Document:

EXHIBIT 10.2

 

SMTEK
INTERNATIONAL, INC.

 

REGISTRATION
RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of
September 8, 2003, (the “Effective Date”), by and between SMTEK
International, Inc., a Delaware corporation (the “Company”), and The Gene Haas
Trust DTD 3-9-99 (“Investor”).

 

A.                                   The
Company and Investor have entered into that certain Series A Preferred Stock
Purchase Agreement of even date herewith (the “Purchase Agreement”), and, upon
the terms and subject to the conditions set forth in the Purchase Agreement,
the Company has agreed to issue and sell to Investor an aggregate of 250,000
shares (the “Shares”) of the Company’s Series A Preferred Stock, $1.00 par
value per share (the “Preferred Stock”), which shall be convertible into shares
of common stock, $0.01 par value per share (the “Common Stock”), of the Company
(as converted, the “Conversion Shares”).

 

B.                                     To
induce Investor to execute and deliver the Purchase Agreement, the Company has
agreed to provide certain registration rights to Investor under the Securities
Act of 1933, as amended, and the rules and regulations thereunder (the
“Securities Act”), and applicable state securities laws.

 

NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

 

1.                                       Definitions.

 

1.1                                 Definitions.  As used in this Agreement, the following
terms shall have the following meanings:

 

“Business Day” means any day other than
Saturday, Sunday or any other day on which commercial banks in the State of
California are required by law to remain closed.

 

“Exchange Act” means the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder.

 

“Holder” means Investor, for so long as it
holds Registrable Securities, and any transferees or assignees holding
Registrable Securities who agree to become bound by the provisions of this
Agreement in accordance with Section 6.

 

“Person” means any individual, firm,
corporation, partnership, limited liability company, unincorporated
association, trust, Governmental Entity.

 

“Register,” “registered,” and “registration”
refer to a registration effected by preparing and filing a Registration
Statement in compliance with the Securities Act and the declaration or ordering
of effectiveness of such Registration Statement by the SEC.

 

 

“Registrable Securities” means (i) the
Conversion Shares issued upon conversion of the Shares and (ii) shares of
Common Stock issued with respect to the Shares or the Conversion Shares by way
of a stock dividend or stock split.  As
to any particular Registrable Securities, such securities shall cease to be
Registrable Securities when (i) a Registration Statement registering such
securities under the Securities Act has been declared effective and such
securities have been sold or otherwise transferred by the holder thereof
pursuant to such effective Registration Statement or (ii) such securities may
be sold to the public in accordance with Rule 144.

 

“Registration Expenses” means all expenses
incurred by the Company in complying with Sections 2.1 and 2.2 hereof,
including, without limitation, all registration and filing fees, printing expenses,
fees and disbursements of counsel and independent public accountants for the
Company, fees and expenses (including reasonable counsel fees) incurred in
connection with complying with state securities or “blue sky” laws, fees of the
National Association of Securities Dealers, Inc., the reasonable fees and
expenses of one counsel to the Holders incurred in connection with the exercise
of the Holders’ rights hereunder, and fees of transfer agents and registrars,
but excluding any Selling Expenses.

 

“Registration Statement” means a registration
statement of the Company under the Securities Act.

 

“Requisite Amount” means 51% of the
Conversion Shares issuable upon conversion of the Shares as of the date hereof.

 

“Rule 144” means Rule 144 promulgated under
the Securities Act, or any successor provision.

 

“SEC” means the Securities and Exchange
Commission.

 

“Selling Expenses” means all underwriting
discounts and selling commissions, selling or placement agent or broker fees
and commissions and transfer taxes, if any, applicable to the sale of
Registrable Securities.

 

1.2                                 Capitalized
Terms.  Capitalized terms used
herein and not otherwise defined herein shall have the respective meanings set
forth in the Purchase Agreement.

 

2.                                       Registration.

 

2.1                                 Demand
Registration.

 

(a)                                  Holders
of the Requisite Amount of Registrable Securities in aggregate shall be
entitled to make a written request of the Company (such request being a
“Demand”) for registration under the Securities Act, of all or part of the
Registrable Securities (a “Demand Registration”).  The Demand shall specify: (i) the aggregate number of Registrable
Securities requested to be registered; and (ii) the intended method of
distribution in connection with the Demand Registration to the extent then
known.  The Demand shall not be
effective or impose any obligation upon the Company unless the Demand shall
request the registration of not less than the Requisite Amount of Registrable
Securities.  Within 10 days after
receipt of the

 

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Demand, the Company shall give
written notice of the Demand to all other Holders and, subject to the terms of
this Agreement, shall include in such registration all Registrable Securities
of each Holder with respect to which the Company has received a written request
for inclusion therein within 20 days after the receipt by such Holder of the
Company’s notice required by this Section 2.1(a).  The Holders shall be entitled to one Demand
Registration.

 

(b)                                 A
registration shall not be treated as a Demand Registration until (i) the
Registration Statement under the Securities Act has been filed with the SEC
with respect to the Demand Registration and been declared effective and
(ii) such Registration Statement shall have been maintained continuously
effective for a period 60 days after the effective date of such Registration
Statement, or such shorter period when all Registrable Securities included
therein have been sold thereunder. 
Notwithstanding the foregoing, if the Company is eligible to file a
Registration Statement on Form S-3, the Holders of the Requisite Amount may
request that, pursuant to Rule 415 under the Securities Act, the Registration
Statement be maintained continuously effective until two (2) years after the
Effective Date, or such shorter period when all Registrable Securities included
therein have been sold thereunder or the Company is no longer eligible to use
Form S-3.

 

(c)                                  The
Company may include in the Demand Registration other securities held by
security holders of the Company, provided that such securities are of the
same class as the Registrable Securities with respect to which the Demand
Registration has been made.

 

(d)                                 If,
in connection with the Demand Registration, any managing underwriter advises
the Company and the Holders of the Registrable Securities sought to be included
in such Demand Registration that, in its judgment, marketing or other factors
dictate that limiting the securities to be included in the Registration
Statement is necessary to facilitate public distribution of the Registrable
Securities ultimately to be included therein, then the Company shall include in
the Registration Statement only such limited portion of the Registrable
Securities as the underwriter shall advise in accordance with this Section 2.1(d).  Any exclusion of Registrable Securities
shall be made pro rata among the Holders seeking to include Registrable
Securities, in proportion to the number of Registrable Securities sought to be
included by such Holders; provided, however, that the Company shall
not exclude any Registrable Securities unless the Company has first excluded
all outstanding securities other than the Registrable Securities.  If the Holders of a majority of the
Registrable Securities sought to be registered in the Demand Registration
request that such Demand Registration be an underwritten offering and the
parties hereto deem it commercially reasonable, then, provided that a nationally
recognized underwriter is willing to accept such engagement, the Company shall
select a nationally recognized underwriter to manage and administer such
offering (which underwriter shall be reasonably acceptable to Holders of a
majority of the Registrable Securities sought to be registered in the Demand
Registration).

 

(e)                                  If,
in connection with a Demand, if the Company or its subsidiaries (other than in
connection with employee benefit and similar plans) has commenced preparations
for a registration or the Company has received on behalf of any other security
holder of the Company holding a demand registration right a notice of the
exercise of such demand registration right prior to the receipt of the Demand
(collectively, a “Company Offering”) with respect to which the Company
furnishes the Holders of the Registrable Securities sought to be

 

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registered in the Demand
Registration a certificate signed by the chief executive officer or chief
financial officer of the Company to such effect (the “Transaction Delay
Notice”) promptly after such receipt of the Demand, the Company shall not be
required to effect the Demand Registration until the earliest of
(i) 90 days after the completion of such Company Offering,
(ii) promptly after the abandonment of such Company Offering or (iii) 180 days
after the date of the Transaction Delay Notice; provided, however, that in
any event the Company shall not be required to effect any Demand Registration
prior to the termination or waiver of any “blackout period” applicable to the
Holders pursuant to Section 2.3 or the Company, if any, in connection with
the Company Offering.

 

(f)                                    With
respect to any Registration Statement to be filed in connection with a Demand
Registration, (i) if the Company’s Board of Directors determines in its good
faith judgment that the filing of a Registration Statement (or the
effectiveness of such Registration Statement) would require the Company to
disclose material non-public information or would materially interfere with any
proposal or plan with respect to any material financing, acquisition, corporate
reorganization or merger or other transaction involving the Company or any of
its subsidiaries and the Company’s Board of Directors concludes, as a result of
such potential disclosure or interference, that it is in the best interests of
the Company to defer the filing or effectiveness of such Registration Statement
at such time and (ii) the Company shall furnish to the Holders of the
Registrable Securities sought to be registered in the Demand Registration a
Transaction Delay Notice stating that in the good faith judgment of the
Company’s Board of Directors, it would be materially detrimental to the Company
for such Registration Statement to be filed or declared effective in the near
future and that it is, therefore, in the best interests of the Company to defer
the filing or effectiveness of such Registration Statement, then the Company
shall have the right to defer such filing or effectiveness; provided,
however, that such deferral shall not continue for a period of more
than 90 days.  The Company shall
not be required to state in any Transaction Delay Notice delivered pursuant to
this Section 2.1(f), the nature of any event or circumstance constituting
the basis for the Transaction Delay Notice.

 

(g)                                 In
the event the Company delivers the Holders of Registrable Securities sought to
be registered in the Demand Registration a Transaction Delay Notice, Holders of
a majority of the Registrable Securities making the Demand will be entitled for
a period of 60 days, or if earlier, notice from the Company of its
intention to commence preparation to file the Registration Statement, to
withdraw the Demand and, if the Demand is withdrawn, such registration will not
count as the Demand Registration hereunder.

 

2.2                                 Piggy-Back
Registrations.

 

(a)                                  If
the Company proposes to file with the SEC a Registration Statement (a
“Piggyback Registration Statement”) relating to an offering for its own account
or the account of others under the Securities Act of any of its Common Stock
(except for Registration Statements registering convertible debt securities,
which only includes Common Stock issuable upon conversion, repurchase or
payment therefor, Registration Statements on Form S-4 or Form S-8 or any
successor forms or any other form not available for registering resales of the
Registrable Securities), then prior to such filing, the Company shall send to
each Holder written notice of such determination and, if within fifteen (15)
days after the date of such notice, a Holder shall so request in writing, the
Company shall include in such Registration

 

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Statement all or any part of
the Registrable Securities such Holder requests to be registered, provided
that the Company shall not be obligated to include Registrable Securities if
such Registrable Securities are covered by a Registration Statement pursuant to
Section 2.1.

 

(b)                                 Notwithstanding
the foregoing, if, in connection with any such offering for the account of the
Company or for the account of others, the managing underwriter(s) thereof shall
impose a limitation on the number of shares of Common Stock which may be
included in the Registration Statement because, in such underwriter(s)’
judgment, marketing, or other factors dictate that such limitation is necessary
to facilitate public distribution, then the Company shall be obligated to
include in such Registration Statement only such limited portion of the
Registrable Securities with respect to which such Holder has requested
inclusion hereunder as the underwriter(s) shall deem advisable.  Any exclusion of Registrable Securities
shall be made pro rata among the Holders seeking to include Registrable
Securities, in proportion to the number of Registrable Securities sought to be
included by such Holders; provided, however, that the Company shall
not exclude any Registrable Securities unless the Company also proportionately
excludes all outstanding securities, the holders of which did not initiate the
filing of such Registration Statement pursuant to so-called “demand” registration
rights (it being agreed that the Holders’ rights under this Section 2.2
shall be at least co-equal with the rights of any other holder of “piggy-back”
registration rights granted by the Company); and provided further, however,
that, after giving effect to the immediately preceding proviso, any exclusion
of Registrable Securities shall be made pro rata with holders of other
securities having the right to include such securities in the Registration
Statement on the basis of the number of securities such holders have requested
to include in such Registration Statement. 
No right to registration of Registrable Securities under this
Section 2.2 shall be construed to limit the right of Holders of the
Requisite Amount of Registrable Securities to Demand one Demand Registration
under Section 2.1 hereof. 
Notwithstanding anything contained in this Section 2.2 to the
contrary, the Company shall not be required to exclude any Common Stock to be
sold by the Company in the Registration Statement prior to excluding shares of
Registrable Securities.

 

(c)                                  If
an offering in connection with which a Holder is entitled to registration under
this Section 2.2 is an underwritten offering, then each Holder whose
Registrable Securities are included in such Registration Statement shall,
unless otherwise agreed by the Company, offer and sell such Registrable
Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same
terms and conditions as other shares of Common Stock included in such
underwritten offering.

 

(d)                                 The
Company may withdraw any Registration Statement referred to in this
Section 2.2 without incurring any liability to the Holders.

 

2.3                                 Holdback.

 

(a)                                  Subject
to Section 2.3(b), each Holder shall not file or cause to be effected any
other registration of or effect any public sale or distribution of equity
securities of the Company, or any securities convertible into or exchangeable
or exercisable for such securities, during the 10 days prior to and the 90-day
period beginning on the effective date of any underwritten public offering of
Common Stock for the account of the Company or for the account of others
(except as part of such underwritten registration, if permitted by
Section 2.2 or

 

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otherwise permitted) unless the
underwriters managing the registered public offering otherwise agree and such
sale or distribution otherwise complies with Regulation M of the Exchange Act.

 

(b)                                 Notwithstanding
the foregoing, the Holders will not be subject to the foregoing holdback for
any period or periods in the aggregate which are in excess of 150 days during
any 365-day period.

 

3.                                       Registration
Procedures.

 

3.1                                 Company
Obligations.  If and whenever the Company
is required by the provisions of Sections 2.1 or 2.2 to effect the registration
of any shares of Registrable Securities under the Securities Act, the Company
will use its reasonable efforts to as expeditiously as possible:

 

(a)                                  prepare
and file with the SEC a Registration Statement with respect to such securities
and use its reasonable efforts to cause such Registration Statement to become
and remain effective for the period contemplated hereby; provided, however, at least
five Business Days before the filing of any Registration Statement, the Company
will furnish the Holder of Registrable Securities covered by such Registration
Statement, the underwriters, if any, and any attorney, accountant or other
agent retained by any such Holders or underwriters a copy of all such documents
proposed to be filed, which documents will be subject to review and reasonable
comments of such Holders, their counsel and underwriters, if any;

 

(b)                                 prepare
and file with the SEC such amendments and supplements to such Registration
Statement and the prospectus used in connection therewith as may be necessary
to keep such Registration Statement effective for the period specified in
subsection (a) above and to comply with the provisions of the Securities
Act;

 

(c)                                  furnish
to each Holder of Registrable Securities covered by such Registration Statement
and to each underwriter such number of copies of the Registration Statement and
the prospectus included therein (including each preliminary prospectus) as such
Persons reasonably may request in order to facilitate the public sale or other
disposition of the Registrable Securities covered by such Registration
Statement;

 

(d)                                 use
its reasonable efforts to register or qualify the Registrable Securities
covered by such Registration Statement under the securities or “blue sky” laws
of such jurisdictions as the Holders of Registrable Securities covered thereby,
or, in the case of an underwritten public offering, the managing underwriter
reasonably shall request; provided, however, that the Company shall
not for any such purpose be required to qualify generally to transact business
as a foreign corporation in any jurisdiction where it is not so qualified, to
subject itself to taxation in any such jurisdiction, or to consent to general
service of process in any such jurisdiction;

 

(e)                                  use
its reasonable efforts to list for quotation the Registrable Securities covered
by such Registration Statement with any market on which the Common Stock of the
Company is then listed;

 

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(f)                                    immediately
notify each Holder of Registrable Securities covered by such Registration
Statement and each underwriter under such Registration Statement, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event of which the Company has
knowledge as a result of which the prospectus contained in such Registration
Statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing and, subject to Sections 3.2 and 3.3(e), at the request of any such
Holder, prepare and furnish to such Holder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such shares, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or incomplete in the light of the circumstances then existing;

 

(g)                                 if
the offering is underwritten, at the request of any Holder of Registrable
Securities covered by such Registration Statement and the underwriters,
(i) use its reasonable efforts to furnish on the date that the Registrable
Securities are delivered to the underwriters for sale pursuant to such
registration, an opinion dated such date of counsel representing the Company
for the purposes of such registration, addressed to the underwriters in
customary form and covering such matters as are customarily covered by such
opinions  delivered
to underwriters in such underwritten offerings, and (ii) use its
reasonable efforts to furnish on the date that the Registrable Securities are
delivered to the underwriters for sale pursuant to such registration, a letter
dated such date from the independent public accountants retained by the Company,
addressed to the underwriters, in customary form and covering such matters as
are customarily covered by “comfort” letters delivered to underwriters in such
underwritten offerings;

 

(h)                                 to
the extent applicable, make available for inspection by a Holder of Registrable
Securities covered by such Registration Statement designated by a majority of
the Registrable Securities covered thereby, any underwriter participating in
any distribution pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by such Holder or underwriter, at the
offices where normally kept, during reasonable business hours, all financial
and other records, pertinent corporate documents and properties of the Company,
and cause the Company’s officers, directors and employees to supply all
information, in each case, as is reasonably requested by such Holder,
underwriter, attorney, accountant or agent in connection with such Registration
Statement, as shall be necessary, in the opinion of their respective counsel,
to conduct a reasonable investigation under Section 11 of the Securities
Act; provided,
however, that the foregoing shall not require the Company to provide
access to (or copies of) any competitively sensitive information relating to
the Company or its subsidiaries or their respective businesses; provided
further, however that such Holder and the underwriters and their
respective counsel, accountants and other agents shall use their reasonable
best efforts to minimize the disruption to the Company’s business and
coordinate any such investigation of the books, records and properties of the
Company and any discussions with the Company’s officers and accountants so that
all such investigations occur at the same time and all such discussions occur
at the same time; and provided, further that any non-public
information that is delivered to the Holder or the underwriters or their
respective counsel, accountants and other agents hereunder shall be kept
confidential by the Holder or any such underwriter, attorney, accountant or
agent

 

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unless (i) disclosure of such
information is required by court or administrative order, (ii) disclosure
of such information, in the opinion of counsel to any such inspecting Person,
is required by law or (iii) such information becomes generally available to the
public other than as a result of a disclosure or failure to safeguard by any
such inspecting Person, and provided further that each Person provided
access hereunder agrees that is shall, upon learning that disclosure of such
information is sought in or by a court or other Governmental Entity of
competent jurisdiction, give prompt notice to the Company and allow the
Company, at its expense, too undertake appropriate action to prevent such
disclosure of, or to obtain a protective order for, such information;

 

(i)                                     use
its reasonable efforts to obtain the withdrawal of any stop order or other
order suspending the effectiveness of any Registration Statement or sales
thereunder at the earliest possible time;

 

(j)                                     provide
a transfer agent and registrar for all Registrable Securities registered
pursuant to such Registration Statement not later than the effective date of
such Registration Statement;

 

(k)                                  otherwise
use its reasonable efforts to comply with all applicable rules and regulations
of the SEC, and make available to its security holders, as soon as reasonably
practicable, an earnings statement satisfying the provisions of
Section 11(a) of the Securities Act (including Rule 158 of the Securities
Act);

 

(l)                                     permit
any underwriter or any Holder, which in its reasonable judgment, might be
deemed to be an underwriter or a controlling person of the Company, to
participate in the preparation of such Registration Statement and to include
therein any material, furnished to the Company in writing, which in the
reasonable judgment of such underwriter or Holder and their respective counsel
should be included (which material shall be reasonably acceptable to the
Company);

 

(m)                               promptly
(but in any event, within five Business Days) notify the Holders of Registrable
Securities covered by such Registration Statement, their counsel and the
underwriters, if any, and, if requested, confirm such notice in writing, with
respect to the following:

 

(i)                                     when a prospectus
or any supplement or post-effective amendment to such prospectus has been
filed, and with respect to a Registration Statement or any post-effective
amendment thereto when the same has become effective;

 

(ii)                                  of any request to the
Company by the SEC or any other Governmental Entity for amendments or
supplements to an effective Registration Statement or related prospectus or for
additional information;

 

(iii)                               of the issuance to the
Company by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of any
prospectus or the initiation of any proceedings by any Person for that purpose;

 

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(iv)                              of the receipt by the
Company of any notification with respect to (A) the suspension of the
qualification or exemption from qualification of a Registration Statement or
any of the Registrable Securities for offer or sale under the securities of
blue sky laws of any jurisdiction or (B) the contemplation, initiation or
threatening, of any proceeding for such purpose; and

 

(v)                                 of the Company’s
reasonable determination that a post-effective amendment to a Registration
Statement would be appropriate;

 

(n)                                 cooperate
with the Holders of Registrable Securities covered by such Registration
Statement and the underwriters, if any, to facilitate the timely preparation
and delivery of certificates representing the Registrable Securities sold
pursuant to such Registration Statement without restrictive legends and cause
such Registrable Securities to be in such denominations and registered in such
names as the underwriters, if any, or Holders of such Registrable Securities
may request at least two Business Days prior to any sale of Registrable Securities
pursuant to the Registration Statement;

 

(o)                                 cooperate
with all reasonable requests of each Holder of Registrable Securities covered
by such Registration Statement and each underwriter, if any, participating in
the disposition of such Registrable Securities and their respective counsel in
connection with any filings to be made with the National Association of
Securities Dealers, Inc; and

 

(p)                                 enter
into and perform its obligations under any underwriting agreement, in usual and
customary form, reasonably acceptable to the Company with the underwriters of
such offering.

 

3.2                                 Suspension
of Use of Registration Statement. 
At any time, when a Registration Statement effected pursuant to
Sections 2.1 or 2.2 relating to Registrable Securities is effective and a
prospectus relating thereto is required to be delivered under the Securities
Act, that the Company becomes aware that the prospectus included in such
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, the Company shall promptly provide
the Holders written notice thereof, and the Holders shall suspend sales of
Registrable Securities pursuant to such Registration Statement until the date
upon which the Company notifies the Holders the prospectus included in such
Registration Statement, as then supplemented or amended, no longer includes an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.  In such event, the Company shall promptly
make such disclosure as necessary to enable such continued sales under the
Registration Statement, provided, however, that if the Company, in
good faith determines that such amendment or supplement would require
disclosure of material information which the Company has a bona fide business
purpose for preserving as confidential the Company may delay making such
amendment or supplement for up to 90 days.

 

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3.3                                 Holders’
Obligations.  In connection with the
registration of the Registrable Securities, a Holder shall have the following
obligations:

 

(a)                                  such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, other securities of the Company held by it,
its affiliations with broker-dealers, and the intended method of disposition of
the Registrable Securities held by it as shall be reasonably required to effect
the registration of such Registrable Securities and such Holder shall execute
such documents in connection with such registration as the Company may
reasonably request;

 

(b)                                 each
Holder, shall cooperate with the Company as reasonably requested by the Company
in connection with the preparation and filing of the Registration Statements,
unless such Holder has notified the Company in writing of such Holder’s
election to exclude all of such Holder’s Registrable Securities from the
applicable Registration Statement, in which case such Holder is not required to
cooperate in connection with such preparation and filing until it notifies the
Company of its desire to include Registrable Securities in a Registration
Statement;

 

(c)                                  each
Holder whose Registrable Securities are included in a Registration Statement
understands that the Securities Act may require delivery of a prospectus
relating thereto in connection with any sale thereof pursuant to such
Registration Statement, and each such Holder shall comply with the applicable
prospectus delivery requirements of the Securities Act in connection with any
such sales;

 

(d)                                 each
Holder shall notify the Company promptly, but in any event within five Business
Days after the date on which all Registrable Securities covered by a
Registration Statement which are owned by such Holder have been sold by such
Holder, if such date is prior to the expiration of the Registration Period;

 

(e)                                  each
Holder, upon receipt of written notice from the Company of the happening of any
event of the kind described in Section 3.2, shall immediately discontinue
disposition of Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities until such Holder’s receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3.2 and,
if so directed by the Company, such Holder shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Holder’s possession (other than a limited
number of permanent file copies), of the prospectus covering such Registrable
Securities current at the time of receipt of such notice;

 

(f)                                    no
Holder may participate in any underwritten distribution pursuant to a
Registration Statement under Sections 2.1 or 2.2 unless such Holder (i) agrees
to sell such Holder’s Registrable Securities on the basis provided in any
underwriting arrangements in usual and customary form entered into by the
Company, (ii) delivers the Registrable Securities and completes, executes
and delivers all documents reasonably required under the terms of such
underwriting arrangements, and (iii) agrees to pay its pro rata share of all
Selling Expense and any Registration Expenses in excess of those payable by the
Company pursuant to Section 3.4.

 

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3.4                                 Expenses
of Registration.

 

(a)                                  The
Company will pay all Registration Expenses in connection with each Registration
Statement under Sections 2.1 and 2.2.

 

(b)                                 All
Selling Expenses in connection with each Registration Statement under
Sections 2.1 and 2.2 shall be borne by the participating Holders and such
other participating security holders other than the Company (except to the
extent the Company shall be a seller) in proportion to the number of shares
sold by each under the Registration Statement.

 

4.                                       Indemnification
and Contribution.

 

4.1                                 Indemnification
by the Company. In the event of a registration of any of the Registrable
Securities under the Securities Act pursuant to Sections 2.1 and 2.2, the
Company will indemnify and hold harmless each Holder of Registrable Securities
included in such Registration Statement, each underwriter of such Registrable
Securities thereunder and each other Person, if any, who controls such Holder
or underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, to which such Holder, underwriter or
controlling Person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Registration Statement under
which such Registrable Securities were registered under the Securities Act
pursuant to Sections 2.1 or 2.2, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each such Holder, each such
underwriter and each such controlling Person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case (i) if and to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made
in conformity with information furnished by any such Holder, any such
underwriter or any such controlling Person in writing specifically pertaining
to such Holder, underwriter or controlling Person for use in such Registration
Statement or prospectus or (ii) such untrue statement or alleged untrue
statement or omission or alleged omission was contained in a preliminary
prospectus and corrected in a final or amended prospectus, and such Holder,
underwriter or controlling Person failed to deliver a copy of the final or
amended prospectus at or prior to the confirmation of the sale of Registrable
Securities to the Person asserting any such loss, claim, damage or liability in
any case where such delivery is required by the Securities Act or any state securities
laws.

 

4.2                                 Indemnification
by the Holders.  In the event of a
registration of any of the Registrable Securities under the Securities Act
pursuant to Sections 2.1 and 2.2, each Holder of Registrable Securities covered
by such Registration Statement, severally and not jointly, will indemnify and
hold harmless the Company and its affiliates, directors, officers, agents and
employees and each Person, if any, who controls the Company within the meaning
of the Securities Act and the affiliates, directors, officers, agents or
employees of such controlling

 

11

 

Persons, each underwriter and
each Person who controls any underwriter within the meaning of the Securities
Act, against all losses, claims, damages or liabilities, joint or several, to
which the Company or such officer, director, underwriter or controlling Person
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement under which such
Registrable Securities were registered pursuant to Sections 2.1 or 2.2
hereof, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case, to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity with
information pertaining to such Holder, furnished in writing to the Company by
such Holder specifically for use in such Registration Statement or prospectus,
and will reimburse the Company and each such officer, director, underwriter and
controlling Person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the liability of
each Holder hereunder shall be limited to the proportion of any such loss,
claim, damage, liability or expense which is equal to the proportion that the
public offering price of the shares sold by such Holder under such Registration
Statement bears to the total public offering price of all securities sold thereunder,
but not in any event to exceed the proceeds received by such Holder from the
sale of Registrable Securities covered by such Registration Statement.

 

4.3                                 Procedures.

 

(a)                                  Promptly
after receipt by an indemnified party hereunder of notice of the commencement
of any action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party hereunder, notify the indemnifying
party in writing thereof, but the omission so to notify the indemnifying party
shall not relieve it from any liability which it may have to such indemnified
party other than under this Section 4 and shall only relieve it from any
liability which it may have to such indemnified party under this Section 4
if and to the extent the indemnifying party is materially prejudiced by such
omission.

 

(b)                                 Subject
to Section 4.3(c), in case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in and, to the extent it shall wish, to assume and undertake the defense
thereof with counsel reasonably satisfactory to such indemnified party, and,
after notice from the indemnifying party to such indemnified party of its
election so to assume and undertake the defense thereof, the indemnifying party
shall not be liable to such indemnified party under this Article 4 for any
expenses subsequently incurred by such indemnified party in connection with the
defense thereof.

 

(c)                                  Any
indemnified party 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 the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing
by the indemnifying party, (ii) the indemnifying party shall have failed to
assume the defense of such action, or (iii) the named

 

12

 

parties to any such action (including
any impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there are conflicts of interest between such indemnified party and the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified
party).  In any such case, the
indemnifying party shall not, in connection with any one action or separate but
substantially similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all indemnified parties and all such fees and expenses shall be
reimbursed as they are incurred.

 

(d)                                 Whether
or not such defense is assumed by the indemnifying party, such indemnifying
party will not be subject to any liability for any settlement made without its
consent (which consent shall not be unreasonably withheld or delayed).  No indemnifying party shall, without the
consent of the indemnified party (which consent shall not be unreasonably
withheld or delayed), consent to entry of any judgment or enter into any
settlement which (i) does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect of such claim or litigation for which such indemnified
party would be entitled to indemnification hereunder, or (ii) provides for
other than monetary damages.

 

4.4                                 Contribution.  If the indemnification provided for in this
Article 4 is unavailable to or insufficient to hold harmless an
indemnified party under Sections 4.1 or 4.2 in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then, except to the extent that contribution is not permitted under
the Securities Act, each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
the relative benefits received by each party from the offering of the
Registrable Securities (taking into account the portion of the proceeds
received by each), as well as any other relevant equitable considerations.  The relative fault of such indemnifying
party and indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by such indemnifying party or by such indemnified party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.

 

13

 

5.                                       Reports
Under the Exchange Act.  With a view
to making available to the Holders the benefits of Rule 144, the Company agrees
that so long as the Registrable Securities remain outstanding:

 

(a)                                  the
Company shall use its reasonable efforts to timely file all reports required to
be filed with the SEC pursuant to the Exchange Act, and the Company shall not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
permit such termination;

 

(b)                                 the
Company shall use its reasonable efforts to file with the SEC in a timely
manner and make and keep available all reports and other documents required of
the Company under the Securities Act and the Exchange Act to the extent that
the filing and availability of such reports and other documents is required for
the Holders to sell Registrable Securities under Rule 144; and

 

(c)                                  the
Company shall furnish to each Holder, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting requirements
of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents filed by the Company with the SEC, and (iii) such other publicly
available information as may be reasonably requested to permit the Holders to
sell such securities pursuant to Rule 144.

 

6.                                       Assignment
of Registration Rights.  The rights
of the Holders hereunder, including the right to have the Company register
Registrable Securities pursuant to this Agreement, shall be automatically
assigned by each Holder to any transferee of all or any portion of the
Registrable Securities (other than pursuant to a Registration Statement or in
reliance on Rule 144) provided the transferee or assignee agrees in writing for
the benefit of the Company to be bound by all of the provisions contained
herein.

 

7.                                       Amendment
of Registration Rights.  Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only with written consent of the Company and Holders who then
hold a majority of the Registrable Securities. 
Any amendment or waiver effected in accordance with this Section 7
shall be binding upon each Holder and the Company.  Notwithstanding the foregoing, (i) no such amendment,
modification or waiver shall be effective against a particular Holder without
such Holder’s consent, if such amendment, modification or waiver would
adversely affect such Holder’s rights under this Agreement in a manner
disproportionate (in relation to such Holder’s proportional ownership of
Registrable Securities) to the effect of such amendment, modification or waiver
on other Holders, and (ii) the provisions of this Section 7 shall not
be amended or modified without the written consent of each of the Holders.

 

8.                                       Miscellaneous.

 

8.1                                 Record
Holder.  A Person is deemed to be a
Holder whenever such Person owns of record such Registrable Securities.  If the Company receives conflicting
instructions, notices or elections from two or more Persons with respect to the
same Registrable Securities,

 

14

 

the Company shall act upon the
basis of instructions, notice or election received from the registered owner of
such Registrable Securities.

 

8.2                                 Entire
Agreement.  This Agreement and the
Purchase Agreement constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and supersede all prior agreements
and understandings both written and oral and all contemporaneous oral
agreements and understandings between the parties with respect to the subject
matter hereof.  Except for the express
representations, warranties and covenants contained herein, there are no
representations, warranties or covenants by or on behalf of the parties hereto.

 

8.3                                 No
Third Party Beneficiaries.  Except
as expressly set forth in Section 4, nothing in this Agreement, express or
implied, is intended to confer upon any Person other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.

 

8.4                                 Governing
Law.  This Agreement shall be
governed by and construed under the laws of the State of California as applied
to agreements among California residents entered into and to be performed
entirely within California.

 

8.5                                 Submission
to Jurisdiction.  Each of the
parties irrevocably agrees that any legal action or proceeding arising out of
or related to this Agreement or for recognition and enforcement of any judgment
in respect hereof brought by any other party hereto or its successors or
assigns may be brought and determined in the federal courts located in the
County of Ventura, California or the courts of the State of California located
in the County of Ventura, and each of the parties hereby irrevocably submits to
the exclusive jurisdiction of the aforesaid courts for itself and with respect
to its property, generally and unconditionally, with regard to any such action
or proceeding arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any action, suit or proceeding
relating thereto except in such courts). 
Each of the parties agrees further to accept service of process in any
manner permitted by such courts.  Each
of the parties hereby irrevocably and unconditionally waives, and agrees not to
assert, by way of motion or as a defense, counterclaim or otherwise, in any
action or proceeding arising out of or related to this Agreement or the
transactions contemplated hereby, (a) any claim that it is not personally
subject to the jurisdiction of the above-named courts for any reason other than
the failure lawfully to serve process, (b) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise), (c) to the fullest extent permitted by law, that (i) the suit,
action or proceeding in any such court is brought in an inconvenient forum,
(ii) the venue of such suit, action or proceeding is improper or (iii) this
Agreement, or the subject matter hereof, may not be enforced in or by such
courts and (d) any right to a trial by jury.

 

8.6                                 Waiver
of Jury Trial.  EACH OF THE PARTIES
TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

15

 

8.7                                 Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, and all of which
together shall constitute one instrument.

 

8.8                                 Notices.  All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed given upon
personal delivery or three Business Days after being mailed by certified or
registered mail, postage prepaid, return receipt requested, or one Business Day
after being sent via a nationally recognized overnight courier service if
overnight courier service is requested from such service or upon receipt of
electronic or other confirmation of transmission if sent via facsimile, to the
parties, their successors in interest or their assignees at the following
addresses and telephone numbers, or at such other addresses or telephone
numbers as the parties may designate by written notice in accordance with this Section 8.8:

 

	
  if to the Company to:

  	
   

  	
  SMTEK International, Inc.

  200 Science Drive

  Moorpark, CA  93021

  Facsimile:  (805) 532-1608

  Attention:  Kirk A. Waldron

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Gibson, Dunn & Crutcher LLP

  4 Park Plaza

  Irvine, CA  92614

  Facsimile:  (949) 451-4220

  Attention:  Mark W. Shurtleff

  
	
   

  	
   

  	
   

  
	
  if to a Holder:

  	
   

  	
  to such Holder’s address as it appears on the Company’s records.

  

 

8.9                                 Attorneys’
Fees.  In the event that any dispute
among the parties to this Agreement should result in litigation, the prevailing
party in such dispute shall be entitled to recover from the losing party all
fees, costs and expenses of enforcing any right of such prevailing party under
or with respect to this Agreement, including without limitation, such
reasonable fees and expenses of attorneys and accountants, which shall include,
without limitation, all fees, costs and expenses of appeals.

 

8.10                           Severability.  If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.

 

16

 

8.11                           Interpretation.  When a reference is made in this Agreement
to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated.  The
headings contained in this Agreement are for convenience of reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.  All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require.  Unless the context clearly
requires otherwise “or” is not exclusive, and “includes” means “includes, but
is not limited to.”

 

8.12                           Termination.
The obligations of the Company under this Agreement shall terminate on the
second anniversary of the Effective Date.

 

8.13                           Further
Assurances.  Each party shall do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order
to carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.

 

8.14                           Additional
Registration Rights.  The Company
shall not enter into any registration rights or comparable agreement which
provides rights or restrictions which are inconsistent with this
Agreement.  In the event the
registration requirements under the Securities Act are amended or eliminated to
accommodate a “company registration” or similar approach, this Agreement shall
be deemed amended to the extent necessary to reflect such changes and the
intent of the parties hereto with respect to the benefits and obligations of
the parties, and in such connection, the Company shall use its best efforts to
provide the Holders with equivalent benefits to those provided hereunder.

 

[Signature
page follows.]

 

17

 

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

 

 

	
   

  	
  SMTEK INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kirk A. Waldron

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Kirk A. Waldron

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President, CFO

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TRUSTEE OF THE GENE HAAS TRUST

  DTD 3-9-99

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gene Haas

  
	
   

  	
  Gene Haas, as Trustee of The Gene Haas

  Trust DTD 3-9-99

  
						

 

18EXHIBIT 10.1

C O N S U L T I N G   A G R E E M E N T

         This Agreement is made as of August 29, 2003 by and between BLUE MOON
GROUP, INC. (hereinafter "COMPANY") with its principal office in New York
located at 4890 Garland Branch Road, Dover FL 22527 and Mark Wilson
("Consultant") with its principal office located at 5 Ari Drive, Wesley Hills,
New York 10901 .

         WHEREAS, COMPANY desires to retain Consultant to perform any array of
consulting services aimed at increasing the publicity, value and business
efforts of Company;

         WHERAS, Consultant is willing to perform an array of services from time
to time; and

         NOW, THEREFORE, in consideration of mutual promises, covenants and
conditions contained herein, and other good and valuable consideration, the
parties heretofore hereby agree as follows:

         1. Both COMPANY and Consultant warrant that they have the requisite
authority and capacity to enter into this Agreement.

         2. Both Company and Consultant warrant that they are in compliance with
the terms and conditions of this Agreement and will not violate any instrument
or any other agreement which he may be a party, or any Federal and State rules
or regulations applicable to Consultant.

         3. COMPANY retains Consultant, on a consulting basis, to provide the
following business development services:
                  (a) to review COMPANY's managerial and financial requirements;
                  (b) to review COMPANY budget and business plans/forecasts;
                  (c) to analyze COMPANY's efforts to raise capital and/or
                      financing; and
                  (d) other matters intended to increase COMPANY's public
                      awareness.

         4. Consultant acknowledges that COMPANY routinely conducts quality
control audits to monitor compliance with applicable Federal and State laws and
regulations. In this light, Consultant agrees to cooperate with COMPANY in such
audits and to submit all relevant documentation in the possession of Consultant
when requested by COMPANY for the purpose of performing the aforementioned
audits.

         5. This Agreement shall be for a term of one year (1) year and shall
renew for an additional like period unless terminated by either party with sixty
(60) days notice to the non-terminating party prior to that term's cancellation.
Consultant will be entitled to collect the requisite fees as provided for under
this Agreement, notwithstanding the cancellation of this Agreement.

         6. (a) Upon execution of this Agreement COMPANY shall transfer to
Consultant, as compensation for Consultant's yearly services as under this
Agreement, 100,000 shares of COMPANY free-trading common stock ("Stock"), the
Stock containing no restrictions.

<PAGE>
         7. It is expressly understood and agreed that this Agreement does not
create any agency and/or employment relationship as between Consultant and
COMPANY. As such, Consultant shall be deemed an independent contractor, and,
except as provided herein, shall have no authority to act on behalf of COMPANY.

         8. This Agreement constitutes the entire understanding concerning the
subject matter contained herein and supersedes any prior or contemporaneous
representations and/or agreements not contained herein as to such subject
matter.

         9. This Agreement may not be amended and/or modified in any manner
unless such amendment and/or modification is in writing signed by both COMPANY
and Consultant.

         10. This Agreement and the obligations, rights and remedies of the
parties hereto are to be construed in accordance with and governed by the laws
of the State of New York.

         11. If any provision of this Agreement shall be held invalid or
unenforceable for whatever reason, the remainder of this agreement shall not be
affected thereby and every remaining provision of this Agreement shall be valid
and enforceable to the fullest extent permitted by law.

         12. Company recognizes that Consultant now renders, and may continue to
render financial consulting services and other investment banking services to
other entities which may or may not conduct business and activities similar to
those of Company. In this light, as the subject Agreement is non-exclusive,
Consultant shall not be required to devote his full-time, effort and attention
to the performance of his duties under this Agreement, but shall devote only so
much of his time, effort and attention, i his own discretion, as is deemed
reasonable.

         13. All notices or correspondence shall be delivered personally or by
certified or registered U.S. mail, postage prepaid, addressed to the respective
parties at the addresses set forth below:

             COMPANY :             BLUE MOON GROUP, INC.
                                   4890 Garland Branch Road
                                   Dover FL 33527
                                   Attn.: Michael Muzio, Chief Executive Officer

             CONSULTANT:           Mark Wilson
                                   5 Ari Drive
                                   Wesley Hills, New York  10901

         14. All provisions of this Agreement shall inure to the benefit of
COMPANY and its respective successors and assigns.

<PAGE>
         15. If any controversy or dispute shall arise between the parties
hereto in connection with, arising from, or in respect to this Agreement and if
such controversy or dispute shall not be resolved within thirty (30) days after
the same shall arise, then such dispute or controversy shall be submitted for
arbitration to the New York, New York office of the American Arbitration
Association in accordance with its commercial rules then in effect. Such
proceeding shall be conducted in New York, New York. Any such dispute or
controversy shall be determined by a panel of three (3) arbitrators. Such
arbitrators may award any relief which he/she shall deem proper in the
circumstances, without regard to the relief which would otherwise be available
to either party hereto in a court of law or equity, including with limitation an
award of money damages (including interest on unpaid amounts, calculated from
the due date of any such amount, at a rate per annum determined by said ar!
bitrators, specific performance, injunctive relief and attorney's fees. The
award and findings of the majority of such arbitrators shall be conclusive and
binding upon the parties thereto, and judgment upon such award may be entered in
any court of competent jurisdiction. Any party against whom an arbitrators'
award shall be issued shall not, in any manner, oppose or defend against any
suit to confirm such award, or any enforcement proceedings brought against any
such party, whether within or outside of the Untied States of America, with
respect to any judgment entered upon the award, and such party hereby consents
to the entry of judgment against it, in the full amount thereof, or other relief
granted therein, in any jurisdiction in which such enforcement is sought. The
party against whom the arbitrators' award is issued shall pay the fees of the
arbitrators.

         16. Company agrees to reimburse Consultant for reasonable documented
expenses incurred by Consultant in connection with the services performed by
consultant as under this Agreement.

         17. (a) COMPANY agrees to indemnify and hold harmless Consultant, and
its officers, employees and agents from any and all losses, claims, damages,
liabilities and expenses incurred (including reasonable attorneys' fees and
disbursements) that result from the bad faith, gross negligence or unauthorized
representations of Company.

             (b) Consultant agrees to indemnify and hold harmless COMPANY, its
officers, employees and agents from any and all losses, claims, damages,
liabilities and expenses incurred (including reasonable attorneys' fees and
disbursements) that result from the bad faith, gross negligence or unauthorized
representations of Company.

             (c) Each person or entity seeking indemnification hereunder shall
notify the other party as applicable and shall not pay settle and/or acknowledge
liability under any such claim without the consent of the indemnifying party.
The scope of the indemnification, as stated under this section, is limited to
transaction and/or performances performed and/or contemplated pursuant to this
Agreement.

         18. Consultant shall be deemed an independent contractor, and, except
as provided herein, shall have no authority to act on behalf of COMPANY.

         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written:

COMPANY                                                CONSULTANT

By: /s/ Michael Muzio                                  By: /s/ Mark Wilson
   -----------------------------------                     ---------------
Michael Muzio, Chief Executive Officer                 Mark Wilson
BLUE MOON GROUP, INC.

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