Document:

ex101.htm

Exhibit 10.1

	
  

	
LICENSING AGREEMENT

 

 

	
  

	
This Licensing Agreement (“Agreement”) is made and entered into as of the 8th day of March, 2011, by and between M-Solo International, Inc., a corporation established under Delaware law (the “Licensor”) having its principal office at 488 Madison Avenue, New York, New York 10022 and Spring Creek Healthcare Systems, Inc., a corporation organized under the laws of Nevada ( “Spring Creek”), having its principal place of business at 120 Wall Street, Ste. 2401, New York, New York 10005 and NewCo, a subsidiary of Spring Creek to be formed upon execution of this Agreement (“Licensee”).  Each of the Licensor, Spring Creek and Licensee are also referred to herein as a “Party” and cumulatively as the “Parties”.

 

	
  

	
Whereas, Licensor has the right to grant licenses for the distribution and marketing of certain multi-function anti-aging products; and

 

	
  

	
Whereas, Licensee wishes to obtain a license for the aforementioned products upon the terms and conditions hereinafter set forth;

 

	
  

	
NOW, THEREFORE, in consideration of the premises and the faithful performance of the covenants herein contained and intending to be bound by the terms, hereof, the Parties agree as follows:

 

	
  

	
ARTICLE I - DEFINITIONS

 

	
  

	
For the purpose of this agreement, the following definitions shall apply:

 

	
1.

	
Product(s):  A multi-function anti-aging product, ReVersital® 3-in-1 MicrodermaStick®, that combines three skin care treatments – cleansing, microdermabrasion and hydration – in a portable, hands-free dial-up stick, including all improvements, enhancements and modifications of such product developed at any time during the term of this Agreement.  The definition of Product(s) may be expanded from time to time to include other cosmetic and beauty products which the parties may mutually approve and which right of approval is described in Article VII below.

 

	
2. 

	
Confidential Proprietary Information:   Shall mean with respect to any Party all scientific, business or financial information relating to such Party, its subsidiaries or affiliates or their respective businesses, except when such information:

 

	
a. 

	
Becomes known to the other Party prior to receipt from such first Party;

 

	
b.

	
Becomes publicly known through sources other than such first Party;

 

	
c. 

	
Is lawfully received by such other Party from a party other than the first   Party; or

 

	
d.   

	
Is approved for release by written authorization from such first Party.

 

	
  

	
Each party agrees to maintain the confidentiality of the Confidential Proprietary Information of the other Party during the term of this Agreement and following its termination for any reason.

 

	
3. 

	
Exclusive License: The term “Exclusive License” shall mean an Exclusive License for the mass consumer market, whereby Licensee’s rights are sole and entire and operate to exclude all others, including Licensor and its affiliates except as otherwise expressly agreed and/or provided herein. The Exclusive License shall include the right of Licensee to make, have made, produce, use, market, advertise, promote, distribute and sell the Products.   The parties acknowledge that Licensor has heretofore presented the Product(s) for distribution to Eniva Corporation, an international multi-level marketing company, and that this license excludes such channel of trade.

 

 

 

  

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4. 

	
Know-how:  Shall mean any and all technical data, information, materials, trade secrets and technology, including any improvements thereto, trade names, trademarks, service marks or other licensed product names associated with the Products in any form in which the foregoing may exist, now owned or co-owned by or exclusively, semi-exclusively or non-exclusively licensed to Licensor prior to the date of this Agreement or hereafter acquired by Licensor during the term of this Agreement. The trade names, trademarks, service marks or other product names associated with the Products are set forth on Schedule A to this Agreement.

 

	
  

	
ARTICLE II- GRANT OF EXCLUSIVE LICENSE.

 

	
1. 

	
Subject to the provisions of Article I, paragraph 3 above and the performance terms set forth in Article IV, Licensor hereby grants to Licensee the Exclusive License to use, market, advertise, promote, distribute and sell the Products in the territory of the United States and any additional territories that Licensor obtains the right to grant licenses with regard to the Products during the term of this Agreement, without further cost to Licensee.

 

 

	
  

	
ARTICLE III- LICENSE PAYMENTS

 

	
1.  

	
License Fee.  In consideration for the exclusive license being granted by Licensor to Licensee, Spring Creek agrees to issue to Licensor and/or its designated assigns, 4,900,000 shares of common stock, representing 49% of NewCo, which will be 51% owned by Spring Creek on the Closing Date.  The Closing Date shall mean the date that (a) this Agreement is signed by the Parties and (b) Licensor has received the shares.  Except as provided above, the Products shall be marketed solely through NewCo.  Neither the Licensor nor Spring Creek shall have the right to sell, transfer or assign all or any of its shares of NewCo common stock without first offering such shares to the other party at a price and on terms no less favorable than those offered to the third party to whom such shares are to be sold, transferred or assigned.

 

	
2.  

	
Royalty:  Licensor shall receive a 5% share of “net revenue participation” from the applicable sales accounts in the form of quarterly distributions payable no later than the 30th day after the quarter ends. The definition of net revenue participation is NewCo’s share of net sales as provided in Generally Accepted Accounting Principles (“GAAP”).  Such distribution shall be accompanied by a statement listing gross sales and applicable deductions.  Licensor shall have the right to audit Licensee’s books and records on a semi-annual basis providing thirty (30) days notice , provided that Licensor engages Henry Kaelber CPA or another accredited CPA in good standing, who signs a non-disclosure agreement prior to receiving access to Licensee’s books and records.

 

	
3.

	
Additional Consideration: In addition, M-Solo International, Inc. shall be granted 300,000 shares of Spring Creek (SCRK).  Such shares shall not be registered under the Securities Act of 1933, as amended (the “Act”), or the securities laws of any state, and as such must be held indefinitely and may not be sold or transferred unless registered under the Act or unless an exemption from such registration exists. 

 

	
  

	
ARTICLE IV – DILIGENCE AND PERFORMANCE

 

	
1.  

	
Spring Creek shall use its best efforts to bring the Products to market through NewCo via a thorough, vigorous and diligent program and to continue active, diligent marketing efforts throughout the life of this Agreement.

 

	
2.  

	
Licensee’s failure to perform in accordance with paragraph 1 of this ARTICLE IV shall be grounds for Licensor to terminate this Agreement, but Licensor must give Licensee not less than ninety (90) calendar days advance written notice during which time Licensee shall have the right to cure such failure to perform.

 

	
3.

	
Licensee shall use its best efforts to generate net sales during the first year of the term of this Agreement (including but not limited to television/web/direct response sales) equal to five hundred thousand dollars ($500,000) and thereafter during each year of the term an average increase of not less than ten (10%) percent in net sales of the Product(s) per annum for the first three years of the Agreement.  After the first three years of the Agreement, the Parties agree to mutually agree upon the required average increase of net sales for the remaining term of the Agreement.

 

	
4.

	
Licensor shall use its best efforts to promote the Products and shall be available to participate in marketing and advertising programs mutually agreed upon by the Parties.

 

 

  

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ARTICLE V - TERMINATION OF LICENSE

 

	
1.  

	
Termination by Licensor.                                                                                  

 

	
  

	
Option of Licensor:  Licensor may, at its option, terminate this Agreement but only by giving not less than ninety (90) calendar day advance written notice to Licensee, but only in case of:

 

	
a. 

	
Default in the performance of any other material obligation including the commitments set forth in Article IV contained in this Agreement on the part of Licensee to be performed and such default shall continue for a period of ninety (90) calendar days after Licensor shall have given to Licensee written notice of such default.

 

	
b. 

	
Adjudication that Licensee is bankrupt or insolvent.

 

	
c.  

	
The filling by Licensee of a petition of bankruptcy, or a petition or answer seeking reorganization, readjustment or rearrangement of its business or affairs under any law or governmental regulation relating to bankruptcy or insolvency.

 

	
d.    

	
The appointment of a receiver of the business or for all or substantially all of the property of Licensee; or the making by Licensee of assignment or an attempted assignment for the benefit of its creditors; or the institution by Licensee of any proceedings for the liquidation or winding up of its business or affairs.

 

	
e.    

	
Licensee fails to generate Purchase Orders and has not begun the bona fide distribution and sale of the Products within a period of one hundred and eighty (180) days from execution of this Agreement; or

 

	
f.     

	
Failure by Licensee to make two consecutive timely payments due hereunder or submit any statement required hereunder within thirty (30) business days from the date on which such payment or statement is due, which failure is not cured following a ten (10) day notice to cure.

 

 

	
g.

	
Failure by Licensee to sustain an average increase of 10% in net sales of the Products per annum during the first three years of the Agreement and the average percentage increase agreed upon by the Parties with respect to the remaining term of the Agreement.

 

	
2. 

	
Effect of termination.

 

	
  

	
Termination of this Agreement shall not in any way operate to impair or destroy any of Spring Creek’s, Licensee’s or Licensor’s rights or remedies, either at law or in equity, or to relieve Licensee of any of its obligations to pay royalties and/or Licensor’s share of revenue participation and/or to comply with any other of the obligations hereunder, accrued prior to or after the expiration or effective date of termination.  However, if Licensor terminates this Agreement for Licensee’s non-performance, the Licensor’s remedies shall be limited to its share of unpaid royalties or revenue participation.

 

	
  

	
After expiration or termination as the case may be, Licensee shall have a period of ninety (90) days to sell, ship, market and distribute the Products provided that royalties and Licensor’s share of revenue are paid in a timely manner.  Moreover, any Products not shipped or distributed shall, at Licensor’s request, be returned pursuant to Licensor’s notice to a location it selects at Licensor’s sole cost, including the cost of the Products and shipping.  At the end of such ninety (90) day period, Licensee shall provide a full and final accounting to Licensor identifying all customers, sales to date and monies due, accrued and/or unpaid.

 

	
3.  

	
Effect of delay, etc.

 

	
  

	
Failure or delay by Licensor to exercise its rights of termination hereunder by reason of any default by Licensee in carrying out any obligation imposed upon it by this Agreement shall not operate to prejudice Licensor’s right of termination for any other subsequent default by Licensee.

 

	
4. 

	
Return of Licensed Product Rights.

 

	
  

	
Upon termination of this Agreement, all of the Licensed Product Rights shall be returned to Licensor.

 

 

	
  

	
ARTICLE VI – TERM

 

	
  

	
Unless previously terminated as hereinbefore provided, and depending on NewCo’s gross sales on an annual basis, the term of this Agreement shall extend for a period of ten years from and after the date hereof (the “Initial Term”).   Thereafter, this Agreement shall be automatically renewed, at the same terms and conditions, for additional, successive three (3) year periods (each, a “Renewal Term”) unless either party hereto gives to the other party written notice to terminate this Agreement no later than ninety (90) days prior to the end of the Initial Term or any Renewal Term.  The Initial Term and the Renewal Term are hereinafter collectively referred to as the “Term”.

 

 

 

  

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ARTICLE VII – RIGHT OF FIRST REFUSAL

 

 

	
  

	
During the Term hereof,  Spring Creek and Licensor shall notify Licensee of any new products in the cosmetic and beauty products industry which Licensor and Spring Creek are made aware of and/or which either may be interested in licensing, marketing and/or distributing, submitting in reasonable detail, specifications, design, product availability, pricing and other material terms.  NewCo shall have a right of first refusal, for a period of thirty (30) calendar days from receipt of such notice from Spring Creek or Licensor to provide written notice of its decision to offer to represent the products.

 

	
  

	
VIII - QUALITY AND APPROVAL

 

	
1. 

	
In order to maintain the quality reputation of the Products, all product packaging and formulations relating to the Products must have Licensor’s approval, which approval shall not be unreasonably withheld.  In that regard, Licensee shall submit to Licensor for approval any new pre-production sample for any proposed Products or promotional or packaging material relating to the Products.  Licensee shall use reasonable commercial efforts to not permit the manufacture, sale, marketing or distribution of any products or materials relating to the Products unless it obtains Licensor’s approval of all required submittals, which approval will not be unreasonably withheld.  Licensor’s failure to approve within five (5) days after receipt of Licensee’s submission shall constitute an approval.  Licensee shall use commercially reasonable efforts to cause any subcontractor to submit, at its own cost, two (2) sets of any new or reformulated or new batch samples of the Products and/or promotional packaging as well.

 

	
2. 

	
Licensee shall use its best efforts to ensure that neither it, nor its subcontractors will sell, market, distribute or use for any purpose or knowingly permit any third party to sell, market or distribute Products which are defective, damaged or otherwise fail to meet Licensor’s specifications or reasonable quality control standards, including approved trademark and copyright usage and notice requirements.

 

	
  

	
ARTICLE IX - NOTICES, ASSIGNEES

 

	
1. 

	
Notices. Notices and payments required hereunder shall be deemed properly given if duly sent by first class mail and addressed to the parties at the addresses set forth above, by fax with a receipt attached or by email with a receipt (i.e., sent confirmation) attached. The parties hereto will keep each other advised of address changes.

 

	
2.    

	
Assignees, etc.  This Agreement shall be binding upon and shall inure to the benefit of the assigns of Licensor and upon and to the benefit of the successors of the entire business of Licensor, but neither this Agreement nor any of the benefits thereof nor any rights thereunder shall, directly or indirectly, without the prior written consent of Licensor, be assigned, divided, or shared by the Licensee to or with any other party or parties (except a successor of the entire business of the Licensee).

 

	
  

	
ARTICLE X - MISCELLANEOUS

 

	
1. 

	
Governing Law and Consent to Jurisdiction. This Agreement is executed and delivered in The United States and shall be governed by, and constructed in accordance with, the laws of the State of New York without giving effect to the conflicts of law principles thereof.  The Parties to this Agreement agree to be subject to the exclusive jurisdiction of the state and federal courts located in the State of New York.

 

	
2.  

	
Entire Agreement; Amendments.  This Agreement, together with any Schedules attached hereto, sets forth the entire understanding of the Parties as to the subject matter of this Agreement and merges all prior agreements and understanding between the Parties, whether oral or written, with respect to this subject matter.  This Agreement may not be modified except in writing, signed by both of the Parties hereto.

 

	
3.  

	
Representation regarding patents of third parties. Licensor represents and warrants to Licensee and Spring Creek that to the best of its knowledge the Licensed Product Rights manufactured, or used, under the exclusive license granted herein are free of claims of infringement of patent rights of any other person or persons. The Licensor warrants that it has the right to distribute, sell, market, commercially exploit and market the Licensed Product and all Rights from the inventors in the territory of the United States.

 

	
4.    

	
Indemnity.  Licensor and NewCo shall maintain liability insurance in the amount of  $5 million unless less is required by the market, and Licensor shall add Licensee and Spring Creek as additional insureds to the manufacturer’s policy.

 

	
5. 

	
Advertising.  Licensee agrees that Licensee may not use in any way the name of Licensor or any logotypes or symbols associated with Licensor or the names of any researchers without the express written permission of Licensor, which shall not be unreasonably withheld.  If Licensor fails to respond within five (5) business days to a request to use Licensor’s name, logotypes or symbols associated with Licensor or the names of any researchers, permission is deemed to be provided.

 

 

 

 

  

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6. 

  

	
Confidentiality. The Parties agree to maintain discussions and proprietary information revealed pursuant to this Agreement in confidence, to disclose them only to persons within their respective organizations having a need to know, and to furnish assurances to the other Party that such persons understand this duty on confidentiality.

 

	
7.

	
Context and Construction.  Whenever required by the context of this Agreement, the singular shall include the plural and masculine shall include the feminine. This Agreement shall not be construed as if it had been prepared by one of the Parties, but rather as if all the parties had prepared the same.

 

	
8.

	
Waiver.  No failure or delay of any of the Parties in the exercise of any right or privilege hereunder shall operate as a waiver thereof or of the exercise of any other right or privilege hereunder nor shall any single or partial exercise of any such right or privilege preclude other or further exercise thereof or of any other right or privilege.

 

	
9.

	
Context and Construction.  Whenever required by the context of this Agreement, the singular shall include the plural and masculine shall include the feminine. This Agreement shall not be construed as if it had been prepared by one of the Parties, but rather as if all the parties had prepared the same.

 

	
10.

	
Titles and Captions. Any title or caption included herein is for convenience only and is not to be used in the interpretation of this Agreement.

 

	
11.

	
Severability.  Should any clause, sentence or paragraph of this Agreement be declared to be invalid, unenforceable or void, such decision shall not invalidate or void the remainder of this Agreement and the Parties hereby agree that the part or parts of this Agreement so held to be invalid, unenforceable or void shall be deemed to have been stricken, and the remainder shall have the same force and effect as if such part or parts had never been included herein.

 

	
12.

	
Counterparts.  This Agreement may be executed in two or more counterparts, all of which taken together shall constitute one instrument.  Execution and delivery of this Agreement by exchange of facsimile copies bearing the facsimile signature of a Party shall constitute a valid and binding execution and delivery of this Agreement by such Party. Such facsimile copies shall constitute enforceable original documents.

 

 

	
  

	
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorized representatives.

 

The effective date of this Agreement is March 8th, 2011.

 

 

M-SOLO INTERNATIONAL, INC., Licensor

 

By: /s/ Margaux Levy

 

Name: Margaux Levy

 

Title: President

 

 

 

SPRING CREEK HEALTHCARE SYSTEMS, INC.

 

By: /s/ Kelly T. Hickel

 

Name: Kelly T. Hickel

 

Title: CEO

 

 

NEWCO, Licensee

 

By: /s/ Kelly T. Hickel

 

Name: Kelly T. Hickel

 

Title: CEO

 

6Agreement

  CLEOPATRA INTERNATIONAL GROUP, INC.
 INDEPENDENT DIRECTOR AGREEMENT
 This  INDEPENDENT DIRECTOR AGREEMENT (the “Agreement”) is made and entered into as of this 1st  day of April 2011 and effective as of the same date (the “Effective Date”), by and between Cleopatra International Group, Inc., a Nevada corporation (the “Company”), and Li Guo (Howard) Zhao, a citizen of China, located at c/o Cleopatra International Group, Inc., No. 12 Yingchun Road, Luohu District, Shenzhen City, Guangdong Province, China (the “Independent Director”).
 WHEREAS, the Company desires to engage the Independent Director, and the Independent Director desires to serve, as a non-employee director of the Company, subject to the terms and conditions contained in this Agreement.
 NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the receipt of which is hereby acknowledged, the Company and the Independent Director, intending to be legally bound, hereby agree as follows:
 
 1.
 DEFINITIONS.
 
 (a)
 “Corporate Status” describes the capacity of the Independent Director with respect to the Company and the services performed by the Independent Director in that capacity.
 
 (b)
 “Entity” shall mean any corporation, partnership, limited liability company, joint venture, trust, foundation, association, organization or other legal entity.
 
 (c)
 “Proceeding” shall mean any threatened, pending or completed claim, action, suit, arbitration, alternate dispute resolution process, investigation, administrative hearing, appeal, or any other proceeding, whether civil, criminal, administrative or investigative, whether formal or informal, including a proceeding initiated by the Independent Director pursuant to Section 12 of this Agreement to enforce the Independent Director’s rights hereunder.
 
 (d)
 “Expenses” shall mean all reasonable fees, costs and expenses, approved by the Company in advance and reasonably incurred in connection with any Proceeding, including, without limitation, attorneys’ fees, disbursements and retainers, fees and disbursements of expert witnesses, private investigators, professional advisors (including, without limitation, accountants and investment bankers), court costs, transcript costs, fees of experts, travel expenses, duplicating, printing and binding costs, telephone and fax transmission charges, postage, delivery services, secretarial services, and other disbursements and expenses.
 
 (e)
 “Liabilities” shall mean judgments, damages, liabilities, losses, penalties, excise taxes, fines and amounts paid in settlement.
 
 (f)
 “Parent” shall mean any corporation or other entity (other than the Company) in any unbroken chain of corporations or other entities ending with the Company, if 
 

 	 	 	 
	  
  
	  
	  

  

 

 
 each of the corporations or entities, other than the Company, owns stock or other interests possessing 50% or more of the economic interest or the total combined voting power of all classes of stock or other interests in one of the other corporations or entities in the chain.
 
 (g)
 “Subsidiary” shall mean any corporation or other entity (other than the Company) in any unbroken chain of corporations or other entities beginning with the Company, if each of the corporations or entities, other than the last corporation or entity in the unbroken chain, owns stock or other interests possessing 50% or more of the economic interest or the total combined voting power of all classes of stock or other interests in one of the other corporations or entities in the chain.
 
 2.
 SERVICES OF INDEPENDENT DIRECTOR. While this Agreement is in effect, the Independent Director shall perform duties as an independent director and/or a member of the committees of the Board, be compensated for such and be reimbursed expenses in accordance with the Schedule A attached to this Agreement, subject to the following.
 
 (a)
 The Independent Director will perform services as is consistent with Independent Director’s position with the Company, as required and authorized by the By-Laws and Articles of Incorporation of the Company, and in accordance with high professional and ethical standards and all applicable laws and rules and regulations pertaining to the Independent Director’s performance hereunder, including without limitation, laws, rules and regulations relating to a public company.
 
 (b)
 The Independent Director is solely responsible for taxes arising out of any compensation paid by the Company to the Independent Director under this Agreement, and the Independent Director understands that he/she will be issued a U.S. Treasury form 1099 for any compensation paid to him/her by the Company.  The Independent Director acknowledges and agrees that because he is not an employee of the Company, the Company will not withhold any amounts for taxes from any of his payments under the Agreement.
 
 (c)
 The Company may offset any and all monies payable to the Independent Director to the extent of any monies owing to the Company from the Independent Director.
 
 (d)
 The rules and regulations of the Company notified to the Independent Director, from time to time, apply to the Independent Director. Such rules and regulations are subject to change by the Company in its sole discretion. Notwithstanding the foregoing, in the event of any conflict or inconsistency between the terms and conditions of this Agreement and rules and regulations of the Company, the terms of this Agreement control.
 
 3.
 REQUIREMENTS OF INDEPENDENT DIRECTOR. During the term of the Independent Director’s services to the Company hereunder, Independent Director shall observe all applicable laws and regulations relating to independent directors of a public company as promulgated from to time, and shall not: (1) be an employee of the Company or any Parent or Subsidiary; (2) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the Company other than as a director and/or a member of a committee of the Board; (3) be an affiliated person of the Company or any Parent or Subsidiary, as the term “affiliate” is defined 
 

 	 	 	 
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 in 17 CFR 240.10A-3(e)(1), other than in his capacity as a director and/or a member of a committee of the Board; (4) possess an interest in any transaction with the Company or any Parent or Subsidiary, for which disclosure would be required pursuant to 17 CFR 229.404(a), other than in his capacity as a director and/or a member of a committee of the Board committees; (5) be engaged in a business relationship with the Company or any Parent or Subsidiary, for which disclosure would be required pursuant to 17 CFR 229.404(a), except that the required beneficial interest therein shall be modified to be 5% hereby.
 
 4.
 REPORT OBLIGATION. While this Agreement is in effect, the Independent Director shall immediately report to the Company in the event: (1) the Independent Director knows or has reason to know or should have known that any of the requirements specified in Section 3 hereof is not satisfied or is not going to be satisfied; and (2) the Independent Director simultaneously serves on an audit committee of any other public company.
 
 5.
 TERM AND TERMINATION. The term of this Agreement and the Independent Director’s services hereunder shall be for three (3) years from the Effective Date, subject to the Independent Director’s election by shareholders at the Company’s annual meeting of shareholders, and unless terminated as provided for in this Section 5. This Agreement and the Independent Director’s services hereunder shall terminate upon the earlier of the following:
 
 (a)
 Removal of the Independent Director as a director of the Company, upon proper Board or stockholder action in accordance with the By-Laws and Articles of Incorporation of the Company and applicable law;
 
 (b)
 Resignation of the Independent Director as a director of the Company upon written notice to the Board of Directors of the Company; or
 
 (c)
 Termination of this Agreement by the Company, in the event any of the requirements specified in Section 3 hereof is not satisfied, as determined by the Company in its sole discretion.
 
 6.
 LIMITATION OF LIABILITY. In no event shall the Independent Director be individually liable to the Company or its shareholders for any damages for breach of fiduciary duty as an independent director of the Company, unless the Independent Director’s act or failure to act involves intentional misconduct, fraud or a knowing violation of law.
 
 7.
 AGREEMENT OF INDEMNITY. The Company agrees to indemnify the Independent Director as follows:
 
 (a)
 Subject to the exceptions contained in Section 8(a) below, if the Independent Director was or is a party or is threatened to be made a party to any Proceeding (other than an action by or in the right of the Company) by reason of the Independent Director’s Corporate Status, the Independent Director shall be indemnified by the Company against all Expenses and Liabilities incurred or paid by the Independent Director in connection with such Proceeding (referred to herein as “INDEMNIFIABLE EXPENSES” and “INDEMNIFIABLE LIABILITIES,” respectively, and collectively as “INDEMNIFIABLE AMOUNTS”).
 

 	 	 	 
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 (b)
 Subject to the exceptions contained in Section 8(b) below, if the Independent Director was or is a party or is threatened to be made a party to any Proceeding by or in the right of the Company, to procure a judgment in its favor by reason of the Independent Director’s Corporate Status, the Independent Director shall be indemnified by the Company against all Indemnifiable Expenses.
 
 (c)
 For purposes of this Agreement, the Independent Director shall be deemed to have acted in good faith in conducting the Company’s affairs as an independent director of the Company and/or a member of a committee of the Board of the Company, if the Independent Director: (i) exercised or used the same degree of diligence, care, and skill as an ordinarily prudent man would have exercised or used under the circumstances in the conduct of his own affairs; or (ii) took, or omitted to take, an action in reliance upon advise of counsels or other professional advisors for the Company, or upon statements made or information furnished by other directors, officers or employees of the Company, or upon a financial statement of the Company provided by a person in charge of its accounts or certified by a public accountant or a firm of public accountants, which the Independent Director had reasonable grounds to believe to be true.
 
 8.
 EXCEPTIONS TO INDEMNIFICATION. Director shall be entitled to indemnification under Sections 7(a) and 7(b) above in all circumstances other than the following:
 
 (a)
 If indemnification is requested under Section 7(a) and it has been adjudicated finally by a court or arbitral body of competent jurisdiction that, in connection with the subject of the Proceeding out of which the claim for indemnification has arisen, (i) the Independent Director failed to act in good faith and in a manner the Independent Director reasonably believed to be in or not opposed to the best interests of the Company, (ii) the Independent Director had reasonable cause to believe that the Independent Director’s conduct was unlawful, or (iii) the Independent Director’s conduct constituted willful misconduct, fraud or knowing violation of law, then the Independent Director shall not be entitled to payment of Indemnifiable Amounts hereunder.
 
 (b)
 If indemnification is requested under Section 7(b) and
 
 (i)
 it has been adjudicated finally by a court or arbitral body of competent jurisdiction that, in connection with the subject of the Proceeding out of which the claim for indemnification has arisen, the Independent Director failed to act in good faith and in a manner the Independent Director reasonably believed to be in or not opposed to the best interests of the Company, including without limitation, the breach of Section 4 hereof by the Independent Director, the Independent Director shall not be entitled to payment of Indemnifiable Expenses hereunder; or
 
 (ii)
 it has been adjudicated finally by a court or arbitral body of competent jurisdiction that the Independent Director is liable to the Company with respect to any claim, issue or matter involved in the Proceeding out of which the claim for indemnification has arisen, including, without limitation, a claim that the Independent Director received an improper benefit or improperly took advantage of a corporate opportunity, the Independent Director shall 
 

 	 	 	 
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 not be entitled to payment of Indemnifiable Expenses hereunder with respect to such claim, issue or matter.
 
 9.
 WHOLLY OR PARTLY SUCCESSFUL. Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that the Independent Director is, by reason of the Independent Director’s Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, the Independent Director shall be indemnified in connection therewith. If the Independent Director is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify the Independent Director against those Expenses reasonably incurred by the Independent Director or on the Independent Director’s behalf in connection with each successfully resolved claim, issue or matter. For purposes of this section, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
 
 10.
 ADVANCES AND INTERIM EXPENSES. The Company may pay to the Independent Director all Indemnifiable Expenses incurred by the Independent Director in connection with any Proceeding, including a Proceeding by or in the right of the Company, in advance of the final disposition of such Proceeding, if the Independent Director furnishes the Company with a written undertaking, to the satisfaction of the Company, to repay the amount of such Indemnifiable Expenses advanced to the Independent Director in the event it is finally determined by a court or arbitral body of competent jurisdiction that the Independent Director is not entitled under this Agreement to indemnification with respect to such Indemnifiable Expenses.
 
 11.
 PROCEDURE FOR PAYMENT OF INDEMNIFIABLE AMOUNTS. The Independent Director shall submit to the Company a written request specifying the Indemnifiable Amounts, for which the Independent Director seeks payment under Section 7 hereof and the Proceeding of which has been previously notified to the Company and approved by the Company for indemnification hereunder. At the request of the Company, the Independent Director shall furnish such documentation and information as are reasonably available to the Independent Director and necessary to establish that the Independent Director is entitled to indemnification hereunder. The Company shall pay such Indeminfiable Amounts within thirty (30) days of receipt of all required documents.
 
 12.
 REMEDIES OF INDEPENDENT DIRECTOR.
 
 (a)
 RIGHT TO PETITION COURT. In the event that the Independent Director makes a request for payment of Indemnifiable Amounts under Sections 7, 9-11 above, and the Company fails to make such payment or advancement in a timely manner pursuant to the terms of this Agreement, the Independent Director may petition the appropriate judicial authority to enforce the Company’s obligations under this Agreement.
 
 (b)
 BURDEN OF PROOF. In any judicial proceeding brought under Section 12 (a) above, the Company shall have the burden of proving that the Independent Director is not entitled to payment of Indemnifiable Amounts hereunder.
 

 	 	 	 
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 (c)
 EXPENSES. The Company agrees to reimburse the Independent Director in full for any Expenses incurred by the Independent Director in connection with investigating, preparing for, litigating, defending or settling any action brought by the Independent Director under Section 12 (a) above, or in connection with any claim or counterclaim brought by the Company in connection therewith.
 
 (d)
 VALIDITY OF AGREEMENT. The Company shall be precluded from asserting in any Proceeding, including, without limitation, an action under Section 12 (a) above, that the provisions of this Agreement are not valid, binding and enforceable or that there is insufficient consideration for this Agreement and shall stipulate in court that the Company is bound by all the provisions of this Agreement.
 
 (e)
 FAILURE TO ACT NOT A DEFENSE. The failure of the Company (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses under this Agreement shall not be a defense in any action brought under Section 12 (a) above.
 
 13.
 PROCEEDINGS AGAINST COMPANY. Except as otherwise provided in this Agreement, the Independent Director shall not be entitled to payment of Indemnifiable Amounts or advancement of Indemnifiable Expenses with respect to any Proceeding brought by the Independent Director against the Company, any Entity which it controls, any director or officer thereof, or any third party, unless the Company has consented to the initiation of such Proceeding. This section shall not apply to counterclaims or affirmative defenses asserted by the Independent Director in an action brought against the Independent Director.
 
 14.
 INSURANCE. The Company may, at its discretion, obtain and maintain a policy or policies of director and officer liability insurance, in an amount not less than $10,000,000, of which the Independent Director will be named as an insured, providing the Independent Director with coverage for Indemnifiable Amounts and/or Indemnifiable Expenses in accordance with said insurance policy or policies (“D&O INSURANCE”); provided that:
 
 (a)
 The Independent Director agrees that, while the Company has valid and effective D&O Insurance, and except as provided in (c) of this section, Sections 7-13 of this Agreement shall not apply, and the Company’s indemnification obligation to the Independent Director under this Agreement shall be deemed fulfilled by virtue of purchasing and maintaining such insurance policy or policies, in accordance with the terms and conditions thereof and subject to exclusions stated thereon. The Independent Director agrees that the Company shall have no obligation to challenge the decisions made by the insurance carrier(s) (“INSURANCE CARRIER”) relating to any claims made under such insurance policy or policies;
 
 (b)
 The Independent Director agrees that the Company’s indemnification obligation to the Independent Director under (a) of this section shall be deemed discharged and terminated, in the event the Insurance Carrier refused payment for any Proceedings against the Independent Director due to the acts or omissions of the Independent Director;
 

 	 	 	 
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 (c)
 While the D&O Insurance is valid and effective, the Company agrees that it shall indemnify the Independent Director for the Indemnifiable Amounts and Indemnifiable Expenses, to the extent that any Proceedings are coverable by D&O Insurance, but in excess of the policy amount, in accordance with Sections 7-13 of this Agreement; and
 
 (d)
 While the D&O Insurance is valid and effective, this Section 14 states the entire and exclusive remedy of the Independent Director with respect to the indemnification obligation of the Company to the Independent Director under this Agreement.
 
 15.
 SUBROGATION. In the event of any payment of Indemnifiable Amounts under this Agreement or the D&O Insurance, the Company or its Insurance Carrier, as the case may be, shall be subrogated to the extent of such payment to all of the rights of contribution or recovery of the Independent Director against other persons, and the Independent Director shall take, at the request of the Company, all reasonable action necessary to secure such rights, including the execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
 
 16.
 AUTHORITY. Each party has all necessary power and authority to enter into, and be bound by the terms of, this Agreement, and the execution, delivery and performance of the undertakings contemplated by this Agreement have been duly authorized by each party hereto:
 
 17.
 SUCCESSORS AND ASSIGNMENT. This Agreement shall (a) be binding upon and inure to the benefit of all successors and assigns of the Company (including any transferee of all or a substantial portion of the business, stock and/or assets of the Company and any direct or indirect successor by merger or consolidation or otherwise by operation of law), and (b) be binding on and shall inure to the benefit of the heirs, personal representatives, executors and administrators of the Independent Director. The Independent Director has no power to assign this Agreement or any rights and obligations hereunder.
 
 18.
 CHANGE IN LAW. To the extent that a change in applicable law (whether by statute or judicial decision) shall mandate broader or narrower indemnification than is provided hereunder, the Independent Director shall be subject to such broader or narrower indemnification and this Agreement shall be deemed to be amended to such extent.
 
 19.
 SEVERABILITY. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement, or any clause thereof, shall be determined by a court of competent jurisdiction to be illegal, invalid or unenforceable, in whole or in part, such provision or clause shall be limited or modified in its application to the minimum extent necessary to make such provision or clause valid, legal and enforceable, and the remaining provisions and clauses of this Agreement shall remain fully enforceable and binding on the parties.
 
 20.
 MODIFICATIONS AND WAIVER. Except as provided in Section 18 hereof with respect to changes in applicable law which broaden or narrow the right of the Independent Director to be indemnified by the Company, no supplement, modification or amendment of this Agreement shall be binding unless executed in writing by each of the parties 
 

 	 	 	 
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 hereto. No delay in exercise or non-exercise by the Company of any right under this Agreement shall operate as a current or future waiver by it as to its same or different rights under this Agreement or otherwise.
 
 21.
 NOTICES. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered by hand, (b) when transmitted by facsimile and receipt is acknowledged, or (c) if mailed by certified or registered mail with postage prepaid, on the third business day after the date en which it is so mailed:
 If to Independent Director, to: 
 Li Guo (Howard) Zhao
 Room 504, Block A, Yuehai Building, 
 Intersection of Jianguo Road, Shengli Road, 
 Hebei District, Tianjing, China
 

 If to the Company, to: 
 

 Yongping Xu, CEO 
 Cleopatra International Group, Inc.
 No. 12 Yingchun Road
 9th Floor, Haiwailianyi Building, Luohu District
 Shenzhen City, Guangdong Province, China
 

 or to such other address as may have been furnished in the same manner by any party to the others.
 
 22.
 GOVERNING LAW. This Agreement shall be governed by and construed and enforced under the laws of the State of New York.
 
 23.
 CONSENT TO JURISDICTION. The parties hereby consent to the jurisdiction of the courts having jurisdiction over matters arising in New York County, New York for any proceeding arising out of or relating to this Agreement. The parties agree that in any such proceeding, each party shall waive, if applicable, inconvenience of forum and right to a jury.
 
 24.
 AGREEMENT GOVERNS. This Agreement is to be deemed consistent wherever possible with relevant provisions of the By-Laws and Articles of Incorporation of the Company; however, in the event of a conflict between this Agreement and such provisions, the provisions of this Agreement shall control.
 
 25.
 INDEPENDENT CONTRACTOR. The parties understand, acknowledge and agree that the Independent Director’s relationship with the Company is that of an independent contractor and nothing in this Agreement is intended to or should be construed to create a relationship other than that of independent contractor. Nothing in this Agreement shall be construed as a contract of employment/engagement between the Independent Director and the 
 

 	 	 	 
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 Company or as a commitment on the part of the Company to retain the Independent Director in any capacity, for any period of time or under any specific terms or conditions, or to continue the Independent Director’s service to the Company beyond any period.
 
 26.
 ARBITRATION. Any dispute, controversy or claim arising out of or relating to this Agreement or the breach thereof, shall be settled by arbitration, before one arbitrator in accordance with the rules of the American Arbitration Association then in effect and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The arbitrator will be selected, by the parties, from a panel of attorney arbitrators. The parties agree that any arbitration shall be held in New York, New York. The language of the arbitration shall be in English. The arbitrator will have no authority to make any relief, finding or award that does not conform to the terms and conditions of this Agreement. Each party shall bear its own attorneys’ or expert fees and any and all other party specific costs. Either party, before or during any arbitration, may apply to a court having jurisdiction for a restraining order or injunction where such relief is necessary to protect its interests. Prior to initiation of arbitration, the aggrieved party will give the other party written notice, in accordance with this Agreement, describing the claim as to which it intends to initiate arbitration.
 
 27.
 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the Company and the Independent Director with respect to the subject matter hereof, and supersedes all prior understandings and agreements with respect to such subject matter.
 IN WITNESS WHEREOF, the parties hereto have executed this Independent Director Agreement as of the day and year first above written.
 

 	 	 
	  
	  

	 AGREED
	 AGREED

	  
	  

	 Cleopatra International Group, Inc. 
	 Independent Director

	  
	  

	  
	  

	  
	  

	 _/s/ Yongping Xu_______________
	 _/s/ Li Guo (Howard) Zhao___________

	 Name:  Yongping Xu 
	 Name: Li Guo (Howard) Zhao

	 Title:   CEO
	  

	  
	  

 

 

 	 	 	 
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 SCHEDULE A
 
 I
 POSITION:
 INDEPENDENT DIRECTOR.
 
 II.
 COMPENSATION:
 

 FEES. For all services rendered by the Independent Director pursuant to this Agreement, both during and outside of normal working hours, including but not limited to, attending all required meetings of the Board or applicable committees thereof, executive sessions of the independent directors, reviewing filing reports and other corporate documents as requested by the Company, providing comments and opinions as to business matters as requested by the Company, the Company agrees to pay to the Independent Director a fee in cash of RMB6,000 per month during the Term (the “Base Fee”).  The Base Fee shall be paid in cash to the Independent Director on a monthly basis in equal installments on the last day of each calendar month. 
 STOCK. The Independent Director shall be granted on the date of execution of this Agreement, 200,000 restricted shares of common stock of the Company.  
 EXPENSES. During the term of the Independent Director’s service as a director of the Company, the Company shall promptly reimburse the Independent Director for all expenses incurred by him/her in connection with attending (a) all meetings of the Board or applicable committees thereof, (b) executive sessions of the independent directors, and (c) stockholder meetings, as a director or a member of any committee of the Board , provided that any such expenses over $1,000 shall be approved by the Company in writing in advance.  In addition, the Independent Director shall rely on the Company to arrange all hotel accommodations in connection with any such meetings the Independent Director must attend. The amount of such expenses eligible for reimbursement by the Company during a calendar year shall not affect such expenses eligible for reimbursement by the Company in any other calendar year, and the reimbursement of any such eligible expenses shall be made on or before the last day of the calendar year next following the calendar year in which the expense was incurred.
 

 	 	 	 
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 NO OTHER BENEFITS OR COMPENSATION. The Independent Director acknowledges and agrees that he/she is not granted and is not entitled to any other benefits or compensation from the Company for the services provided under this Agreement except expressly provided for in this Schedule A.  Notwithstanding the above, the Independent Director acknowledges that, pursuant to a separate arrangement with the Company, since October 2010 he has been receiving RMB60,000 per month for his services as a managerial consultant to the Company.
 

 	 	 
	  
	  

	 AGREED
	 AGREED

	  
	  

	 Cleopatra International Group, Inc.
	 Independent Director

	  
	  

	  
	  

	  
	  

	 /s/ Yongping Xu
	 /s/ Li Guo (Howard) Zhao

	 Name:  Yongping Xu
	 Name:  Li Guo (Howard) Zhao

	 Title:   CEO
	  

	  
	  

 

 

 

 

 	 	 	 
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