Document:

ex10-7.htm

 

Exhibit 10.7

NEOMAGIC CORPORATION

2003 STOCK PLAN

(AS AMENDED AND RESTATED MAY 15, 2010)

1.      Purposes of the Plan.    The purposes of this 2003 Stock Plan are:

	
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to attract and retain the best available personnel for positions of substantial responsibility,

	
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to provide additional incentive to Employees, Directors and Consultants, and

	
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to promote the success of the Company's business.

Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant. Stock Purchase Rights and Stock Appreciation Rights may also be granted under the Plan.

2.      Definitions.    As used herein, the following definitions will apply:

(a)   "Administrator" means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan.

(b)   "Applicable Laws" means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Options or Stock Purchase Rights are, or will be, granted under the Plan.

 

(c)   "Board" means the Board of Directors of the Company.

(d)   "Change in Control" means the occurrence of any of the following events:

(i)    Any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the "beneficial owner" (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company's then outstanding voting securities; or

 

(ii)   The consummation of the sale or disposition by the Company of all or substantially all of the Company's assets;

(iii)   A change in the composition of the Board occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. "Incumbent Directors" means directors who either (A) are Directors as of the effective date of the Plan, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company); or

(iv)  The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

 

(e)   "Code" means the Internal Revenue Code of 1986, as amended.

(f)    "Committee" means a committee of Directors appointed by the Board in accordance with Section 4 of the Plan.

 

 

 

 

(g)   "Common Stock" means the common stock of the Company.

(h)   "Company" means NeoMagic Corporation, a Delaware corporation.

(i)    "Consultant" means any natural person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity.

(j)    "Director" means a member of the Board.

(k)   "Disability" means total and permanent disability as defined in Section 22(e)(3) of the Code.

(l)    "Employee" means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. A Service Provider will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the 91st day of such leave any Incentive Stock Option held by the Optionee will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option. Neither service as a Director nor payment of a director's fee by the Company will be sufficient to constitute "employment" by the Company.

(m)  "Exchange Act" means the Securities Exchange Act of 1934, as amended.

(n)   "Fair Market Value" means, as of any date, the value of Common Stock determined as follows:

(i)    If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value will be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(ii)   If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock will be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

(iii)  In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator.

(o)   "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

(p)   "Inside Director" means a Director who is an Employee.

(q)   "Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option.

(r)   "Notice of Grant" means a written or electronic notice evidencing certain terms and conditions of an individual Option or Stock Purchase Right grant. The Notice of Grant is part of the Option Agreement.

(s)   "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(t)    "Option" means a stock option granted pursuant to the Plan.

 

 

 

 

 

(u)   "Option Agreement" means an agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.

(v)   "Optioned Stock" means the Common Stock subject to an Option, Stock Purchase Right or Stock Appreciation Right.

(w)  "Optionee" means the holder of an outstanding Option, Stock Purchase Right or Stock Appreciation Right granted under the Plan.

(x)   "Outside Director" means a Director who is not an Employee.

(y)   "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code.

(z)   "Plan" means this 2003 Stock Plan.

(aa) "Restricted Stock" means shares of Common Stock acquired pursuant to a grant of Stock Purchase Rights under Section 11 of the Plan or Shares of restricted stock issued pursuant to an Option.

(bb) "Restricted Stock Purchase Agreement" means a written agreement between the Company and the Optionee evidencing the terms and restrictions applying to stock purchased under a Stock Purchase Right. The Restricted Stock Purchase Agreement is subject to the terms and conditions of the Plan and the Notice of Grant.

(cc) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.

(dd) "SAR Agreement" means an agreement between the Company and an Optionee evidencing the terms and conditions of an individual SAR grant. The SAR Agreement is subject to the terms and conditions of the Plan and the Notice of Grant.

(ee) "Stock Appreciation Right" or "SAR" means an award that pursuant to Section 12 is designated as a SAR.

(ff)  "Section 16(b)" means Section 16(b) of the Exchange Act.

(gg) "Service Provider" means an Employee, Director or Consultant.

(hh) "Share" means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan.

(ii)   "Stock Purchase Right" means the right to purchase Common Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.

(jj)   "Subsidiary" means a "subsidiary corporation", whether now or hereafter existing, as defined in Section 424(f) of the Code.

3.    Stock Subject to the Plan.    Subject to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares that may be optioned and sold under the Plan is 20,000,000 Shares.1 The Shares may be authorized, but unissued, or reacquired Common Stock. Notwithstanding the foregoing, the Company may not grant more than 20% of the total Shares reserved for issuance hereunder pursuant to Options, Stock Purchase Rights or Stock Appreciation Rights that have a per share exercise or purchase price that is less than Fair Market Value on the date of grant.

 

1 Includes Shares issued under the Plan prior to May 15, 2010.

 

 

 

 

If an Option, Stock Purchase Right or Stock Appreciation Right expires or becomes unexercisable without having been exercised in full, the unpurchased Shares which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated); provided, however, that Shares that have actually been issued under the Plan, whether upon exercise of an Option or right, will not be returned to the Plan and will not become available for future distribution under the Plan, except that if unvested Shares of Restricted Stock are repurchased by the Company, such Shares will become available for future grant under the Plan.

4.      Administration of the Plan.

(a)   Procedure.

(i)    Multiple Administrative Bodies.    Different Committees with respect to different groups of Service Providers may administer the Plan.

(ii)    Section 162(m).    To the extent that the Administrator determines it to be desirable to qualify Options granted hereunder as "performance-based compensation" within the meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two or more "outside directors" within the meaning of Section 162(m) of the Code.

(iii)    Rule 16b-3.    To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3.

(iv)    Other Administration.    Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws.

(b)    Powers of the Administrator.    Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion:

(i)     to determine the Fair Market Value;

(ii)    to select the Service Providers to whom Options, Stock Purchase Rights and Stock Appreciation Rights may be granted hereunder;

(iii)   to determine the number of shares of Common Stock to be covered by each Option, Stock Purchase Right and Stock Appreciation Right granted hereunder;

(iv)   to approve forms of agreement for use under the Plan;

(v)    to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Option, Stock Purchase Right or Stock Appreciation Right granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options, Stock Purchase Rights and Stock Appreciation Rights may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option, Stock Purchase Right or Stock Appreciation Right or the shares of Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, will determine;

(vi)   to construe and interpret the terms of the Plan and awards granted pursuant to the Plan;

(vii)  to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws;

 

 

 

 

(viii)  to modify or amend each Option, Stock Purchase Right or Stock Appreciation Right (subject to Section 16(c) of the Plan), including the discretionary authority to extend the post-termination exercisability period of Options longer than is otherwise provided for in the Plan;

(ix)   to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option, Stock Purchase Right or Stock Appreciation Right that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld will be determined on the date that the amount of tax to be withheld is to be determined. All elections by an Optionee to have Shares withheld for this purpose will be made in such form and under such conditions as the Administrator may deem necessary or advisable;

(x)    to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Option, Stock Purchase Right or Stock Appreciation Right previously granted by the Administrator;

(xi)   to make all other determinations deemed necessary or advisable for administering the Plan.

 

(c)    Effect of Administrator's Decision.    The Administrator's decisions, determinations and interpretations will be final and binding on all Optionees and any other holders of Options, Stock Purchase Rights or Stock Appreciation Rights.

5.      Eligibility.    Nonstatutory Stock Options, Stock Purchase Rights and Stock Appreciation Rights may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.

 

 6.     Limitations.

(a)   Each Option will be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options will be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted.

(b)   Neither the Plan nor any Option, Stock Purchase Right or Stock Appreciation Right will confer upon an Optionee any right with respect to continuing the Optionee's relationship as a Service Provider with the Company, nor will they interfere in any way with the Optionee's right or the Company's right to terminate such relationship at any time, with or without cause.

(c)   The following limitations will apply to grants of Options:

(i)    No Service Provider will be granted, in any fiscal year of the Company, Options to purchase more than 5,000,000 Shares.

(ii)   In connection with his or her initial service, a Service Provider may be granted Options to purchase up to an additional 200,000 Shares, which will not count against the limit set forth in subsection (i) above.

(iii)  The foregoing limitations will be adjusted proportionately in connection with any change in the Company's capitalization as described in Section 14.

(iv)  If an Option is cancelled in the same fiscal year of the Company in which it was granted (other than in connection with a transaction described in Section 14), the cancelled Option will be counted against the limits set forth in subsections (i) and (ii) above. For this purpose, if the exercise price of an Option is reduced, the transaction will be treated as a cancellation of the Option and the grant of a new Option.

 

 

 

 

7.      Term of Plan.    Subject to Section 20 of the Plan, the Plan will become effective upon its adoption by the Board. It will continue in effect for a term of ten (10) years unless terminated earlier under Section 16 of the Plan.

 

8.      Term of Option.    The term of each Option will be stated in the Option Agreement. In the case of an Incentive Stock Option, the term will be ten (10) years from the date of grant or such shorter term as may be provided in the Option Agreement. Moreover, in the case of an Incentive Stock Option granted to an Optionee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement.

 

9.      Option Exercise Price and Consideration.

(a)    Exercise Price.    The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, subject to the following:

 

(i)    In the case of an Incentive Stock Option

(1)   granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than 110% of the Fair Market Value per Share on the date of grant.

(2)   granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price will be no less than 100% of the Fair Market Value per Share on the date of grant.

(ii)   In the case of a Nonstatutory Stock Option, the per Share exercise price will be determined by the Administrator. In the case of a Nonstatutory Stock Option intended to qualify as "performance-based compensation" within the meaning of Section 162(m) of the Code, the per Share exercise price will be no less than 100% of the Fair Market Value per Share on the date of grant.

(iii)   Notwithstanding the foregoing, Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a merger or other corporate transaction.

        (b)    Waiting Period and Exercise Dates.    At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised.

 

        (c)    Form of Consideration.    The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of:

(i)     cash;

(ii)    check;

(iii)   promissory note;

 

 

 

 

(iv)   other Shares, provided Shares acquired directly or indirectly from the Company, (A) have been vested and owned by the Optionee for more than six (6) months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option will be exercised;

(v)    consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan;

(vi)   a reduction in the amount of any Company liability to the Optionee, including any liability attributable to the Optionee's participation in any Company-sponsored deferred compensation program or arrangement;

(vii)   any combination of the foregoing methods of payment; or

(viii)  such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.

 

10.    Exercise of Option.

 

(a)    Procedure for Exercise; Rights as a Stockholder.    Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. Unless the Administrator provides otherwise, vesting of Options granted hereunder will be suspended during any unpaid leave of absence. An Option may not be exercised for a fraction of a Share.

An Option will be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 14 of the Plan.

Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(b)    Termination of Relationship as a Service Provider.    If an Optionee ceases to be a Service Provider, other than upon the Optionee's death or Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option will remain exercisable for three (3) months following the Optionee's termination. Unless otherwise provided by the Administrator, if on the date of termination the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

 

 

 

(c)    Disability of Optionee.    If an Optionee ceases to be a Service Provider as a result of the Optionee's Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option will remain exercisable for twelve (12) months following the Optionee's termination. Unless otherwise provided by the Administrator, if on the date of termination the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Optionee does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

(d)    Death of Optionee.    If an Optionee dies while a Service Provider, the Option may be exercised following the Optionee's death within such period of time as is specified in the Option Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Option Agreement), by the Optionee's designated beneficiary, provided such beneficiary has been designated prior to Optionee's death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Optionee, then such Option may be exercised by the personal representative of the Optionee's estate or by the person(s) to whom the Option is transferred pursuant to the Optionee's will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Option Agreement, the Option will remain exercisable for twelve (12) months following Optionee's death. Unless otherwise provided by the Administrator, if at the time of death Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

11.    Stock Purchase Rights.

(a)   Rights to Purchase.    Stock Purchase Rights may be issued either alone, in addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it will advise the offeree in writing or electronically, by means of a Notice of Grant, of the terms, conditions and restrictions related to the offer, including the number of Shares that the offeree will be entitled to purchase, the price to be paid, and the time within which the offeree must accept such offer. The offer will be accepted by execution of a Restricted Stock Purchase Agreement in the form determined by the Administrator.

(b)    Repurchase Option.    Unless the Administrator determines otherwise, the Restricted Stock Purchase Agreement will grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser's service with the Company for any reason (including death or Disability). The purchase price for Shares repurchased pursuant to the Restricted Stock Purchase Agreement will be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option will lapse at a rate determined by the Administrator.

(c)    Other Provisions.    The Restricted Stock Purchase Agreement will contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion.

(d)    Rights as a Stockholder.    Once the Stock Purchase Right is exercised, the purchaser will have the rights equivalent to those of a stockholder, and will be a stockholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 14 of the Plan.

12.    Stock Appreciation Rights.    Each SAR grant will be evidenced by a SAR Agreement that will specify the terms of the SAR, the conditions of exercise, the expiration date, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Notwithstanding the foregoing, the rules of Sections 9(c) and 10 of the Plan also will apply to SARs. Upon exercise of a SAR, an Optionee will be entitled to receive a payment from the Company (at the discretion of the Administrator, in cash, in Shares of equivalent value, or in some combination thereof) in an amount determined by multiplying (i) the difference between the Fair Market Value of a Share on the date of exercise over the exercise price, by (ii) the number of Shares with respect to which the SAR is exercised.

 

 

 

 

13.    Transferability of Options, Stock Purchase Rights and Stock Appreciation Rights.    Unless determined otherwise by the Administrator, an Option, Stock Purchase Right or Stock Appreciation Right may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. If the Administrator makes an Option, Stock Purchase Right or Stock Appreciation Right transferable, such Option, Stock Purchase Right or Stock Appreciation Right will contain such additional terms and conditions as the Administrator deems appropriate.

14.    Adjustments; Dissolution or Liquidation; Merger or Change in Control.

(a)    Adjustments.    In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, may (in its sole discretion) adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Option, Stock Purchase Right or Stock Appreciation Right, as well as the numerical Share limits in Section 6 of the Plan.

(b)    Dissolution or Liquidation.    In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option or Stock Appreciation Right until ten (10) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option or Stock Appreciation Right would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option applicable to any Shares purchased upon exercise of an Option or Stock Purchase Right will lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Option, Stock Purchase Right or Stock Appreciation Right will terminate immediately prior to the consummation of such proposed action.

(c)    Merger or Change in Control.    In the event of a merger of the Company with or into another corporation, or a Change in Control, each outstanding Option, Stock Purchase Right and Stock Appreciation Right will be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option, Stock Purchase Right or Stock Appreciation Right, the Optionee will fully vest in and have the right to exercise the Option, Stock Purchase Right or Stock Appreciation Right as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option, Stock Purchase Right or Stock Appreciation Right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or Change in Control, the Administrator will notify the Optionee in writing or electronically that the Option, Stock Purchase Right or Stock Appreciation Right will be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and the Option, Stock Purchase Right or Stock Appreciation Right will terminate upon the expiration of such period.

 

 

 

 

For the purposes of this subsection (c), the Option, Stock Purchase Right or Stock Appreciation Right will be considered assumed if, following the merger or Change in Control, the option or right confers the right to purchase or receive, for each Share subject to the Option, Stock Purchase Right or Stock Appreciation Right immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) or, in the case of a Stock Appreciation Right upon the exercise of which the Administrator determines to pay cash, the fair market value of the consideration, received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, Stock Purchase Right or Stock Appreciation Right, for each Share subject to the Option, Stock Purchase Right or Stock Appreciation Right, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or Change in Control.

 

15.    Date of Grant.    The date of grant of an Option, Stock Purchase Right or Stock Appreciation Right will be, for all purposes, the date on which the Administrator makes the determination granting such Option, Stock Purchase Right or Stock Appreciation Right, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Optionee within a reasonable time after the date of such grant.

 

16.    Amendment and Termination of the Plan.

(a)    Amendment and Termination.    The Board may at any time amend, alter, suspend or terminate the Plan.

(b)    Stockholder Approval.    The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

(c)    Effect of Amendment or Termination.    No amendment, alteration, suspension or termination of the Plan will impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan will not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to Options, Stock Purchase Rights and Stock Appreciation Rights granted under the Plan prior to the date of such termination.

17.    Conditions Upon Issuance of Shares.

(a)    Legal Compliance.    Shares will not be issued pursuant to the exercise of an Option, Stock Purchase Right or Stock Appreciation Right unless the exercise of such Option, Stock Purchase Right or Stock Appreciation Right and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.

(b)    Investment Representations.    As a condition to the exercise of an Option, Stock Purchase Right or Stock Appreciation Right, the Company may require the person exercising such Option, Stock Purchase Right or Stock Appreciation Right to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

18.    Inability to Obtain Authority.    The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained.

19.    Reservation of Shares.    The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan.

20.    Stockholder Approval.    The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.ex10-57.htm

    Exhibit 10.57

     

     

    
      LOCATION
BASED TECHNOLOGY, INC.

       

      AFFINITAS
CORPORATION

       

      MASTER
SERVICE AGREEMENT

      

      

      THIS AGREEMENT (the
"Agreement") is made and entered into this ____ day of August, 2009, by and
between AFFINITAS
CORPORATION, a
Nebraska corporation, currently of 1015 North 98th
Street, Suite 100, Omaha, NE  68114 (hereinafter referred to as
"AFFINITAS") and LOCATION BASED
TECHNOLOGIES, INC., a Nevada Corporation currently
of  4999 E. La Palma Avenue, Anaheim, California 92807 (hereinafter
referred to as "LBT").

      

      R
E C I T A L S

      

      AFFINITAS
is interested in contracting with LBT to provide certain direct marketing and
agency services, including, but not limited to marketing and agency services,
web services, direct mail, data analysis and lists, and  inbound and
outbound telemarketing services to LBT and AFFINITAS is interested in
contracting with LBT to provide those services as AFFINITAS’s capacity
permits.  This Agreement is intended to set forth the terms of the
parties’ agreement for such services.

      

      THEREFORE,
in consideration of the mutual promises and obligations of AFFINITAS and LBT as
set forth below, and other good and valuable consideration, the sufficiency of
which the parties acknowledge, the parties agree as follows:

      

      ARTICLE
I.

      SERVICES PROVIDED BY
AFFINITAS

      

      The
services to be performed by AFFINITAS pursuant to the terms of this Agreement
shall be inbound telemarketing services on behalf of LBT, as described from time
to time, on separate attachments to this Agreement as part of Exhibit “A” and
shall, when properly executed, become a part of this Agreement and incorporated
herein.  In the event there are specific requirements
of  LBT pursuant to the services to be performed by AFFINITAS, such
requirements shall be set out on a separate statement of work (“SOW”) to be
attached hereto as part of Exhibit “A.”

       

      
      

      ARTICLE
II.

      DURATION AND TERMINATION OF
SERVICE

      

      The term
of this Agreement shall be for a period beginning on the date hereof (“Date of
Commencement”) and ending three (3) years thereafter.  The term hereof
shall be automatically extended from year to year under the same terms and
conditions unless one hundred twenty (120) days’ advance notice is provided by
either party of its intention not to renew for an additional
term.  Notwithstanding anything contained herein to the contrary,
either party may terminate this Agreement as provided in Article XVII
hereof.

       

      
        
           

        

        
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      ARTICLE
III.

      SERVICE LEVEL
AGREEMENT

      

      LBT will
provide hourly and monthly call volumes to Affinitas no later than thirty (30)
days from the start of each report month.   Affinitas will work
with LBT to create a staffing plan to achieve a service level of answering
eighty percent (80%) of the calls within 30 seconds so long as the call volumes
are +/- 5% of projected and agreed upon call volumes.  Hours of
Operation shall be 8:30 AM EST to 8:00 PM, Monday through Friday.

       

      ARTICLE
IV.

      COMPENSATION FOR SERVICES
RENDERED

      

      4.1  
Compensation.  AFFINITAS
shall receive, as compensation for all services provided to LBT as herein
described, the fees as set out on Exhibit “A”.  Unless otherwise
provided, all compensation shall be adjusted at the commencement of each
anniversary of this Agreement to reflect the increase in the Consumer Price
Index (the U.S. City Average 1982-84 equal 100) as prepared by the United States
Department of Labor from the date of this Agreement.

      

      4.2  
Hourly
Rate.   Hourly rate as used in this Agreement, Exhibit “A”
attached hereto, and any work order, shall be defined as any hour in which an
agent is logged into call management systems and/or able to handle, and/or is
handling LBT calls, plus any related work time, including, without limitation,
all ancillary service, after call work, awaiting calls and breaks.

       

      Training
hours includes all hours in which agents/CSR’s are being trained on a LBT
program, including, without limitation, initial training, cross-training,
up-training, and all new hire training associated with covering turnover and
attrition.

      

      4.3  
Telecom
Costs.  
LBT shall be responsible to pay all telecom costs and expenses reasonably
required by AFFINITAS to perform the services and shall timely undertake such
action necessary to establish such connectivity to AFFINITAS locations and have
billing for services directed to LBT for payment.

      

      4.4  
Consulting
Services.  AFFINITAS shall receive, as compensation for all
consulting services, not otherwise identified on Exhibit “A”, from time to time,
at an hourly rate to be agreed upon.

      

      4.5  
Other
Expenses.  In addition to the compensation, travel to LBT's
corporate office or other reasonable and appropriate travel and related costs
approved by LBT will be paid for by LBT and will be billed at
cost.  AFFINITAS will abide by established and reasonable travel
policies provided by LBT to AFFINITAS in advance.  An itemized expense
report, with supporting documentation, will be submitted to LBT on a monthly
basis for reimbursement.

      

      4.6  
Out
of Pocket Costs.  In addition to the compensation, all out of
pocket costs, including but not limited to presentation materials and supplies
and tapes for recording, incurred by AFFINITAS will be reimbursed by
LBT.  All such out of pocket costs exceeding $200.00 per item must be
pre-approved by LBT.  An itemized expense report, with supporting
documentation, will be submitted to LBT on a monthly basis for
reimbursement.

       

      
        
           

        

        
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      4.7  
Billing
Procedure.  AFFINITAS shall submit invoices at least weekly to
LBT.   LBT agrees to pay AFFINITAS the amount of the invoice upon
receipt. One half the cost of mail production pieces shall be paid prior to
printing.  All postage must be paid in full prior to
mailing.  If any invoice is not paid within thirty (30) days of the
date of the invoice, AFFINITAS may require LBT to post a deposit prior to the
continuation of services, assess a late fee equal to 5% of the outstanding
invoice, charge interest at 18% per annum or the highest rate available by law,
or stop providing services hereunder.  The failure by AFFINITAS to
exercise any of its rights hereunder, shall not be deemed a waiver of its future
rights.

      

      4.8  
Holiday/Overtime
Compensation AFFINITAS shall be paid one and one half times the
Hourly and Daily Rates as set forth in any attachment to this Agreement, any
Statement of Work or Work Authorization, for all services conducted at the
request of LBT on any holidays or that result in overtime being paid to
employees of AFFINITAS.

       

      4.9  Taxes. All
amounts billed to LBT hereunder are exclusive of foreign, federal, state and
local sales, use, or similar sales-like or value added taxes.

      

      4.10  
No
Abatement.  LBT agrees that any sums payable to AFFINITAS under
this Agreement shall not be subject to any abatement, defense, set-off,
counterclaim or recoupment.

       

      ARTICLE
V.

      WARRANTIES AND
REPRESENTATIONS OF LBT

      

      5.1   Authority.  LBT
has full power and lawful authority to execute and deliver this Agreement and to
consummate and perform the transactions contemplated hereby in the manner herein
provided.  This Agreement, assuming due execution by LBT, constitutes
and, when executed and delivered, the agreements and instruments referred to
herein to be executed by LBT will constitute, legal, valid and binding
obligations of LBT, enforceable against it in accordance with their respective
terms.

      

      5.2   Responsibility
for Offers.  LBT is solely responsible for its offers made
during the provision of the  services and for all representations made
during caller contacts or otherwise.  LBT is solely responsible for
the products or services covered by the offers.

      

      5.3   Compliance.  LBT
warrants and represents that at all times such offers of LBT, which are the
subject of the inbound telemarketing services being provided, will comply in
full with any and all requirements of federal, state and local laws and
regulations, including but not limited to, any statute pertaining to gaming or
to the solicitation of charitable or political contributions. LBT is responsible
for determining whether an existing business relationship exists if such
exception to any Federal or State Do Not Call rule, regulation or
law.  LBT warrants and represents that any cell phone numbers provided
to AFFINITAS as part of the outbound services are only those that have been
specifically authorized to be called by LBT. LBT will comply with all applicable
laws, rules, regulations and ordinances, including without limitation: (i) local
license and permit requirements, and (ii) all export, import and customs laws
and regulations (such as the export and re-export controls under the U.S. Export
Administration Regulations and/or similar regulations of the U.S. or Argentina
which may apply.

       

      
        
           

        

        
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      ARTICLE
VI.

      WARRANTIES AND
REPRESENTATIONS OF AFFINITAS

      

      AFFINITAS
has full power and lawful authority to execute and deliver this Agreement and to
consummate and perform the transactions contemplated hereby in the manner herein
provided.  The execution and delivery of this Agreement by AFFINITAS
and the consummation and performance of the transactions contemplated hereby in
the manner herein provided have been duly and validly authorized by all
necessary corporate action. This Agreement, assuming due execution by AFFINITAS,
constitutes and, when executed and delivered, the agreements and instruments
referred to herein to be executed by AFFINITAS will constitute, legal, valid and
binding obligations of AFFINITAS, enforceable against it in accordance with
their respective terms.

      

      ARTICLE
VII.

      NO
PARTNERSHIP

      

      This
Agreement shall not in any way be construed to constitute a partnership or joint
venture between the parties hereto and the business of AFFINITAS shall be
operated separate and apart from the business of LBT.  In addition,
the inbound telemarketing services to be provided hereunder by AFFINITAS to LBT
are being provided as an independent contractor and do not constitute an
employer/employee relationship.  Therefore, the compensation paid to
AFFINITAS for such services is not subject to FICA and FUTA
taxes.  AFFINITAS shall be responsible for payment of all taxes
arising out of AFFINITAS’s activities in accordance with this Agreement,
including by way of illustration but not limitation, federal and state income
taxes, social security taxes, unemployment insurance taxes, and any other taxes
or business license fees as required.  Moreover,  AFFINITAS
agrees to obtain all necessary insurance coverage, including by way of
illustration but not limitation, liability, property, workers’ compensation and
state disability insurance, with sufficient limits, not less than (i) $1,000,000
for commercial general liability, (ii) $1,000,000 for automobile liability, and
(iii) statutory limits for workers’ compensation. All insurance will be kept in
force and effect for the duration of this Agreement.

      

      AFFINITAS
shall not represent directly or indirectly that it or any of its employees are
agents or legal representatives of LBT, nor shall AFFINITAS incur any
liabilities or obligations of any kind in the name of or on behalf
of  LBT other than those specifically made a part of this
Agreement.

      

      ARTICLE
VIII.

      NON-EXCLUSIVE
SERVICE

      

      AFFINITAS
is not restricted, during the term hereof, from dealing with any other
individual, agency or related entities whether operating as a proprietorship,
partnership or authorized corporation, from furnishing any type of service to
any other person or entity.

       

      
        
           

        

        
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      ARTICLE
IX.

      RESTRICTIONS ON HIRING
EMPLOYEES OF AFFINITAS

      

      During
the term hereof, and for a period of three (3) years after termination of this
Agreement, LBT shall be restricted from hiring any and all employees of
AFFINITAS, or its subsidiaries who are employees during the term or any
continuation of this Agreement, including those in management and administrative
positions, as well as all hourly employees and those contracting with AFFINITAS
for specific projects.   In the event of a violation of this
restriction by LBT, LBT shall pay to AFFINITAS a fee of two times the annual
salary of said employee, plus all costs incurred by AFFINITAS to replace the
employee.

      

      ARTICLE
X.

      CONFIDENTIALITY AND
NONDISCLOSURE

      

      10.1  
Confidentiality.  In
connection with the services provided to LBT, LBT may provide AFFINITAS with
information, including names and telephone numbers, of its LBT and customers
(“Customer Data”).  LBT shall retain all rights in and to any Customer
Data provided by LBT to AFFINITAS, as well as in and to any information relating
to Customer Data developed by AFFINITAS in the course of its performances of the
services.  In addition, LBT, in its sole discretion, may disclose to
AFFINITAS information (e.g., marketing programs, strategies and sales), which is
proprietary to LBT.  LBT shall retain all rights in and to such
proprietary information.  AFFINITAS agrees to maintain all of the
foregoing information in confidence using the same standards of protection as it
applies to its own confidential information and to refrain from disclosing such
information to third parties without LBT’s prior written consent, unless (1)
AFFINITAS is legally required to do so, after providing notice to LBT of such
requirement, (2) such information is already known by AFFINITAS, (3) is legally
obtained by AFFINITAS from other sources, or (4) such information is or becomes
generally available to the public through no fault of AFFINITAS.

      

      10.2   Nondisclosure.  AFFINITAS
will use reasonable care in safeguarding confidential and proprietary
information of LBT and shall, upon written request of LBT, return such
information to LBT upon the termination of this Agreement.  AFFINITAS
agrees that any information, whether written or oral, received by AFFINITAS
during the performance of this Agreement, that concerns the personnel,
financial, technical, or other confidential affairs of LBT or its affiliates
will be treated by AFFINITAS in full confidence and will not be revealed to any
persons, firms or organizations without the prior written consent of
LBT.  This paragraph will survive the termination of this
Agreement.

       

      ARTICLE
XI.

      INDEMNIFICATION

      

      11.1  
Indemnification.   AFFINITAS
will indemnify and hold LBT and its affiliated companies, officers, agents,
directors and employees harmless from any and all expenses, loss or damage as a
result of claims, suits, complaints, actions or legal proceedings (including
threatened proceedings) directly or indirectly arising out of AFFINITAS’s
performance of services under this Agreement, except for claims, suits,
complaints, actions or legal proceedings arising from negligent acts or
omissions or wrongful or willful misconduct of LBT, its affiliated companies,
its agents, officers, directors or employees.  LBT will indemnify and
hold AFFINITAS, its affiliated companies, officers, agents, directors and
employees harmless from any and all expenses, loss or damage as a result of
claims, suits, complaints, actions or legal proceedings (including threatened
proceedings) directly or indirectly arising out of LBT’s actions under this
Agreement, except for claims, suits, complaints, actions or legal proceedings
arising from negligent acts or omissions or wrongful or willful misconduct of
AFFINITAS, its affiliated companies, its agents, officers, directors and
employees.

       

      
        
           

        

        
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      11.2  
Waiver
of Claims.  In the event LBT provides equipment or materials to
AFFINITAS for use by AFFINITAS in providing the services contracted for
hereunder, AFFINITAS shall endeavor to use a reasonable degree of care in
handling and protecting such equipment, but shall not be liable for, and LBT
waives all claims for damages resulting from, any loss or damages that may be
caused by theft, fire, accidents, the elements or any other reason; it being
specifically understood that risk of all such loss or damage shall be LBT’s, and
LBT shall carry its own fire, extended coverage and theft insurance as required
on said equipment.

      

      ARTICLE
XII.

      REPRESENTATIONS AND
WAIVER

      

      This Agreement contains the sole
understanding between the parties hereto and any oral or written agreement or
representations which may have been made prior to entry into this Agreement
shall be deemed to have been merged into this Agreement, and shall be of no
force and effect except as reflected herein, and the obligations of AFFINITAS
and LBT may not be modified except in a written amendment hereto signed by
AFFINITAS and LBT.   No waiver by either party of any breach of
this Agreement by the other shall be deemed to be a waiver of any preceding or
subsequent breach.

      

      ARTICLE
XIII.

      ASSIGNABILITY

      

      Neither party shall have the right to
assign this Agreement, except with the prior written consent of the other, and
this Agreement shall in no way constitute an asset of either party so as to be
assignable to or by a trustee in bankruptcy or a receiver or by operation of
law.  Nothing contained herein shall prohibit AFFINITAS from assigning
its obligations hereunder to a subsidiary or other related entity, a successor
to all or substantially all of the business of AFFINITAS, or an entity with
which AFFINITAS is merged or consolidated, and upon the assumption of this
Agreement by the Assignee, the Assignee shall be solely responsible for all
obligations of AFFINITAS hereunder.

      

      ARTICLE
XIV.

      DISCLAIMER

      

      AFFINITAS will use its best
commercially reasonable efforts to perform the services and all related
operations hereunder in accordance with industry standards, but cannot be
guarantor of its services, nor can AFFINITAS guarantee complete freedom from
error, but cannot be a guarantor of its services, nor can AFFINITAS guarantee
complete freedom of error.   LBT is aware that, in providing
inbound  telemarketing services, AFFINITAS will not be able to make
actual contact with all names, addresses and phone numbers provided
to  AFFINITAS by LBT.

       

      
        
           

        

        
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      ARTICLE
XV.

      NOTICE

      

      Any
notice required or permitted by this Agreement shall be effectively delivered,
for all purposes, upon deposit, postage prepaid, registered and certified mail,
return receipt requested, in the United States mail, addressed to LBT at its
aforementioned address attention Ms. Desiree Mejia, Chief Operating Officer of
LBT (e-mail address: desiree@pocketfinder.com) and/or Affinitas  at
their aforementioned office addresses, with a copy to David Steier at 1015 North
98th
Street, Suite 100, Omaha, NE  68114, (fax number 402-505-5044; e-mail
address dsteier@affinitas.net)
or to such other address as either party may, by notice in writing to the other,
furnish for purposes of notice hereunder.

      

      ARTICLE
XVI.

      CONSTRUCTION

      

      This
Agreement shall be construed under the laws of the State of
Nebraska.  For the purpose of any action or proceeding instituted with
respect to any claim arising under this Agreement, both LBT and AFFINITAS hereby
irrevocably consent to the jurisdiction of any court having subject matter
jurisdiction in Omaha, Nebraska.  LBT further irrevocably consents to
the service of process out of said court by mailing a copy thereof, by
registered mail, postage prepaid, to LBT at its office address listed above, and
agrees that such service, to the fullest extent permitted by law, (i) shall be
deemed in every respect effective service of process upon it in any such suit,
action or proceeding and (ii) shall be taken and held to be valid personal
service upon the personal delivery to it.  In connection with any
suit, action or proceeding instituted in any state or federal court located in
Omaha, Nebraska, LBT hereby irrevocably waives, to the fullest extent permitted
by law, any objection that it may have or hereafter have to the laying of the
venue of any such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in such court has been
brought in an inconvenient forum.  Only AFFINITAS's President shall
have the power to accept this Agreement or to execute any amendment
hereof.

      

      ARTICLE
XVII.

      MODIFICATION

      

      LBT  may expand or modify the
scope of services of this Agreement at any time upon sixty (60) days’ notice to
AFFINITAS. If this Agreement is expanded or modified, the fees and expenses and
timing of the expanded or modified services will be redefined to the mutual
satisfaction of both parties.  Notification must be given by LBT in
writing to AFFINITAS.  In no event shall the monthly minimum be
reduced without permission of AFFINITAS.

      

      ARTICLE
XVIII.

      TERMINATION

      

      18.1  
Events
of Default.  The following events shall constitute events of
default (“Events of Default”) under this Agreement:

      

      (a) a failure
by LBT to pay any amount due to AFFINITAS when due;

      (b) a failure
by either party (“Defaulting Party”) to perform one or more material obligations
under this Agreement;

      (c) a breach
of either party of a material representation, warranty, covenant or condition
under this Agreement; or

      (d) a filing
by either party under bankruptcy or insolvency laws.

       

      
        
           

        

        
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      18.2  
Rights
Upon Event of Default.  Upon the occurrence of an Event of
Default, the other party (“Non-Defaulting Party”) may deliver written notice
thereof to the Defaulting Party of its decision to terminate this
Agreement.  The Defaulting Party shall thereafter have thirty (30)
days to cure such breach or, if such breach is not curable within the thirty
(30) day period, then to commence a cure, provided such cure shall be pursued to
a prompt conclusion.  If such breach is not cured within such thirty
(30) days, the Non-Defaulting Party shall thereafter have the right to terminate
this Agreement as specified in its notice of default.

      

      18.3  
AFFINITAS
Rights Upon Event of Default by Failure to Pay.  In the event
the breach is failure by LBT to pay any amount due to AFFINITAS when due, LBT
shall thereafter have two (2) days to cure such breach by payment in full of all
amounts then due to AFFINITAS.  If such breach is not cured within
such two (2) days, AFFINITAS shall be provided a possessory lien on all assets
of LBT in AFFINITAS’s possession and shall thereafter have the right to
terminate this Agreement as specified in its notice of default.

      

      18.4  
Consequence
of Termination for Default.  In the event of termination of
this Agreement, the Non-Defaulting Party may pursue any remedy that may be
available, at law or in equity, with respect to such
breach.   Regardless of whether AFFINITAS or LBT is the
Defaulting Party, upon a termination of this Agreement, LBT shall pay AFFINITAS
through the date of termination and, provided LBT is not the Defaulting Party,
AFFINITAS shall assist LBT in the transition of the Services to LBT or another
party of LBT’s choosing to avoid an interruption in Services, provided LBT shall
pay AFFINITAS for any reasonable costs, in addition to the cost of Services
provided by AFFINITAS through the date of termination, directly incurred in
effecting such transition.

      

      18.5  
Early
Termination without Default.  Either party may terminate this
Agreement by giving not less than one hundred twenty (120) days prior written
notice thereof to the other party.  In the event that LBT elects to
terminate the Agreement early, LBT shall continue to provide monthly call
volumes or other work to AFFINITAS during the sixty (60) day period following
its notice at a level not less than the monthly average of the two (2) months
prior to the date of notice of early termination or, in lieu of supplying such
call volumes, LBT shall pay AFFINITAS for each month during the one hundred
twenty (120) day period following its notice the average monthly compensation
for Services paid to AFFINITAS during the two (2) months prior to the notice of
early termination or a mutually agreeable termination
period.  Exception: if LBT is acquired or merged into another company
LBT will work closely with Affinitas to close down its operation with as little
impact upon Affinitas as possible. LBT will be required to pay sixty (60) days
at a level not less than the monthly average of the two (2) months prior to the
date of notice of termination due to merger or acquisition.

       

      
        
           

        

        
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      ARTICLE
XIX.

      MISCELLANEOUS

      

      19.1   Headings.  The
subject headings contained in the Agreement are included for purposes of
convenience only, and shall not affect the construction or interpretation of any
of its provisions.

      

      19.2   Exhibits
and Schedules.  All Exhibits and Payment Schedules referred to
in this Agreement are deemed attached hereto and are incorporated herein and
made an integral part hereof.

      

      19.3   Entire
Agreement; Amendments; Waiver.  This Agreement, including all
Exhibits and Schedules hereto (all of which are incorporated herein by reference
and made a part hereof), constitute the entire Agreement between the parties
pertaining to the subject matter hereof, and supersedes any prior agreements,
representations and understandings of the parties.  No supplement,
modification or amendment to this Agreement shall be binding unless executed in
writing by each of the parties hereto.  No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver.  No waiver shall be binding unless executed in
writing by the party making the waiver.

      

      19.4   Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same
instrument.

      

      19.5   Parties
in Interest.  This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
assigns.

      

      19.6   Due
Authorization.  The parties hereto have caused this Agreement
to be executed and delivered by this respective duly authorized
officers.

      

      19.7   Exclusive
Benefits.  Nothing in this Agreement is intended to confer any
rights or remedies, whether express or implied, under or by reason of this
Agreement on any persons other than the parties hereto and their respective
successors and assigns nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement.

      

      19.8   Invalid
Portions.  In the event any portion of this Agreement is deemed
to be invalid or unenforceable, the parties agree that the remaining portions
shall remain in full force and effect.

      

      19.9   Officers,
Directors Exempt.  Neither party shall have recourse or right
of action against any shareholder, officer or director, in his or her individual
capacity as such, whether past, present or future, of the other party or of any
successor thereto, whether by virtue of any statute or rule of law or otherwise,
all such liability being, by the acceptance hereof and as part of the
consideration of the execution hereof by AFFINITAS and LBT, expressly waived and
released, except for the willful or negligent acts of such shareholder, officer
or director or either party.

      

      19.10   Consents
and Approvals.  The parties hereby shall take all necessary
corporate and other action and shall use its best efforts to obtain all material
consents and approvals required to enable it to carry out the transactions
contemplated by this Agreement.

      

      19.11  
Limited
Warranty.  AFFINITAS disclaims all warranties, express or
implied, as to description, AFFINITAS, merchantability, fitness for a particular
purpose, productiveness, or any other matter, with respect to any of the
products or services sold by LBT pursuant to this Agreement.

       

      
        
           

        

        
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      IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the
_____ day of September, 2009.

      

      "AFFINITAS":

      

      AFFINITAS CORPORATION,

      a Nebraska corporation,

      

      By:________________________________________

           Its
____________________________

      

       "LBT"

      

      LOCATION
BASED TECHNOLOGIES, INC.,

      a Nevada
Corporation,

      

      

      By:________________________________________

                                                                                                          
Its
_______________________

      

      
        
           

        

        
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      EXHIBIT
"A"

      

      SERVICES
TO BE PERFORMED BY AFFINITAS

       

      
        
          	
                   

                	
                        
                    Service

                  

                	Fees
	 
      	 
      	 
      
	
                  1.

                	
                  Consultant

                	
                  $    1,750
      per day

                
	
                  2.

                	
                  Agent
      Hourly Rate – Inbound

                	
                  $   TBD
      per hour

                
	
                  3.

                	
                  Agent
      Hourly Rate – Administration

                	
                  $   19.00
      per hour

                
	
                  4.

                	
                  Agent
      Hourly Rate – Training

                	
                  $   19.00
      per agent hour

                
	
                  5.

                	
                  Connectivity
      (video, data & voice)

                	
                  $   Cost
      incurred

                
	
                  6.

                	
                  Set-up
      and Development Fee (one time)

                	
                  $   TBD
      depending upon actual set up needed

                
	
                  7.

                	
                  CTI
      Set Up and Development

                	
                  Not
      needed at this time

                
	
                  8.

                	
                  IVR
      cost per minute or message played

                	
                  $
      TBD

                
	
                  9.

                	
                  Programming
      (optional)

                	
                  $   185.00/Hr.

                
	
                  10.

                	
                  Courier/Overnight

                	
                  $   Cost
      Incurred

                
	
                  11.

                	
                  Monthly
      Minimum

                	
                  TBD

                
	
                  12.

                	
                  Agency
      Services

                	
                  TBD

                
	
                  13.

                	
                  Postage

                	
                  $
      Cost Incurred

                

        

      

       

      DEFINITIONS:

      

      
        (1)
Set-up fee is a one-time
charge to develop all the requisite inbound program elements i.e. scripts,
routing, reports, etc. Additional programming may be
required.

      

      

      (2) Agent Hourly Fee is the fee
associated with the actual time agents are logged into call management systems
and/or able to handle, and/or is handling LBT calls, plus any related work time,
including, without limitation, all ancillary service, after call work, awaiting
calls and breaks.  Unless set forth  herein or any work
order, the hourly fee structure includes labor, telecom and facility
charges.

      

      (3) Agent Training hours are those
hours in which agents/CSR’s are being trained on a LBT program, including,
without limitation, initial training, cross-training, up-training, and all new
hire training associated with covering turnover and attrition.

      

      (4) Custom programming is
available based upon LBT requests for specialized system or data
requirements.

      

      (5) Clerical/data entry – any
clerk work or data entry that is LBT requested is billed at the aforementioned
hourly rate.

      

      (6) Minimum Billing is the minimum
fee billed per month to keep operations staff and management in place during the
duration of the program.

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

       

      IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the
_____ day of September, 2009.

      

      "Affinitas
":

      AFFINITAS
CORPORATION,

      A
Nebraska corporation,

      By:
________________________________________

      

      

      "LBT"

      LOCATION
BASED TECHNOLOGIES, INC.

      A Nevada
Company,

      

      By:
________________________________________

      

      

       

      12

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