Document:

prop_ex1018.htm

EXHIBIT 10.18

 

ESCROW DEPOSIT AGREEMENT

 

This ESCROW DEPOSIT AGREEMENT (this “Agreement”) dated as of this __ day of November 2011, by and amongPropanc Health Group Corporation, a Delaware corporation (the “Company”), having an address at576 Swan Street, Richmond, VIC, 3121, Australia,    and SIGNATURE BANK (the “Escrow Agent”), a New York State chartered bank, having an office at 565 Fifth Ave, New York, NY 10017.  All capitalized terms not herein defined shall have the meaning ascribed to them in that certainProspectusProspectus, datedNovember, 2011, as amended or supplemented from time-to-time, including all attachments, schedules and exhibits thereto (the “Prospectus”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to the terms of the Prospectus the Company desires to sell (the “Offering”) a minimum of 500,000 (“Minimum Amount”) of Common Stock, $ 0.001 par value (“Shares”) in the amount of $$750,000 (“Minimum Amount”) and a maximum of 5,000,000 of such shares in the amount of $7,500,000 (“Maximum Amount”). Each Share is being sold at a price of $1.50 per Share; and

 

WHEREAS, unless the Minimum Amount is sold by February 13, 2012 (the “Termination Date”), or by  May 14, 2012 (the “Final Termination Date”) if the Termination Date has been extended by Company, the Offering shall terminate and all funds shall be returned to the subscribers in the Offering; and

 

WHEREAS, the Company desires to establish an escrow account with the Escrow Agent into which the Company shall instruct subscribers (the “Subscribers”) to deposit checks and other instruments for the payment of money made payable to the order of “Signature Bank as Escrow Agent forPropanc Health Group Corporation,” and Escrow Agent is willing to accept said checks and other instruments for the payment of money in accordance with the terms hereinafter set forth; and

 

WHEREAS, the Company represents and warrants to the Escrow Agent that it has not stated to any individual or entity that the Escrow Agent’s duties will include anything other than those duties stated in this Agreement; and

 

WHEREAS, the Company warrants to the Escrow Agent that a copy of each document that has been delivered to Subscribers and third parties that include Escrow Agent’s name and duties, has been attached hereto as Schedule I.

 

  

1

  

 

NOW, THEREFORE, IT IS AGREED as follows:

 

1.             Delivery of Escrow Funds.

 

(a)    The Company shall instruct Subscribers to deliver to Escrow Agent checks made payable to the order of “Signature Bank, as Escrow Agent forPropanc Health Group Corporation,” or wire transfer to Signature Bank,[insert address of Signature Bank’s financial center maintaining the account], ABA No. 026013576 for credit to Signature Bank, as Escrow Agent for Propanc Health Group Corporaiton, Account No. _____________, in each case, with the name, address and social security number or taxpayer identification number of the individual or entity making payment.  In the event any Subscriber’s address and/or social security number or taxpayer identification number are not provided to Escrow Agent by the Subscriber, then the Company agree to promptly provide Escrow Agent with such information in writing.  The checks or wire transfers shall be deposited into a non interest-bearing account at Signature Bank entitled “Signature Bank, as Escrow Agent forPropanc Health Group Corporation” (the “Escrow Account”).

 

(b)           The collected funds deposited into the Escrow Account are referred to as the “Escrow Funds.”

 

(c)           The Escrow Agent shall have no duty or responsibility to enforce the collection or demand payment of any funds deposited into the Escrow Account.  If, for any reason, any check deposited into the Escrow Account shall be returned unpaid to the Escrow Agent, the sole duty of the Escrow Agent shall be to return the check to the Subscriber and advise the Company promptly thereof.

 

2.             Release of Escrow Funds.  The Escrow Funds shall be paid by the Escrow Agent in accordance with the following:

 

(a)            In the event that the Company advises the Escrow Agent in writing that the Offering has been terminated (the “Termination Notice”), the Escrow Agent shall promptly return the funds paid by each Subscriber to said Subscriber without interest or offset.

 

(b)    If prior to 3:00 P.M. Eastern time on the Termination Date, the Escrow Agent receives written notice, in the form of Exhibit A, attached hereto and made a part hereof, and signed by the Company, stating that the Termination Date has been extended to the Final Termination Date (“Extension Notice”), then the Termination Date shall be so extended.

 

  

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(c)     Provided that the Escrow Agent does not receive the Termination Notice in accordance with paragraph 2(a) and there is the Minimum Amount deposited into the Escrow Account on or prior to later of the Termination Date or  the date stated in the Extension Notice, if any, received by the Escrow Agent in accordance with paragraph 2(b) above, the Escrow Agent shall, upon receipt of written instructions, in the form of Exhibit B, attached hereto and made a part hereof, or in a form and substance satisfactory to the Escrow Agent, received from the Company, pay the Escrow Funds in accordance with such written instructions. Such payment or payments shall be made by wire transfer within one (1) Business Day of receipt of such written instructions, which must be received by the Escrow Agent no later than 3:00 PM Eastern Time on a Business Day for the Escrow Agent to process such instructions that Business Day.

 

(d)           If by 3:00 P.M. Eastern time on the later of the Termination Date or the date stated in the Extension Notice, if any, that the Escrow Agent has received in accordance with paragraph 2(b) above, the Escrow Agent has not received written instructions from the Company regarding the disbursement of the Escrow Funds and the total amount of the Escrow Funds is less than the Minimum Amount, then the Escrow Agent shall promptly return the Escrow Funds to the Subscribers without interest or offset.  The Escrow Funds returned to each Subscriber shall be free and clear of any and all claims of the Escrow Agent.

 

(e)           The Escrow Agent shall not be required to pay any uncollected funds or any funds that are not available for withdrawal.

 

(f)           If the Termination Date, Final Termination Date or any date that is a deadline under this Agreement for giving the Escrow Agent notice or instructions or for the Escrow Agent to take action is not a Business Day, then such date shall be the Business Day that immediately preceding that date. A Business Day is any day other than a Saturday, Sunday or a Bank holiday.

 

3.           Acceptance by Escrow Agent.  The Escrow Agent hereby accepts and agrees to perform its obligations hereunder, provided that:

 

(a)           The Escrow Agent may act in reliance upon any signature believed by it to be genuine, and may assume that any person who has been designated by the Company to give any written instructions, notice or receipt, or make any statements in connection with the provisions hereof has been duly authorized to do so.  Escrow Agent shall have no duty to make inquiry as to the genuineness, accuracy or validity of any statements or instructions or any signatures on statements or instructions.  The names and true signatures of each individual authorized to act singly on behalf of the Company are stated in Schedule II, which is attached hereto and made a part hereof. The Company may  remove or add one or more of its authorized signers stated on Schedule II by notifying the Escrow Agent of such change in accordance with this Agreement, which notice shall include the true signature for any new authorized signatories.

 

  

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(b)           The Escrow Agent may act relative hereto in reliance upon advice of counsel in reference to any matter connected herewith.  The Escrow Agent shall not be liable for any mistake of fact or error of judgment or law, or for any acts or omissions of any kind, unless caused by its willful misconduct or gross negligence.

 

(c)           The Company agree to indemnify and hold the Escrow Agent harmless from and against any and all claims, losses, costs, liabilities, damages, suits, demands, judgments or expenses (including but not limited to reasonable attorney’s fees) claimed against or incurred by Escrow Agent arising out of or related, directly or indirectly, to this Escrow Agreement unless caused by the Escrow Agent’s gross negligence or willful misconduct

 

(d)           In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder, the Escrow Agent shall be entitled to (i) refrain from taking any action other than to keep safely the Escrow Funds until it shall be directed otherwise by a court of competent jurisdiction, or (ii) deliver the Escrow Funds to a court of competent jurisdiction.

 

(e)           The Escrow Agent shall have no duty, responsibility or obligation to interpret or enforce the terms of any agreement other than Escrow Agent’s obligations hereunder, and the Escrow Agent shall not be required to make a request that any monies be delivered to the Escrow Account, it being agreed that the sole duties and responsibilities of the Escrow Agent shall be to the extent not prohibited by applicable law (i) to accept checks or other instruments for the payment of money and wire transfers delivered to the Escrow Agent for the Escrow Account and deposit said checks and wire transfers into the non-interest bearing Escrow Account, and (ii) to disburse or refrain from disbursing the Escrow Funds as stated above, provided that the checks received by the Escrow Agent have been collected and are available for withdrawal.

 

4.           Escrow Account Statements and Information. The Escrow Agent agrees to send to the Company a copy of the Escrow Account periodic statement, upon request in accordance with the Escrow Agent’s regular practices for providing account statements to its non-escrow clients and to also provide the Company, or their designee, upon request other deposit account information, including Account balances, by telephone or by computer communication, to the extent practicable. The Company agrees to complete and sign all forms or agreements required by the Escrow Agent for that purpose.  The Company consents to the Escrow Agent’s release of such Account information to any of the individuals designated by Company, which designation has been signed in accordance with paragraph 3(a) by any of the persons in Schedule II.  Further, the Company has an option to receive e-mail notification of incoming and outgoing wire transfers.  If this e-mail notification service is requested and subsequently approved by the Escrow Agent, the Company agrees to provide a valid e-mail address and other information necessary to set-up this service and sign all forms and agreements required for such service.  The Company consents to the Escrow Agent’s release of wire transfer information to the designated e-mail address(es).  The Escrow Agent’s liability for failure to comply with this section shall not exceed the cost of providing such information.

 

  

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5.           Resignation and Termination of the Escrow Agent.  The Escrow Agent may resign at any time by giving 30 days’ prior written notice of such resignation to the Company.  Upon providing such notice, the Escrow Agent shall have no further obligation hereunder except to hold as depositary the Escrow Funds that it receives until the end of such 30-day period.  In such event, the Escrow Agent shall not take any action, other than receiving and depositing Subscribers checks and wire transfers in accordance with this Agreement, until the Company has designated a banking corporation, trust company, attorney or other person as successor.  Upon receipt of such written designation signed by the Company, the Escrow Agent shall promptly deliver the Escrow Funds to such successor and shall thereafter have no further obligations hereunder.  If such instructions are not received within 30 days following the effective date of such resignation, then the Escrow Agent may deposit the Escrow Funds held by it pursuant to this Agreement with a clerk of a court of competent jurisdiction pending the appointment of a successor.  In either case provided for in this paragraph, the Escrow Agent shall be relieved of all further obligations and released from all liability thereafter arising with respect to the Escrow Funds.

 

6.           Termination.  The Company may terminate the appointment of the Escrow Agent hereunder upon written notice specifying the date upon which such termination shall take effect, which date shall be at least 30 days from the date of such notice.  In the event of such termination, the Company shall, within 30 days of such notice, appoint a successor escrow agent and the Escrow Agent shall, upon receipt of written instructions signed by the Company, turn over to such successor escrow agent all of the Escrow Funds; provided, however, that if the Company fails to appoint a successor escrow agent within such 30-day period, such termination notice shall be null and void and the Escrow Agent shall continue to be bound by all of the provisions hereof.  Upon receipt of the Escrow Funds, the successor escrow agent shall become the escrow agent hereunder and shall be bound by all of the provisions hereof and Signature Bank shall be relieved of all further obligations and released from all liability thereafter arising with respect to the Escrow Funds and under this Agreement.

 

7.            Investment.  All funds received by the Escrow Agent shall be invested only in non-interest bearing bank accounts at Signature Bank.

 

8.            Compensation.  Escrow Agent shall be entitled, for the duties to be performed by it hereunder, to a fee of $3,500, which fee shall be paid by the Company upon the signing of this Agreement. In addition, the Company shall be obligated to reimburse Escrow Agent for all fees, costs and expenses incurred or that become due in connection with this Agreement or the Escrow Account, including reasonable attorney’s fees.  Neither the modification, cancellation, termination or rescission of this Agreement nor the resignation or termination of the Escrow Agent shall affect the right of Escrow Agent to retain the amount of any fee which has been paid, or to be reimbursed or paid any amount which has been incurred or becomes due, prior to the effective date of any such modification, cancellation, termination, resignation or rescission.  To the extent the Escrow Agent has incurred any such expenses, or any such fee becomes due, prior to any closing, the Escrow Agent shall advise the Company and the Company shall direct all such amounts to be paid directly at any such closing.

 

  

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9.            Notices.  All notices, requests, demands and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if sent by hand-delivery, by facsimile (followed by first-class mail), by nationally recognized overnight courier service or by prepaid registered or certified mail, return receipt requested, to the addresses set forth below:

 

If to the Company:

 

Propanc Health Group Corporation

576 Swan Street

Richmond, VIC, 3121 Australia

Attention: James Nathanielsz

 

If to Escrow Agent:

 

Signature Bank

565 Fifth Ave

New York, NY 10017Attention: Edwin Sirlin, Group Director and Senior Vice President

Fax: 646-822-1937 

 

  

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10.          General.

 

(a)    This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York applicable to agreements made and to be entirely performed within such State, without regard to choice of law principles and any action brought hereunder shall be brought in the courts of the State of New York, located in the County of New York.  Each party hereto irrevocably waives any objection on the grounds of venue, forum non­conveniens or any similar grounds and irrevocably consents to service of process by mail or in any manner permitted by applicable law and consents to the jurisdiction of said courts.  Each of the parties hereto hereby waives all right to trial by jury in any action, proceeding or counterclaim arising out of the transactions contemplated by this Agreement.

 

(b)           This Agreement sets forth the entire agreement and understanding of the parties with respect to the matters contained herein and supersedes all prior agreements, arrangements and understandings relating thereto.

 

(c)           All of the terms and conditions of this Agreement shall be binding upon, and inure to the benefit of and be enforceable by, the parties hereto, as well as their respective successors and assigns.

 

(d)           This Agreement may be amended, modified, superseded or canceled, and any of the terms or conditions hereof may be waived, only by a written instrument executed by each party hereto or, in the case of a waiver, by the party waiving compliance.  The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect its right at a later time to enforce the same.  No waiver of any party of any condition, or of the breach of any term contained in this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed to be or construed as a further or continuing waiver of any such condition or breach or a waiver of any other condition or of the breach of any other term of this Agreement.  No party may assign any rights, duties or obligations hereunder unless all other parties have given their prior written consent.

 

(e)           If any provision included in this Agreement proves to be invalid or unenforceable, it shall not affect the validity of the remaining provisions.

 

(f)           This Agreement and any modification or amendment of this Agreement may be executed in several counterparts or by separate instruments and all of such counterparts and instruments shall constitute one agreement, binding on all of the parties hereto.

 

11.           Form of Signature. The parties hereto agree to accept a facsimile transmission copy of their respective actual signatures as evidence of their actual signatures to this Agreement and any modification or amendment of this Agreement; provided, however, that each party who produces a facsimile signature agrees, by the express terms hereof, to place, promptly after transmission of his or her signature by fax, a true and correct original copy of his or her signature in overnight mail to the address of the other party.

 

  

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first set forth above.

 

	 	Propanc Health Group Corporation	 
	 	 	 	 
	
 

	
By: 

	/s/ James Nathanielsz	 
	 	 	Name: James Nathanielsz,	 
	 	 	Title: CEO	 
	 	 	Officer	 
	 	 	 	 
	 	
SIGNATURE BANK

	 
	 	 	 	 
	 	
By: 

	/s/ Edwin Sirlin	 
	 	 	Name: Edwin Sirlin	 
	 	 	Title: SVP	 
	 	 	 	 
	 	By:	/s/ Timothy Collins	 
	 	 	Name: Timothy Collins	 
	 	 	Title: VP	 

 

  

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Schedule I

 

OFFERING DOCUMENTS

 

  

9

 

Schedule II

 

The Escrow Agent is authorized to accept instructions signed or believed by the Escrow Agent to be signed by any one of the following on behalf of the Company.

 

[insert Company’s full legal name]

 

	 	Name:	 	True Signature:	 
	 	 	 	 	 
	 	 	 	 	 

 

 

  

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Exhibit A

 

Extension Notice

 

Date: __________________

 

Signature Bank

565 Fifth Ave

New York, NY 10017

Attention: Edwin Sirlin, Group Director and Senior Vice President

 

Dear Mr. Sirlin:

In accordance with the terms of paragraph 2(b) of an Escrow Deposit Agreement dated ___ _______, by and among Propanc Health Group Corporation (the “Company”), and Signature Bank (the “Escrow Agent”), the Company hereby notifies the Escrow Agent that the Termination Date has been extended to  __________ __, 201_, the Final Termination Date.

Very truly yours,

Propanc Health Group Corporation

 

By:_____________

Name:James Nathanielsz

Title: CEO

  

11

 

Exhibit B

FORM OF ESCROW RELEASE NOTICE

Date:

Signature Bank

565 Fifth Ave

New York, NY 10017

Attention: Edwin Sirlin, Group Director and Senior Vice President

Dear Mr. Sirlin:

In accordance with the terms of paragraph 2(c) of an Escrow Deposit Agreement dated as of ________ __, 201_ (the "Escrow Agreement"), by and between Propanc Health Group Corporation (the "Company")and __________., the Company hereby notifies the Escrow Agent that the ________ closing will be held on ___________ for gross proceeds of $_________.

 

PLEASE DISTRIBUTE FUNDS BY WIRE TRANSFER AS FOLLOWS (wire instructions attached):

 

Propanc Health Group Corporation:                                        $

 

Very truly yours,

Propanc Health Group Corporation 

 

By:_____________

Name:__________

Title:____________

 

 

 

12opmg_1022.htm

EXHIBIT 10.22

 

CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER A CONFIDENTIAL TREATMENT REQUEST. THE REDACTED TERMS HAVE BEEN MARKED IN THIS EXHIBIT AT THE APPROPRIATE PLACE WITH FOUR ASTERISKS [****].

 

The Big Company, LLC and Options Media Group Holdings, Inc., t/b/k/a PhoneGuard, Inc.

AGREEMENT

	
Product Parties:

	
Options Media Group Holdings, Inc., n/k/a PhoneGuard, Inc., a Nevada corporation, (hereinafter “OPMG/PhoneGuard”).

	
Other Parties:

	
The Big Company, LLC (“TBC”)

	
Product:

	
Software Application for portable and mobile communications  devices that provides monitoring, notification and service blocking to prevent text messaging activities and service while driving or riding in a moving vehicle, and also provide notices of excessive speed and location tracking of mobile device along with antivirus protection for smart phones.

	
Product Name:

	
DriveSafeTM and PhoneGuard® mobile software applications for smart phones.

	
Purpose:

	
Provide Justin Bieber and Remster 2, LLC (“Endorsement Party” and “Consulting Party, respectively”) and TBC to contract as Endorsement Party and Consulting Party to provide Spokesperson services for launch of national advertising and promotions campaign of the Product via all available digital and traditional media, including but not limited to mentions and placement at live events, on Twitter®, MySpace®, Facebook® and Endorsement Parties’ web pages.  OPMG/PhoneGuard shall also consult and provide input, guidance and approval of all print and broadcast promotional media for the advertising and promotions campaign. This Agreement is dependent upon Justin Bieber executing a binding Agreement or Term Sheet with OPMG/PhoneGuard in the form presented to TBC, or with such changes as are reasonable to OPMG/PhoneGuard, as indicated by OPMG/PhoneGuard’s execution of said Agreement or Term Sheet.

	
Territory:

	
North America, Central America and South America.

	
Term:

	
One year from the date of execution of this Term Sheet or such longer term as exists in any Agreement or Term Sheet with Endorsement Party and Consulting Party and OPMG/PhoneGuard.

 

  

Page 1 of 9

  

 

	
Compensation:

	
OPMG/PhoneGuard is the licensee of the Software Application at issue for the Territory referenced herein and is a publicly traded company on the OTC Markets as “OPMG”, with 433,794,654 shares of common stock outstanding and a market cap of approximately $4,771,741. TBC will be issued by OPMG/PhoneGuard EIGHTEEN MILLION (18,000,000) shares of common stock,  TWELVE MILLION (37,000,000) one-year warrants, that are exercisable at $0.01 per share for the above referenced warrants and TWENTY FIVE MILLION (25,000,000) one-year warrants exercisable at $0.02 per share (together the “Issued Shares” and the warrants together the “Warrants”). If the Endorsement Party and Consulting Party renew their agreements with OPMG/PhoneGuard the terms of the Warrants shall be extended  for the same terms as the renewal agreements not to exceed a total exercise period of three years (the initial year plus up to two more years).

 

TBC’s shares and Warrants (and the shares into which they are convertible) shall be protected from dilution as follows: TBC shall have (i) so-called “full ratchet” anti-dilution protection from subsequent issuances of Common Stock (or warrants or other instruments convertible into Common Stock) either for no consideration or for a lower cost per share than the exercise price of the Warrants (as set forth below), except for Exempt Issuances (as defined below), and Company further agrees to an adjustment to be negotiated in good faith with TBC to protect the value of TBC’s Warrants from the financial dilution inherent in any issuance of Common Stock (or warrants or other instruments convertible into Common Stock) at a price per share (or exercise price per share) of less than the fair market value of such security at the time of issuance (if higher than the Exercise Price of the Warrants), provided that no such adjustment shall be required in the case of public offering of any such security at a customary discount from fair market value per common practice in the securities industry among arms-length parties trying in good faith to maximize the value of the offering to the issuer (ii) the pre-emptive rights set forth below, (iii) customary adjustments for stock splits or share dividends as set forth below, and (iv) protection against Company’s distribution of cash or property prior to TBC’s exercise of the Warrants as set forth below. Exempt Issuances shall mean issuances amounting, in the aggregate, to less than ten percent (10%) of the currently outstanding shares of Common Stock as of the date hereof, in connection with strategic partnerships. OPMG/PhoneGuard covenants that the shares, when issued pursuant to the exercise of the Warrants, will be duly and validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issuance thereof. The number of and kind of securities purchasable upon exercise of the Warrants and the Exercise Price shall be subject to adjustment from time to time as follows: (a) if OPMG/PhoneGuard shall at any time prior to the expiration of the Warrants subdivide the shares or underlying Common Stock, by split-up or otherwise, or combine the shares or underlying Common Stock, or issue additional shares of its Common Stock as a dividend, the number of shares issuable on the exercise of the Warrants shall be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination. Appropriate adjustments shall also be made to the purchase price payable per share, but the aggregate purchase price payable for the total number of shares purchasable under the Warrants (as adjusted) shall remain the same. In case of any reclassification, capital reorganization, or change in the capital stock of the Company (other than as a result of a subdivision, combination, or stock dividend provided above), then the Company shall make appropriate provision so that the holder of the Warrants shall have the right at any time prior to the expiration of the Warrants to purchase, at a total price equal to that payable upon the exercise of the Warrants, the kind and amount of shares of stock and other securities and property receivable in connection with such reclassification, reorganization, or change by a holder of the same number of shares as were purchasable by the holder immediately prior to such reclassification, reorganization, or change. In any such case appropriate provisions shall be made with respect to the rights and interest of the holder so that the provisions hereof shall thereafter be applicable with respect to any shares of stock or other securities and property deliverable upon exercise hereof, and appropriate adjustments shall be made to the purchase price per share payable hereunder, provided the aggregate purchase price shall remain the same. Company and TBC agree that in the event of distributions of cash (including dividends, for the avoidance of doubt) or property (other than Common Stock) prior to TBC’s exercise of the Warrants, TBC shall be entitled to its share of such distributions on a real time basis, as and when they are made, to the same extent as if TBC had exercised all of its Warrants prior to any such distribution. Except for Exempt Issuances, if Company shall issue, on or after the date upon which the Warrants are issued to TBC, any additional Common Stock, warrants or other securities convertible into Common Stock, either without consideration or for a consideration per share less than the Exercise Price applicable to the Warrants in effect immediately prior to the issuance of such additional securities, the Exercise Price for the Warrants in effect immediately prior to each such issuance shall forthwith (except as otherwise provided in this clause) be adjusted to an Exercise Price equal to the price paid (or payable in the case of a warrant, etc.) per share for such additional security, and the number of shares of Common Stock for which the Warrants are exercisable shall be proportionately increased so that TBC shall still have the right to acquired the same aggregate percentage interest of the fully-diluted Common Stock as may be calculated from the numbers above . When any adjustment is required to be made pursuant to the foregoing provisions, the Company shall promptly notify the holder of such event and of the number of shares or other securities or property thereafter purchasable upon exercise of the Warrants. The Company agrees during the term the rights under the Warrants are exercisable to reserve and keep available from its authorized and unissued shares for the purpose of effecting the exercise of the Warrants such number of shares of Common Stock for issuance upon conversion of the Warrants as shall from time to time be sufficient to effect the exercise of the rights under the Warrants. Company agrees not take any action with the intent of undermining the effect of the anti-dilution provisions, and agrees to act in good faith and make appropriate adjustments to the conversion price (and number of shares into which the Warrants are convertible) for events which are not specifically dealt with herein. In the event OPMG/PhoneGuard desires to issue additional Common Stock (or warrants or other instruments convertible into Common Stock) at a price per share (or exercise price per share) greater than the fair market value of such security at the time of issuance and greater than the Exercise Price of the Warrants, OPMG/PhoneGuard shall give written notice of the intent to issue such additional securities to TBC. For a period of time after such notice by OPMG/PhoneGuard equivalent to the time remaining on the unexercised Warrants, if any, plus thirty (30) days, TBC shall have an irrevocable first option to purchase at the issuing price up to the number of shares (or rights to purchase shares) of the additional Common Stock or security. For the avoidance of doubt, the foregoing pre-emption right shall not be applicable in the case of stock issued by Company for the purpose of acquiring an unaffiliated company in a merger, except to the extent other holders of Common Stock are entitled to such pre-emption rights.

  

Page 2 of 9

  

 

CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER A CONFIDENTIAL TREATMENT REQUEST. THE REDACTED TERMS HAVE BEEN MARKED IN THIS EXHIBIT AT THE APPROPRIATE PLACE WITH FOUR ASTERISKS [****].

	
  

	
Additionally, effective as of March 1, 2011, OPMG/PhoneGuard will retain TBC as a consultant for one (1)  year as additional consideration for its services in securing Endorsement Party and Consulting Party and other good and valuable consideration. The consultancy fee payable to TBC shall be TWENTY THOUSAND AND NO/100 DOLLARS ($20,000) per month, which fee shall accrue until OPMG/PhoneGuard closes a financing of at least $5,000,000. Provided, however, if prior to the closing of the $5,000,000 OPMG/PhoneGuard closes a bridge financing of at least $500,000 or enters into a factoring agreement, OPMG/PhoneGuard shall pay TEN THOUSAND AND NO/100 DOLLARS ($10,000) per month and the remaining TEN THOUSAND AND NO/100 DOLLARS ($10,000) per month Consultant’s Fee due TBC will continue to accrue as provided above. The Consultant’s fees paid to TBC will be deducted from sales royalties payable to TBC with credits to OPMG/PhoneGuard. TBC’s duties will consist of marketing the Software Applications directly and through working with Justin Bieber and Remster 2, LLC. Any breach by TBC of the Consulting duties shall only impact payment of the monthly fees set forth above and not other royalty or other amounts otherwise payable to TBC hereunder.

 

TBC have the right to have one person serve on the Board of Directors of OPMG/PhoneGuard at all times during the Term of this Agreement.

Additionally, TBC shall receive the following payment amounts for of all sales of the Product by OPMG/PhoneGuard in the Territory, as follows:

 

	
·  

	
Payment by OPMG/PhoneGuard to TBC of a sales royalty amount equal to a percentage of the of the net profit as described below, which is defined as deducting from the gross sales sums received by OPMG/PhoneGuard for each Software Application sold by OPMG/PhoneGuard in the Territory [****]:

 

[****] are amortized under Generally Accepted Accounting Principles or when applicable, International Financial Reporting Standards, all sales royalties payable to Justin Bieber, Remster 2, LLC, DB Technologies, LLC and Last Gang Management, Inc. and for wholesale sales where OPMG/PhoneGuard does not sell directly to consumers, the commissions payable to sales representatives and companies. The percentage payable shall be [****] for direct annual sales to consumers and [****] on monthly sales where [****] payments have been made ([****]) and [****] on wholesale sales. The costs other than commissions and sales royalties referred to above shall be [****] per Software Application per person. In determining the gross sales sums received by OPMG/PhoneGuard, all taxes, tariffs, duties or fees deducted by purchasers or other third parties shall not be considered as having been received by OPMG/PhoneGuard. Furthermore, in calculating the sales royalties for the annual sales to consumers, an additional [****] shall be deducted by OPMG/PhoneGuard after multiplying the net sales price by [****] for the individual plan and [****] deducted for the family plan.

 

  

Page 3 of 9

  

 

CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER A CONFIDENTIAL TREATMENT REQUEST. THE REDACTED TERMS HAVE BEEN MARKED IN THIS EXHIBIT AT THE APPROPRIATE PLACE WITH FOUR ASTERISKS [****].

 

	
·  

	
All sales royalty payments to TBC will be paid directly by OPMG/PhoneGuard to TBC or its designee and shall be computed and paid not later than the [****] following receipt by OPMG/PhoneGuard.

	
·  

	
The sales royalty amounts only begin if Justin Bieber is acting as Spokesperson for the Product. All sales completed before the date Justin Bieber begins officially acting as Spokesperson for OPMG/PhoneGuard, e.g., pursuant to a term sheet or other contractual agreement, shall be paid in accordance with the above, but only to the extent it can be shown that the sales are attributable to TBC’s promotional efforts.

 

	

Additional

Shares Option:

	
For good and valuable additional consideration, the receipt and sufficiency of which is hereby acknowledged by OPMG/PhoneGuard, TBC is granted the following options to purchase additional shares of OPMG/PhoneGuard common stock:

	
·  

	
TBC shall have an option, exercisable within ten (10) business days of the date it receives any sales report from OPMG/PhoneGuard beginning during the initial twenty-four (24) month period following execution of this Agreement, to cause OPMG/PhoneGuard to issue TBC up to fifty percent (50%) of the sales royalties due TBC in shares of OPMG/PhoneGuard common stock in lieu of payment of the royalty, at the option price of $0.01 per share for up to FIFTY MILLION (25,000,000) shares of common stock, payable during an individual sales reporting period or multiple sales reporting periods until the option has been fully exercised.

  

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CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER A CONFIDENTIAL TREATMENT REQUEST. THE REDACTED TERMS HAVE BEEN MARKED IN THIS EXHIBIT AT THE APPROPRIATE PLACE WITH FOUR ASTERISKS [****].

 

	

Payment

Adjustments:

	
In the event of any refunds or adjustments made by OPMG/PhoneGuard to customers, sales agents and carriers, OPMG/PhoneGuard will be entitled to a credit upon sustaining the refund or adjustment on a cash basis.

 

	
·  

	
If OPMG/PhoneGuard or its designee makes any overpayment to TBC, TBC will reimburse OPMG/PhoneGuard for such over-payment [****]of receipt of written notice of same. OPMG/PhoneGuard also may deduct the amount of the over-payment from any payments due or becoming due to TBC. If OPMG/PhoneGuard pays TBC any amounts for sales of the Product which sales proceeds are returned later, those Payments will be considered overpayments. OPMG/PhoneGuard may at any time elect to utilize a different method of computing royalties so long as such method does not decrease the net monies received by or credited to TBC hereunder. In the event of any actual refunds or adjustments made by OPMG/PhoneGuard to customers, sales agents and carriers, OPMG/PhoneGuard will be entitled to a credit from TBC for any previously paid sales royalties attributable thereto upon sustaining the refund or adjustment on a cash basis. After the expiration of the Term, no statements shall be required for periods during which no additional payments accrue unless TBC gives OPMG/PhoneGuard, or its designee, a written request therefore before the expiration of the [****] accounting period to which the desired statement relates. If any deductions for any taxes, tariffs, duties or fees are required, or if any Licensee deducts any such taxes, tariffs, etc. from its payments to OPMG/PhoneGuard, OPMG/PhoneGuard may deduct a proportionate amount of those taxes from TBC’s royalties, on the same basis and in the proportionate ([****]) amount as OPMG/PhoneGuard’s royalties are reduced. OPMG/PhoneGuard will provide notice to TBC of any such deductions with the next [****] accounting and payment, along with supporting documentation regarding same.

 

  

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Audit:

	
OPMG/PhoneGuard will maintain books and records which report the sales or other exploitations of the Product hereunder on which payments hereunder are payable to TBC.  TBC may, at its sole expense, designate a certified public accountant ("CPA") or other qualified representative to examine those books and records, as provided in this paragraph only.  Such examination: (a) may be made only for the purpose of verifying the accuracy of the statements sent by OPMG/PhoneGuard; (b) may be made for a particular statement only once and only within three (3) years after the date when OPMG/PhoneGuard sent that statement; and (c) may be made only during OPMG/PhoneGuard's usual business hours, and at the place where it keeps the books and records to be examined, and upon reasonable notice to OPMG/PhoneGuard.  (OPMG/PhoneGuard will be deemed conclusively to have sent each statement on the dates prescribed above unless TBC notifies OPMG/PhoneGuard otherwise, with respect to any statement, within ninety (90) days after that date.)  No examination may be made of any records that do not specifically report sales, returns or other distributions of the Product or other transactions on which payments are due TBC (or calculation of Fixed Costs or Retained Share). Notwithstanding the foregoing, TBC will be permitted to examine records that reflect the number of subscriptions sold, any movement of OPMG/PhoneGuard's inventory of such Software Applications, and any credits or rebates that are given in respect of such Software Applications, for each accounting period that is the subject of the audit.  Further, such examination shall be conditioned upon the CPA's written agreement to OPMG/PhoneGuard that the CPA will not voluntarily disclose any findings to any Person or entity other than TBC, its attorney or other advisers.

	
  

	
If TBC has any objections to a royalty statement, they will give OPMG/PhoneGuard specific notice of that objection and the reasons for it within three (3) year after the date that OPMG/PhoneGuard is deemed to have sent that statement.  Each royalty statement will become conclusively binding at the end of that three (3) period, and TBC will no longer have any right to make any other objections to it.  TBC will not have the right to sue OPMG/PhoneGuard in connection with any royalty accounting, or to sue OPMG/PhoneGuard for royalties from Product sales or subscriptions sold or receipts derived by OPMG/PhoneGuard during the period a royalty accounting covers, unless TBC commences the suit within six (6) months after the end of that three (3)  ­year period.  If TBC commences suit on any controversy or

 

  

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claim concerning royalty accountings rendered to TBC under this Term Sheet Agreement and any subsequent Agreement, the scope of the proceeding will be limited to determination of the amount of the payments due for the accounting periods concerned, and the court will have no authority to consider any other issues or award any relief except recovery of any payments found owing. Recovery of any such royalties will be the sole remedy available to TBC by reason of any claim related to OPMG/PhoneGuard's royalty accountings. Without limiting the generality of the preceding sentence, TBC will not have any right to seek termination of this Agreement or subsequent Agreement or avoid the performance of its obligations under it by reason of any such claim. The preceding three sentences will not apply to any item in a royalty accounting if TBC establishes that the item was fraudulently misstated.

 

	
Interest:

	
Interest will not be payable on any amounts paid to TBC, except for those amounts that are due without dispute and are paid late, with thirty (30) days grace period.

	
Confidentiality:

	
The Parties will enter into a separate Confidentiality Agreement. Until such time, all matters, materials, terms and discussions relating to this Agreement shall be kept strictly confidential as though such a reasonable and customary in the software development and marketing industry confidentiality agreement were in place, the disclosure of which may result in legal action by OPMG/PhoneGuard or TBC to recover all available legal and equitable relief. This Agreement shall be governed in its entireties by and construed in accordance with the laws of the State of Florida without regard to the principles of conflicts of law.  Venue for any legal action relating to or arising from this Agreement shall lie exclusively in the State and federal Courts of Volusia County, Florida. In the event that a legal action is brought to enforce, interpret or in any manner relating to or arising from this Agreement, the prevailing party shall be entitled to recover its costs of courts, including all attorneys' fees at all trial and appellate levels, which sum shall include costs associated with reasonable attorneys' travel, reasonable investigative and expert witness costs and reasonable paralegal fees.

 

  

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Legal Expenses:

	
Each party will bear their own fees and costs relating to this Term Sheet Agreement and any subsequent agreements that may arise herefrom.

	
Documentation:

	
All subsequent documentation, to the extent required, will be jointly prepared by counsel for the OPMG/PhoneGuard or its designee and TBC or its designee and will be in the form and on terms acceptable to TBC. Until such time, this Agreement constitutes the entire agreement between the parties hereto with respect to the matters set forth herein, and supersedes in its entirety any and all agreements or communications, whether written or oral, previously or contemporaneously made in connection with the matters herein.  Any agreement to amend or modify the terms and conditions of this Agreement must be in writing and executed by the parties hereto. This Agreement may be executed and delivered in two or more counterparts each of which shall be deemed an original and all of which together shall constitute one instrument.  A facsimile or photocopy of a signature on this Agreement shall constitute an original for all purposes.

 

	

Subsequent

Employment:

	
OPMG/PhoneGuard will use all best efforts to cause Cellular Spyware, Inc. to engage TBC for agency, consulting, marketing and promotional services for the DriveSafeTM and PhoneGuard® mobile software applications in the World markets, which for the purposes of this Agreement shall be defined as the entirety of the planet Earth, exclusive of North America, Central America and South America. 

	
Survival of Terms:

	
If a court of competent jurisdiction invalidates any provision of this Agreement, then all of the remaining provisions of this Agreement shall remain in full force and effect, provided that both parties hereto may still effectively realize the complete benefit of the promises and considerations conferred hereby. The parties agrees that the terms applicable to the warrants and shares (including term, exercise price, anti-dilution protection, etc.) and the calculation of the revenue percentages set forth herein shall be provided on a most favored nations basis with the terms applicable to Justin Bieber or Remster 2, LLC or Last Gang in their respective agreements with OPMG/PhoneGuard.

 

  

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Capacity:

	
The parties acknowledge and agree that this Agreement has been entered into without duress and that each party has the authority to fully bind the person or entity they enter this agreement on behalf of and any argument of lack of capacity is specifically waived. The parties acknowledge and agree that each party and its counsel, and counsel being retained as is deemed appropriate in the sole discretion of each party doing so, if at all, have reviewed and revised this Agreement and that 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.

	
Agreed this 2nd day of May, 2011.

	
For The Big Company, LLC:

	
_____________________________________________

	
By: Keith St. Clair, Manager.

	
Agreed this 2nd day of May, 2011.

	
For Options Media Group Holdings, Inc., t/b/k/a PhoneGuard, Inc.:

 

	
_____________________________________________

	
By: Scott Frohman, CEO

 

 

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