminated
immediately upon Employee’s death or disability. For purposes of this Agreement,
“disability” shall be defined as Employee’s inability to provide services for Company for a
period in excess of one hundred-twenty (120) days.
	 
	 	c.	 	Cooperation Upon Termination. Following notice of termination of this Agreement
by either party, Employee shall fully cooperate with Company in all matters relating to the
winding up of Employee’s pending work on behalf of Company and the orderly transfer of such
pending work to such other individuals as may be designated by Company.
	 
	 	d.	 	Return of Materials Upon Termination. Upon termination of this Agreement,
Employee shall return all Company property in its possession and/or control.

	8.	 	Alternative Dispute Resolution. In the event of any dispute under this Agreement,
Company and Employee agree to attempt to resolve the dispute by negotiation. In the event of a
dispute under this Agreement, prior to pursuing any remedy otherwise available to a party,
such party shall notify the other party of the dispute setting forth in reasonable detail the
issues involved. For a period of sixty (60) days after such notice is given, the parties agree
in good faith to attempt to resolve the dispute through negotiation. Such efforts shall
include one meeting in person between Employee and a representative of Company having full
authority to resolve the dispute. This provision shall not prohibit a party from seeking
immediate injunctive relief.
	 
	9.	 	Mediation. Prior to either party commencing or serving a complaint or otherwise
commencing a legal action regarding the terms hereof, the parties agree to select a

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	 	 	mutually agreeable, neutral third party to help them mediate, for at least ninety (90) days,
any dispute that arises under the terms of this Agreement. This provision shall not prohibit
a party from seeking immediate injunctive relief.
	 
	10.	 	Indemnification.

	 	a.	 	The Company shall defend the Employee, and hold it harmless against, any and all demands,
claims, debts, actions, assessments, judgments, settlements, sanctions, obligations and
other liabilities (whether absolute, accrued, contingent, fixed or otherwise, known or
unknown, due or to become due or otherwise), monetary damages, fines, fees, penalties,
interest obligations, deficiencies, losses and expenses (including, without limitation,
amounts paid in settlement, interest, court costs, costs of investigators, reasonable fees
and expenses of attorneys, accountants, financial advisors and other experts, and other
expenses of litigation) arising out of or relating in any way to the services provided by
Employee to the Company under this Agreement (collectively referred to as the “Damages”),
provided that the Employee was acting within the scope of their duties and were not guilty
of intentional misconduct, willful neglect of the duties of the Employee’s position
hereunder, or bad faith.
	 
	 	b.	 	Employee shall give prompt written notification to the Company of the commencement of any
action, suit or proceeding relating to a claim for which indemnification pursuant to this
Paragraph may be sought; provided, however, that no delay on the part of either Employee or
Company in making the required notification shall relieve the other party from any liability
or obligation under this Paragraph unless such notification delay shall have materially
prejudiced that party. Within thirty (30) days after delivery of such notification, the
notified party will, upon written notice thereof, assume control of the defense of such
action, suit or proceeding with counsel reasonably satisfactory to the requesting party, and
the notified party will acknowledge in writing to the requesting party that the notified
party shall indemnify the requesting party with respect to all elements of such action, suit
or proceeding and any damages, fines, costs or other liabilities that may be assessed
against the requesting party in connection with such action, suit or proceeding. If the
notified party does not so assume control of such defense due to conflicts of interest, the
requesting party shall control such defense. The party not controlling such defense may
participate therein; provided, that if the notified party assumes control of such defense
and the requesting party is advised by counsel in writing that the notified party and the
requesting party may have conflicting interests or different defenses available with respect
to such action, suit or proceeding, the reasonable fees and expenses of counsel to the
requesting party shall be considered Damages for purposes of this Agreement. The party
controlling such defense shall keep the other party advised of the status of such action,
suit or proceeding and the defense thereof and shall consider in good faith recommendations
made by the

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	 		 	other party with respect thereto. The requesting party shall not agree to any
settlement of such action, suit or proceeding without the prior written consent of
the notified party which shall not be unreasonably withheld (it being understood
that it is reasonable to withhold such consent if, among other things, the
settlement or the entry of a judgment (A) lacks a complete release of the notified
party for all liability with respect thereto, or (B) imposes any liability or
obligation on the notified party). The notified party shall not agree to any
settlement or the entry of a judgment in any action, suit or proceeding without the
prior written consent of the requesting party, which shall not be unreasonably
withheld (it being understood that it is reasonable to withhold such consent if,
among other things, the settlement or the entry of a judgment (A) lacks a complete
release of the requesting party for all liability with respect thereto, or (B)
imposes any liability or obligation on the requesting party).

	11.	 	Notices. All notices hereunder shall be sent by registered or certified mail to the
following addresses:

	 	 	 	 	 
	 

	 	If to Company:
	 	True North Finance Corporation
	 

	 	 	 	4999 France Avenue South, Suite 248
	 

	 	 	 	Minneapolis, MN 55410
	 

	 	 	 	Attn: Scott Carlson
	 
	 	 	 	 
	 

	 	If to Employee:
	 	Christopher E. Clouser
	 

	 	 	 	11119 Wightman Drive
	 

	 	 	 	Wellington, FL 33414

		 	or to such other address as either party may designate in writing to the other party.
	 
	12.	 	General. This Agreement shall inure to the benefit of and be binding upon the
successors, assigns, heirs, executors and administrator of the parties hereto.
	 
	13.	 	Governing Law and Venue. The provisions of this Agreement shall be governed by the laws
of the State of Minnesota and all disputes concerning this Agreement are to be adjudicated in
federal or state court in Minnesota.
	 
	14.	 	Invalidity. If the scope of any of the provisions of this Agreement shall be broader
than those permitted by law, then such provisions shall be enforceable to the extent permitted by
law, and the invalidity of any provisions of this Agreement shall not affect the validity of any
other provisions contained herein.
	 
	15.	 	Entire Agreement. This Agreement contains the entire agreement between the parties and
may be changed only by an agreement in writing signed by all parties.

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	16.	 	Assignment. The rights and benefits of Employee hereunder are personal and no such
right or benefit shall be subject to voluntary or involuntary alienation, assignment or
transfer.
	 
	17.	 	Remedies. If any arbitration, litigation, or other legal proceeding occurs between
the
parties relating to this Agreement, each party shall be responsible for their own costs
and expenses, including attorney’s fees, incurred by such party.
	 
	18.	 	Counterparts. This Agreement may be executed simultaneously in counterparts, each of
which shall be deemed an original (including executed copies sent via facsimile) and all
of which together shall constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties have executed this Agreement the day and year first above
written.

“COMPANY”

True North Finance Corporation

	 	 	 	 	 
	By:

	 	/s/ Todd A. Duckson
 

Its: President
	 	 

“EMPLOYEE”

	 	 	 
	CHRISTOPHER E. CLOUSER
	 	 
	 
	 	 
	/s/ Christopher E. Clouser

	 	 
	 
	 	 

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EXHIBIT A

NONQUALIFIED STOCK OPTION AGREEMENT

     THIS AGREEMENT is dated effective as of the grant date set forth on Exhibit A-1 attached
hereto, between True North Finance Corporation, a Minnesota corporation (the “Corporation”), its
successors and assigns, and the party listed on Exhibit A-1 (“Grantee”).

     WHEREAS, the Corporation desires to grant and the Grantee desires to accept the Nonqualified
Stock Options to purchase Common Stock of the Corporation (as defined below);

     NOW THEREFORE, in consideration of the premises and of the covenants and agreements set forth
below, it is mutually agreed as follows:

	1.	 	Grant of Options. The Corporation hereby grants to Grantee an Option to purchase
from the Corporation all or any part of an aggregate amount of the shares of the Common Stock
of the Corporation (the “Common Stock”), at the Option price and on other terms, as set forth
in Exhibit A-1 attached hereto and made a part hereof. The date of this Agreement is the
effective date of the grant. This Option is not intended to qualify as an Incentive Stock
Option as described in Section 422 of the Internal Revenue Code of 1986 and is referred to as
a Nonqualified Stock Option.
	 
	2.	 	Exercise Period. This Option shall vest and become exercisable in accordance with the
schedule attached hereto as Exhibit A-1 and made a part hereof. All vested Options must be
exercised on or before a date five (5) years from the date of the grant. Vesting shall
continue in accordance with Exhibit A-1 unless accelarated or terminated as described in more
detail below.
	 
	3.	 	Exercise of Option. The vested portion of this Option may be exercised only by
written notice of intent to the Corporation at its office at 4999 France Avenue South North
Sixth Street, Minneapolis, Minnesota 55410. Such notice shall state the number of shares of
Common Stock in respect of which the Option is being exercised and shall be accompanied by
payment for such Common Stock in cash, certified or cashier’s check or by personal check. A
form of Notice of Exercise is attached hereto.
	 
	4.	 	Withholding. In the event that the Grantee elects to exercise this Option or any part
thereof, and if the Corporation shall be required to withhold any amounts by reasons of any
federal, state or local tax laws, rules or regulations in respect of the issuance of shares to
the Grantee pursuant to the Option, the Corporation shall be entitled to deduct and withhold
such amounts from any payments to be made to the Grantee. In any event, the Grantee shall make
available to the Corporation, promptly when requested by the Corporation, sufficient funds to
meet the requirements of such withholding; and the Corporation shall be entitled to take and
authorize such steps as it may deem advisable in order to have such funds available to the
Corporation out of any funds or property due or to become to the Grantee.

 

 

	5.	 	No Shareholder Rights. Grantee shall have no rights as a stockholder with respect to
any shares of Common Stock subject to this Option prior to the date of issuance of a
certificate or certificates for such shares.
	 
	6.	 	Investment Representation. Notice of the exercise of this Option shall include a
representation that any of the Option shares purchased shall be acquired as an
investment and not with a view to, or for sale in connection with, any public distribution.
	 
	7.	 	Compliance with Law and Regulations. The Grantee acknowledges that this Option may
not be exercised until the Corporation has taken all actions then required to comply with all
applicable federal and state laws, rules and regulations and any exchange on which the Common
Stock may then be listed. The certificates representing the shares purchased upon the exercise
of this Option may bear a legend in substantially the following form:
	 
	 	 	These shares have not been registered either under any applicable federal law and rules and
resale will not be permitted under state law unless the shares are first registered under
the Minnesota Securities Law. Further, no sale, offer to sell, or transfer of these shares
shall be made unless a registration statement under the federal Securities Act of 1933, as
amended, with respect to such shares is then in effect or an exemption from the registration
requirements of such Act is then in fact applicable to such shares.
	 
	8.	 	Binding Agreement. This Agreement shall be binding upon and inure to the benefit of
the legal representatives, executors, administrators, successors and assigns of each party to
this Agreement.
	 
	9.	 	Non-Transferability. This Option shall not be transferable otherwise than by will or
the laws of descent and distribution and this Option may be exercised, during the lifetime of
Grantee, only by Grantee. Any attempt to assign, transfer, pledge or otherwise dispose of this
Option contrary to the provisions of this paragraph or any attachment or similar process upon
this Option shall be null and void and without effect.
	 
	10.	 	Termination of Relationship. If the Employment Agreement between Grantee and the
Corporation is terminated without cause or with cause by Grantee (as those terms are defined in the
parties Consulting Agreement), all further vesting shall cease immediately as of the date of the
termination and Grantee shall have ninety (90) days from the date of the termination of the
relationship to exercise any unexercised but vested options. Any unexercised but vested options
that are not exercised within this time period shall be cancelled.
	 
	11.	 	Termination of Relationship for Cause. If the Employment Agreement between Grantee and
the Corporation is terminated for cause (as that term is defined in the parties Employment
Agreement), all further vesting shall cease immediately as of the date of

 

 

	 	 	termination and any unexercised but vested options as of the date of the termiation shall
be cancelled.
	 
	12.	 	Vesting Upon Change of Control. If a Change of Control occurs (as defined below),
all
unvested options shall immediately vest and Grantee shall have one hundred-eighty
(180) days to exercise any of those vested options. Any unexercised but vested options
that are not exercised within this time period shall be cancelled.
	 
	13.	 	Complete Agreement. This Agreement sets forth the entire understanding of the parties
hereto and shall not be amended, changed or terminated except by an instrument in
writing signed by the parties to this Agreement.
	 
	14.	 	Counterparts and Governing Law. This Agreement may be executed in counterparts,
and its validity, construction and performance, shall be governed by the laws of the
state of Minnesota.
	 
	15.	 	Certain Definitions. For purposes of this Agreement, a “Change in Control” of the
Corporation shall mean any of the following:

	 	(i)	 	a change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the
Company is then subject to such reporting requirement; or
	 
	 	(ii)	 	a merger or consolidation to which the Corporation is a party if, following the
effective date of such merger or consolidation, the individuals and entities who were
shareholders of the Corporation prior to the effective date of such merger or
consolidation have beneficial ownership (as defined in Rule 13d-3 under the Exchange
Act) of less than fifty percent (50%) of the combined voting power of the surviving
corporation following the effective date of such merger or consolidation.

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

	 	 	 	 	 	 	 
	 	 	TRUE NORTH FINACE CORPORATION  
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Todd A. Duckson	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Todd A. Duckson, President	 	 
	 
	 	 	 	 	 	 
	 	 	GRANTEE
	 
	 	 	 	 	 	 
	 	 	[Grantee’s signature is set forth on Exhibit
A-1 attached hereto and made a part hereof.]

 

 

EXHIBIT A-1

OPTION TERMS

	 	 	 
	Name of Grantee:

	 	Christopher E. Clouser
	 
	 	 
	Date of Grant:

	 	August 1, 2009
	 
	 	 
	Number of Shares Granted:

	 	10,000,000 Series B Common Shares
(10% of total issued and outstanding
Series B Common Shares of the
Corporation as of the date of this
Non-Qualified Stock Option Agreement)
	 
	 	 
	Exercise Price:

	 	The exercise price per share shall be
equal to one cent ($0.01) per share.
	 
	 	 
	Type of Option
	 	 
	(Qualified or Non-Qualified):

	 	Non-Qualified
	 
	 	 
	Vesting:

	 	One half of the Options shall vest
immediately and the other half upon
the Company receiving $200,000,000 in
new debt or equity financing but in
no event later than the term of the
Employment Agreement.

	 	 	 	 	 	 	 	 	 	 	 
	TRUE NORTH FINANCE	 	 	 	Accepted and agreed to by	 	 
	CORPORATION	 	 	 	the undersigned Grantee)	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Todd A. Duckson
	 	 	 	By:
	 	/s/ Christopher E. Clouser	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Todd A. Duckson, President	 	 	 	Christopher E. Clouser	 	 

[Please execute two copies of this Exhibit A-1

and return one copy to the Corporation.]

 

 

EXHIBIT A-1

OPTION TERMS

	 	 	 
	Name of Grantee:

	 	Christopher E. Clouser
	 
	 	 
	Date of Grant:

	 	August 1, 2009
	 
	 	 
	Number of Shares Granted:

	 	10,000,000 Series B Common Shares
(10% of total issued and outstanding
Series B Common Shares of the
Corporation as of the date of this
Non-Qualified Stock Option Agreement)
	 
	 	 
	Exercise Price:

	 	The exercise price per share shall be
equal to one cent ($0.01) per share.
	 
	 	 
	Type of Option
	 	 
	(Qualified or Non-Qualified):

	 	Non-Qualified
	 
	 	 
	Vesting:

	 	One half of the Options shall vest
immediately and the other half upon
the Company receiving $200,000,000 in
new debt or equity financing but in
no event later than the term of the
Employment Agreement.

	 	 	 	 	 	 	 	 	 	 	 
	TRUE NORTH FINANCE	 	 	 	Accepted and agreed to by	 	 
	CORPORATION	 	 	 	the undersigned Grantee	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Todd A. Duckson
	 	 	 	By:
	 	 /s/ Christopher E. Clouser	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Todd A. Duckson, President	 	 	 	Christopher E. Clouser	 	 

[Please execute two copies of this Exhibit A-1

and return one copy to the Corporation.]Exhibit 10.1

EXHIBIT 10.1

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”), dated as of November 18, 2009,
is entered into by and between Helios & Matheson North America, Inc., a Delaware corporation (the
“Company”), and Helios & Matheson Information Technology Ltd., an India corporation (the
“Purchaser”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act and Rule 506 promulgated thereunder, or, alternatively,
Regulation S promulgated thereunder, the board of directors of the Company has authorized the sale
and issuance to the Purchaser of $1,000,000 of Common Stock, for a price per share to be determined
as provided herein, subject to the terms and conditions of this Agreement (the “Offering”).

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
the Company and the Purchaser agree as follows:

ARTICLE I.

DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the
following terms have the meanings indicated in this Section 1.1:

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a Person, as
such terms are used in and construed under Rule 144 under the Securities Act.

“Business Day” means any day except Saturday, Sunday, any day which shall be a
federal legal holiday in the United States or any day on which banking institutions in the
State of New York are authorized or required by law or other governmental action to close or
any day that the Common Stock is not traded on the NASDAQ Stock Market.

“Closing” means the closing of the purchase and sale of the Securities pursuant
to Section 2.1.

“Closing Date” means the Business Day when this Agreement has been executed and
delivered by the Company and the Purchaser, and all conditions precedent to (i) the
Purchaser’s obligations to pay the Subscription Amount and (ii) the Company’s obligations to
deliver the Securities have been satisfied or waived; provided that the Closing Date shall
be no later than November 20, 2009, unless otherwise agreed by the Company.

“Commission” means the United States Securities and Exchange Commission.

 

 

 

“Common Stock” means the common stock of the Company, $0.01 par value per
share, and any other class of securities into which such securities may hereafter be
reclassified or changed into.

“Offering” has the meaning set forth in the recitals hereof.

“Person” means an individual or corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint stock
company, government (or an agency or subdivision thereof) or other entity of any kind.

“Registration Statement” means a registration statement filed with the
Commission covering the resale of the Securities.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same effect as such
Rule.

“Securities” means the number of shares of Common Stock to be purchased by
Purchaser pursuant to this Agreement, determined by dividing the Subscription Amount by the
greater of $0.81 and the closing bid price per share of the Common Stock on the Closing
Date, as reported by Bloomberg LP on the Closing Date.

“Securities Act” means the Securities Act of 1933, as amended, and the rules
and regulations promulgated hereunder.

“Subscription Amount” means the amount of United States Dollars, in immediately
available funds, set forth on the Purchaser’s signature page hereto.

ARTICLE II.

PURCHASE AND SALE

2.1 Closing. On the Closing Date, upon the terms and subject to the conditions set
forth herein, the Company agrees to sell and the Purchaser agrees to purchase the Securities. The
Closing shall occur upon satisfaction of the deliveries and conditions set forth in Sections 2.2
and 2.3.

2.2 Deliveries.

(a) On the Closing Date, the Company shall deliver or cause to be delivered to the
Purchaser the following:

(i) this Agreement duly executed by the Company;
and

(ii) a certificate issued in the name of the Purchaser representing the
Securities, or, if acceptable to the Purchaser for the purpose of the Closing, a
copy of such certificate provided by the Company’s stock transfer agent; provided,
however, the Purchaser may waive such condition and allow the Company to have such
certificate prepared and delivered to the Purchaser as soon as commercially
practicable following the Closing.

 

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(b) On the Closing Date, the Purchaser shall deliver or cause to be delivered to the
Company the following:

(i) this Agreement duly executed by the Purchaser;
and

(ii) the Subscription Amount by wire transfer to the Company.

2.3 Closing Conditions.

(a) The obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:

(i) the accuracy in all material respects when made and on the Closing Date of
the representations and warranties of the Purchaser contained herein; and

(ii) the delivery by the Purchaser of the items set forth in Section 2.2(b) of
this Agreement.

(b) The obligations of the Purchaser hereunder in connection with the Closing are
subject to the following conditions being met:

(i) the accuracy in all material respects when made and on the Closing Date of
the representations and warranties of the Company contained herein;

(ii) the delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement; and

(iii) the Company shall have completed a merger with Helios & Matheson North America, Inc., a
New York corporation (“HMNA NY”), as described in HMNA NY’s Definitive Proxy Statement filed with
the Commission on October 6, 2009.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. The Company hereby represents and
warrants as of the date hereof and as of the Closing Date to the Purchaser as follows:

(a) Organization and Qualification. The Company is an entity duly
incorporated, validly existing and in good standing under the laws of the State of Delaware,
USA, with the requisite power and authority to own and use its properties and assets and to
carry on its business as currently conducted.

 

3

 

(b) Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by this
Agreement and otherwise to carry out its obligations hereunder. The execution and delivery
of this Agreement by the Company and the consummation by it of the transaction contemplated
hereby have been duly authorized by the Company’s board of directors and no further action
is required by the Company’s board of directors or its stockholders in connection herewith.

(c) Issuance of the Securities. The Securities are duly authorized and, when
issued and paid for in accordance with this Agreement, will be duly and validly issued,
fully paid and non-assessable.

3.2 Representations and Warranties of the Purchaser. The Purchaser hereby represents
and warrants as of the date hereof and as of the Closing Date to the Company as follows:

(a) Organization; Authority. The Purchaser is an entity duly organized,
validly existing and in good standing under the laws of India with full right and corporate
or partnership power and authority to enter into and consummate the transaction contemplated
by this Agreement. The execution, delivery and performance by the Purchaser of the
transaction contemplated by this Agreement has been duly authorized by all necessary
corporate or similar action on the part of the Purchaser.

(b) Own Account. The Purchaser understands that the Securities are “restricted
securities” and have not been registered under the Securities Act or any applicable U.S.
state securities law and is acquiring the Securities as principal for its own account and
not with a view to or for distributing or reselling such Securities or any part thereof in
violation of the Securities Act or any applicable U.S. state securities law, has no present
intention of distributing any of such Securities in violation of the Securities Act or any
applicable state securities law and has no direct or indirect arrangement or understandings
with any other persons to distribute or regarding the distribution of such Securities in
violation of the Securities Act or any applicable U.S. state securities law (this
representation and warranty not limiting the Purchaser’s right to sell or otherwise transfer
the Securities in compliance with applicable U.S. Federal and state securities laws).

(c) Purchaser Status. At the time the Purchaser was offered the Securities, it
was, and at the date hereof it is, an “accredited investor” as defined in Rule 501 under the
Securities Act.

(d) Experience of the Purchaser. The Purchaser, either alone or together with
its representatives, has such knowledge, sophistication and experience in business and
financial matters as to be capable of evaluating the merits and risks of the prospective
investment in the Securities and has so evaluated the merits and risks of such investment.
The Purchaser is able to bear the economic risk of an investment in the Securities.

 

4

 

(e) General Solicitation. The Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding the Securities
published in any newspaper, magazine or similar media or broadcast over television or radio
or presented at any seminar or any other general solicitation or general advertisement.

(f) Access to Company Information. The Purchaser acknowledges that it has been
afforded access and the opportunity to obtain all financial and other information concerning
the Company that the Purchaser desires (including the opportunity to meet with the Company’s
executive officers, either in person or telephonically). The Purchaser has reviewed copies
of the Company’s periodic and current reports filed with the Commission since January 1,
2008 and is familiar with the contents thereof, including, without limitation, the risk
factors contained in the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2008, and there is no further information about the Company that the Purchaser
desires in determining whether to acquire the Securities.

(g) No Broker’s Fees. The Company shall not be obligated to pay any commission,
brokerage fee, or finder’s fee based on any alleged agreement or understanding between the
Purchaser and a third person in respect of the transactions contemplated hereby.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1 Transfer Restrictions.

(a) The Securities may only be disposed of in compliance with U.S. state and Federal
securities laws. In connection with any transfer of Securities, the Company or its stock
transfer agent may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor and reasonably acceptable to the Company, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Securities under the
Securities Act.

(b) The Purchaser agrees to the imprinting, so long as is required by this Section 4.1,
of a legend on any of the Securities in substantially the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO
THE COMPANY.

 

5

 

(c) The Purchaser agrees that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 4.1 is predicated upon the Company’s
reliance that the Purchaser will sell any Securities pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom, and that if Securities are sold pursuant to a
Registration Statement, they will be sold in compliance with the plan of distribution set
forth therein.

ARTICLE V.

MISCELLANEOUS

5.1 Entire Agreement. This Agreement contains the entire understanding of the parties
with respect to the subject matter hereof and supersedes all prior agreements and understandings,
oral or written, with respect to such matters, which the parties acknowledge have been merged into
this Agreement.

5.2 Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earliest of (a) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30
p.m. (New York City time) on a Business Day, (b) the next Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto on a day that is not a Business Day or later than
5:30 p.m. (New York City time) on any Business Day, (c) the 2nd Business Day following
the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon
actual receipt by the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages attached hereto.

5.3 Amendments; Waivers. Except as otherwise set forth herein, any provision of this
Agreement may be waived, modified, supplemented or amended in a written instrument signed by the
Company and the Purchaser. No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver
of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right.

5.4 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. Neither the Company nor the
Purchaser may assign this Agreement or any rights or obligations hereunder without the prior
written consent of the other (other than by operation of law).

5.5 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not for the benefit of,
nor may any provision hereof be enforced by, any other Person.

 

6

 

5.6 Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Delaware, without regard to the principles of conflicts of
law thereof. Each party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement (whether brought against
a party hereto or its respective affiliates, directors, officers, shareholders, employees or
agents) shall be commenced exclusively in the state or Federal courts sitting in the City of New
York, New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state
and Federal courts sitting in the City of New York for the adjudication of any dispute hereunder or
in connection herewith or with the transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper or is an inconvenient venue for such proceeding. The parties hereby waive
all rights to a trial by jury. If either party shall commence an action or proceeding to enforce
any provisions of this Agreement, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such action or proceeding.

5.7 Survival. The representations and, warranties, shall survive the Closing and the
delivery, of the Securities, for the applicable statue of limitations.

5.8 Execution. This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature
page were an original thereof.

5.9 Severability. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the intention of the parties
that they would have executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

5.10 Construction. The parties agree that each of them and/or their respective counsel
has reviewed and had an opportunity to revise this Agreement and, therefore, the normal rule of
construction to the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments hereto.

(Signature Pages Follow)

 

7

 

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated above.

	 	 	 
	HELIOS & MATHESON NORTH AMERICA, INC.,

	 	Address for Notice:
	a Delaware corporation
	 	 
	 

	 	200 Park Avenue South, Ste 901
	 

	 	New York, New York 10003
	 

	 	Attention: Chief Executive Officer
	 

	 	Fax 212-979-2517

	 	 	 	 	 
	By:

	 	/s/ Salvatore M. Quadrino
 

Name: Salvatore M. Quadrino
	 	 
	 

	 	Title:   Interim Chief Executive Officer	 	 

With a copy to (which shall not constitute notice):

Kevin Friedmann, Esq.

Richardson & Patel, LLP

Fax: (917) 591-6898

Email: kfriedmann@richardsonpatel.com

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

8

 

[HMIT SIGNATURE PAGE TO HMNA SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase Agreement to be duly
executed by its authorized signatory as of the date first indicated above.

Name of Purchaser: Helios & Matheson Information Technology Ltd.

	 	 	 
	Signature of Authorized Signatory of Purchaser:

	 	/s/ V. Ramachandiran
	 

	 	 

	 	 	 
	Name of Authorized Signatory:

	 	V. Ramachandiran
	 
	 	 
	Title of Authorized Signatory:

	 	Chairman

Email Address of Authorized Signatory: ram@heliosmatheson.com

	 	 	 
	Facsimile Number of Purchaser:
	 	 
	 

	 	 

Address for Notice of Purchaser:

9 Nungambakkam High Road

Chennai 600 034

India

Subscription Amount: $1,000,000

 

9

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