Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - EYI Industries, Inc. - Exhibit 10.37

 CONSULTING AGREEMENT

This Agreement dated for reference the 1st day of April 2004 as at 9:01 pm PST  

BETWEEN: 

  
     EYI Industries, Inc.

      3960 Howard Hughes Parkway, Suite 500 

      Las Vegas, Nevada 89109 

      Ph: (702) 296-8034 Fax: 604-502-5144 

      ("EYI") 

  

AND:    

  
     Daniel Matos 

      Av. Francisco de Miranda 

      Centro Plaza, Torre A 

      P.H. Los Palos Grandes, Venezuela 

      Ph: (58-212) 283.75.98/98.89/89.86 Fax: (58-212) 286.44.57 

      (the "Consultant") 

  

WHEREAS: 

	 A.      	 EYI has the exclusive right to market and distribute EYI brand of health
      products; and 
	 B.      	 EYI desires to secure the services of the Consultant as set out in Section
      3 herein ; 

 NOW THEREFORE in consideration of the premises and of the
  mutual covenants and agreements herein set forth and contained and the payment
  of $10.00 to each other (the receipt and sufficiency of which is acknowledged),
  The Consultant and EYI (the "Parties") agree each with the other as follows:

	 1.      	 APPOINTMENT 
	 	 1.1.      	 EYI hereby engages the Consultant and the Consultant
        hereby accepts such engagement for the purpose of assisting EYI and its
        business. 

	 
	 2.      	 TERM 
	 	 2.1.      	 This Agreement shall be deemed to be effective as
        of and from April 1 st, 2004 and shall continue for a period of two (2)
        years. 

	 
	 3.      	 SERVICES 
	 	 3.1.      	 The Company hereby retains the Consultant as an
        independent contractor to provide the Services on the terms and subject
        to the conditions set out in this Agreement. The Services to be provided
        by the Consultant are outlined in this section. 

	 

 

	 	 3.2      	 The Consultant shall provide the following
        services including but not limited to: 

	 	 	a.	Establishing and working with various businesses and persons for the purpose
      of establishing business relationship in Latin America; 
	 	 	b.	Marketing and promoting EYI products in Latin America; and 
	 	 	c.	Such any other services, as EYI shall reasonably request. 
	 
	 4.      	 REMUNERATION 
	 	 4.1.      	 The Consultant will receive two million
        (2,000,000) stock options ("Options") to purchase common shares at a price
        of twenty ($0.20) cents per share. The Consultant shall be paid a consulting
        fee of $16,667 monthly and this sum will be used by the Consultant to
        acquire shares of EYI by exercising the Options. 

	 	 4.2.      	 Consultant shall be responsible for payment
        of all local, state and federal taxes in regard to any amounts paid by
        EYI under this agreement and Consultant hereby indemnifies and save harmless
        EYI from all claims in this regard. 

	 	 4.3.      	 The Consultant agrees to comply with all
        laws, ordinances, rules and regulations, which are applicable to the performance
        of his services. The Consultant agrees to indemnify and hold EYI harmless
        from all claims, damages, and expenses resulting from the Consultant's
        failure to comply, and his performance hereunder. 

	 	 4.4.      	 The Consultant shall provide and be fully
        responsible for all cost and out of pocket expenses of whatever nature
        and kind necessary, in the Consultants opinion, acting reasonably, to
        carry out the Services assigned. 

	 
	 5.      	 RELATIONSHIP OF CONSULTANT TO COMPANY 
	 	 5.1      	 It is expressly agreed that neither the
        Consultant nor any of its employees are employees of EYI for any purpose
        whatsoever, but that the Consultant is an independent contractor and any
        employees of the Consultant are employees of the Consultant for all purposes.
        The Consultant shall be responsible and shall deduct and promptly pay
        all employee deductions in compliance with all applicable legislation
        and shall indemnify the Company from any liability for the same. 

	 	 5.2      	 The Consultant warranties that he is a
        Non US Resident for US income tax purposes and that the Consultant does
        not have a permanent place of business in the United States. 

	 	 5.3      	 The Consultant shall perform its duties
        in strict compliance with all applicable laws, rules and regulations of
        duly constituted government authorities and shall obtain all licenses,
        registrations or other approvals required by law in connection with the
        services to be rendered herein. 

	 
	 6.      	 CONFIDENTIALITY 
	 	 6.1      	 The Consultant acknowledges that in the
        performance of its responsibilities hereunder, the Consultant will have
        access to confidential information and records including business plans,
        designs and trade secrets of the Company and its customers (the "Confidential
        Information"). During and after the Term of this Agreement, the Consultant
        shall not, directly or indirectly, disclose such Confidential Information
        to any person or use any such Confidential Information, except: 

	 	 	 	 
	 	 	 (a)      	 as required in the course of performing such services and then only to
      staff of the Company on a need-to-know basis; or 
	 

	 	 	(b) 	with the prior written consent of the Company; 

       and all Confidential Information which the Consultant
        shall prepare or use or come in contact with shall be and remain the Company's
        sole property and shall not be used by the Consultant for its own use
        without its prior written consent, except as required in the normal course
        of performing the consulting services under this Agreement. From time
        to time the Company may enter into confidentiality agreements with its
        business partners whereby information provided by those business partners
        to the Company is the confidential and proprietary information of such
        business partners and must be treated in the same manner as the Consultant
        is bound to treat the confidential and proprietary information of the
        Company and the Consultant shall agree to be bound by any such confidentiality
        agreement. 

	 	 	 
	 	 6.2      	 The Consultant agrees to return to the
        Company all the Confidential Information provided by the Company and any
        copies of such material in its possession forthwith upon demand. 

	 
	 	 6.3      	 Save as otherwise permitted herein, the
        Consultant agrees that it will not (without prior written consent of the
        Company) at any time during the period of three year from the termination
        of this Agreement individually or in partnership of jointly or in conjunction
        with any person or persons, firm, association, syndicate, company or corporation
        as a principal, agent, shareholder or in any other manner whatsoever carry
        on or be engaged in or be concerned with or interested in or advise, lend
        money to, guarantee the debts or obligations of or permit their names
        or any part thereof to be used or employed by any person or persons, firm,
        association, syndicate, company or corporation engaged in or concerned
        with or interested in any business similar to the business heretofore
        carried on by the Company being the business of operating a Network based
        multilevel marketing of herbal products. 

	 
	 	 6.4      	 The Parties agree that all restrictions
        in this Article 6 are reasonable, fair and valid in all the circumstances
        and, to the fullest extent permitted by law, hereby waive all defenses
        to the strict enforcement thereof by the other. 

	 
	 	6.5   	
      In the event
        of the breach of covenants set out in this Agreement, the Consultant:
      

	 	 	 	 a.      	 Acknowledges that an injunction or other equitable
        relief may be obtained against the Consultant to prevent further breaches;
        and 

	 	 	 	 b.      	 The Consultant shall be liable for liquidated damages
        for such breach, without restricting any other claims or remedies that
        may be available at law or equity against the Consultant. 

 All confidential information disclosed to consultant shall
  be kept confidential by consultant and treated with at least the same level
  of protection as consultant gives its own confidential information of similar
  nature, but no less than a reasonable level of protection. Consultant 

 shall promptly notify EYI if it becomes aware of any unauthorized
  disclosure or use of the confidential information.

	7 	TERMINATION
	 	 	a. 	 This Agreement shall terminate without further
      notice upon: 
	 	 	 	 i.      	 The death of the Consultant; 

	 	 	 	 ii.      	 The winding up or bankruptcy of Consultant; 

	 	 	 	 iii.      	 Any breach under the Agreement and where such breach
        continues for a period of Fifteen (15) days after written notice from
        the non-defaulting / non-breaching party; 

	 	 	 	 iv.      	 The Consultant being found guilty of fraud or other
        serious criminal offense or being declared mentally incompetent; 

	 	 	 	 v.      	 The agreement of the parties to so do in writing.
      

	 	 	 	 vi.      	 For any reason, provided that the Company provides
        the Consultant with 30 days notice in writing. 

	 	 	b.	 In the event of a termination under 7 (a) above,
      no further payments need to be made to the Consultant and any unexercised
      options will expire immediately. 

	 	 
	8	COVENANTS 
	 	 	a. 	The Consultant covenants to EYI as follows: 
	 	 	 	 i.      	 To carry out the services performed on behalf of
        EYI with due diligence and in the best interests of EYI; 

	 	 	 	 ii.      	 To exercise all reasonable effort to provide the
        services to EYI on a timely basis and to perform the services in accordance
        with good business practice; 

	 	 	 	 iii.      	 To comply with all lawful and reasonable directions
        and instructions of EYI 

	 	 	 	 iv.      	 The Services shall be performed in a competent and
        diligent manner by the Consultant using all the resources that the Consultant
        deems necessary to perform the Consultants duties. 

	 	 	 	 v.      	 The Consultant shall provide the Board with a weekly
        report of all work performed. 

	 	 	 	 vi.      	 The Consultant will also keep detail log of all
        the contacts made by the Consultant and provide the Board with a copy
        if requested. 

	 	 	 	 	 
	9 	NON-ASSIGNMENT 
	 	9.1 	The Consultant shall not assign any of
        the rights or benefits granted herein save and except to a private company
        owned or controlled by the Consultant and then only on the basis that
        the Consultant covenants and agrees to continue to provide the services
        required. 

	 	 	 	 	 

	10 	INDEMNITY 
	 	 10.1      	 The Consultant acknowledges and agrees that the
        Company shall not be responsible or liable for any negligence, act or
        omission of the Consultant and the Consultant agrees to defend, indemnify
        and save the Company harmless from and against any and all claims, demands,
        losses, damages, costs, liabilities and expenses of whatever kind or character,
        on account of any actual or alleged loss, injury or damage to any person,
        firm or corporation or to any property, arising out of or in connection
        with the services rendered by the Consultant pursuant hereto. 

	 	 10.2      	 The Company acknowledges and agrees that the Consultant
        shall not be responsible or liable for any negligence, act, or omission
        of the Company or for any matter arising out of the Company's business
        and the Company agrees to defend, indemnify and save the Consultant harmless
        from and against any and all claims, demands, losses, damages, costs,
        liabilities and expenses of whatever kind or character, on account of
        any actual or alleged loss, injury or damage to any person, firm or corporation
        or to any property, arising out of or in connection with the Company's
        business. 

	 	 10.3      	 In the event of any such claim each Party agrees
        to cooperate with the other and their insurers and professional advisors
        and to assist in resolving such claim. 

	 

	11 	WAIVER
	 	11.1 	The Parties agree that all restrictions in this Agreement
        are necessary and fundamental to the protection of the business of the
        Company and are reasonable and valid, and the Parties hereby waives all
        defenses to the strict enforcement thereof by the other party. 

	 	 11.2      	 The Parties each reserve the right, from time to
        time, and on more than one occasion, to waive any of the obligations imposed
        under this Agreement on the other party. No waiver by a party of any breach
        of any of the covenants or conditions of this Agreement by the other shall
        constitute a waiver by the party of any prior, concurrent or subsequent
        breach of the same or any other covenant or condition. 

	 

	12 	NOTICES 
	 	12.1 	Any Notice required or permitted to be given
      hereunder shall be in writing and shall be effectively given if: 
	 	 	 a)      	 Delivered personally; 
	 	 	 b)      	 Sent by prepaid courier service or mail; or 
	 	 	 c)      	 Sent prepaid by fax or other similar means of electronic communication
      (confirmed on the same of following day by prepaid mail); 
	 	 	 d)      	 Addressed to the relevant party at the address shown for that party at
      the beginning of this Agreement or in the Definition section. 

	 	 12.2      	 Any notice so given shall be deemed conclusively to have been given and
      received when: 

	 	 	 a)      	 Personally delivered; or 
	 	 	 b)      	 Sent by fax or other electronic communications,
        on the first business day thereafter; or 

	 	 	 c)      	 If sent by mail on the tenth business day thereafter.
        Any party may change any particulars of its address for notice by notice
        to the others in the manner above described. 

	 

 Any changes or amendments or additions to the Agreement must
  be in writing and signed by both parties to be effective. 

 The execution of this agreement will cause the previously
  executed agreement, namely Management consulting agreement to be null and void.

 This Agreement shall be construed in accordance with the laws
  of the State of Nevada and the Courts of the said State shall have exclusive
  jurisdiction to hear all actions arising out of or in respect of this Agreement.

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

 EYI INDUSTRIES, INC. 

 

	____________________________	____________________________
	 Jay Sargeant  	 Daniel Matos  
	 PresidentFiled by Automated Filing Services Inc. (604) 609-0244 - EYI Industries, Inc. - Exhibit 10.38

Source Capital Group, Inc. 
	 Members NASD, SIPC  	 Investment Bankers / Brokers  	 tcoffin @sourcegrp.com  

W. Todd Coffin 

 Mr. Dori O'Neill 

  EYI Industries, Inc. 

  3960 Howard Hughes Parkway, Suite 500 

  Las Vegas, Nevada 89109 

May 25, 2004 

Dear Mr. O'Neill: 

 The purpose of this letter is to confirm the understanding
  and agreement (the "Agreement") between Source Capital Group, Inc., ("SCG")
  and EYI Industries, Inc. (or the "Company"), regarding the retention of SCG
  by the Company as its financial advisor for the purposes set forth herein.

 Under this Agreement, SCG will provide financial advisory services to the
  Company as follows: 

	A) 	Raising of Capital. SCG shall
        use its best efforts to provide up to $5 million in equity/debt financing
        for the Company.

	 	 
	B) 	Fees, Commissions & Expenses.
        The Company agrees to pay the following fees to SCG for its services.
      

	 	 	 
	 	 1.      	 SCG will be compensated 6% cash and 6% ("warrant")
        coverage on any funds introduced by SCG during this engagement. The exercise
        price of the warrants shall be equal to the issue price, conversion price
        or strike price of the stock, convertible security or warrant at the time
        of the sale and will be subject to adjustment in accordance with the terms
        of any adjustment provided for in the Financing document. Said warrants
        shall be exercisable for five (5) years from date of issuance. The terms
        of said warrants shall include such piggyback registration rights, anti-dilution
        rights, and "cashless" exercise provisions in the event of exercise by
        SCG. Such fees shall be paid at the closing from an escrow account at
        the same time any new investment is dispersed to the company. 

	 
	 	 2.      	 SCG will receive $-0- as a non-refundable retainer
        upon signing of this agreement. 

	 
	 	 3.      	 Expenses. In addition to any fees that may
        be payable to SCG under this Agreement, the Company agrees to reimburse
        SCG for its reasonable out-of-pocket expenses incurred in connection with
        the services rendered by SCG hereunder (including, without limitation,
        travel and lodging, data and word processing, graphics and communication
        charges, research costs, and courier services and 

	 

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	 Source Capital Group, Inc.  	 Page 2 of 6  

 

	 	 	 fees) provided expenses in excess of $200 shall
        require the prior approval of the Company. 

	 
	 	 4.      	 All cash payments under this Agreement shall be
        made in U.S. dollars and without withholding or deduction of any tax,
        assessment or other governmental charges unless required by law. Fees
        and retainers should be made payable and wired to: 

	 
	 	 	 Source Capital Group Inc. 

        Fleet Bank 

        ABA# 011900571 

        Acct.# 9361882644 

	 
	 	 5.      	 Mergers, Acquisitions & Joint Ventures ("MA&JV").
        The Company may at its discretion and on a case by case basis engage
        SCG to assist it in its discussions with potential Merger, Acquisition
        and or Joint Venture candidates, which may include directly negotiating
        on the Company's behalf and the rendering independent opinions as to valuation
        and formulae, among other things. Upon SCG's acceptance of any such assignment,
        The Company will pay SCG flat closing fee equal to 3.00% of the amount
        paid or received (in kind) in any transaction by and or between the Company,
        the MA&JV candidate and or the surviving company (the "M&A Fee").
      

	 	 	 
	C) 	Information. The Company
        will furnish or cause to be furnished to SCG, such information, as SCG
        believes appropriate to its assignment (all such information so furnished
        being the "Information"). The Company recognizes and confirms that SCG
        (a) will use and rely primarily on the Information and on information
        available from generally recognized public sources in performing the services
        contemplated by this Agreement without having independently verified the
        same, (b) does not assume responsibility for the accuracy or completeness
        of the Information and such other information, (c) is entitled to rely
        upon the Information without independent verification and (d) will not
        make an appraisal of any assets or valuation of the Company in connection
        with its assignment 

	 	 
	D) 	Confidentiality. Except
        as contemplated by the terms hereof or as required by applicable law or
        legal process, SCG shall keep confidential all non-public information
        provided to it by or at the request of the Company, and shall not disclose
        such information to any third party or to any of its employees or advisors
        except to those persons who have a need to know such information in connection
        with SCG's performance of its responsibilities hereunder. The Company
        understands that any documents, presentations or analyses prepared by
        SCG are proprietary and SCG is under no obligation to provide (by e-mail,
        floppy disk or otherwise) either the Company or its assigns with the computer
        files of such work product. Except as required by applicable law, any
        advice to be provided by 

	 	 

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	 Source Capital Group, Inc.  	 Page 3 of 6  

	 	 
	 	SCG under this Agreement shall not be disclosed publicly
        or made available to third parties without the prior written consent of
        SCG. In addition, SCG may not be otherwise publicly referred to without
        its prior written consent. All services, advice and information and reports
        provided by SCG to the Company in connection with this assignment shall
        be for the sole benefit of the Company and shall not be relied upon by
        any other person. 

	 	 
	E) 	 Indemnity. The Company acknowledges and agrees
        that SCG has been retained to act solely as financial advisor to the Company.
        In such capacity, SCG shall act as an independent contractor, and any
        duties of SCG arising out of its engagement pursuant to this Agreement
        shall be owed solely to the Company. The Company agrees to indemnify SCG
        in accordance with the indemnification agreement attached as Exhibit
        A. 

	 	 
	F) 	 Arbitration. Any and all disputes, demands,
        claims or controversies hereto arising out of or relating to this agreement
        or the breach thereof, shall be settled by binding arbitration in accordance
        with the rules of the American Arbitration Association ("AAA"). The arbitration
        shall be conducted in New York City under the rules of the AAA. Any judgment
        upon the award rendered by the arbitrator may be entered into any court
        or administrative tribunal having jurisdiction thereof. Costs associated
        with the arbitration, including reasonable attorney's fees, shall be borne
        by whichever parties the arbitrators shall deem just and fair. 

	 	 
	G) 	 Term & Termination. The term of SCG's engagement
        hereunder (the "Term") shall commence on the date hereof and shall end
        on the earlier of June. 30, 2005, upon 90 days written notice after a
        closing of an equity financing by SCG or upon 10 days written notice prior
        to the closing of any equity financing pursuant to this Agreement (the
        "Expiration Date") without cause by either the Company or SCG. Notwithstanding
        the foregoing, the provisions relating to the payment of fees and expenses
        accrued through the Expiration Date, the status of SCG as an independent
        contractor and the limitation on to whom SCG shall owe any duties will
        survive any such termination, and any such termination shall not affect
        the Company's obligations under the indemnification agreement. 

       SCG will be entitled to the fees set forth above in
        the event that within 18 months following the Expiration Date, a Financing
        is consummated with an investor who was introduced to the Company by SCG
        prior to the Expiration Date and which investor is included on a schedule
        of investors delivered by SCG to the Company within 10 calendar days following
        the Expiration Date. 

	 	 
	H) 	 Right of First Refusal. Upon successful completion
        of a financing SCG shall retain the right of first refusal on any additional
        financing. 

	 	 
	I) 	 Exclusivity. During the Term of this agreement,
        The Company's relationship with SCG will be non-exclusive. Except in the
        normal course of business operations, during the Term of this agreement
        the Company will not engage any other financial advisor for the purpose
        of performing an equity financing or receive or agree to receive any equity
        based financing from an individual or entity without notifying SCG. 

	 	 

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	 Source Capital Group, Inc.  	 Page 4 of 6  

	 	 
	 J)      	 Advertisements. The Company acknowledges
        that SCG may, at its option and expense, place an announcement in such
        newspapers and periodicals as it may choose, stating that SCG has acted
        as the financial advisor to the Company. SCG agrees that the Company will
        have the right to approve the form of such announcement, which approval
        shall not be unreasonably withheld or delayed. 

 This Agreement (including the attached indemnification) embodies
  the entire agreement and understanding between the parties hereto and supersedes
  all prior agreements and understandings relating to the subject matter hereof.
  If any provision of this Agreement is determined to be invalid or unenforceable
  in any respect, such determination will not affect such provision in any other
  respect, which will remain in full force and effect. No waiver, amendment or
  other modification of this Agreement shall be effective unless in writing and
  signed by each party to be bound thereby. This Agreement shall be governed by,
  and construed in accordance with, the laws of the State of New York applicable
  to contracts executed in and to be performed in that state. 

 Please confirm that the foregoing correctly sets forth our
  agreement by signing and returning to SCG the duplicate copy of this Agreement,
  the indemnification agreement attached hereto as Exhibit A. 

	  	 By:  ______________________________
	  	 W. Todd Coffin, Managing Director  
	  	 Source Capital Group, Inc.  
	  
	  
	  
	 By:  ______________________________	  
	 Dori O'Neill  	  
	 EYI Industries, Inc.  	  

 

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	 Source Capital Group, Inc.  	 Page 5 of 6  

 This Exhibit A is a part of and is incorporated into
  that certain letter agreement, May 25, 2004 (the "Agreement"), by and between
  EYI Industries, Inc. an Nevada corporation (with its wholly-owned subsidiaries
  collectively, the "Company"), and Source Capital Group, Inc. (the "Placement
  Agent"). Capitalized terms used herein and not otherwise defined shall have
  the respective meanings provided in the Agreement. 

 The Company agrees to indemnify and hold harmless the Placement
  Agent, its affiliates and each person controlling the Placement Agent (within
  the meaning of Section 15 of the Securities Act), and the directors, officers,
  agents and employees of the Placement Agent, its affiliates and each such controlling
  person (the Placement Agent, and each such entity or person. an "Indemnified
  Person") from and against any losses, claims, damages, judgments, assessments,
  costs and other liabilities (collectively, the "Liabilities"), and shall reimburse
  each Indemnified Person for all fees and expenses (including the reasonable
  fees and expenses of one counsel for all Indemnified Persons, except as otherwise
  expressly provided herein) (collectively, the "Expenses") as they are incurred
  by an Indemnified Person in investigating, preparing, pursuing or defending
  any claim, action, proceeding or investigation, whether or not any Indemnified
  Person is a party thereto (collectively, the "Actions"), (i) caused by, or arising
  out of or in connection with, any untrue statement or alleged untrue statement
  of a material fact contained in any offering documents prepared by the Company
  (including any amendments thereof and supplements thereto) (the "Offer Documents")
  or by any omission or alleged omission to state therein a material fact necessary
  to make the statements therein, in light of the circumstances under which they
  were made, not misleading (other than untrue statements or alleged untrue statements
  in, or omissions or alleged omissions from, information relating to an Indemnified
  Person furnished in writing by or on behalf of such Indemnified Person expressly
  for use in the Offer Documents) or (ii) otherwise arising out of or in connection
  with advice or services rendered or to be rendered by any Indemnified Person
  pursuant to the Agreement, the transactions contemplated thereby or any Indemnified
  Person's actions or inactions in connection with any such advice, services or
  transactions; provided, however, that, in the case of clause (ii) only,
  the Company shall not be responsible for any Liabilities or Expenses of any
  Indemnified Person that have resulted primarily from such Indemnified Person's
  (x) gross negligence, bad faith or willful misconduct in connection with any
  of the advice, actions, inactions or services referred to above or (y) use of
  any offering materials or information concerning the Company in connection with
  the offer or sale of the Securities in the Transaction which were not authorized
  for such use by the Company and which use constitutes negligence, bad faith
  or willful misconduct. The Company also agrees to reimburse each Indemnified
  Person for all Expenses as they are incurred in connection with enforcing such
  Indemnified Person's rights under the Agreement, which includes this 

 Exhibit A. 

 Upon receipt by an Indemnified Person of actual notice of
  an Action against such Indemnified Person with respect to which indemnity may
  be sought under the Agreement, such Indemnified Person shall promptly notify
  the Company in writing; provided that failure by any Indemnified Person so to
  notify the Company shall not relieve the Company from any liability which the
  Company may have on account of this indemnity or otherwise to such Indemnified
  Person, except to the extent the Company shall have been prejudiced by such
  failure. The Company shall, if requested by the Placement Agent, assume the
  defense of any such Action including the employment of counsel reasonably satisfactory
  to the Placement Agent, which counsel may also be counsel to the Company. Any
  Indemnified Person shall have the right to employ separate counsel in any such
  action and participate in the defense thereof, but the fees and expenses of
  such counsel shall be at the expense of such Indemnified Person unless: (i)
  the Company has failed promptly to assume the defense and employ counsel or
  (ii) the named parties to any such Action (including any impeded parties) include
  such Indemnified Person and the Company, and such Indemnified Person shall have
  been advised in the reasonable opinion of counsel that there is an actual conflict
  of interest that prevents the counsel selected by the Company from representing
  both the Company (or another client of such counsel) and any Indemnified Person;
  provided that the Company shall not in such event be responsible hereunder for
  the fees and expenses of more than one firm of separate counsel for all Indemnified
  Persons in connection with any Action or related Actions, in addition to any
  local counsel. The Company shall not be liable for any settlement of any Action
  effected without its written consent (which shall not be unreasonably withheld).
  In addition, the Company shall not, without the prior written consent of the
  Placement Agent (which shall not be unreasonably withheld), settle, compromise
  or consent to the entry of any judgment in or otherwise seek to terminate any
  pending or threatened Action in respect of which indemnification or contribution
  may be sought hereunder (whether or not such Indemnified Person is a party thereto)
  unless such settlement, compromise, consent or termination includes an unconditional
  release of each Indemnified Person from all Liabilities arising out of such
  Action for which indemnification or contribution may be sought hereunder. The
  indemnification required hereby shall be made by 

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	 Source Capital Group, Inc.  	 Page 6 of 6  

 periodic payments of the amount thereof during the course
  of the investigation or defense, as such expense, loss, damage or liability
  is incurred and is due and payable. 

 In the event that the foregoing indemnity is unavailable to
  an Indemnified Person other than in accordance with the Agreement, the Company
  shall contribute to the Liabilities and Expenses paid or payable by such Indemnified
  Person in such proportion as is appropriate to reflect (i) the relative benefits
  to the Company, on the one hand, and to the Placement Agent and any other Indemnified
  Person, on the other hand, of the matters contemplated by the Agreement or (ii)
  if the allocation provided by the immediately preceding clause is not permitted
  by applicable law, not only such relative benefits but also the relative fault
  of the Company, on the one hand, and the Placement Agent and any other Indemnified
  Person, on the other hand, in connection with the matters as to which such Liabilities
  or Expenses relate, as well as any other relevant equitable considerations;
  provided that in no event shall the Company contribute less than the amount
  necessary to ensure that all Indemnified Persons, in the aggregate, are not
  liable for any Liabilities and Expenses in excess of the amount of fees actually
  received by the Placement Agent pursuant to the Agreement. For purposes of this
  paragraph, the relative benefits to the Company, on the one hand, and to the
  Placement Agent on the other hand, of the matters contemplated by the Agreement
  shall be deemed to be in the same proportion as (a) the total value paid or
  contemplated to be paid to or received or contemplated to be received by the
  Company in the transaction or transactions that are within the scope of the
  Agreement, whether or not any such transaction is consummated, bears to (b)
  the fees paid to the Placement Agent under the Agreement. Notwithstanding the
  above, no person guilty of fraudulent misrepresentation within the meaning of
  Section 11(f) of the Securities Act of 1933, as amended, shall be entitled to
  contribution from a party who was not guilty of fraudulent misrepresentation.

 The Company also agrees that no Indemnified Person shall have
  any liability (whether direct or indirect, in contract or tort or otherwise)
  to the Company for or in connection with advice or services rendered or to be
  rendered by any Indemnified Person pursuant to the Agreement, the transactions
  contemplated thereby or any Indemnified Person's actions or inactions in connection
  with any such advice, services or transactions except for Liabilities (and related
  Expenses) of the Company that have resulted primarily from such Indemnified
  Person's gross negligence, bad faith or willful misconduct in connection with
  any such advice, actions, inactions or services. 

 The reimbursement, indemnity and contribution obligations
  of the Company set forth herein shall apply to any modification of the Agreement
  and shall remain in full force and effect regardless of any termination of,
  or the completion of any Indemnified Person's services under or in connection
  with, the Agreement. 

	 1221 Post Road East 	•	Westport, CT 06880	•	 203 341-3500  	• 	 800 882-2889  	• 	 Fax 203 341-3515

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