Document:

heviex105.htm

Exhibit 10.5

EXHIBIT E

SUBSIDIARY GUARANTEE

SUBSIDIARY GUARANTEE, dated as of August 29, 2012 (this “Guarantee”), made by each of the signatories hereto (together with any other entity that may become a party hereto as provided herein, the “Guarantors”), in favor of the purchasers signatory (together with their permitted assigns, the “Purchasers”) to that certain Securities Purchase Agreement, dated as of the date hereof, between Heavy Earth Resources, Inc., a Florida corporation (the “Company”) and the Purchasers.

 

W I T N E S S E T H:

WHEREAS, pursuant to that certain Securities Purchase Agreement, dated as of the date hereof, by and between the Company and the Purchasers (the “Purchase Agreement”), the Company has agreed to sell and issue to the Purchasers, and the Purchasers have agreed to purchase from the Company the Debentures, subject to the terms and conditions set forth therein; and

WHEREAS, each Guarantor will directly benefit from the extension of credit to the Company represented by the issuance of the Debentures; and

NOW, THEREFORE, in consideration of the premises and to induce the Purchasers to enter into the Purchase Agreement and to carry out the transactions contemplated thereby, each Guarantor hereby agrees with the Purchasers as follows:

 

1. Definitions. Unless otherwise defined herein, terms defined in the Purchase Agreement and used herein shall have the meanings given to them in the Purchase Agreement. The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import when used in this Guarantee shall refer to this Guarantee as a whole and not to any particular provision of this Guarantee, and Section and Schedule references are to this Guarantee unless otherwise specified. The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.  The following terms shall have the following meanings:

“Guarantee” means this Subsidiary Guarantee, as the same may be amended, supplemented or otherwise modified from time to time.

“Obligations” means, in addition to all other costs and expenses of collection incurred by Purchasers in enforcing any of such Obligations and/or this Guarantee, all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing to, of the Company or any Guarantor to the Purchasers, including, without limitation, all obligations under this Guarantee, the Debentures and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from any of the Purchasers as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time.  Without limiting the generality of the foregoing, the term “Obligations” shall include, without limitation: (i) principal of, and interest on the Debentures and the loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities of the Company or any Guarantor from time to time under or in connection with this Guarantee, the Debentures and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith; and (iii) all amounts (including but not limited to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations to pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Company or any Guarantor.

 

                2. Guarantee.

(a) Guarantee.

 

(i) The Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantee to the Purchasers and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations.

 

 

(ii) Anything herein or in any other Transaction Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Transaction Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws, including laws relating to the insolvency of debtors, fraudulent conveyance or transfer or laws affecting the rights of creditors generally (after giving effect to the right of contribution established in Section 2(b)).

  

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(iii) Each Guarantor agrees that the Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Purchasers hereunder.

(iv) The guarantee contained in this Section 2 shall remain in full force and effect until all the Obligations and the obligations of each Guarantor under the guarantee contained in this Section 2 shall have been satisfied by indefeasible payment in full.

 

(v) No payment made by the Company, any of the Guarantors, any other guarantor or any other Person or received or collected by the Purchasers from the Company, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Obligations or any payment received or collected from such Guarantor in respect of the Obligations), remain liable for the Obligations up to the maximum liability of such Guarantor hereunder until the Obligations are indefeasibly paid in full.

(vi) Notwithstanding anything to the contrary in this Guarantee, with respect to any defaulted non-monetary Obligations the specific performance of which by the Guarantors is not reasonably possible (e.g. the issuance of the Company's Common Stock), the Guarantors shall only be liable for making the Purchasers whole on a monetary basis for the Company's failure to perform such Obligations in accordance with the Transaction Documents.

(b) Right of Contribution. Subject to Section 2(c), each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has not paid its proportionate share of such payment. Each Guarantor's right of contribution shall be subject to the terms and conditions of Section 2(c). The provisions of this Section 2(b) shall in no respect limit the obligations and liabilities of any Guarantor to the Purchasers and each Guarantor shall remain liable to the Purchasers for the full amount guaranteed by such Guarantor hereunder.

 

(c) No Subrogation.  Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by the Purchasers, no Guarantor shall be entitled to be subrogated to any of the rights of the Purchasers against the Company or any other Guarantor or any collateral security or guarantee or right of offset held by the Purchasers for the payment of the Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Company or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Purchasers by the Company on account of the Obligations are indefeasibly paid in full. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Purchasers, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Purchasers in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Purchasers, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Purchasers may determine.

 

(d) Amendments, Etc. With Respect to the Obligations. Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Obligations made by the Purchasers may be rescinded by the Purchasers and any of the Obligations continued, and the Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Purchasers, and the Purchase Agreement and the other Transaction Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Purchasers may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Purchasers for the payment of the Obligations may be sold, exchanged, waived, surrendered or released. The Purchasers shall have no obligation to protect, secure, perfect or insure any Lien at any time held by them as security for the Obligations or for the guarantee contained in this Section 2 or any property subject thereto.

 

 

  

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(e) Guarantee Absolute and Unconditional. Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Purchasers upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the Company and any of the Guarantors, on the one hand, and the Purchasers, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor waives to the extent permitted by law diligence,presentment, protest, demand for payment and notice of default or nonpayment to or upon the Company or any of the Guarantors with respect to the Obligations. Each Guarantor understands and agrees that the guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment and performance without regard to (a) the validity or enforceability of the Purchase Agreement or any other Transaction Document, any of the Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Purchasers, (b) any defense, set-off or counterclaim (other than a defense of payment or performance or fraud by Purchasers) which may at any time be available to or be asserted by the Company or any other Person against the Purchasers, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Company or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Company for the Obligations, or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Purchasers may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as they may have against the Company, any other Guarantor or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by the Purchasers to make any such demand, to pursue such other rights or remedies or to collect any payments from the Company, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Company, any other Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Purchasers against any Guarantor. For the purposes hereof, “demand” shall include the commencement and continuance of any legal proceedings.

 

(f) Reinstatement. The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Purchasers upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Company or any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made.

(g) Payments. Each Guarantor hereby guarantees that payments hereunder will be paid to the Purchasers without set-off or counterclaim in U.S. dollars at the address set forth or referred to in the Signature Pages to the Purchase Agreement.

3. Representations and Warranties. Each Guarantor hereby makes the following representations and warranties to Purchasers as of the date hereof:

 

(a) Organization and Qualification. The Guarantor is a corporation, duly incorporated, validly existing and in good standing under the laws of the applicable jurisdiction set forth on Schedule 1, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Guarantor has no subsidiaries other than those identified as such on the Disclosure Schedules to the Purchase Agreement. The Guarantor is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate, (x) adversely affect the legality, validity or enforceability of any of this Guaranty in any material respect, (y) have a material adverse effect on the results of operations, assets, prospects, or financial condition of the Guarantor or (z) adversely impair in any material respect the Guarantor's ability to perform fully on a timely basis its obligations under this Guaranty (a “Material Adverse Effect”).

 

(b) Authorization; Enforcement.  The Guarantor has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Guaranty, and otherwise to carry out its obligations hereunder. The execution and delivery of this Guaranty by the Guarantor and the consummation by it of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of the Guarantor. This Guaranty has been duly executed and delivered by the Guarantor and constitutes the valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application.

(c) No Conflicts. The execution, delivery and performance of this Guaranty by the Guarantor and the consummation by the Guarantor of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of its Certificate of Incorporation or By-laws or (ii) conflict with, constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Guarantor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Guarantor is subject (including Federal and State securities laws and regulations), or by which any material property or asset of the Guarantor is bound or affected, except in the case of each of clauses (ii) and (iii), such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as could not, individually or in the aggregate, have or result in a Material Adverse Effect. The business of the Guarantor is not being conducted in violation of any law, ordinance or regulation of any governmental authority, except for violations which, individually or in the aggregate, do not have a Material Adverse Effect.

 

 

  

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(d) Consents and Approvals. The Guarantor is not required to obtain any consent, waiver, authorization or order of, or make any filing or registration with, any court or other federal, state, local, foreign or other governmental authority or other person in connection with the execution, delivery and performance by the Guarantor of this Guaranty.

(e) Purchase Agreement. The representations and warranties of the Company set forth in the Purchase Agreement as they relate to such Guarantor, each of which is hereby incorporated herein by reference, are true and correct as of each time such representations are deemed to be made pursuant to such Purchase Agreement, and the Purchasers shall be entitled to rely on each of them as if they were fully set forth herein, provided that each reference in each such representation and warranty to the Company's knowledge shall, for the purposes of this Section 3, be deemed to be a reference to such Guarantor's knowledge.

(f) Foreign Law.  Each Guarantor has consulted with appropriate foreign legal counsel with respect to any of the above representations for which non-U.S. law is applicable. Such foreign counsel have advised each applicable Guarantor that such counsel knows of no reason why any of the above representations would not be true and accurate. Such foreign counsel were provided with copies of this Subsidiary Guarantee and the Transaction Documents prior to rendering their advice.

4. Covenants.

(a) Each Guarantor covenants and agrees with the Purchasers that, from and after the date of this Guarantee until the Obligations shall have been indefeasibly paid in full, such Guarantor shall take, and/or shall refrain from taking, as the case may be, each commercially reasonable action that is necessary to be taken or not taken, as the case may be, so that no Event of Default (as defined in the Debentures) is caused by the failure to take such action or to refrain from taking such action by such Guarantor.

 

(b) So long as any of the Obligations are outstanding, unless Purchasers holding at least 67% of the aggregate principal amount of the then outstanding Debentures shall otherwise consent in writing, each Guarantor will not directly or indirectly on or after the date of this Guarantee:

i. other than Permitted Indebtedness (as defined in the Debentures) enter into, create, incur, assume or suffer to exist any indebtedness for borrowed money of any kind, including but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

ii. other than Permitted Liens (as defined in the Debentures) enter into, create, incur, assume or suffer to exist any liens of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

iii. amend its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of any Purchaser;

iv. repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its securities or debt obligations;

v. pay cash dividends on any equity securities of the Company;

vi. enter into any transaction with any Affiliate of the Guarantor which would be required to be disclosed in any public filing of the Company with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required for board approval); or

vii. enter into any agreement with respect to any of the foregoing.

  

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5. Miscellaneous.

(a) Amendments in Writing. None of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except in writing by the Purchasers.

 

(b) Notices. All notices, requests and demands to or upon the Purchasers or any Guarantor hereunder shall be effected in the manner provided for in the Purchase Agreement, provided that any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at its notice address set forth on Schedule 5(b).

(c) No Waiver By Course Of Conduct; Cumulative Remedies. The Purchasers shall not by any act (except by a written instrument pursuant to Section 5(a)), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default under the Transaction Documents or Event of Default. No failure to exercise, nor any delay in exercising, on the part of the Purchasers, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Purchasers of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Purchasers would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

(d) Enforcement Expenses; Indemnification.

(i) Each Guarantor agrees to pay, or reimburse the Purchasers for, all its costs and expenses incurred in collecting against such Guarantor under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under this Guarantee and the other Transaction Documents to which such Guarantor is a party, including, without limitation, the reasonable fees and disbursements of counsel to the Purchasers.

 

(ii) Each Guarantor agrees to pay, and to save the Purchasers harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable in connection with any of the transactions contemplated by this Guarantee.

(iii) Each Guarantor agrees to pay, and to save the Purchasers harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Guarantee to the extent the Company would be required to do so pursuant to the Purchase Agreement.

(iv) The agreements in this Section shall survive repayment of the Obligations and all other amounts payable under the Purchase Agreement and the other Transaction Documents.

(e) Successor and Assigns. This Guarantee shall be binding upon the successors and assigns of each Guarantor and shall inure to the benefit of the Purchasers and their respective successors and assigns; provided that no Guarantor may assign, transfer or delegate any of its rights or obligations under this Guarantee without the prior written consent of the Purchasers.

 

(f) Set-Off. Each Guarantor hereby irrevocably authorizes the Purchasers at any time and from time to time while an Event of Default under any of the Transaction Documents shall have occurred and be continuing, without notice to such Guarantor or any other Guarantor, any such notice being expressly waived by each Guarantor, to set-off and appropriate and apply any and all deposits, credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Purchasers to or for the credit or the account of such Guarantor, or any part thereof in such amounts as the Purchasers may elect, against and on account of the obligations and liabilities of such Guarantor to the Purchasers hereunder and claims of every nature and description of the Purchasers against such Guarantor, in any currency, whether arising hereunder, under the Purchase Agreement, any other Transaction Document or otherwise, as the Purchasers may elect, whether or not the Purchasers have made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured. The Purchasers shall notify such Guarantor promptly of any such set-off and the application made by the Purchasers of the proceeds thereof, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Purchasers under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Purchasers may have.

 

 

  

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(g) Counterparts. This Guarantee may be executed by one or more of the parties to this Guarantee on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

(h) Severability. Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

(i) Section Headings. The Section headings used in this Guarantee are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

(j) Integration. This Guarantee and the other Transaction Documents represent the agreement of the Guarantors and the Purchasers with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Purchasers relative to subject matter hereof and thereof not expressly set forth or referred to herein or in the other Transaction Documents.

(k) Governing Laws. All questions concerning the construction, validity, enforcement and interpretation of this Guarantee shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.  Each of the Company and the Guarantors agree that all proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Guarantee (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan. Each of the Company and the Guarantors hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Guarantee and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Guarantee or the transactions contemplated hereby.

(l) Acknowledgements.  Each Guarantor hereby acknowledges that:

(i) it has been advised by counsel in the negotiation, execution and delivery of this Guarantee and the other Transaction Documents to which it is a party;

 

(ii) the Purchasers have no fiduciary relationship with or duty to any Guarantor arising out of or in connection with this Guarantee or any of the other Transaction Documents, and the relationship between the Guarantors, on the one hand, and the Purchasers, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

(iii) no joint venture is created hereby or by the other Transaction Documents or otherwise exists by virtue of the transactions contemplated hereby among the Guarantors and the Purchasers.

(m) Additional Guarantors.  The Company shall cause each of its subsidiaries formed or acquired on or subsequent to the date hereof to become a Guarantor for all purposes of this Guarantee by executing and delivering an Assumption Agreement in the form of Annex 1 hereto.

 

(n) Release of Guarantors. Each Guarantor will be released from all liability hereunder concurrently with the indefeasible repayment in full of all amounts owed under the Purchase Agreement, the Debentures and the other Transaction Documents.

(o) Seniority. The Obligations of each of the Guarantors hereunder rank senior in priority to any other Indebtedness (as defined in the Purchase Agreement) of such Guarantor.

(p) WAIVER OF JURY TRIAL. EACH GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, THE PURCHASERS, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN.

*********************

 

(Signature Pages Follow)

  

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IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee to be duly executed and delivered as of the date first above written.

                         Deep Core Inc.

                         By:_________________________________

                                   Name: Grant Draper

                                   Title:   Chief Executive Officer

 

     DCX, S.A.S.

                         By:_________________________________

                                   Name: Anthony Ives

                                   Title:   Chief Financial Officer

                         Deep Core (Barbados) Inc.

                         By:_________________________________

                                   Name: Grant Draper

                                   Title:   Director

  

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SCHEDULE 1

GUARANTORS

                  The following are the names, notice addresses and jurisdiction of organization of each Guarantor.

                                                                                                       COMPANY

                                                       JURISDICTION OF                                       OWNED BY

                                                       INCORPORATION                                          PERCENTAGE

                                                       -------------                                              ----------

Deep Core Inc.                             Cayman Islands                                                  100.00%

DCX, S.A.S.                                  Colombia                                                99.68%

 

Deep Core (Barbados) Inc.         Barbados                                                             100.00%

  

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Annex 1 to

SUBSIDIARY GUARANTEE

ASSUMPTION AGREEMENT, dated as of ____ __, ______ made by ______________________________, a ______________ corporation (the “Additional Guarantor”), in favor of the Purchasers pursuant to the Purchase Agreement referred to below. All capitalized terms not defined herein shall have the meaning ascribed to them in such Purchase Agreement.

 

W I T N E S S E T H :

           WHEREAS, Heavy Earth Resources, Inc., a Florida corporation (the “Company”) and the Purchasers have entered into a Securities Purchase Agreement, dated as of August ___, 2012 (as amended, supplemented or otherwise modified from time to time, the “Purchase Agreement”);

           WHEREAS, in connection with the Purchase Agreement, the Subsidiaries of the Company (other than the Additional Guarantor) have entered into the Subsidiary Guarantee, dated as of August __, 2012 (as amended, supplemented or otherwise modified from time to time, the “Guarantee”) in favor of the Purchasers;

           WHEREAS, the Purchase Agreement requires the Additional Guarantor to become a party to the Guarantee; and

           WHEREAS, the Additional Guarantor has agreed to execute and

deliver this Assumption Agreement in order to become a party to the Guarantee;

 

NOW, THEREFORE, IT IS AGREED:

1. Guarantee. By executing and delivering this Assumption Agreement, the Additional Guarantor, as provided in Section 5(m) of the Guarantee, hereby becomes a party to the Guarantee as a Guarantor thereunder with the same force and effect as if originally named therein as a Guarantor and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Guarantor thereunder. The information set forth in Annex 1 hereto is hereby added to the information set forth in Schedule 1 to the Guarantee. The Additional Guarantor hereby represents and warrants that each of the representations and warranties contained in Section 3 of the Guarantee is true and correct on and as the date hereof as to such Additional Guarantor (after giving effect to this Assumption Agreement) as if made on and as of such date.

 

2. Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

  

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                  IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed and delivered as of the date first above written.

                                           [ADDITIONAL GUARANTOR]

                                            By: _______________________                                                                                                

                                            Name:

                                            Title:

 

 

10savw_ex101.htm

EXHIBIT 10.1

 

 

RETENTION OF SERVICES AGREEMENT

This RETENTION OF SERVICES AGREEMENT (this “Agreement”) and is made as of August 29, 2012 (the “Effective Date”) by and between ROBERT P. MAHONEY, an individual with an address of 4 Daniels Farm Road #305, Trumbull, CT 06611, (the “Manager”), and  SAVWATT USA, INC., a Delaware Corporation with an address of 475 Park Ave. South, 30th Floor, New York, N.Y. 10016, (the “Company”) (collectively, the Manager and the Company may be referred to as the “parties” or individually as a “party”).

Background

	
1.  

	
The Company is a publicly-traded corporation engaged in the business of marketing and sale of a line of solid-state lighting products and lighting technologies that are based on a light-emitting semiconductor material. The most common solid-state lighting technologies are those that use light emitting diodes (also known as LED lighting).  The Company is also engaged in renewable energy projects and related services including but not limited to photovoltaic solar energy (collectively, the “Business”).

	
2.  

	
In order to grow, the Company has developed a strategy to acquire other companies as going concerns that are engaged in activities, products and services closely associated with the Business.

	
3.  

	
The Manager has experience and expertise necessary to the success of the Company with its chosen growth strategy and in the Business.  The Company desires to engage the Manager, and the Manager desires to accept such engagement, on the terms and conditions set forth herein.

 

NOW, THEREFORE,

In consideration of the agreements made herein and intending to be legally bound hereby, it is agreed by and between the parties hereto as follows:

Section 1. Appointment of Manager as the Company’s Chief Financial Officer.

 

	
(a)  

	
The Company appoints, as of the date hereof, the Manager to act as its Chief Financial Officer pursuant to the terms of this Agreement and the Manager agrees to perform such duties and responsibilities as are normally related to such position and to act in a manner consistent with the Company’s policies. The Manager accepts any obligations imposed on him as the Company’s Chief Financial Officer including but not limited to the certification of the Company’s financial statements, Form 10-Q reports, and Form 10-K reports, among others, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	
(b)  

	
The Manager agrees to use his best efforts to provide the services set forth in Section 2.

	
(c)  

	
The Manager shall not allow any other person to perform any of the services required under this Agreement for or instead of the Manager. The Manager shall comply with the statutes, rules, regulations and orders of any governmental or quasi-governmental authority which are applicable to the performance of the Manager’s services hereunder and as they apply to the responsibilities of the Chief Financial Officer of a publicly-traded company, and the Company’s rules, regulations, policies, and practices as they may from time-to-time be adopted or modified.

 

  

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Section 2. The Responsibilities and Services of the Manager.

 

	
(a)  

	
The Manager shall recommend to the Company certain personnel to engage for the purpose of assisting the Manager in performing the day-to-day accounting, financial reporting including those required by the rules of the Securities and Exchange Commission, legal disclosures, the preparation of analyses, and other administrative functions so as to ensure that internal controls and procedures are in place and maintained to provide timely financial data that is produced accurately and in accordance with generally accepted accounting principles.

	
(b)  

	
The Manager shall assist the CEO by identifying acquisition candidates consistent with the Company’s strategic plan and within its financial resources, and in so doing, the Manager shall negotiate and structure transactions for consideration and approval of the Company’s CEO and its Board.

	
(c)  

	
Subject to the terms of this Agreement, the Manager, on behalf of the Company, shall perform and render management, investment, administrative, consulting and other services to the Company as may be required by the Company to properly conduct its business, including, without limitation, the following:

	
(i)  

	
Managing the financial operations of the Company, its accounting, and the preparation of its financial statements;

	
(ii)  

	
providing general business advice, including recommendations as to, and identification of, potential investments and acquisitions;

	
(iii)  

	
conducting due diligence in connection with potential investments and acquisitions;

	
(iv)  

	
structuring and negotiating transactions;

	
(v)  

	
assist the Company’s CEO in identifying, structuring, negotiating, obtaining bank, institutional and other sources of financing necessary or appropriate in connection with any proposed acquisition or investment;

	
(vi)  

	
supervising the preparation and review of all documents required to complete any transaction involving investments, including, where appropriate, any acquisition agreements, financing documents, and other documents in connection with such transaction;

	
(vii)  

	
monitoring the performance of the Company’s assets and subsisiaries;

	
(viii)  

	
communicating with the Company’s CEO, subsidiary(ies) management, and the Company’s Board;

	
(ix)  

	
maintaining the books and records of the Company, and managing other administrative matters of the company;

	
(x)  

	
managing the Company’s receivables and payables including assisting the CEO in determining the amounts available for payments, and disbursing such payments with respect to operating expenses, administrative costs, legal fees, and other expenses of the Company; and

 

  

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(xi)  

	
providing such other assistance to the Company’s CEO, its Board of Directors, the Company’s counsel and auditors as generally may be required of the Chief Financial Officer of the Company.

	
(d)  

	
The Manager shall perform his obligations under this Agreement in good faith and in a diligent and timely manner. In addition to his services, the Manager shall, to the extent that he determines that it is necessary or advisable to perform the services for the Company which are required hereunder, seek the CEO’s approval and then arrange for and coordinate the services of other professionals, experts and consultants (collectively, “Third Parties”), and the Manager shall cause the Company to compensate such Third Parties for such services.

	
(e)  

	
The Manager may enter into contracts and transactions on behalf of the Company, provided that the terms of any such contract or transaction are prior approved by the Company’s CEO.

	
(f)  

	
Notwithstanding the services provided by the Manager as the Company’s Chief Financial Officer, the Manager shall be deemed to be an independent contractor and not an employee of the Company, nor an officer or legal representative of the Company and, unless otherwise expressly authorized by the Company’s CEO, the Manager shall not be authorized to act in the name of, or bind the Company.

	
(g)  

	
The management, policies and operations of the Company (including the ultimate approval of the making or disposition of any investment or acquisition by the Company, as well as the terms thereof) shall be the responsibility of the Company’s CEO, acting pursuant to and in accordance with the direction of the Company’s Board of Directors, as required.

	
(h)  

	
The Manager shall have unfettered access to books and records of the Company, as necessary to enable him to fulfill his obligations hereunder as the Company’s Chief Financial Officer.

Section 3. Indemnification.

 

	
(a)  

	
The Company shall, to the maximum extent permitted by applicable law, indemnify, defend and hold harmless the Manager, and the Company shall release the Manager, to the fullest extent permitted by law, from and against any and all damages, including, without limitation, damages incurred which arise out of, relate to or are in connection with this Agreement or the management or conduct of the business or affairs of the Company or any Company subsidiary in which the Company has a direct or indirect interest as such management or conduct of business or affairs relates directly or indirectly to the Company (including, without limitation, actions taken or not taken directly or indirectly on behalf of the Company by the Manager, provided that the act or failure to act giving rise to such damages was taken in good faith by the Manager and except for any such damages that are found by a court of competent jurisdiction to have resulted primarily from any act or omission which constituted gross negligence, intentional misconduct, an intentional breach of this Agreement or a knowing violation of law by the Manager. In the event of any claim as to which the Manager is entitled to indemnification under this Section, the Company may, at the discretion of the Company’s CEO, elect to engage counsel on behalf of the Manager to defend such claim.

 

	
(b)  

	
The termination of any proceeding by settlement shall not be deemed to create a presumption that the Manager did not act in good faith or acted in a manner which constituted gross negligence, intentional misconduct, an intentional or material breach of this Agreement, a knowing violation of law or a material breach of any securities laws. The indemnification provisions of this Section may be asserted and enforced by, and shall be for the benefit of, the Manager, and the Manager is hereby specifically empowered to assert and enforce such right; provided that if the Manager enters into a settlement of any proceeding without the prior approval of the Company’s CEO (which approval shall not be unreasonably delayed or withheld), then the Manager shall not be entitled to the indemnification provided in this Section. The right of the Manager to the indemnification provided in this Section shall be cumulative of, and in addition to, any and all rights to which the Manager may otherwise be entitled by contract or as a matter of law or equity and shall extend to his heirs, successors, assigns and legal representatives.

 

  

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Section 4. Part-Time; Non-exclusivity; Other Activities.

 

	
(a)  

	
It is understood and agreed that the Manager will serve the Company to the best of his ability in a diligent and professional manner; provided, however, that Manager shall not be required to render such services on a full-time basis. The Manager will devote such attention and energies to the performance of the services as Manager as are necessary to discharge his responsibilities to the Company.  This Agreement and the duties of the Manager hereunder shall not preclude the Manager from providing services to any other entity, be employed by another company, serve on another company’s Board of Managers, Board of Directors or Advisory Board, engage in any other business activity (whether or not pursued for pecuniary advantage), or engage in passive investment and in community, charitable, and social activities. During the term of this Agreement, the Manager shall be permitted to engage in other business activities or endeavors, or serve as a manager, officer, advisor, director or trustee of another corporation or entity unrelated to the business of the Company; provided that such other activities are not to be performed for entities which in the reasonable judgment of the Manager are in direct competition with the Company, and the time devoted by the Manager to such other activities does not conflict with or materially interfere with the Manager’s performance of his duties to the Company hereunder. The ownership of an equity interest in an entity, by itself, shall not constitute a violation of this duty. The Company shall not have any rights or obligations by virtue of this Agreement in and to such independent ventures and activities of the Manager or the income or profits that are derived therefrom. Specifically, the Manager shall not engage in any activity that is in direct competition with the Company or serve in any capacity (including, but not limited to, as an employee, consultant, advisor or director) in any the Company or entity that competes directly with the Company, as reasonably determined by the Company’s CEO.

 

	
(b)  

	
The Manager represents that, to the best of his knowledge, he has no outstanding agreement or obligation that is in conflict with any of the provisions of this Agreement, and the Manager agrees to use his best efforts to avoid or minimize any such conflict and agrees not to enter into any agreement or obligation that could create such a conflict, without the approval of the Company’s CEO. If, at any time, the Manager is required to make any disclosure or take any action that may conflict with any of the provisions of this Agreement, the Manager will promptly notify the Company’s CEO of such obligation, prior to making such disclosure or taking such action.

 

	
(c)  

	
The Manager will not engage in any activity that creates an actual conflict of interest with the Company, regardless of whether such activity is prohibited by the Company’s conflict of interest guidelines, policies, or this Agreement, and the Manager agrees to notify the Company’s CEO before engaging in any activity that creates a potential conflict of interest with the Company.

 

Section 5. Term and Termination.

 

	
(a)  

	
This Agreement shall remain in effect for a period of one (1) year from the Effective Date, and it shall be automatically renewed thereafter for one or more additional one-year terms until terminated either (i) by the Manager or the Company by giving written notice to the other party at least thirty (30) days’ prior to the end of its term or prior to any renewal date; or (ii) pursuant to the terms of Section 5(b).

 

	
(b)  

	
This Agreement shall remain in effect as provided in Section 5(a), provided, however, that (i) the Agreement shall terminate upon the Manager’s resignation, death or Disability (as defined in the following sentence); and (ii) this Agreement may be terminated by the Company for Cause (as defined below).  For purposes of this Agreement, the term “Disability” means any long-term disability or incapacity that appears to be permanent which (i) renders the Manager unable to substantially perform his duties hereunder for sixty (60) days during any 12-month period; or (ii) would reasonably be expected to render the Manager unable to substantially perform his duties for one hundred twenty (120) days during any 12-month period, as certified to the Company by a physician reasonably acceptable to the Company and the Manager. The last day on which Manager is retained by the Company, whether separation is voluntary or involuntary or by reason of the Manager's resignation, is referred to as the “Termination Date.” For purposes of this Agreement, “Cause” means if the Manager: (i) is convicted of any felony or other offense involving moral turpitude or any crime relating to his engagement by the Company; (ii) violates this Agreement in any material respect, as determined by the Company’s Board of Directors; (iii) is convicted of an act of fraud, theft or personal dishonesty with respect to the Company; (iv) performs his duties hereunder, as determined by the Company’s Board of Directors, in a grossly negligent or reckless manner or with willful malfeasance; (v) exhibits habitual drunkenness or substance abuse; or (vi) is found to have committed any material violation of any state or federal law relating to the workplace environment including, without limitation, laws relating to sexual harassment or age, sex or other prohibited discrimination.

 

  

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(c)  

	
The Company shall not be entitled to terminate the Manager for Cause pursuant to Section 5(b)(ii) or Section 5(b)(iv) unless the Company provides to the Manager written notice stating in reasonable detail the basis for termination and allowing a 10-day opportunity for the Manager to cure.

 

	
(d)  

	
Upon termination of this Agreement, the Manager agrees that all Company property, including, without limitation, all equipment, tangible proprietary information, documents, records, notes, contracts, and computer-generated materials provided to or prepared by the Manager, incident to his services hereunder, that are documented to belong to the Company, shall be promptly returned at the request of the Company.

 

	
(e)  

	
Upon termination of this Agreement, the Manager shall be deemed to have resigned from all offices then held with the Company or any of its subsidiaries by virtue of this Agreement. The Manager agrees that following any termination of this Agreement, the Manager shall cooperate with the Company in the winding-up or transferring to other Company employees or retained professionals any pending work and shall also cooperate with the Company (to the extent allowed by law, and at the Company’s expense) in the defense of any action brought by any third party against the Company that relates to the Manager’s services.

 

	
(f)  

	
In the event of a legal merger of the Company with another entity or a “change in control” of the Company during the term of this Agreement, the then surviving entity or, in the event of a change in control, the Company shall agree in writing to the Manager that it shall assume the responsibilities of the Company hereunder or the Agreement shall be terminated as of the date of the merger or the “change in control” under which event the termination fee due the Manager shall be three times the then remaining fees due under this Agreement to the end of its term, which termination fee shall be immediately due and payable in a lump sum payment to the Manager.

 

Section 6. Subsequent Employment of the Manager by the Company.

 

	
(a)  

	
Upon the Company attaining $5 million of gross revenues, this Agreement may be terminated by the Manager and then the Company’s CEO and the Manager will negotiate in good faith the terms of an Employment Agreement under which the Manager shall thereafter devote full time to his responsibilities to the Company and be compensated with salary, benefits, stock options and employee benefits consistent with a Chief Financial Officer of a publicly-traded company having revenues of $5 million.

 

	
(b)  

	
Notwithstanding the provisions of Section 6(a), the Manager shall have the right of first refusal to the full-time position as the Company’s Chief Financial Officer if during the term of this Agreement, the Company’s CEO or its Board has decided that a full-time employee is needed for that position rather than continuing this Agreement with the Manager as a part-time retained professional, and if so decided, the salary, benefits, stock options and employee benefits of the full-time position shall be set by the Board consistent with those of a Chief Financial Officer of a publicly-traded company having revenues of $5 million.

 

  

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Section 7. Remuneration; Stock Options; Warrant.

 

	
(a)  

	
The Company hereby agrees to pay the Manager a fee to serve as its part-time Chief Financial Officer, payable monthly in arrears, equal to Two Thousand Five Hundred and No/100ths Dollars ($2,500.00) per month.  The first such payment shall be due on September 30, 2012 and thereafter on the last day of each month during the term of this Agreement.

 

	
(b)  

	
During the term of this Agreement, the Manager may be granted (i) additional fees to recognize the Manager’s finding appropriate acquisitions for the Company, or for his services and extraordinary efforts to negotiate, structure and close acquisitions for the Company; and/or (ii) options to acquire the Company’s common stock or other equity rights, as determined by the Company’s Board of Directors or its Compensation Committee, in its sole discretion. In the event (i) of a merger, change in control or sale of the Company; or (ii) this Agreement is terminated where the Manager has not engaged in conduct which would constitute “cause” for such termination, as determined by a majority vote of the Company’s Board of Directors, any such options shall become immediately fully vested.

 

	
(c)  

	
As a signing bonus, upon the Company’s execution of this Agreement, the Company shall issue a five-year warrant (in the form attached hereto as Exhibit A) to the Manager that entitles the Manager to subscribe for and purchase from the Company up to One Million Five Hundred Thousand (1,500,000) shares of the company’s common stock at an exercise price of No and 10/100ths Dollars ($0.10) per share (with the right to a cashless exercise) exercisable at any time, in part or in whole, provided that at the time of an exercise, the Manager is then retained or otherwise associated with the Company. If during the term of the Warrant, the Manager’s retention by, association with, or employment by the Company is terminated, then the Manager must exercise within thirty (30) days any remaining shares available under the warrant, otherwise any un-exercised portion of the Warrant shall be forfeited at the end of the thirty-day period following the date of such termination. A minimum of three (3) months of services must be rendered for warrant to be valid.

 

Section 8. Expenses.

 

	
(a)  

	
During the term of this Agreement, the Company shall reimburse the Manager for all preapproved, incurred expenses for travel and other business-related expenses including certain monthly recurring expenses associated with the Manager’s office in Shelton, Connecticut such as a dedicated telephone number for the Company’s business, office supplies and services, and other such usual and ordinary office expenses, provided such expenses are incurred in the course of the Manager performing his duties under this Agreement, and such expenses are reasonable and consistent with the Company’s policies in effect from time to time with respect to travel, entertainment, and other business expenses, subject in all instances to the Company’s requirements with respect to reporting and documentation of such expenses.

 

	
(b)  

	
The Manager’s travel to the Company’s New York City headquarters office shall be required at least once every two weeks; otherwise, the Manager may attempt to work remotely in his Shelton, Connecticut personal office as long as he is able to properly and effectively discharge his duties to the Company.

 

  

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Section 9. Benefits. The Manager shall not be eligible to participate in any benefits made generally available by the Company to its senior executives, and the Manager shall not be entitled to any paid vacation leave.

 

Section 10. Liability of Manager.  The Manager shall not be liable, responsible or accountable, whether directly or indirectly, in contract or tort or otherwise, to the Company, any of its officers, or any other person in which the Company has a direct or indirect interest for any damages asserted against, suffered or incurred by the Company, any of its officers, any subsidiary of the Company or any other Person in which the Company has a direct or indirect interest arising out of, relating to or in connection with any act or failure to act pursuant to this Agreement or otherwise with respect to: (i) the management or conduct of the business and affairs of the Company; (ii) the offer and sale of interests in the Company; and (iii) the management or conduct of the business and affairs of the Company, provided that such act or failure to act was taken in good faith and except, in each case, for damages that are finally found by a court of competent jurisdiction to have resulted primarily from any act or omission of the Manager which constituted gross negligence, intentional misconduct, an intentional or knowingly breach of this Agreement or the Company policies or a knowing violation of law.  Notwithstanding the foregoing provisions, the Manager shall not be liable to the Company for any action taken or omitted to be taken by any other person. The Manager may (in his own name or in the name of the Company) consult with counsel, accountants and other professional advisors with respect to the affairs of the Company, and, provided that such counsel, accountants or other professional advisors were selected with reasonable care, the Manager shall be deemed to have acted in good faith and not to have acted with gross negligence, to have engaged in intentional misconduct or to have intentionally or knowingly breached this Agreement or the Company policies with respect to any action or failure to act and shall be fully protected and justified in so acting or failing to act, if such action or failure to act is taken or not taken in good faith upon the advice or opinion of such counsel, accountants or other professional advisors, except for actions or failures to act by the Manager which constitute a knowing violation of law.

 

Section 11. Nondisclosure Obligations. Throughout the term of this Agreement, the Manager agrees that confidential information of the Company will be disclosed to him and that any unauthorized disclosure of such information to third parties or use other than for the purposes of completing his obligations under this Agreement could cause extensive harm to the Company. “Confidential information” includes any and all trade secrets, confidential, private or secret information including without limitation (i) business and financial information, (ii) business methods and practices, (iii) marketing strategies, and (iv) such information as the Company may from time to time designate as being confidential. Confidential information will not include information that is known to the Manager prior to its disclosure or is in the public domain, or information that falls into the public domain, unless such information falls into the public domain by disclosure or other acts by the Manager, or through the Manager’s fault.

 

Section 12. Ownership of Intellectual Property.  If during the Term or any extension thereto, whether during the course of its normal duties or other duties specifically assigned by the Company to the Manager by the terms of this Agreement, either alone or in conjunction with any other person create or develop any intellectual property (including any work in which copyright subsists or may subsist), the Manager shall immediately disclose same to the Company.  The Manager also agrees that all such intellectual property and the copyright and other intellectual property rights therein will be owned by the Company.  Insofar as any intellectual property rights therein for the full term in which such rights exist or are capable of existing throughout the world.  The Manager hereby waives unconditionally and irrevocably all of his moral rights and rights of a similar nature (including those rights arising under the copyright law) in respect of any work (including works which may come into existence after the date hereof) in which copyright may subsist, created by the Manager during his services in each jurisdiction throughout the world, to the extent that such rights may be waived in each respective jurisdiction. This waiver extends to any and all acts of the Company and their successors, assigns and licensees and acts of third persons done with the authority of the Company and their successors and assigns.  The parties agree that the above shall not apply to any technology or product licensed by the Company as the licensee under a license with a third party.

  

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Section 13. General Provisions.

 

	
(a)  

	
Notices.   Any notice or other communication to be given hereunder shall be in writing and shall be mailed or telecopied to such party at the address or number set forth below:

 

	If to the Manager: 	
Robert P. Mahoney 

4 Daniels Farms Road #305

Trumbull, CT 06611

Telephone: (203) 242-3064

Telecopier: (203) 549-0592

	If to the Company: 	
SavWatt USA, Inc. 

475 Park Ave. South, 30th Floor

New York, N.Y. 10016

Att’n: President & CEO

Telephone No.: (646) 478-2676

Telecopier No.: (917) 621-3150

 

	
 

	
or to such other person, address or number as the party entitled to such notice or communication shall have specified by notice to the other party given in accordance with the provisions of this Section.  Any such notice or other communication shall be deemed given: (i) if mailed, when deposited in the mail, properly addressed and with postage prepaid; or (ii) if sent by telecopy, when transmitted.

	
(b)  

	
Controlling Law and Attorney Fees.  This Agreement shall be interpreted in accordance with the laws of the State of New York, and shall be exclusively enforced in any court of competent jurisdiction in the state of Connecticut or the state of New York. Should either party hereto, or any heir, personal representative, successor or assign of either party hereto, resort to litigation to enforce this Agreement, the party or parties prevailing in such litigation shall be entitled, in addition to such other relief as may be granted, to recover its or their reasonable attorneys’ fees and costs in such litigation from the party or parties against whom enforcement was sought.

	
(c)  

	
Entire Agreement.  It is the mutual desire and intent of the parties to provide certainty to his future rights and remedies against each other by defining fully and completely the extent of his mutual undertakings as provided herein. The parties have incorporated all representations, warranties, covenants, commitments and understandings on which they have relied on in entering into this agreement, and, except as provided for herein, the parties make no covenant or other commitment to the other concerning its future action. Accordingly, this Agreement: (i) constitutes the entire agreement and understanding between the parties, and there are no promises, representations, conditions, provisions or terms related thereto other than those set forth in this agreement, and (ii) supersedes all previous understandings, agreements and representations between the parties, written or oral, and, (iii) any changes or amendments to this agreement must be in writing and signed by all parties or their legal representative. This Agreement has been created by the mutual efforts of the parties and any ambiguity shall not be construed against either party as purported author.

 

  

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(d)  

	
Force Majeure.  Neither the Manager nor the Company shall be responsible for delays or failures in performance resulting from acts beyond their control.  Such acts shall include, but not be limited to, acts of God, strikes, riots, acts of war, epidemics, fire, communication line failures, earthquakes, floods, or other disasters.

	
(e)  

	
Severability.  In the event that any provision of this Agreement is held invalid or unenforceable for any reason by a court of competent jurisdiction, such provision or part thereof shall be considered separate from the remaining provisions of this agreement which shall remain in full force and effect.

	
(f)  

	
Successors and Assigns.  This Agreement is binding upon the parties and their heirs, personal representatives, successors and assigns, as the case may be.

	
(g)  

	
Authority.  The Manager and the Company have all necessary power and authority to execute, deliver, and perform his or its obligations under this Agreement; the execution, delivery and performance by the Manager and the Company of this Agreement have been duly authorized by all necessary action on his or its part; and this Agreement has been duly and validly executed and delivered by the Manager and the Company and constitutes the legal, valid and binding obligation of the Manager and the Company.

	
(h)  

	
Counterparts.  This Agreement may be executed in counterparts, which when taken together shall nonetheless be one and the same agreement.

	
(i)  

	
Dispute Resolution - Arbitration.   Any dispute, controversy or claim arising out of or relating to this Agreement, or any breach or alleged breach hereof shall, upon the request of either party, be submitted to, and settled by, arbitration, before a single arbitrator in New York City, New York.  The arbitration shall proceed pursuant to and in accordance with the provisions of this Section and otherwise pursuant to and in accordance with the New York Arbitration Rules then in effect of the American Arbitration Association (or at any other place or under any other form of arbitration mutually acceptable to the parties).  The parties shall agree on a single arbitrator within thirty (30) days after notice from either party seeking or demanding arbitration; provided, however, that if they do not so agree then the arbitrator shall be either the one proposed by the Company or the one proposed by the Company, to be determined by a toss of the coin (if only one party proposes an arbitrator then the arbitrator shall be the one so proposed).  The arbitrator shall base the award on applicable law and judicial precedent and, unless both parties agree otherwise, shall include in such award the findings of fact and conclusions of law upon which the award is based.  Any award rendered shall be final and conclusive upon the parties and a judgment thereon may be entered in the appropriate court of any forum, state or federal, having jurisdiction. The expenses of the arbitration shall be borne equally by the parties to the arbitration or as otherwise determined by the arbitrator to be more just and equitable under all the circumstances.  Each party shall pay for and bear the cost of its own experts, evidence and counsel’s fees except to the extent, if at all, the arbitrator determines that it is more just and equitable under all the facts and circumstances that one party reimburse the other, in whole or in part, for the cost of the other party's experts, evidence and/or counsel fees; provided, however that if either party fails to proceed with the arbitration as provided herein or unsuccessfully seeks to stay such arbitration, or fails to comply with any arbitration award, the other party shall be entitled to be awarded costs, including reasonable attorneys’ fees, paid or incurred by such other party in successfully compelling such arbitration and/or successfully defending or enforcing the award.  The parties shall use all reasonable efforts to ensure that the arbitration is completed as promptly as reasonably possible, and preferably within not more than ninety (90) days after either party’s request for arbitration hereunder.

ACKNOWLEDGMENT OF ARBITRATION.  This Agreement contains an agreement to arbitrate.  After signing this document, we understand that we will not be able to bring a lawsuit concerning any dispute that may arise which is covered by the arbitration agreement, unless it involves a question of constitutional or civil rights.  Instead, we agree to submit any such dispute to an impartial arbitrator.

 

  

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IN WITNESS WHEREOF, the parties, as evidenced by the signatures of their duly authorized agents, do hereby execute this Agreement intending it to be effective as of the Effective Date.

 

IN THE PRESENCE OF:

 

	 	

SAVWATT USA, INC.

	 
	 	 	 	 
	 	
By: 

	/s/ Isaac H. Sutton	 
	 	 	Isaac H. Sutton, President & CEO	 
	 	 	 	 
	 	MANAGER:	 
	 	 	 	 
	 	 	/s/ Robert Mahoney	 
	 	 	Robert P. Mahoney	 

 

  

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