Document:

Unassociated Document

THIS WARRANT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS, OR IF THE PROPOSED TRANSFER MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.

TMG ENEGRY CORP.

Common Stock Purchase Warrant

	  	
State of New York

	
Shares Underlying Warrant:  22,187,500

	
Effective Date: March 25, 2011

Date: April 19, 2011

FOR VALUE RECEIVED and subject to the terms and conditions hereinafter set out, HFP Capital Markets LLC,  or its registered transferee or assigns, as the registered holder of this Warrant as set forth on the books and records of the Company (the “Holder”), is entitled upon surrender of this Warrant to purchase from TMG ENEGRY CORP. (the “Company”) 22,187,500 shares fully paid and non-assessable shares of Common Stock, $.0001 par value (the “Common Stock”), at the Exercise Price (as defined below) per share.

This Warrant shall expire at the close of business on March 25, 2021.

	
1.

	
Issuance.

This Warrant is being issued by the Company to the Holder for consulting services.

	
2.

	
Exercise of Warrant.

(a)           The right to purchase shares of Common Stock represented by this Warrant may be exercised by the Holder, in whole or in part, ( in whole dollar increments), by (i) the surrender of this Warrant (properly endorsed if required) at the principal office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Company), (ii) a duly executed notice of exercise in the form of Annex A hereto, and (iii) upon payment to the Company, by cash or by certified check or bank draft, of the exercise price of $0.0001 per share (the “Exercise Price”).  The Holder shall have the right to exercise the entire warrant in part or in whole on a cashless basis during the term of the warrant by presentation and surrender by the Holder of this Warrant to the Company at its principal executive offices with a written notice of the holder’s intention to effect a cashless exercise, including a calculation of the number of shares of Common Stock to be issued upon such exercise in accordance with the terms hereof (a “Cashless Exercise”). In the event of a Cashless Exercise, in lieu of paying the Exercise Price in cash, the holder shall surrender this Warrant for that number of shares of Common Stock determined by multiplying the number of shares of Common Stock to which it would otherwise be entitled by a fraction, the numerator of which shall be the difference between the then current Market Price (as defined below) per share of the Common Stock and the Exercise Price, and the denominator of which shall be the then current Market Price per share of Common Stock. For example, if the holder is exercising 1,000,000 Warrants with a per Warrant exercise price of $0.0001 per share through a cashless exercise when the Common Stock’s current Market Price per share is $0.05 per share, then upon such Cashless Exercise the holder will receive 998,000 shares of Common Stock. “Market Price,” as of any date, (i) means the closing price for the shares of Common Stock on the OTC immediately preceding the exercise as reported by Bloomberg, or (ii) if the OTC is not the principal trading market for the shares of Common Stock, the closing price  on the principal trading market for the Common Stock immediately preceding the exercise as reported by Bloomberg.  The Company acknowledges that, in the event of a Cashless Exercise, the holding period for Rule 144 purposes, shall tack back to the original issuance date of this Warrant. The Company agrees that the shares of Common Stock so purchased shall be deemed to be issued to the Holder as the record owner of such shares of Common Stock as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares of Common Stock as aforesaid.  Certificates for the shares of Common Stock so purchased shall be delivered to the Holder within a reasonable time, not exceeding five (5) business days, after the rights represented by this Warrant shall have been so exercised, and, unless this Warrant has expired, a new Warrant representing the number of shares of Common Stock, if any, with respect to which this Warrant shall not then have been exercised, in all other respects identical with this Warrant, shall also be issued and delivered to the Holder within such time, or, at the request of the Holder, appropriate notation may be made on this Warrant and the same returned to the Holder.

  

 

  

(b)           Notwithstanding anything in this Warrant to the contrary, in no event shall the Holder of this Warrant be entitled to exercise a number of Warrants (or portions thereof) in excess of the number of Warrants (or portions thereof) upon exercise of which the sum of (i) the number of shares of Common Stock beneficially owned by the holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unexercised Warrants and the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein) and (ii) the number of shares of Common Stock issuable upon exercise of the Warrants (or portions thereof) with respect to which the determination described herein is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.9% of the outstanding shares of common stock. For purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13D-G thereunder, except as otherwise provided in clause (i) of the preceding sentence. Notwithstanding anything to the contrary contained herein, the limitation on exercise of this Warrant set forth herein may not be amended without (i) the written consent of the Holder hereof and the Company and (ii) the approval of a majority of shareholders of the Company.

(c)           Piggyback Registration.  The underlying warrant shares of the Company shall carry piggyback registration rights.

	
3.

	
Fractional Shares.

No fractional Common Stock shall be issued in connection with any exercise of this Warrant.

	
4.

	
Adjustment to Exercise Price.

The Exercise Price shall be adjusted as follows:

(a)           In the case of any amendment to the Certificate of Incorporation of the Company to change the rights, privileges, restrictions or conditions in respect to the Common Stock or division of the Common Stock, this Warrant shall be adjusted so as to provide that upon exercise thereof, the Holder shall receive, in lieu of each share of Common Stock theretofore issuable upon such exercise, the kind and amount of shares, other securities, money and property receivable upon such change or division by the Holder issuable upon such exercise had the exercise occurred immediately prior to such designation, change or division.

(b)           If the Company shall at any time subdivide its outstanding shares of Common Stock into a greater number of shares of Common Stock, or declare a dividend or make any other distribution upon the Common Stock payable in shares of Common Stock, the Exercise Price in effect immediately prior to such subdivision or dividend or other distribution shall be proportionately reduced, and conversely, in case the outstanding shares of Common Stock shall be combined into a smaller number of shares of Common Stock, the Exercise Price in effect immediately prior to such combination shall be proportionately increased.

  

 

  

(c)           If any capital reorganization or reclassification of the capital stock of the Company, or any consolidation or merger of the Company with another corporation or entity, or the sale of all or substantially all of the Company’s assets to another corporation or other entity shall be effected in such a way that holders of shares of Common Stock shall be entitled to receive stocks, securities, other evidence of equity ownership or assets with respect to or in exchange for shares of Common Stock, then, as a condition of such reorganization, reclassification, consolidation, merger or sale (except as otherwise provided below in this Section 4), lawful and adequate provisions shall be made whereby the Holder shall thereafter have the right to receive upon the basis and upon the terms and conditions specified herein, such shares of stock, securities, other evidence of equity ownership or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of Common Stock immediately theretofore purchasable and receivable upon the exercise of this Warrant under this Section 4 had such reorganization, reclassification, consolidation, merger or sale not taken place, and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Exercise Price and of the number of shares of Common Stock receivable upon the exercise of this Warrant) shall thereafter be applicable, as nearly as may be, in relation to any shares of stock, securities, other evidence of equity ownership or assets thereafter deliverable upon the exercise hereof (including an immediate adjustment, by reason of such consolidation or merger, of the Exercise Price to the value for the Common Stock reflected by the terms of such consolidation or merger if the value so reflected is less than the Exercise Price in effect immediately prior to such consolidation or merger).  Subject to the terms of this Warrant, in the event of a merger or consolidation of the Company with or into another corporation or other entity as a result of which the number of shares of common stock of the surviving corporation or other entity issuable to holders of Common Stock of the Company, is greater or lesser than the number of shares of Common Stock of the Company outstanding immediately prior to such merger or consolidation, then the Exercise Price in effect immediately prior to such merger or consolidation shall be adjusted in the same manner as though there were a subdivision or combination of the outstanding shares of Common Stock of the Company.

(d)           Whenever the Exercise Price shall be adjusted pursuant to this Section 4, the Company shall issue a certificate signed by its President and by its Treasurer or Secretary, setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board of Directors of the Company made any determination hereunder), and the Exercise Price after giving effect to such adjustment, and shall cause copies of such certificates to be mailed (by first-class mail, postage prepaid) to the Holder of this Warrant.

	
5.

	
Covenants of the Company.

The Company covenants and agrees that all Common Stock upon issuance against payment in full of the Exercise Price by the Holder pursuant to this Warrant will be validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issue thereof; and, without limiting the generality of the foregoing, the Company covenants and agrees that it will take from time to time all such action as may be requisite to assure that the par value per share of the Common Stock is at all times equal to or less than the then effective Exercise Price.  The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will have at all times authorized, and reserved for the purpose of issue or transfer upon exercise of the rights evidenced by this Warrant, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant.  The Company will take all such action as may be necessary to assure that such shares of Common Stock may be so issued without violation of any applicable law or regulation.  The Company will not take any action which would result in any adjustment in the number of shares of Common Stock purchasable hereunder if the total number of shares of Common Stock issuable pursuant to the terms of this Warrant after such action upon full exercise of this Warrant and, together with all shares of Common Stock then outstanding and all shares of Common Stock then issuable upon exercise of all options and other rights to purchase shares of Common Stock then outstanding, would exceed the total number of shares of Common Stock then authorized by the Company’s Certificate of Incorporation, as then amended.

	
6.

	
EXCHANGE.

This Warrant is exchangeable, upon the surrender hereby by the Holder at the office or agency of the Company, for new Warrants of like tenor representing in the aggregate the right to subscribe for and purchase the number of shares of Common Stock which may be subscribed for and purchased hereunder, each of such new Warrants to represent the right to subscribe for and purchase such number of shares of Common Stock as shall be designated by the Holder at the time of such surrender.  Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant or any such new Warrants and, in the case of any such loss, theft, or destruction, upon delivery of a bond of indemnity, reasonably satisfactory to the Company, or, in the case of any such mutilation, upon surrender or cancellation of this Warrant or such new Warrants, the Company will issue to the Holder a new Warrant of like tenor, in lieu of this Warrant or such new Warrants, representing the right to subscribe for and purchase the number of shares of Common Stock which may be subscribed for and purchased hereunder.

  

 

  

	
7.

	
Miscellaneous.

(a)           Limited Rights of Holders.  This Warrant shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Company, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.

(b)           Amendments and Waivers; Assignment.  No provision of this Warrant may be amended without the express written consent of both the Company and the Holder. No delay by the Company in exercising any power or right hereunder shall operate as a waiver of any power or right, nor shall any single or partial exercise of any power or right preclude other or further exercise thereof, or the exercise thereof, or the exercise of any other power or right hereunder or otherwise; and no waiver whatsoever or modification of the terms hereof shall be valid unless set forth in writing by the Holder and then only to the extent set forth therein.  The Holder may assign this Warrant at its own discretion provided that such assignment is not in contravention with the Securities Act of 1933, as amended, or any other state or federal securities laws.

(c)           Governing Law; Jurisdiction.  This Warrant is made and delivered in, and shall be governed by and construed in accordance with the laws of, the State of New York (without giving effect to principles of conflicts of laws of the State of New York or any other state), and any dispute shall be resolved in the state or federal courts located in Nassau County, New York.

(d)           Counterparts.  This Agreement may be executed in one or more counterparts, including facsimile signatures, each of which shall be deemed an original but all of which together will constitute one and the same instrument.

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by a duly authorized officer as of the date first above indicated.

	  	
TMG ENEGRY CORP.

	  	  	  
	  	
By:

	
/s/ Edward Miller

	  	  	
Name:  Edward Miller

	  	  	
Title: Chief Executive Officer

 

  

 

  

ANNEX A

COMMON STOCK SUBSCRIPTION WARRANT

Notice of Exercise

To:           TMG ENEGRY CORP.

The undersigned, pursuant to the provisions set forth in the Common Stock Subscription Warrant dated as of March 25, 2011, hereby irrevocably elects and agrees

CHECK AND COMPLETE ONE

_______ The undersigned hereby elects to purchase ___________________ of  the shares of Common Stock covered by such Warrant (the “Warrant Shares”), and herewith makes payment therefor in full of the aggregate Exercise Price of $________________.

_____ The undersigned hereby elects to exercise the Holder’s option to purchase __________ shares of the common stock of the Company at a price of $0.0001 per share, by Net Exercise, on the terms and subject to the conditions set forth in the Agreement

The undersigned hereby represents that the undersigned is exercising such Warrant for its own account and will not sell or otherwise dispose of the underlying Warrant Shares in violation of applicable securities laws.  If said number of shares is less than all of the shares purchasable hereunder the undersigned requests that a new Warrant evidencing the rights to purchase the remaining Warrant Shares (which new Warrant shall in all other respects be identical to the Warrant exercised hereby) be registered in the name of the undersigned.

The undersigned has executed this Notice this ____ day of __________, 20__.

	
Signature:

	  
	
Printed Name:

	  
	
Address:EMPLOYMENT AGREEMENT

 

AGREEMENT dated as of the 24th day of March, 2011 by and between TMG Energy Corp., a Nevada corporation with its principal office at 29 Broadway, 22nd Floor, New York, New York 10006 (the “Company”), and Edward Miller (the “Executive”).

 

WITNESSETH:

 

WHEREAS, the Company has engaged Executive as its Chief Executive Officer, President, Secretary, Chief Financial Officer, Chief Accounting Officer and Treasurer and desires to continue to obtain the benefits of Executive’s knowledge, skill and ability in connection with managing the operations of the Company and to continue to employ Executive on the terms and conditions hereinafter set forth; and

 

WHEREAS, Executive desires to provide his services to the Company and to accept employment by the Company on the terms and conditions hereinafter set forth;

 

NOW, THEREFORE, in consideration of the mutual promises set forth in this Agreement, the parties agree as follows:

 

1.           Employment and Duties.

 

(a)           Subject to the terms and conditions hereinafter set forth, the Company hereby employs the Executive as its Chief Executive Officer, President, Secretary, Chief Financial Officer, Chief Accounting Officer and Treasurer, and he shall have the duties and responsibilities associated with such positions of a public corporation.  Additionally, during the Term, as hereinafter defined, the Company shall include Executive as one of the board of directors’ nominees for election as a director.  During the Employment Term, as hereinafter defined, the Executive shall report to the Company’s board of directors (the “Board”).  Executive shall also perform such other duties and responsibilities as may be determined by the Board, as long as such duties and responsibilities are consistent with those of the such positions as set forth in this Agreement.

  

  

  

(b)           The Executive shall serve as a director of the Company or any of its subsidiaries, if elected, and in such executive capacity or capacities with respect to any affiliate of the Company to which he may be elected or appointed, provided that such duties are consistent with those of the Company’s Chief Executive Officer.  During the Employment Term, the Executive shall receive no additional compensation for services rendered pursuant to this Paragraph 1(b).

 

(c)           Unless terminated earlier as provided for in Paragraph 5 of this Agreement, this Agreement shall have an initial term (the “Initial Term”) commencing as of the date of this Agreement and expiring three (3) years from the date hereof.  The Executive shall have the right, on notice given not later than sixty (60) days prior to the end of the Initial Term, to extend the term for a period of one (1) year.  The Initial Term and the one-year extension are collectively referred to as the “Employment Term.”

 

2.           Executive’s Performance.  Executive hereby accepts the employment contemplated by this Agreement. During the Employment Term, Executive shall devote substantially all of his business time to the performance of his duties under this Agreement, and shall perform such duties diligently, in good faith and in a manner consistent with the best interests of the Company.

 

3.           Compensation and Other Benefits.

 

(a)      For his services to the Company during the Employment Term, the Company shall pay the Executive an annual salary (“Salary”) at the rate of $197,000.00 which will be increased to $275,000 upon the execution of contract(s) representing $2,500,000 in revenue.  All Salary payments shall be payable in such installments as the Company regularly pays its executive officers, but not less frequently than semi-monthly.

 

(b)           If the Board establishes a bonus pool for the Company’s key management employees, which plan may be based on a percentage of the Company’s net income or such other formula as the Board may determine, the Executive shall participate in the bonus pool.  The size of the bonus pool and the extent of Executive’s participation in the bonus pool will be determined by the Board, whose determination shall be final, binding and conclusive on the Company and Executive. If for any year no bonus pool is established, the Executive shall be eligible for a discretionary bonus by the Board. Any bonus payments made to the Executive shall hereinafter be referred to as a “Bonus.”

  

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(c)           In addition to Salary and Bonus, the Executive shall receive the following benefits during the Term:

 

(i)           Major medical health insurance for the Executive and members of his immediate family.

 

(ii)           Accident and life insurance and officer’s life insurance to the extent such benefits are provided to the Company’s executive officers and long-time disability insurance which is presently in effect for the Executive.

 

(iii)           Long-term medical care insurance to the extent that the Company is able, by using reasonable efforts, to obtain such coverage for an annual premium which does not exceed $3,000.  To the extent that the annual premium for such coverage exceeds $3,000, if the Executive desires such coverage, he shall be responsible for the additional premiums.

 

(iv)           An automobile allowance of $500 per month payable monthly.

 

(v)           Vacation in accordance with Company policy.

 

(d)           In the event of a termination of Executive’s employment as a result of his death or Disability, as hereinafter defined, the Company shall continue to pay to Executive or his beneficiary, his Salary at the annual rate in effect at the date of death or termination resulting from a Disability, until the earlier of (i) six (6) months from the date of death or such termination or (ii) the expiration of the Term.

 

(e)           Any payments (“disability insurance payments”) received by Executive pursuant to a disability policy obtained through the Company (whether paid for by the Company or Executive) shall be applied on a dollar-for-dollar basis to reduce the Salary or disability payments payable by the Company pursuant to this Agreement during the period when such disability insurance payments are being made.

  

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(f)           As used in this Agreement, the term “Cash Compensation” shall include Salary, Bonus, automobile expenses and vacation pay.  One month’s Cash Compensation shall mean one twelfth (1/12) of the sum of (i) the annual Salary, (ii) the Bonus for previous year, (iii) the annual automobile allowance plus (iv) the annual vacation pay.  During the Consulting Term, references to “Salary” shall mean the annual compensation payable pursuant to Paragraph 3(a) of this Agreement.

 

(g)      The Executive shall be issued a Stock Option to acquire 15,000,000 shares of common stock of the Company at an exercise price of $0.0001 per share for a period of ten (10) years (the “Option”).  The form of the Option is attached hereto as Exhibit A.

 

3.      Reimbursement of Expenses.  The Company shall reimburse Executive, upon presentation of proper expense statements, for all authorized, ordinary and necessary out-of-pocket expenses reasonably incurred by Executive during the Term in connection with the performance of his services pursuant to this Agreement hereunder in accordance with the Company’s expense reimbursement policy.

 

4.      Termination of Employment.

 

(a)           This Agreement and Executive’s employment hereunder shall terminate immediately upon the death of the Executive.

 

(b)           This Agreement and Executive’s employment pursuant to this Agreement, may be terminated by the Executive or the Company on not less than thirty (30) days’ written notice in the event of Executive’s Disability. The term “Disability” shall mean any illness, disability or incapacity of the Executive which prevents him from substantially performing his regular duties for a period of three (3) consecutive months or four (4) months, even though not consecutive, in any twelve (12) month period.  However, if the Executive is covered by long-term disability insurance, the Company may not terminate this Agreement pursuant to this Paragraph 4(b) unless the Executive is eligible for disability payments under his long-term disability insurance.

  

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(c)           The Company may terminate this Agreement and the Executive’s employment pursuant to this Agreement for cause, in which event no further Cash Compensation shall be payable to Executive subsequent to the date of such termination. The term “Cause” shall mean (i)  repeated failure to perform material instructions from the Board, or, if Executive does not report to the Board, from the officer to whom Executive reports, provided that such instructions are reasonable and consistent with Executive’s duties as set forth in Paragraph 1 of this Agreement, (ii) a breach of Paragraphs 5, 6 or 7 of this Agreement; (iii) a breach of trust whereby the Executive obtains personal gain or benefit at the expense of or to the detriment of the Company; or (iv) a conviction of the Executive of any felony.  If the Company proposes to terminate this Agreement pursuant to clauses (i), (ii) or (iii) of this Paragraph 4(c), the Company shall notify the Executive in writing setting forth in reasonable detail the basis for the proposed termination, and the Executive shall have a reasonable opportunity to respond to the Board and to be represented before the Board by counsel.  For purposes of clauses (iv) of this Agreement, a guilty plea or plea of nolo contendere or similar plea shall be deemed to be a conviction.

 

(d)           In the event that the Company terminates Executive’s employment other than (i) as provided in Paragraphs 4(a), (b) and (c) or (ii) as a result of or following a change of control (other than as provided in Paragraph 4(e) of this Agreement), the Company shall pay to Executive as severance payments (A) his Salary as provided in this Agreement for the balance of the Term, (B) the Bonus paid to Executive for the previous year, both of which shall be paid in twelve (12) equal monthly installments commencing within the month following the month in which Executive’s termination occurs.

 

(e)           (i)           In the event that, following a change of control, as hereinafter defined, Executive is either dismissed other than for cause, or resigns for any reason, or his employment is terminated as a result of a Disability, the Company shall pay Executive severance pay in an amount (determined at the rate in effect on the date of dismissal or resignation) equal to the sum of (A) twelve (12) months’ Cash Compensation plus (B) the applicable number of months’ Cash Compensation, all of which shall be paid to the Executive on the date of the termination of his employment.  The applicable number of months shall be the greater of (x) thirty (30) or (y) one and one-half (1.5) multiplied by the number of full or partial years during which the Executive served as an officer or director of or consultant to the Company.

  

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(ii)           A change of control shall occur or be deemed to have occurred if any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended) is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing fifty (50%) percent or more of the combined voting power of the Company’s then outstanding securities.

 

(f)           In the event of any termination of Executive’s employment, including termination for cause as provided for herein, Executive shall be entitled to all rights under the Company’s benefit plans which had vested as of the date of termination of his employment.  In addition, for a period of three (3) months after any such termination, the Company shall provide Executive and, to the extent permitted by the Company’s insurance plans, his eligible family members with the hospitalization, life insurance, medical and major medical benefits which would have been provided to Executive if he had continued in the employ of the Company pursuant to this Agreement, except that the Company shall not be required to provide life insurance coverage for any family member.

  

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5.           Trade Secrets and Proprietary Information.  Executive recognizes and acknowledges that the Company, through the expenditure of considerable time and money, has developed and will continue to develop in the future information concerning customers, clients, marketing, products, services, business, research and development activities and operational methods of the Company and its customers or clients, contracts, financial or other data, technical data or any other confidential or proprietary information possessed, owned or used by the Company, the disclosure of which could or does have a material adverse effect on the Company, its business, any business it proposes to engage in, its operations, financial condition or prospects and that the same are confidential and proprietary and considered “confidential information” of the Company for the purposes of this Agreement. In consideration of his employment and engagement as a consultant, Executive agrees that he will not, during or after the Term, without the consent of the Board make any disclosure of confidential information now or hereafter possessed by the Company, to any person, partnership, corporation or entity either during or after the term here of, except that nothing in this Agreement shall be construed to prohibit Executive from using or disclosing such information (a) if such disclosure is necessary in the normal course of the Company’s business in accordance with Company policies or instructions or authorization from the Board, (b) such information shall become public knowledge other than by or as a result of disclosure by a person not having a right to make such disclosure, (c) complying with legal process; provided, that in the event Executive is required to make disclosure pursuant to legal process, Executive shall give the Company prompt notice thereof and the opportunity to object to the disclosure, or (d) subsequent to the Term, if such information shall have either (i) been developed by Executive independent of any of the Company’s confidential or proprietary information or (ii) been disclosed to Executive by a person not subject to a confidentiality agreement with or other obligation of confidentiality to the Company.  For the purposes of Paragraphs 5, 6 and 7 of this Agreement, the term “Company” shall include the Company, its parent, its subsidiaries and affiliates.

 

6.           Covenant Not To Solicit or Compete.

 

(a)           During the period from the date of this Agreement until one (1) year following the date on which Executive’s employment or consulting relationship is terminated, Executive will not, directly or indirectly:

 

(i)           Persuade or attempt to persuade any person or entity which is or was a customer, client or supplier of the Company to cease doing business with the Company, or to reduce the amount of business it does with the Company (the terms “customer” and “client” as used in this Paragraph 7 to include any potential customer or client to whom the Company submitted bids or proposals, or with whom the Company conducted negotiations, during the term of Executive’s employment or consulting relationship hereunder or during the twelve (12) months preceding the termination of his employment or consulting relationship, as the case may be);

  

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(ii)           solicit for himself or any other person or entity other than the Company the business of any person or entity which is a customer or client of the Company, or was a customer or client of the Company within one (1) year prior to the termination of his employment or consulting relationship;

 

(iii)           persuade or attempt to persuade any employee of the Company, or any individual who was an employee of the Company during the one (1) year period prior to the lawful and proper termination of this Agreement, to leave the Company’s employ, or to become employed by any person or entity other than the Company; or

 

(iv)           engage in any business in the United States whether as an officer, director, consultant, partner, guarantor, principal, agent, employee, advisor or in any manner, which directly competes with the business of the Company as it is engaged in at the time of the termination of this Agreement, unless, at the time of such termination or thereafter during the period that the Executive is bound by the provisions of this Paragraph 6, the Company ceases to be engaged in such activity, provided, however, that nothing in this Paragraph 6 shall be construed to prohibit the Executive from owning an interest of not more than five (5%) percent of any public company engaged in such activities.

 

(b)           The Executive acknowledges that the restrictive covenants (the “Restrictive Covenants”) contained in Paragraphs 5 and 6 of this Agreement are a condition of his employment and his consulting relationship are reasonable and valid in geographical and temporal scope and in all other respects. If any court determines that any of the Restrictive Covenants, or any part of any of the Restrictive Covenants, is invalid or unenforceable, the remainder of the Restrictive Covenants and parts thereof shall not thereby be affected and shall remain in full force and effect, without regard to the invalid portion. If any court determines that any of the Restrictive Covenants, or any part thereof, is invalid or unenforceable because of the geographic or temporal scope of such provision, such court shall have the power to reduce the geographic or temporal scope of such provision, as the case may be, and, in its reduced form, such provision shall then be enforceable.

  

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(c)      The Company acknowledges that the payment of Cash Compensation to Executive is a necessary prerequisite to Executive being bound by the Restrictive Covenants.  If the Company fails to pay to Executive his Cash Compensation, or any part hereof, within ten business days after receipt of written notice of such failure, Executive shall be relieved of his obligations to comply with the Restrictive Covenants.

 

7.      Inventions and Discoveries. Executive previously holds and maintains all claims to IP, Patents, potential Patents and Trademark rights for Miller Data Power, Miller Hydraulink and EDPAC System Technologies.  Executive agrees promptly to disclose in writing to the Company any invention or discovery made by him during the period of time that this Agreement remains in full force and effect, whether during or after working hours, in any business in which the Company is then engaged or which otherwise relates to any product or service dealt in by the Company and such inventions and discoveries shall be the Company’s sole property. Upon the Company’s request, Executive shall execute and assign to the Company all applications for copyrights and letters patent  of the United States and such foreign countries as the Company may designate, and Executive shall execute and deliver to the Company such other instruments as the Company deems necessary to vest in the Company the sole ownership of all rights, title and interest in and to such inventions and discoveries, as well as all copyrights and/or patents. If services in connection with applications for copyrights and/or patents are performed by Executive at the Company’s request after the termination of his employment hereunder, the Company shall pay him reasonable compensation for such services rendered after termination of this Agreement.

  

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8.           Injunctive Relief. Executive agrees that his violation or threatened violation of any of the provisions of Paragraphs 5, 6 or 7 of this Agreement shall cause immediate and irreparable harm to the Company. In the event of any breach or threatened breach of any of said provisions, Executive consents to the entry of preliminary and permanent injunctions by a court of competent jurisdiction prohibiting Executive from any violation or threatened violation of such provisions and compelling Executive to comply with such provisions. This Paragraph 8 shall not affect or limit, and the injunctive relief provided in this Paragraph 8 shall be in addition to, any other remedies available to the Company at law or in equity or in arbitration for any such violation by Executive. In the event an injunction is issued against any such violation by Executive, the period referred to in Paragraph 7 of this Agreement shall continue until the later of the expiration of the period set forth therein or one (1) month from the date a final judgment enforcing such provisions is entered and the time for appeal has lapsed.  Subject to Paragraph 6(c) of this Agreement, the provisions of Paragraphs 5, 6, 7 and 8 of this Agreement shall survive any termination of this Agreement and Executive’s employment pursuant to this Agreement.

 

9.           Indemnification. The Company shall provide Executive with payment of legal fees and indemnification to the maximum extent permitted by the Company’s Certificate of Incorporation, By-Laws, and the Nevada Revised Statutes.

 

10.           Miscellaneous.

 

(a)           (i)           Executive represents, warrants, covenants and agrees that he has a right to enter into this Agreement, that he is not a party to any agreement or understanding, oral or written, which would prohibit performance of his obligations under this Agreement, and that he will not use in the performance of his obligations hereunder any proprietary information of any other party which he is legally prohibited from using.

 

(i)           The Company represents, warrants and agrees that it has full power and authority to execute and deliver this Agreement and perform its obligations hereunder.  The Company further represents, warrants and agrees that the Agreement: (A) has been duly authorized by the Board and no other corporate action is required of the Company to enter into this Agreement and perform its obligations hereunder; (B) does not require the consent of any third party; and (C) does not violate any law, regulation, rule or material agreement, mortgage, bond, pledge, note or other instrument to which it or its properties are bound.

  

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(b)           Executive will cooperate with the Company in connection with the Company’s application to obtain key-man life insurance on his life, on which the Company will be the beneficiary. Such cooperation shall include the execution of any applications or other documents requiring his signature and submission of insurance applications and submission to a physical.

 

(c)           Any notice, consent or communication required under the provisions of this Agreement shall be given in writing and sent or delivered by hand, overnight courier or messenger service, against a signed receipt or acknowledgment of receipt, or by registered or certified mail, return receipt requested, or telecopier or similar means of communication if receipt is acknowledged or if transmission is confirmed by mail as provided in this Paragraph 10(c), to the parties at their respective addresses set forth at the beginning of this Agreement or by telecopier to the Company at (  )  -    or to Executive at (  )    -   , with notice to the Company being sent to the attention of the individual who executed this Agreement on behalf of the Company. Either party may, by like notice, change the person, address or telecopier number to which notice is to be sent.  If no telecopier number is provided for Executive, notice to him shall not be sent by telecopier.

 

(d)           This Agreement shall in all respects be construed and interpreted in accordance with, and the rights of the parties shall be governed by, the laws of the State of New York applicable to contracts executed and to be performed wholly within such State, without regard to principles of conflicts of laws except that the provisions of Paragraph 9 shall be governed by the Nevada Revised Statutes.

 

(e)           Except for actions, suits, or proceedings taken pursuant to or under Paragraph 5, 6, 7 or 8 of this Agreement, any dispute concerning this Agreement or the rights of the parties hereunder shall be submitted to binding arbitration in New York City before a single arbitrator under the rules of the American Arbitration Association. The award of the arbitrator shall be final, binding and conclusive on all parties, and judgment on such award may be entered in any court having jurisdiction. The arbitrator shall have the power, in his discretion, to award counsel fees and costs to the prevailing party. The arbitrator shall have no power to modify or amend any specific provision of this Agreement except as expressly provided in Paragraph 10(f) of this Agreement.

  

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(f)           Notwithstanding the provisions of Paragraph 10(e) of this Agreement, with respect to any claim for injunctive relief or other equitable remedy pursuant to Paragraph 9 of this Agreement or any claim to enforce an arbitration award or to compel arbitration, the parties hereby (i) consents to the exclusive jurisdiction of the United States District Court for the Southern District of New York and Supreme Court of the State of New York in the County of New York, (ii) agree that any process in any action commenced in such court under this Agreement may be served upon him personally, either (A) by certified or registered mail, return receipt requested, or by Federal Express or other courier service which obtains evidence of delivery, with the same full force and effect as if personally served upon him in New York City, as the case may be, or (B) by any other method of service permitted by law, and (iii) waives any claim that the jurisdiction of any such court is not a convenient forum for any such action and any defense of lack of in personam jurisdiction with respect thereof.

 

(g)           If any term, covenant or condition of this Agreement or the application thereof to any party or circumstance shall, to any extent, be determined to be invalid or unenforceable, the remainder of this Agreement, or the application of such term, covenant or condition to parties or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this Agreement shall be valid and be enforced to the fullest extent permitted by law, and any court or arbitrator having jurisdiction may reduce the scope of any provision of this Agreement, including the geographic and temporal restrictions set forth in Paragraph 6 of this Agreement, so that it complies with applicable law.

  

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(h)           This Agreement constitute the entire agreement of the Company and Executive as to the subject matter hereof, superseding all prior or contemporaneous written or oral understandings or agreements, including any and all previous employment agreements or understandings, all of which are hereby terminated, with respect to the subject matter covered in this Agreement. This Agreement may not be modified or amended, nor may any right be waived, except by a writing which expressly refers to this Agreement, states that it is intended to be a modification, amendment or waiver and is signed by both parties in the case of a modification or amendment or by the party granting the waiver. No course of conduct or dealing between the parties and no custom or trade usage shall be relied upon to vary the terms of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

 

(i)           Neither party hereto shall have the right to assign or transfer any of its or his rights hereunder except in connection with a merger of consolidation of the Company or a sale by the Company of all or substantially all of its business and assets.

 

(j)           This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors, executors, administrators and permitted assigns.

 

(k)           The headings in this Agreement are for convenience of reference only and shall not affect in any way the construction or interpretation of this Agreement.

 

(l)           No delay or omission to exercise any right, power or remedy accruing to either party hereto shall impair any such right, power or remedy or shall be construed to be a waiver of or an acquiescence to any breach hereof. No waiver of any breach hereof shall be deemed to be a waiver of any other breach hereof theretofore or thereafter occurring. Any waiver of any provision hereof shall be effective only to the extent specifically set forth in an applicable writing. All remedies afforded to either party under this Agreement, by law or otherwise, shall be cumulative and not alternative and shall not preclude assertion by such party of any other rights or the seeking of any other rights or remedies against any other party.

 

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

 

	  	
TMG ENERGY CORP.

	  	  
	  	
By:

	
/s/ Michael Murphy

	  	  	
Michael Murphy

	  	  	
Chief Operating Officer

	  	  
	  	
EXECUTIVE:

	  	  
	  	
/s/ Edward Miller

	  	
Edward Miller

 

  

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