Document:

inuv_ex1050.htm

EXHIBIT 10.50

ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement is entered into as of December 10, 2010 (the “Execution Date”), by and among Real Estate School Online Inc., a Florida corporation (“Seller”), Inuvo, Inc., a Nevada corporation (the “Shareholder”) (Seller and the Shareholder, hereinafter are collectively referred to as the “Selling Parties”), and DF Institute, Inc., an Illinois corporation (“Purchaser”). Capitalized terms used in this Agreement and not otherwise defined herein are defined in Exhibit A.

 

Recitals

 

Whereas, the Shareholder is the sole securityholder of Seller;

 

Whereas, the Selling Parties wish to provide for the sale and transfer of the Acquired Assets to Purchaser, and Purchaser wishes to purchase and acquire the Acquired Assets from the Selling Parties, on the terms set forth in this Agreement; and

 

Whereas, concurrently with the execution of this Agreement, Seller has delivered to Purchaser evidence reasonably acceptable to Purchaser that the principal terms of this Agreement and the Transactions have been duly approved by the requisite vote of its Board of Directors and the Shareholder in accordance with its Organizational Documents.

 

Agreement

 

The parties to this Agreement, intending to be legally bound, agree as follows:

 

	
1.  

	
Sale of Assets; Related Transactions.

 

1.1 Sale of Assets.

 

(a) At the Closing, Seller shall sell, assign, transfer, convey and deliver to Purchaser all of Seller’s right, title and interest in and to the Acquired Assets, free and clear of any Encumbrances other than Permitted Encumbrances, on the terms and subject to the conditions set forth in this Agreement.  For purposes of this Agreement, “Acquired Assets” shall mean and include all of the properties, rights, interests and other tangible and intangible assets of Seller (wherever located); provided, however, that the Acquired Assets shall not include any Excluded Assets.  Without limiting the generality of the foregoing, the Acquired Assets shall include:

 

(i) all accounts receivable, notes receivable, other receivables, deposits, claims for refunds, rights to offset and rights to payment from customers of Seller for fees and other amounts payable, or that may become payable, to Seller with respect to services performed or products sold by or on behalf of Seller and that are primarily related to or arising out of the Acquired Business (the “Acquired Receivables”);

  

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(ii) all prepaid expenses primarily related to or arising out of the Acquired Business;

 

(iii) all inventories (including raw materials, work in process and finished goods) that are primarily related to or used in or necessary for the conduct of, the Acquired Business (the “Acquired Inventory”);

 

(iv) all Acquired Equipment;

 

(v) all advertising and promotional materials, customer lists, phone numbers and other sales-related materials possessed by Seller primarily related to or used in or necessary for the conduct of, the Acquired Business;

 

(vi) all Intellectual Property and Intellectual Property Rights owned by Seller and all licenses for Intellectual Property and Intellectual Property Rights that is licensed to Seller by a third party (including the Restricted Names and the Intellectual Property listed or required to be listed in Part 2.13 of the Seller Disclosure Schedule), in each case, primarily related to used in or necessary for the conduct of the Acquired Business (the “Acquired IP”);

 

(vii) subject to the receipt by Seller of such Consents as are necessary, all rights of Seller under the Contracts listed or required to be listed in Part 2.15 of the Seller Disclosure Schedule and all Acquired Business IP Contracts (the “Acquired Business Contracts”);

 

(viii) all Governmental Authorizations listed or required to be listed in Part 2.17 of the Seller Disclosure Schedule (the “Acquired Governmental Authorizations”);

 

(ix) all claims (including claims for past infringement or misappropriation of the Acquired IP) and causes of action of Seller against other Persons (regardless of whether or not such claims and causes of action have been asserted by Seller) pertaining to or arising out of the Acquired Assets or the Acquired Business, and all rights of indemnity, warranty rights, rights of contribution, rights to refunds, rights of reimbursement and other rights of recovery possessed by Seller (regardless of whether such rights are currently exercisable) pertaining to or arising out of the Acquired Assets or the Acquired Business;

 

(x) all Books and Records; and

 

(xi) all goodwill of the Acquired Business.

 

(b) Notwithstanding anything herein to the contrary, the assets set forth on Exhibit B (the “Excluded Assets”) shall not be sold or transferred hereunder and shall be excluded from the definition of Acquired Assets.

  

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1.2 Consideration.

 

(a) As consideration for the sale of the Acquired Assets to Purchaser:

 

(i) at the Closing, Purchaser shall pay to the Selling Parties, in cash, an aggregate purchase price of Seven Hundred Fifty Thousand Dollars ($750,000), as follows (i) a payment to Seller of Seven Hundred Thousand Dollars ($700,000), as adjusted pursuant to Section 1.3(a) (the “Closing Payment”), by wire transfer of same day funds to an account identified by the Selling Parties not less than two business days prior to the Closing Date, and (ii) payment into an escrow account of Fifty Thousand Dollars ($50,000) (the “Escrow Fund”) pursuant to Section 1.2(b).  The Closing Payment, together with the Escrow Fund, as may be adjusted pursuant to Section 1.3, shall be deemed to be the “Purchase Price”; and

 

(ii) at the Closing, Purchaser hereby assumes and agrees, on and after the Closing Date, to pay, perform and discharge promptly and fully when due the Assumed Liabilities.

 

(b) At the Closing, Purchaser shall deliver the Escrow Fund into an escrow account to be established pursuant to an Escrow Agreement, dated as of the Closing Date, substantially in the form attached as Exhibit C hereto (the “Escrow Agreement”).    The Escrow Agent shall hold and disburse the Escrow Fund pursuant to the terms of the Escrow Agreement.

 

(c) For purposes of this Agreement, “Assumed Liabilities” shall mean only the following Liabilities of Seller:

 

(i) all current liabilities in the categories and of the type listed in Part 1.2(c)(i) of the Seller Disclosure Schedule that are related solely to normal operating activities of the Acquired Business and that are included in the Estimated Working Capital and which remain unpaid and are not delinquent as of the Closing Date;

 

(ii) the obligations of Seller under the Acquired Business Contracts, but only to the extent such obligations (A) arise or are to be performed after the Closing Date, (B) do not arise from or relate to any Breach by Seller or its Affiliates of any of such Acquired Business Contracts prior to the Closing Date or any event, circumstance or condition occurring or existing on or prior to the Closing Date that, with notice or lapse of time, would constitute or result in a Breach by Seller or its Affiliates of any of such Acquired Business Contracts, (C) do not arise from the failure to obtain any required Consent from any third party in connection with the assignment and transfer of such Acquired Business Contracts to Purchaser pursuant to this Agreement and (D) are set forth in written Acquired Business Contracts; and

 

(iii) all Liabilities arising out of or relating to the use, ownership, sale or lease of any of the Acquired Assets after the Closing.

  

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(d) Notwithstanding the foregoing, and notwithstanding anything to the contrary  contained in this Agreement, the Assumed Liabilities shall not include, Purchaser shall not be required to assume or to perform or discharge, and Seller and its Affiliates, shall be solely responsible to pay, perform and discharge any other Liability of Seller or any of its Affiliates that is not an Assumed Liability, including without limitation:

 

(i) all current Liabilities not taken into account in determining Final Working Capital;

 

(ii) any Liability of Seller or its Affiliates arising out of or relating to the execution, delivery or performance of any of the Transaction Agreements;

 

(iii) any Liability of Seller or its Affiliates arising from or relating to any acts or omissions of by the Seller or its Affiliates, after the Closing;

 

(iv) any Liability of Seller or its Affiliates arising from or relating to (A) any services performed by Seller or its Affiliates for any Person, (B) any claim or Proceeding against Seller or its Affiliates or (C) any product sold by Seller or its Affiliates;

 

(v) any Liability of Seller or its Affiliates for the payment of any Tax for any period except for all Taxes attributable to the Acquired Business or the Acquired Assets for all taxable periods or ratable portions thereof from and after the Closing Date;

 

(vi) all Liabilities of Seller or its Affiliates to any employee or former employee of the Seller or its Affiliates including, without limitation, (i) Liabilities under or with respect to any Employee Benefit Plan, profit sharing plan or for severance pay or payments triggered by the sale of the Acquired Assets, and (ii) Liabilities with respect to worker’s compensation and unemployment insurance benefits for events, occurrences and or injuries or claims arising prior to the close of business on the Closing Date;

 

(vii) all inter-company Liabilities and obligations;

 

(viii) all Liabilities arising from or related to any breach by Seller or its Affiliates, failure of Seller or its Affiliates to perform, torts related to Seller or its Affiliate’s performance, breach, or non-performance of, violations of Law, infringements or indemnities of Seller or its Affiliates under, guaranties of Seller or its Affiliates pursuant to and overcharges or underpayments by Seller or its Affiliates under, any Acquired Business Contract on or prior to the Closing Date;

 

(ix) any Liability under any Acquired Business Contract, if the Selling Parties shall not have obtained, prior to the Closing Date, any Consent required to be obtained from any Person with respect to the assignment or delegation of any rights or obligations under such Acquired Business Contract in connection with the transactions contemplated under this Agreement;

 

(x) any Liability arising from Seller’s noncompliance with any Legal Requirement or Governmental Authorization;

 

(xi) all Liabilities arising out of or relating to the ownership, operation or conduct by Seller or its Affiliates of any business other than the Acquired Business;

 

(xii) any Liability arising from or related to any Indebtedness of Seller or its Affiliates; or

 

(xiii) any other Liability of any Person, including any Liabilities of Seller or its Affiliates, not otherwise specifically identified in Section 1.2(c).

 

For purposes of this Agreement, all Liabilities not expressly listed in the definition of Assumed Liabilities, including the excluded liabilities described in “(i)” through “(xiii)” above, are referred to as “Excluded Liabilities.”

  

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1.3 Working Capital Adjustment.

 

(a) Within three (3) days prior to the date hereof, Seller shall have prepared in good faith and delivered to Purchaser a written estimate of Working Capital as of the Closing Date (the “Estimated Working Capital”), setting forth in reasonable detail the computation thereof, which shall have been prepared in accordance with Seller’s past practices used in preparing the Financial Statements.  If the Estimated Working Capital is less than $0 (such amount the “Target Working Capital”), then the Closing Payment shall be decreased by the amount of such difference.  If the Estimated Working Capital is greater than the Target Working Capital, then the Closing Payment shall be increased by the amount of such difference.

 

(b) Within 60 days following the Closing Date, Purchaser shall prepare and deliver to Seller an unaudited balance sheet of the Acquired Business as of 11:59 p.m. on the business day immediately prior to the Closing Date (the “Closing Date Balance Sheet”), which shall set forth in reasonable detail the computation of Working Capital as of such time (the “Closing Date Working Capital”).

 

(c) Within 30 days after the date on which Purchaser delivers the Closing Date Balance Sheet to Seller (such 30 day period hereinafter the “Objection Period”), Seller shall have the right to dispute any specific line item(s) included in the calculation of the Closing Date Working Capital set forth in the Closing Date Balance Sheet by delivering a written notice to that effect to Purchaser (a “Dispute Notice”).  Any Dispute Notice so delivered shall identify the specific line item(s) being disputed and include a proposed revision of such line item(s).

 

(d) In the event that prior to the expiration of the Objection Period: (i) Seller notifies Purchaser of its agreement with the calculation of the Closing Date Working Capital or (ii) Seller fails to deliver a Dispute Notice as provided above, the calculation of the Closing Date Working Capital shall be deemed, on the date of such notification (in the case of (i) above) or upon the expiration of the Objection Period (in the case of (ii) above), to have been finally determined for purposes of this Agreement.  In addition, in the event that Seller delivers a Dispute Notice on or prior to the expiration of the Objection Period, any specific line item(s) included within the calculation of the Closing Date Working Capital which such Dispute Notice does not identify as disputed and include a proposed revision thereof shall be deemed, on the date of such delivery, to have been finally determined for purposes of this Agreement.

 

(e) In the event that Seller delivers a Dispute Notice to Purchaser prior to expiration of the Objection Period (the “Objection Date”), Seller and the Purchaser shall promptly meet and attempt in good faith to resolve the disputed line item(s) and negotiate a final determination of the Closing Date Working Capital.  In the event the parties cannot agree upon a final determination of the Closing Date Working Capital within 10 days following the Objection Date, Purchaser or Seller may submit the dispute to an independent accounting firm of national reputation mutually agreed by Purchaser and Seller (the “Dispute Auditors”).  The Dispute Auditors shall be instructed promptly to review the submissions of the parties and the relevant back-up information and designate as the final determination of any disputed line item(s) one of the following:  (A) Purchaser’s calculation as set forth in the Closing Date Balance Sheet or (B) Seller’s calculation as set forth in the Dispute Notice (the foregoing or the Closing Date Working Capital determined in accordance with Section 1.3(c) above, as the case may be, hereinafter, the “Final Working Capital”).  The Dispute Auditors shall not be permitted to designate any calculation other than those set forth in items (A) or (B) above.  The Dispute Auditors shall deliver written notice of their decision simultaneously to Seller and Purchaser within 10 business days after their receipt of the submissions of the parties.  The decision made by the Dispute Auditors shall be deemed the final determination of any disputed line item(s), and shall be conclusive and binding on all parties.  All of the fees and disbursements related to the engagement of the Dispute Auditors shall be paid by the party whose calculation was not designated by the Dispute Auditors as the final determination of the Closing Date Working Capital.

  

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(f) If, after the determination of the Final Working Capital in accordance with the provisions of this Section 1.3, the Final Working Capital is greater than the Estimated Working Capital then, within five (5) business days after such final determination, Purchaser shall pay to Seller, in cash, the amount by which Final Working Capital exceeds the Estimated Working Capital.

 

(g) If, after the determination of the Final Working Capital in accordance with the provisions of this Section 1.3, the Final Working Capital is less than the Estimated Working Capital then, within five (5) business days after such final determination, Seller shall pay to Purchaser, in cash, the amount by which the Estimated Working Capital exceeds the Final Working Capital.

 

1.4 Closing.

 

(a) The closing of the sale of the Acquired Assets to Purchaser (the “Closing”) shall take place at the offices of Purchaser immediately following the execution of this Agreement.  For purposes of this Agreement, “Closing Date” shall mean the date and time as of which the Closing takes place.

 

(b) At the Closing:

 

(i) Seller shall execute and deliver to Purchaser such bills of sale, endorsements, assignments and other documents as may be necessary or appropriate in the reasonable judgment of Purchaser to assign, convey, transfer and deliver to Purchaser good and valid title to the Acquired Assets free and clear of any Encumbrances, including without limitation the Bill of Sale attached hereto as Exhibit D (the “Bill of Sale”);

 

(ii) Seller and Purchaser shall execute and deliver to one another the Escrow Agreement and the Assignment and Assumption Agreement attached hereto as Exhibit E (the “Assignment and Assumption Agreement”) and the Transition Services Agreement attached hereto as Exhibit F (the “Transition Services Agreement”);

 

(iii) Purchaser shall pay the Closing Payment to Seller and the Escrow Fund to the Escrow Agent;

  

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(iv) Purchaser shall enter into a Consulting Agreement with Jim Sweetin on terms reasonably acceptable to Purchaser;

 

(v) Seller shall deliver evidence, reasonably satisfactory to Purchaser, that the principal terms of this Agreement and the Transactions have been duly approved by the requisite vote of its Board of Directors and the Shareholder in accordance with its Organizational Documents;

 

(vi) Purchaser shall deliver evidence, reasonably satisfactory to Seller, that the principal terms of this Agreement and the Transactions have been duly approved by the requisite vote of its Board of Directors in accordance with its Organizational Documents;

 

(vii) Seller shall deliver evidence (including without limitation a lien release executed by Wells Fargo Bank, National Association), reasonably satisfactory to Purchaser, that (a) as of Closing, the Selling Parties will have caused all Indebtedness pursuant to which any acquired Assets may be bound, to be paid in full or to be retained by Seller or its Affiliates, as applicable; and (b) that all Encumbrances listed in Part 2.6(a) of the Seller Disclosure Schedule have been or will be removed;

 

(viii) Seller shall deliver evidence, reasonably satisfactory to Purchaser, that, as of Closing, Seller has received all Consents set forth on Part 2.3 of the Seller Disclosure Schedule and said consents are in full force and effect;

 

(ix) the Selling Parties shall deliver to Purchaser such other documents as Purchaser may request in good faith for the purpose of (A) evidencing the accuracy of any representation or warranty made by the Selling Parties, (B) evidencing the compliance by the Selling Parties, or the performance by the Selling Parties, any covenant or obligation set forth in this Agreement or (C) otherwise facilitating the consummation or performance of any of the Transactions; and

 

(x) Purchaser shall have registered as a Dealer for sales tax purposes with the Florida Department of Revenue and shall deliver a current annual resale certificate issued to Purchaser by the Florida Department of Revenue certifying that the Acquired Inventory is being purchased for resale.

 

1.5 Substitute Arrangements.  Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall be deemed to constitute an agreement to assign any claim, Contract, Governmental Authorization, license, lease, commitment, permit or any right or privilege arising thereunder if an attempted assignment thereof, without the Consent of any Person or Governmental Body, would render any Contract void.  The Selling Parties will use commercially reasonable efforts to obtain any Consents required to assign to Purchaser all rights, benefits and interests under each Acquired Business Contract that requires the Consent of a third party, without any conditions to such transfer or changes or modifications of terms thereunder, in a manner to permit the Acquired Business to be conducted by Purchaser following the Closing as it is currently conducted.  If any such Consent has not been obtained by the Closing, or if an attempted assignment of any such Contract would otherwise be ineffective so that Purchaser would not receive the benefit of all rights thereunder of the Seller or its Affiliates, as applicable, the Selling Parties will provide for Purchaser, at the sole cost and expense of the Selling Parties, any arrangement reasonably requested by Purchaser intended to provide for Purchaser all of the benefits of such rights, including entering into a sublease or subcontract on the same terms and conditions as the underlying lease or Contract or bringing appropriate legal action seeking to enforce for the benefit of Purchaser any and all rights of Seller and its Affiliates, as applicable, against the other party or parties to such claim, Contract, license, lease or commitment.

  

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1.6 Allocation of Purchase Price.  Purchaser and the Selling Parties shall each file all Tax Returns (including amended returns and claims for refund) in a manner consistent with the allocation of the Purchase Price among the Acquired Assets and Assumed Liabilities as set forth on Exhibit G.  Neither Purchaser nor the Selling Parties shall take any position with respect to Taxes that is inconsistent with such allocation, including in any audit or examination by any Governmental Body unless, and only to the extent that, it is required to do so pursuant to a Final Determination (as defined in Section 1313(a) of the Code) and any similar state or local tax provision.  Purchaser and the Selling Parties shall prepare and timely file such reports and information returns as may be required under applicable Legal Requirements to report the allocation of the Purchase Price among the Acquired Assets and Assumed Liabilities in accordance with this Section 1.6.  Each Party agrees to notify the other Party in the event that any Governmental Body takes or proposes to take a position for Tax purposes that is inconsistent with the allocation set forth on Exhibit G.

 

1.7 Prorations.  Notwithstanding anything herein to the contrary, any Taxes imposed on or with respect to the Acquired Assets and other expense items such as rent, utilities and similar expenses with respect to the Acquired Business that relate to a period beginning before the Closing Date and ending after the Closing Date shall be apportioned as of the Closing Date such that Seller shall be liable for (and shall reimburse Purchaser to the extent that Purchaser shall have paid) that portion of such Taxes and other expense items relating to, or arising in respect of, periods through the day before the Closing Date and Purchaser shall be liable for (and shall reimburse Seller to the extent that Seller shall have paid) that portion of such Taxes and other expense items relating to, or arising in respect to, periods from and after the Closing Date.  Appropriate settlement of such amounts will be made within thirty (30) days after the amount of any such item is finally known.

 

	
2.  

	
Representations and Warranties of the Selling Parties.

 

The Selling Parties jointly represent and warrant as of the Closing Date, that each of the representations and warranties contained in this Section 2 is true and correct, except as expressly otherwise set forth in the Seller Disclosure Schedule.  The Seller Disclosure Schedule will be arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Section 2, and the disclosure in any such numbered and lettered Section of the Seller Disclosure Schedule shall be deemed to qualify each Section of this Agreement to which such information is applicable (regardless of whether or not such Section is qualified by reference to the Seller Disclosure Schedule and regardless of whether or not the Seller Disclosure Schedule references such Section), so long as application to such Section is readily apparent on its face (and without the need to review or investigate any referenced documents or matters).

  

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2.1 Due Organization; Etc.  Part 2.1 of the Seller Disclosure Schedule lists each Selling Party’s form of organization, its jurisdiction of organization and each other jurisdiction in which it is authorized to do business.  Each Selling Party has delivered to Purchaser accurate and complete copies of its Organizational Documents.  Each Selling Party is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and Seller has full corporate power and authority to conduct the Acquired Business as it is now being conducted, to own or use the properties and assets that it purports to own or use in connection with the Acquired Business, and to perform all its obligations under the Acquired Business Contracts.  Each Selling Party is duly qualified, authorized, registered or licensed to do business and is in good standing under the laws of each jurisdiction in which either the ownership or use of the Acquired Assets owned or used by it, or the conduct of the Acquired Business by it, requires such qualification, authorization, registration or licensure.  Seller does not have any Subsidiaries, nor has it ever owned, beneficially or otherwise, any shares or other securities of, or any direct or indirect interest of any nature in, any Entity.  The Selling Parties have never conducted the Acquired Business under or otherwise used, for any purpose or in any jurisdiction, any fictitious name, assumed name, trade name or other name in connection with the Acquired Business, other than the names listed in Part 2.1 of the Seller Disclosure Schedule.  Neither Seller nor the Shareholder has ever approved or commenced any proceeding or made any election contemplating the dissolution or liquidation of Seller or any other Entity in which the Acquired Business is conducted, as applicable, or the winding up or cessation of their business or affairs.

 

2.2 Authority; Binding Nature of Agreements.  Each Selling Party has the absolute and unrestricted right, power and authority to enter into and to perform its obligations under each of the Transaction Agreements to which such Selling Party is a party; and the execution, delivery and performance by the Selling Parties of such Transaction Agreements have been duly authorized by all necessary action on the part of the Selling Parties.  Each Transaction Agreement to which any Selling Party is a party constitutes the legal, valid and binding obligation of such Selling Party, enforceable against such Selling Party in accordance with its terms, subject to any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors’ rights generally or to general principles of equity.

 

2.3 Non-Contravention; Consents.  Except as set forth in Part 2.3 of the Seller Disclosure Schedule, neither the execution and delivery of any of the Transaction Agreements, nor the consummation or performance of any of the Transactions, will directly or indirectly (with or without notice or lapse of time):

 

(a) contravene, conflict with or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Transactions or to exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which the Selling Parties or any of the Acquired Assets, is subject;

  

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(b) cause any of the Acquired Assets to be reassessed or revalued by any taxing authority or other Governmental Body;

 

(c) contravene, conflict with or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any Acquired Governmental Authorization;

 

(d) contravene, conflict with or result in a violation of (i) any of the provisions of the Organizational Documents of the Selling Parties or (ii) any resolution adopted by the Shareholder or the Board of Directors of Seller;

 

(e) contravene, conflict with or result in a violation or breach of, or result in a default under, any provision of any Acquired Business Contract or give any Person the right to (i) declare a default or exercise any remedy under any Acquired Business Contract, (ii) accelerate the maturity or performance of any Acquired Business Contract or (iii) cancel, terminate or modify any Acquired Business Contract; or

 

(f) result in the imposition or creation of any Encumbrance upon or with respect to any of the Acquired Assets.

 

Except as listed in Part 2.3 of the Seller Disclosure Schedule, no filing with or notice to, Consent from or vote or other approval by any Person is or will be required to be obtained by either Selling Party in connection with the execution and delivery of any of the Transaction Agreements or the consummation or performance of any of the Transactions.  All filings, notices, Consents, votes or other approvals set forth or required to be set forth on Part 2.3 of the Seller Disclosure Schedule have been made, given, or obtained and are in full force and effect.

 

2.4 Financial Statements.

 

(a) Part 2.4 of the Seller Disclosure Schedules sets forth the following financial statements (collectively, the “Financial Statements”): (i) the unaudited balance sheets of the Acquired Business as of December 31, 2008 and December 31, 2009 and the related unaudited statements of operations for the 12 month periods then ended, and (ii) the unaudited balance sheets of the Acquired Business as of October 31, 2010 (the “Interim Balance Sheet”) and the related unaudited statements of operations for the ten months then ended.  Except as set forth on Part 2.4 of the Seller Disclosure Schedule the Financial Statements (i) have been prepared from, and are in accordance with in all material respects, the books of account and other financial records of the Selling Parties with respect to the Acquired Business, (ii) are accurate and complete in all material respects, and (iii) present fairly in all material respects the financial position of the Acquired Business as of the respective dates thereof and the results of operations of the Acquired Business and for the periods covered thereby.

 

(b) There are no Liabilities primarily related to or arising out of the Acquired Business, except for (i) Liabilities identified as such in the “Liabilities” column of the Interim Balance Sheet, (ii) Liabilities which have arisen since the date of the Interim Balance Sheet in the Ordinary Course of Business, and (iii) Liabilities which are not, individually or in the aggregate, material to the Acquired Business as a whole.

  

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2.5 Absence of Changes.

 

Since October 31, 2010 (i) the Seller has conducted the Acquired Business in the Ordinary Course of Business, (ii) there has not been any material adverse change in, and no event has occurred that could reasonably be expected to have a material adverse effect on, the Acquired Business; (iii) there has not been any material loss, damage or destruction to, or any interruption in the use of, any of the Acquired Assets (whether or not covered by insurance); and (iv) Seller has not:

 

(a) sold or otherwise transferred, or leased or licensed, any material assets used in the Acquired Business to any other Person other than in the Ordinary Course of Business;

 

(b) except as set forth in the Balance Sheet, written off as uncollectible, or established any extraordinary reserve with respect to, any account receivable or other Indebtedness included in the Acquired Assets;

 

(c) amended or terminated any Acquired Business Contract;

 

(d) caused any of the Acquired Assets to become subject to any Encumbrance other than Permitted Encumbrances;

 

(e) purchased or otherwise acquired from any other Person any material asset for use in the Acquired Business, except for supplies acquired in the Ordinary Course of Business;

 

(f) forgiven any debt or otherwise released or waived any material right or claim related to the Acquired Business;

 

(g) changed any of its methods of accounting or accounting practices in any material respect with respect to the Acquired Business;

 

(h) entered into any transaction or taken any other action, in each case related to the Acquired Business, outside the Ordinary Course of Business; and

 

(i) except for the Transactions contemplated hereby, agreed, committed or offered (in writing or otherwise) to take any of the actions referred to in clauses “(a)” through “(h)” above.

 

2.6 Title To Assets.

 

(a) Seller has good title to, or in the case of leased property, a valid leasehold interest in, all of the Acquired Assets (whether real or personal, tangible or intangible).  Except as set forth in Part 2.6(a) of the Seller Disclosure Schedule, none of the Acquired Assets is subject to any Encumbrances (including, without limitation, tax-related Encumbrances) other than Permitted Encumbrances.  At the Closing, Seller will transfer to Purchaser good and valid title to all Acquired Assets, free and clear of any Encumbrances other than Permitted Encumbrances

  

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(b) Except as set forth in Part 2.6(b) of the Seller Disclosure Schedule, the Acquired Assets constitute all of the assets, properties, rights and goodwill necessary to carry on the Acquired Business as presently conducted, and are sufficient to carry on the Acquired Business in the Ordinary Course of Business.  Except as set forth in Part 2.6(b) of the Seller Disclosure Schedule, neither the Shareholder nor any of its Affiliates (other than the Seller) has title to, or in the case of leased property, a leasehold interest in, any of the Acquired Assets.

 

2.7 Fraudulent Transfers.  Neither Selling Party is insolvent, nor will either Selling Party be rendered insolvent by any of the Transactions.  Immediately after consummation of the Transactions, (i) each Selling Party will be able to pay its debts as they become due, (ii)  each Selling Party will not have unreasonably small assets with which to conduct its business and (iii) taking into account all pending and threatened Proceedings against each Selling Party, final judgments against each Selling Party in actions for money damages are not reasonably anticipated to be rendered at a time when, or in amounts such that, such Selling Party will be unable to satisfy any such judgments promptly.  As used in this Section, “insolvent” means that the sum of the then existing saleable value of a Selling Party’s assets, as applicable, does not and will not exceed its then existing debts and other liabilities.

 

2.8 Receivables.  Part 2.8 of the Seller Disclosure Schedule lists a complete breakdown and aging of all Acquired Receivables as of November 30, 2010.  All Acquired Receivables: (a) represent valid obligations of customers arising from bona fide transactions entered into in the Ordinary Course of Business and (b) are current and collectible in full, except as set forth in Part 2.8 of the Seller Disclosure Schedule.  Part 2.8 of the Seller Disclosure Schedule lists all unreturned security deposits and other deposits related to the Acquired Business.

 

2.9 Suppliers.  Part 2.9 of the Seller Disclosure Schedule lists for calendar year 2009 and for the ten-months ended October 31, 2010 the top 10 suppliers of the Acquired Business for each such period, based on the dollar amount of purchases for such periods.  Except as set forth on Part 2.9 of the Seller Disclosure Schedule, none of such suppliers has notified any Selling Party in writing that it intends to stop doing business with, decrease the rate of products or services provided to, or change the terms (whether related to payment, price or otherwise) on which it does business with, the Acquired Business, in each case, as compared to the business in place between such suppliers, on the one hand, and Seller and its Affiliates, on the other hand, in the Acquired Business as of the date hereof (whether as a result of the consummation of the transactions contemplated hereby or otherwise).

 

2.10 Inventory.  Part 2.10 of the Seller Disclosure Schedule lists a complete breakdown of all Acquired Inventory as of the Closing Date.  All Acquired Inventory (a) is of such quality and quantity as to be usable and saleable in the Ordinary Course of Business, (b) has been priced at the lower of cost or market value using the “last-in, first-out” method and (c) is free of any material defect or deficiency.  The inventory levels maintained in the Acquired Business (i) are not excessive in light of the normal operating requirements for the Acquired Business and (ii) are adequate for the conduct of the Acquired Business in the Ordinary Course of Business.

  

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2.11 Equipment, Etc.  Part 2.11 of the Seller Disclosure Schedule lists all Acquired Equipment and lists the date of acquisition, original cost and the book value of each asset included therein.  The Acquired Equipment constitutes all of the equipment, leaselines, materials, prototypes, tools, supplies, vehicles, furniture, fixtures, improvements and other tangible assets primarily related to or used in the conduct of the Acquired Business in the manner in which such business is currently being conducted.  Part 2.11 of the Seller Disclosure Schedule also lists all Acquired Equipment leased on behalf of the Acquired Business and identifies each lease therefor.  All Acquired Equipment (a) is structurally sound, free of defects and deficiencies and in good condition and repair (ordinary wear and tear excepted), (b) complies in all material respects with, and is being operated and otherwise used in full compliance with, all applicable Legal Requirements and (c) is adequate and appropriate for the uses to which it is being put.

 

2.12 Real Property.  Except as set forth in Part 2.12 of the Seller Disclosure Schedule, there is no real property or any interest in real property (including any leasehold interest) which is used or utilized by the Acquired Business.

 

2.13 Intellectual Property.

 

(a) Part 2.13(a) of the Seller Disclosure Schedule lists each Acquired Business Product.

 

(b) Part 2.13(b) of the Seller Disclosure Schedule lists (i) each item of Registered IP and all internet domain names included in the Acquired IP in which the Seller purports to have an ownership interest of any nature (whether exclusively, jointly, with another Person, or otherwise) (ii) the jurisdiction in which such item of Registered IP has been registered or filed and the applicable registration or serial number and (iii) to the Knowledge of the Selling Parties, any other Person that has or purports to have an ownership interest in such item of Registered IP and the nature of such ownership interest. The Selling Parties have made available to the Purchaser accurate copies of all applications and all other correspondence and other material documents related to each such item of Registered IP.

 

(c) Part 2.13(c) of the Seller Disclosure Schedule lists (i) all Intellectual Property Rights or Intellectual Property licensed to the Seller related to, used in or necessary for the operation of the Acquired Business, other than any non-customized software that (A) is so licensed solely in executable or object code form pursuant to a nonexclusive, internal use software license, (B) is not incorporated into the development, manufacturing, or distribution of, the products or services of the Acquired Business and (C) is generally available on standard terms for less than $5,000 (“In-Licensed IP”), (ii) the corresponding Contract or Contracts pursuant to which the In-Licensed IP is licensed and (iii) whether the license or licenses granted for the In-Licensed IP is exclusive or nonexclusive.

 

(d) Part 2.13(d) of the Seller Disclosure Schedule lists each Acquired Business IP Contract in which the aggregate fees and royalties (including maintenance and support fees for the first year of maintenance and support, if any) paid or payable to the Seller or its Affiliates equal or exceed $5,000 and pursuant to which any Person has been granted any license under, or otherwise has received or acquired any right (whether or not currently exercisable) or interest in, any Acquired IP.  Neither the Seller nor any of its Affiliates is bound by, and no owned Acquired IP is subject to, any Contract containing any covenant or other provision that in any way limits or restricts the ability of Purchaser to use, exploit, assert, or enforce any owned Acquired IP anywhere in the world.

 

  

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(e) The Selling Parties have provided to Purchaser a complete and accurate copy of each standard form of Acquired Business IP Contract used in connection with the Acquired Business, including each standard form of (i) end user license agreement, (ii) development agreement, (iii) employee agreement containing any assignment or license of Intellectual Property or Intellectual Property Rights or any confidentiality provision, (iv) consulting or independent contractor agreement, including any agreements used in marketing, advertising or promoting the Acquired Business, containing any assignment or license of Intellectual Property or Intellectual Property Rights or any confidentiality provision or (v) confidentiality or nondisclosure agreement.  Part 2.13(e) of the Seller Disclosure Schedule lists each Acquired Business IP Contract that deviates in any material respect from the corresponding standard form agreement provided to Purchaser.

 

(f) Seller and its Affiliates exclusively own all right, title, and interest to and in the Acquired IP (other than In-Licensed IP) free and clear of any Encumbrances (other than licenses granted pursuant to the Contracts listed in Part 2.13(d) of the Seller Disclosure Schedule).  Each Person who is or was involved in the creation or development of any Acquired IP has signed a valid, enforceable agreement containing an assignment of Intellectual Property Rights (including a release of all copyright rights) to Seller and its Affiliates, as applicable, and confidentiality provisions protecting the Acquired IP.  Seller and its Affiliates have taken all reasonable steps to maintain the confidentiality of and otherwise protect and enforce the Acquired IP.  Neither the Seller nor any of its Affiliates have assigned or otherwise transferred ownership of, or agreed to assign or otherwise transfer ownership of, any Acquired IP to any other Person, other than pursuant to this Agreement.

 

(g) To the Knowledge of the Selling Parties, (i) no Person has infringed, misappropriated or otherwise violated, and no Person is currently infringing, misappropriating or otherwise violating, any Acquired IP and (ii) the use of the Acquired IP has not has infringed, misappropriated or otherwise violated and is not currently infringing, misappropriating or otherwise violating any Intellectual Property Right of any other Person.  Part 2.13(g) of the Seller Disclosure Schedule lists (and the Selling Parties have provided to Purchaser a complete and accurate copy of) each letter or other written or electronic communication or correspondence that has been sent or otherwise delivered by or to the Seller or its Affiliates or their respective Representatives since October 31, 2005 regarding any actual, alleged or suspected infringement or misappropriation of any Acquired IP (or any actual, alleged or suspected infringement or misappropriation of any Intellectual Property Right of any other Person resulting from the use of any Acquired IP), and provides a brief description of the current status of the matter referred to in such letter, communication or correspondence.

 

(h) No Acquired Business Product developed by and proprietary to Seller contains, is derived from, is distributed with, or is being or was developed using Open Source Code that is licensed under any terms that (i) impose or could impose a requirement or condition that any Acquired Business Product or part thereof (A) be disclosed or distributed in source code form, (B) be licensed for the purpose of making modifications or derivative works, or (C) be redistributable at no charge, or (ii) otherwise impose or could impose any other material limitation, restriction, or condition on the right or ability of the Acquired Business to use or distribute any Acquired Business Product.

  

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2.14 Privacy, Data Security.

 

(a) Part 2.14(a) of the Seller Disclosure Schedule lists each Seller Privacy Policy and the Selling Parties have provided a copy of each such policy to Purchaser.  Seller and its Affiliates have complied at all times and in all material respects with all of Seller Privacy Policies and with all Legal Requirements applicable to the Acquired Business pertaining to privacy, User Data, or Personal Data.

 

(b) Part 2.14(b) of the Seller Disclosure Schedule identifies and describes each distinct electronic or other database containing (in whole or in part) Personal Data maintained by or for the Acquired Business at any time (the “Seller Databases”), the types of Personal Data in each Seller Database, the means by which such Personal Data was collected, and the security policies that have been adopted and maintained with respect to each Seller Database.  No material breach or violation of any such security policy has occurred or, to the best of the Selling Parties’ Knowledge, is threatened, and there has been no unauthorized or illegal use of or access to any Personal Data in any of Seller Databases.

 

(c) Neither the execution, delivery, or performance of this Agreement (or any of the ancillary agreements) nor the consummation of any of the transactions contemplated by this Agreement (or any of the ancillary agreements), nor Purchaser’s possession or use of the User Data or any data or information in Seller Databases, will result in any material violation of any Seller Privacy Policy or any material Legal Requirement pertaining to privacy, User Data, or Personal Data.

 

2.15 Acquired Business Contracts.

 

(a) Except as set forth on Part 2.15 of the Seller Disclosure Schedule, the Selling Parties have delivered or made available to Purchaser accurate and complete copies of all Acquired Business Contracts, including all amendments thereto, listed on Part 2.15 of the Seller Disclosure Schedule.  Each Acquired Business Contract is valid and in full force and effect and is enforceable in accordance with its terms.

 

(b) Seller has not, and to Seller’s Knowledge, no other Person has violated or breached in any material respect, or declared or committed any material default under, any Acquired Business Contract.  Seller has not received any written notice regarding any actual or alleged material breach of, or default under, any Acquired Business Contract.  To Seller’s Knowledge, no event has occurred and no circumstance or condition exists, that would reasonably be expected to (with or without notice or lapse of time) result in a material breach of any Acquired Business Contract or give any Person the right to declare a default under, accelerate the maturity or performance of, or terminate or modify, any Acquired Business Contract.

 

2.16 Compliance with Legal Requirements.  Seller has complied in all material respects since October 31, 2005, with each Legal Requirement that is applicable to the conduct or operation of the Acquired Business or the ownership or use of any of the Acquired Assets.  Seller has not received any written notice from any Governmental Body regarding any actual or alleged material violation of any Legal Requirement that is applicable to the conduct or operation of the Acquired Business or the ownership or use of any of the Acquired Assets.  To Seller’s Knowledge, no event has occurred, and no condition or circumstance exists, that could (with or without notice or lapse of time) constitute or result directly or indirectly in a material violation by the Seller of any Legal Requirement that is applicable to the conduct or operation of the Acquired Business or the ownership or use of any of the Acquired Assets.

  

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2.17 Governmental Authorizations.

 

(a) Part 2.17 of the Seller Disclosure Schedule lists each Governmental Authorization that is held by the Seller and relates to, or is necessary for the conduct of, the Acquired Business.  The Selling Parties have delivered or made available to Purchaser accurate and complete copies of all of such Governmental Authorizations and all amendments thereto.  Each such Governmental Authorization is valid and in full force and effect.

 

(b) Seller is and has at all times since October 31, 2005 complied in all material respects with all of the terms and requirements of each Governmental Authorization related to, used in, or necessary for the conduct of, the Acquired Business.  Seller has not received any notice or other communication (in writing or otherwise) from any Governmental Body or any other Person regarding (i) any actual, alleged, possible or potential violation of or failure to comply with any term or requirement of any Governmental Authorization or (ii) any actual, proposed, possible or potential revocation, withdrawal, suspension, cancellation, termination or modification of any Governmental Authorization, in each case that relates to, or is necessary for the conduct of, the Acquired Business

 

2.18 Tax Matters.  There is no outstanding claim, audit or other examination or proceeding with respect to Taxes or failure to file any Tax Return that may result in a Liability to the Acquired Business.  There are no Taxes of Seller or its Affiliates that form or could form the basis for any Encumbrances on any of the Acquired Assets or could increase the amount of any Assumed Liabilities and there are no grounds for the assertion or assessment of any such Encumbrances.  Seller and its Affiliates, as applicable, have timely collected or withheld, and timely paid to the appropriate taxing authorities, set aside in accounts for such purpose, or accrued, reserved against and entered upon the Financial Statements, all monies required to have been collected or withheld from Business Employees for income Taxes and social security and other payroll Taxes.  There is no Proceeding pending or, to the Knowledge of the Selling Parties, threatened against any of the Seller or its Affiliates with respect to any Taxes associated with the Acquired Assets or the Acquired Business.  Neither the Seller nor any of its Affiliates have any liability for the Taxes of any other Person, the non-payment of which would result in an Encumbrance on any Acquired Asset, would otherwise materially and adversely affect the Acquired Business or would result in Purchaser becoming liable or responsible therefor.  There has not been any waiver or extension of any statute of limitations in respect of Taxes associated with the Acquired Assets or the Acquired Business which waiver is currently in effect.

 

2.19 Employee Matters.  Part 2.19 of the Seller Disclosure Schedule lists the name, title and annual compensation of each employee of Seller and its Affiliates whose primary responsibilities are related to the Acquired Business, including any such employee who is on a leave of absence or on layoff status (such individuals are collectively referred to herein as “Business Employees”).

  

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2.20 Environmental Matters.  Seller is in compliance with all Environmental, Health, and Safety Requirements applicable to the Acquired Business.  Seller has not received any written notice, report or other information regarding any actual or alleged violation of Environmental, Health, and Safety Requirements applicable to the Acquired Business, or any liabilities or potential liabilities (whether accrued, absolute, contingent, unliquidated or otherwise), including any investigatory, remedial or corrective obligations, relating to any facilities used in the Acquired Business arising under Environmental, Health, and Safety Requirements.

 

2.21 Proceedings; Orders.  Except as set forth in Part 2.21 of the Seller Disclosure Schedule, there is no pending Proceeding, and, to the Knowledge of the Selling Parties, no Person has threatened in writing to commence any Proceeding (a) that could reasonably be expected to affect the Acquired Business, any of the Acquired Assets or the obligations of the Selling Parties under this Agreement or any of the Transaction Agreements (whether or not the Selling Parties are named as a party thereto) or (b) that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the Transactions.  To the Knowledge of the Selling Parties, no event has occurred, and no claim or dispute or other condition or circumstance exists, that could directly or indirectly give rise to or serve as a basis for the commencement of any such Proceeding.  There is no Order to which the Acquired Business or any Acquired Asset is subject and none of the Seller or its Affiliates are subject to any Order that relates to the Acquired Business or the Acquired Assets.  To the Knowledge of the Selling Parties, there is no proposed Order that, if issued or otherwise put into effect, (i) may have an adverse effect on the business, condition, assets, liabilities, operations, financial performance, net income of the Acquired Business or on the ability of the Shareholder or Seller to comply with or perform any covenant or obligation under any of the Transaction Agreements or (ii) may have the effect of preventing, delaying, making illegal or otherwise interfering with any of the Transactions.

 

2.22 Related Party Transactions.  Except as set forth on Part 2.22 of the Seller Disclosure Schedule, no officer, director or owner of 10% or more of the capital stock of the Seller or any of its Affiliates (each, a “Related Party”) (a) has any direct or indirect interest of any nature in any of the assets related to the Acquired Business, (b) has entered into, or has any direct or indirect financial interest in, any Acquired Business Contract, transaction or business dealing of any nature involving the Acquired Business, (c) is competing, directly or indirectly, with the Acquired Business or (d) has any claim or right against the Acquired Business.

 

2.23 Certain Business Practices.  Neither of the Seller, its Affiliates  nor, to the Knowledge of the Selling Parties, any director, officer, agent or employee of Seller and its Affiliates has, in connection with the Acquired Business (a) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (b) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns or violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (c) made any other unlawful payment.

  

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2.24 Investment Banking Fees.  Except for fees or commissions that may be payable to Hyde Park Capital, LLC, set forth on Part 2.24 of the Seller Disclosure Schedule, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Selling Parties.

 

2.25 Disclaimer of Additional Representations or Warranties.  EXCEPT AS SPECIFICALLY SET FORTH IN THIS SECTION 2, NONE OF THE SELLING PARTIES NOR THEIR RESPECTIVE DIRECTORS, OFFICERS, SECURITYHOLDERS, AFFILIATES, EMPLOYEES, CONSULTANTS OR REPRESENTATIVES MAKES OR HAS MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, TO PURCHASER OR ANY OF ITS AFFILIATES OR REPRESENTATIVES.  ANY REPRESENTATIONS AND WARRANTIES NOT SPECIFICALLY SET FORTH IN THIS SECTION 2, WHETHER EXPRESS OR IMPLIED (INCLUDING ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE), ARE DISCLAIMED BY THE SELLING PARTIES.  EXCEPT AS SET FORTH IN THIS SECTION 2, PURCHASER IS ACQUIRING THE ACQUIRED ASSETS AND ACQUIRED BUSINESS “AS IS” AND “WHERE IS”.  FOR AVOIDANCE OF DOUBT AND WITHOUT LIMITING THE FOREGOING, NO REPRESENTATION OR WARRANTY IS MADE WITH RESPECT TO ANY FINANCIAL PROJECTIONS.

 

	
3.  

	
Representations and Warranties of Purchaser.

 

Purchaser represents and warrants, as of the Closing Date, that each of the following representations and warranties is true and correct:

 

3.1 Due Organization; Etc.  Purchaser is an entity duly organized, validly existing and in good standing under the laws of the State of Illinois.

 

3.2 Authority; Binding Nature Of Agreements.  Purchaser has the absolute and unrestricted right, power and authority to enter into and perform its obligations under each of the Transaction Agreements to which it is a party, and the execution and delivery by Purchaser of each Transaction Agreement to which it is a party has been duly authorized by all necessary action on the part of Purchaser and its board of directors.  Each Transaction Agreement to which Purchaser is a party on the date hereof constitutes the legal, valid and binding obligation of Purchaser, enforceable against it in accordance with its terms, subject to any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors’ rights generally or to general principles of equity.

 

3.3 Non-Contravention; Consents.  Neither the execution and delivery of any of the Transaction Agreements, nor the consummation or performance of any of the Transactions, will directly or indirectly (with or without notice or lapse of time):

 

(a) contravene, conflict with or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Transactions or to exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which Purchaser is subject;

  

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(b) contravene, conflict with or result in a violation of (i) any of the provisions of the Organizational Documents of Purchaser or (ii) any resolution adopted by the securityholders, board of directors of Purchaser;

 

No filing with or notice to, Consent from or vote or other approval by any Person is or will be required in connection with the execution and delivery of any of the Transaction Agreements or the consummation or performance of any of the Transactions.

 

3.4 Financial Resources.  Purchaser has immediately available as of the date hereof all of the financial resources required to consummate the transactions contemplated hereby, including the cash necessary to pay the Purchase Price.  No part of the Purchase Price is contingent upon Purchaser securing, and Purchaser does not have to secure, financing in order to consummate the transactions contemplated hereby.

 

3.5 Investment Banking Fees.  No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Purchaser.

 

3.6 No Reliance.  Except for the specific representations and warranties expressly made by the Selling Parties in Section 2, (a) Purchaser acknowledges and agrees that neither Selling Party is making or has made any representation or warranty, expressed or implied, at law or in equity, in respect of the Acquired Business or either Seller Party’s, assets, liabilities, operations, prospects, or condition (financial or otherwise), including with respect to merchantability or fitness for any particular purpose of any assets, the nature or extent of any liabilities, or the prospects of the Acquired Business, except as is set forth in this Agreement.  In connection with Purchaser’s investigation of the Acquired Business, Purchaser has received from the Selling Parties certain estimates, projections, forecasts, plans and budgets, and Purchaser acknowledges and agrees that (i) there are uncertainties inherent in attempting to make such estimates, projections, forecasts, plans and budgets and (ii) the Selling Parties are not making any representation or warranty with respect to such estimates, projections, forecasts, plans and budgets, (b) Purchaser specifically disclaims that it is relying upon or has relied upon any such other representations or warranties that may have been made by any Person, and acknowledges and agrees that the Selling Parties have specifically disclaimed and do hereby specifically disclaim any such other representation or warranty made by any Person, and (c) Purchaser is acquiring the Acquired Assets subject only to the specific representations and warranties set forth in Section 2 as further limited by the specifically bargained for exclusive remedies as set forth in Section 5.

 

	
4.  

	
Other Agreements.

 

4.1 Further Actions.

 

(a) From and after the Closing Date, Seller and Purchaser shall cooperate with one another and shall execute and deliver such documents and take such other actions as any party hereto may reasonably request, for the purpose of evidencing the Transactions and putting Purchaser in possession and control of all of the Acquired Assets.  Without limiting the generality of the foregoing, from and after the Closing Date, Seller shall promptly remit to Purchaser any funds that are received by Seller and that are included in, or that represent payment of such receivables included in, the Acquired Assets.

  

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(b) From and after the Closing Date, the Selling Parties and Purchaser will cooperate in good faith and render reasonable assistance to the other Parties in connection with the filing of Tax Returns, any audit or Proceeding with respect to Taxes, or any other Proceeding, in each case relating to the Acquired Assets or the Acquired Business, as and to the extent reasonably requested by the other parties hereto.  Such cooperation shall include (i) the retention and (upon a party’s request) the provision of records and information which are reasonably relevant to the preparation of Tax Returns or to any such Proceeding and (ii) making relevant employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.

 

4.2 Employee Matters.

 

(a) Subject to the Transition Services Agreement, Seller and its Affiliates may terminate any of their respective Business Employees at any time following the Closing.  Purchaser has no intent to offer employment to any Business Employees and Seller and its Affiliates shall retain responsibility for any and all obligations owed to any Business Employees.  Seller and its Affiliates shall be responsible for providing any notice of mass layoff or plant closing, as may be required pursuant to the WARN Act and any applicable state or local plant closing notification statute, with respect to Business Employees who are not employed by Seller or its Affiliates after the Closing Date and shall maintain such employees on Seller payrolls for any period of notice required by the WARN Act and any applicable state or local plant closing notification statute.

 

(b) Following the Closing Date, Seller shall be solely responsible for continuation coverage pursuant to Part 6 of Title I of ERISA and Sections 4980B of the Code (“COBRA”) for any of Seller’ covered employee and associated qualified beneficiaries and who incurred a qualifying event (as described in Section 4980B(3) of the Code) before, on or after the Closing Date and who elected COBRA continuation coverage pursuant to Section 4980B(5) of the Code.  Purchaser shall not be considered a successor employer to Seller or its Affiliates with respect to any Employee Benefit Plan as a result of the transactions contemplated herein or otherwise.  Purchaser shall not be liable or otherwise responsible for any accrued or unaccrued liability (including any underfunding, penalties, excise taxes or otherwise) or other obligation, either existing currently or accrued or discovered in the future, with respect to any Employee Benefit Plan.

 

4.3 Confidentiality.

 

(a) The Selling Parties agree that for five (5) years following the Closing Date they shall hold in strict confidence, unless compelled to disclose by judicial or administrative process or by other Legal Requirements (and then only following reasonable prior written notice to Purchaser, to the extent practicable, so that Purchaser shall have an opportunity to object), all confidential information of Purchaser and the Acquired Business in their possession and will not release or disclose such confidential information to any other Person, except to their auditors, attorneys, financial advisors and other consultants, agents and advisors who need to know such information in connection with the Selling Parties’ business (provided that the Selling Parties takes reasonable steps to ensure that each such Person maintain the confidentiality required hereunder); provided that the foregoing obligations shall not apply to any such information which comes into the public domain through no fault of the Selling Parties, or of any Person to whom the Selling Parties are authorized to release or disclose such information, or any information that the recipient of such information independently develops or discovers after the Closing without reference to the disclosed information or breach hereof.

  

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(b) The parties hereto agree that from and after the Closing Date, neither party will make any public announcement to the existence or terms of this Agreement or the Transactions without the express written approval of the other party, except (i) to the extent required by law (including securities laws) or any stock exchange rules or regulations (and then only following reasonable prior written notice to other party, to the extent practicable, so that the other party shall have an opportunity to object) and (ii) disclosures to such party’s Representatives (provided that such party take reasonable steps to ensure that each such Representative maintain the confidentiality required hereunder).

 

4.4 Change Of Name.  Immediately after the Closing, Seller shall change its name to a name that does not include the words “Real Estate School Online” or any variation thereof based on Purchaser’s reasonable business judgment that is confusingly similar thereto.

 

4.5 Non-Competition; Non-Solicitation.

 

(a) The Selling Parties agrees that, for a period of five (5) years following the date hereof, neither Selling Parties nor any of their Affiliates shall, without the prior written consent of Purchaser, directly or indirectly, anywhere in the United States (i) form, acquire, operate, control, make a financial investment in, or otherwise finance, manage, participate in, any on-line real estate, OSHA, food safety, architect, nursing, CFP or insurance education and licensing business (a “Competing Business”), or (ii) for the purpose of conducting or engaging in a Competing Business, call upon, solicit, advise or otherwise do, or attempt to do, business with any suppliers, vendors or other material business relationships of the Acquired Business.

 

(b) The Selling Parties agree that (i) the covenants set forth in this Section 4.5 are reasonable in temporal and geographical scope and in all other respects, and (ii) the covenants contained herein have been made in order to induce Purchaser to enter into this Agreement.  If, at the time of enforcement of this Section 4.5, a court shall hold that the duration or scope stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration or scope under such circumstances shall be substituted for the stated duration or scope and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period and scope permitted by law.  The Selling Parties recognize and affirm that in the event of its breach of any provision of this Section 4.5, money damages would be inadequate and Purchaser would not have an adequate remedy at law.  Accordingly, the Selling Parties agree that in the event of a breach or a threatened breach by any Selling Party of any of the provisions of this Section 4.5, Purchaser, in addition to all other rights and remedies existing in its favor, may apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof (without posting a bond or other security).

  

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4.6 Retention of and Access to Records.  For a period of 3 years after the Closing Date, the Selling Parties shall provide Purchaser and its authorized Representatives, upon reasonable notice and during normal business hours, access to the books and records retained by the Selling Parties, which in any way relate to the Acquired Business that were not included in the Acquired Assets.  The Selling Parties shall, during such 3-year period, preserve and maintain such books and records held by it and shall not destroy or cause to be destroyed any such books or records.  Notwithstanding the foregoing, if at any time after the first anniversary of this Agreement and prior to the expiration of the 3-year period, the Selling Parties want to destroy any of the books and records held by it, it may destroy such books and records in compliance with applicable Legal Requirements after giving Purchaser written notice of the intention to destroy the reasonably identified category of documents at least 30 days prior to the destruction date and the opportunity to take delivery of such books and records.

 

	
5.  

	
Indemnification, Etc.

 

5.1 Survival of Representations and Covenants.

 

(a) Except as expressly set forth in Section 5.1(b) and subject to Section 5.1(d), the representations and warranties made by each party in this Agreement shall expire at 11:59 p.m. on the second anniversary of the Closing.  All of the covenants and obligations of the parties contained in this Agreement shall survive (A) until fully performed or fulfilled, unless non-compliance with such covenants or obligations is waived in writing by the party or parties entitled to such performance or (B) if not fully performed or fulfilled, until the expiration of the relevant statute of limitations.

 

(b) Subject to Section 5.1(d), (i) the representations and warranties set forth in Sections 2.13 (Intellectual Property), 2.18 (Tax Matters), and 2.20 (Environmental Matters) shall expire at 11:59 p.m. (New York time) on the 90th day following the expiration of the relevant statute of limitations, and (ii) the representations and warranties set forth in Sections 2.1 (Due Organization), 2.2 (Authority), 2.6 (Title to Assets), 2.24 (Investment Banking Fees), 2.25 (Disclaimer of Additional Representations or Warranties), 3.1 (Due Organization), 3.2 (Authority) and 3.6 (No Reliance) shall survive indefinitely; provided, however, that if a Claim Notice (as defined below) relating to any representation or warranty set forth in any of the provisions of Section 2 or Section 3 is given to Seller or Purchaser, as applicable, on or prior to the time and date of expiration for such representation or warranty, then, notwithstanding anything to the contrary contained in this Section 5.1(b) and in Section 5.1(a), such representation or warranty shall not so expire, but rather shall remain in full force and effect until such time as each and every claim that is based directly or indirectly upon, or that relates directly or indirectly to, any Breach or alleged Breach of such representation or warranty has been fully and finally resolved, either by means of a written settlement agreement or by means of a final, non-appealable judgment issued by a court of competent jurisdiction.  The representations and warranties described in this Section 5.1(b) are referred to herein as the “Specified Representations”.

 

(c) The representations, warranties, covenants and obligations of each party, and the rights and remedies that may be exercised by the Indemnitees, shall not be limited or otherwise affected by or as a result of any information furnished to, or any investigation made by or Knowledge of, any of the Indemnitees or any of their Representatives.

  

22

  

 

(d) Notwithstanding anything to the contrary contained in Sections 5.1(a) or  5.1(b), if either the Selling Parties or Purchaser commit any intentional and knowing misrepresentation or fraud related to any representation or warranty of the Selling Parties or Purchaser set forth in Section 2 or Section 3, then such representation or warranty shall not expire, but rather shall remain in full force and effect for an unlimited period of time (regardless of whether any Claim Notice relating to such representation or warranty is ever given).

 

(e) For purposes of this Agreement, a “Claim Notice” relating to a particular representation or warranty shall be deemed to have been given if any Indemnitee, acting in good faith, delivers to the indemnifying party a written notice stating that such Indemnitee believes that there is or has been a possible Breach of such representation or warranty and containing (i) a brief description of the circumstances supporting such Indemnitee’s belief that there is or has been such a possible Breach (the “Claim”) and (ii) a non-binding, preliminary estimate of the aggregate dollar amount of the actual and potential Damages that have arisen and may arise as a direct or indirect result of such possible Breach.

 

5.2 Indemnification.

 

(a) From and after the Closing Date, the Selling Parties, jointly and severally, shall hold harmless and indemnify each of the Purchaser and its Indemnitees (each, a “Purchaser Indemnified Party”) from and against, and shall compensate and reimburse each Purchaser Indemnified Party for, any Damages that are directly or indirectly suffered or incurred by any Purchaser Indemnified Party (regardless of whether or not such Damages relate to any third-party claim) and that arise directly or indirectly from or as a direct or indirect result of, or are directly or indirectly connected with:

 

(i) any Breach by either Selling Party of any of the representations or warranties made by the Selling Parties in this Agreement, in any other Transaction Agreement or in any certificate or other instrument delivered by or on behalf of any Selling Party pursuant hereto or thereto;

 

(ii) any Breach by either Selling Party of any covenant or obligation of the Selling Parties contained in this Agreement;

 

(iii) the Excluded Assets or the Excluded Liabilities;

 

(iv) any Liability as a result of any termination of Business Employees prior to or after the Closing and any Liability for misclassification by a Selling Party of any Person as an independent contractor rather than an employee prior to the Closing; or

 

(v) any failure by either Selling Party to comply with bulk sales or bulk transfer laws or similar Legal Requirements in connection with the Transactions.

  

23

  

 

(b) From and after the Closing Date, the Purchaser shall indemnify and hold harmless each of the Selling Parties’ Indemnitees (each a “Seller Indemnified Party”) from and against, and shall compensate and reimburse each Seller Indemnified Party for, any Damages that are directly or indirectly suffered or incurred by any Seller Indemnified Party or to which any Seller Indemnified Party may otherwise become subject at any time (regardless of whether or not such Damages relate to any third-party claim) and that arise directly or indirectly from or as a direct or indirect result of, or are directly or indirectly connected with:

 

(i) any Breach by Purchaser of any of the representations or warranties made by Purchaser in this Agreement, in any other Transaction Agreement or in any certificate or other instrument delivered by or on behalf of Purchaser pursuant hereto or thereto;

 

(ii) any Breach by Purchaser of any covenant or obligation of Purchaser contained in this Agreement; and

 

(iii) the Acquired Assets or the Assumed Liabilities.

 

5.3 Indemnification Procedures.

 

(a) Whenever a claim for indemnification shall arise for which any Indemnitee of Purchaser or the Selling Parties, as applicable, shall be entitled to indemnification hereunder, such Indemnitee shall provide a Claim Notice to the Purchaser or Selling Parties, as applicable (the “Indemnitor”) in writing within thirty (30) days of the first receipt of notice of such claim, and in any event within such shorter period as may be necessary for the Indemnitor to take appropriate action to resist such claim; provided that the failure to give such notice shall not relieve the Indemnitor of its obligation to indemnify the Indemnitee except to the extent that the Indemnitor shall have been materially prejudiced in its ability to defend such claim.  For claims other than third party Claims, the right of the Indemnitee to indemnification, as set forth in the Indemnitee’s notice, shall be deemed agreed to by the Indemnitor unless, within thirty (30) days after the mailing of such notice, the Indemnitor notifies the Indemnitee in writing that it disputes the right of the Indemnitee to indemnification.  If the Indemnitee is timely notified of such dispute, the parties will initiate dispute resolution procedures pursuant to Section 5.3(b).

 

(b) In the event of any dispute regarding the indemnification provisions contained in this Section 5, the parties shall attempt in good faith to resolve such dispute promptly by good faith negotiations between executives who have authority to settle the controversy.  Within 15 days following Indemnitee’s receipt of the Indemnitor’s initial notice of such dispute, the Indemnitee shall submit to the Indemnitor a written response.  The notice from Indemnitor, and the response from Indemnitee, shall each include (i) a statement of such party’s position and a summary of arguments supporting that position, and (ii) the name and title of the executive who will represent that party and of any other person who will accompany the executive during negotiations.  Within 30 days after delivery of the Indemnitee’s notice, the executives of both parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary to attempt to resolve the dispute.  All reasonable requests made by one party to the other for information regarding the dispute will be honored.  If the dispute has not been resolved by negotiation within 45 days of the Indemnitee’s response, or if the parties fail to meet within 20 days from delivery of said response, either party may commence legal action to resolve such dispute.

  

24

  

 

5.4 Limitations of Indemnification.

 

(a) Notwithstanding anything herein to the contrary, with respect to Claims made pursuant to Section 5.2(a)(i) or Section 5.2(b)(i), an Indemnitor shall not be obligated to provide indemnification under such Sections (other than for breaches of Specified Representations) (i) unless and until the aggregate dollar amount of such claims under Section 5.2(a)(i) or Section 5.2(b)(i), as applicable, exceeds $10,000, in which case the applicable Indemnitor shall be obligated to provide indemnification for all such amounts, and (ii) for any amount in excess of $200,000

 

(b) Notwithstanding the foregoing, and for the avoidance of doubt, the limitations on indemnification set forth in Section 5.4(a) shall not apply to any indemnification claim for Liabilities resulting from, in connection with or arising out of (i) any breach of or inaccuracy in any of the Specified Representations, (ii) indemnification obligations set forth in any provision other than Sections 5.2(a)(i) and 5.2(b)(i) and (iii) any fraud or intentional and knowing misrepresentation by any party in connection with this Agreement.

 

5.5 Defense Of Third Party Claims.

 

(a) In the event of the assertion or commencement by any Person of any claim or Proceeding with respect to which the Selling Parties may become obligated to indemnify, hold harmless, compensate or reimburse any of Purchaser’s Indemnitees pursuant to Section 5, Purchaser shall have the right, at its election, to designate Seller to assume the defense of such claim or Proceeding at the sole expense of Seller.

 

(b) If Purchaser so elects to designate Seller to assume the defense of any such claim or Proceeding (i) Seller shall proceed to defend such claim or Proceeding in a diligent manner with counsel satisfactory to Purchaser, (ii) Purchaser shall make available to Seller any non-privileged documents and materials in the possession of Purchaser or its Affiliates that may be necessary to the defense of such claim or Proceeding, (iii) Seller shall keep Purchaser informed of all material developments and events relating to such claim or Proceeding, (iv) Purchaser shall have the right to employee its own counsel (at its expense) to participate in the defense of such claim or Proceeding, (v) Seller shall not settle, adjust or compromise such claim or Proceeding without the prior written consent of Purchaser; provided, however, that Purchaser shall not unreasonably withhold such consent, and (vi) Purchaser may at any time (notwithstanding the prior designation of Seller to assume the defense of such claim or Proceeding) assume the defense of such claim or Proceeding.

 

(c) If Purchaser does not elect to designate Seller to assume the defense of any such claim or Proceeding (or if, after initially designating Seller to assume such defense, Purchaser elects to assume such defense), Purchaser may proceed with the defense of such claim or Proceeding on its own.  If Purchaser so proceeds with the defense of any such claim or Proceeding on its own (i) all expenses relating to the defense of such claim or Proceeding shall be borne and paid exclusively by the Selling Parties, (ii) the Selling Parties shall make available to Purchaser any documents and materials in the possession or control of the Seller or its Affiliates that may be necessary to the defense of such claim or Proceeding, (iii) Purchaser shall keep Seller and Seller informed of all material developments and events relating to such claim or Proceeding, and (iv) Purchaser shall have the right to settle, adjust or compromise such claim or Proceeding with the consent of Seller; provided, however, that Seller shall not unreasonably withhold such consent.

  

25

  

 

(d) Notwithstanding anything in this Agreement to the contrary, if Purchaser determines in good faith that it is likely that a Proceeding may adversely affect it or its Affiliates other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, Purchaser may, regardless of whether or not Purchaser had previously elected to allow the Proceedings to be conducted pursuant to Section 5.4(a) above, at any time by notice to the Selling Parties assume the exclusive right to defend, compromise or settle such Proceeding without the consent of the Selling Parties.

 

5.6 Escrow.  Pursuant to the terms of this Agreement and the Escrow Agreement, the Escrow Fund shall be available to the Purchaser upon the proper exercise of its indemnification rights hereunder to recover any amounts owed to the Purchaser.  The Escrow Fund will be held as a trust fund and will not be subject to any lien, attachment, trustee process or any other judicial process of any creditor of any party hereto.  Notwithstanding anything to the contrary contained herein, the Escrow Fund shall in no way limit or cap the Selling Parties’ indemnification obligations under Section 5.

 

5.7 Remedies Exclusive.  AFTER THE CLOSING, THE REMEDIES PROVIDED IN THIS SECTION 5 ARE AND SHALL BE THE SOLE AND EXCLUSIVE REMEDIES OF THE PARTIES HERETO AND THEIR HEIRS, SUCCESSORS AND ASSIGNS (INCLUDING, WITHOUT LIMITATION, ALL PURCHASER INDEMNIFIED PARTIES) WITH RESPECT TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND ALL MATTERS, TRANSACTIONS AND CIRCUMSTANCES RELATING HERETO, INCLUDING, WITHOUT LIMITATION, ANY BREACH OR NON-PERFORMANCE OF ANY REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT CONTAINED HEREIN, EXCEPT IN THE CASE OF INTENTIONAL AND KNOWING MISREPRESENTATION OR FRAUD, IN WHICH CASE THE PARTY EXERCISING ITS RIGHTS SHALL HAVE ALL RIGHTS AND REMEDIES AVAILABLE UNDER THIS AGREEMENT AND AVAILABLE UNDER THE LAW AGAINST THE OTHER PARTY.  EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, NO PARTY MAY BRING OR COMMENCE ANY CLAIM, SUIT, ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY AND ALL MATTERS, TRANSACTIONS AND CIRCUMSTANCES RELATING HERETO, WHETHER IN CONTRACT, TORT OR OTHERWISE, EXCEPT TO BRING A CLAIM FOR (A) FRAUD OR INTENTIONAL AND KNOWING MISREPRESENTATION AGAINST THE OTHER PARTY, AND (B) INDEMNIFICATION IN ACCORDANCE WITH THIS SECTION 5.  THE PROVISIONS OF THIS SECTION 5 (INCLUDING, WITHOUT LIMITATION, THIS SECTION 5.7) CONSTITUTE AN INTEGRAL PART OF THE CONSIDERATION GIVEN PURSUANT TO THIS AGREEMENT AND WERE SPECIFICALLY BARGAINED FOR AND REFLECTED IN THE TOTAL AMOUNT OF THE PURCHASE PAYABLE TO SELLER.  NOTWITHSTANDING THE FOREGOING, THE PARTIES SHALL BE ENTITLED TO EQUITABLE REMEDIES IN CONNECTION WITH BREACHES OF THE COVENANTS CONTAINED IN SECTIONS 4.3, 4.4 AND/OR 4.5 OF THIS AGREEMENT.

  

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6.  

	
Miscellaneous Provisions.

 

6.1 Further Assurances.  Each party hereto shall execute and/or cause to be delivered to each other party hereto such instruments and other documents, and shall take such other actions, as such other party may reasonably request (prior to, at or after the Closing) for the purpose of carrying out or evidencing any of the Transactions.

 

6.2 Fees and Expenses; Investment Banking Fees.

 

(a) Except as otherwise contemplated herein, each party to this Agreement shall bear and pay all fees, costs and expenses (including all legal fees and expenses) that have been incurred or that are in the future incurred by, on behalf of or for the benefit of such party in connection with (i) the negotiation, preparation and review of any letter of intent or similar document relating to any of the Transactions, (ii) the investigation and review conducted by such party and its Representatives with respect to the Transactions, (iii) the negotiation, preparation and review of this Agreement, the other Transaction Agreements and all other bills of sale, assignments, certificates, opinions and other instruments and documents delivered or to be delivered in connection with the Transactions, (iv) the preparation and submission of any filing or notice required to be made or given in connection with any of the Transactions, and the obtaining of any Consent required to be obtained in connection with any of the Transactions and (v) the consummation and performance of the Transactions except that all conveyance, sales, use and other transfer Taxes arising in connection with the consummation of the Transactions shall be paid 50% by Seller and 50% by Buyer.

 

(b) Notwithstanding anything to the contrary contained elsewhere in this Agreement, each party to this agreement shall pay its own investment banking, broker or finder fees incurred in connection with the Transactions.

 

6.3 Attorneys’ Fees.  If any legal action or other legal proceeding relating to any of the Transaction Agreements or the enforcement of any provision of any of the Transaction Agreements is brought against any party to this Agreement, the prevailing party shall be entitled to recover reasonable attorneys’ fees, costs and disbursements (in addition to any other relief to which the prevailing party may be entitled).

  

27

  

 

6.4 Notices.  Any notice or other communication required or permitted to be delivered to any party under this Agreement shall be in writing and shall be deemed properly delivered, given and received when delivered (by hand, by registered mail, by courier or express delivery service or by facsimile) to the address or facsimile telephone number set forth beneath the name of such party below (or to such other address or facsimile telephone number as such party shall have specified in a written notice given to the other parties hereto):

 

if to the Shareholders or Seller:

 

Inuvo, Inc.

15550 Lightwave Drive, Third Floor

Clearwater, FL  33760

Attention: Wallace D. Ruiz, Chief Financial Officer

Facsimile:  (727) 683-9342

 

With a copy (which copy shall not constitute notice) to:

 

Hill Ward Henderson

101 E. Kennedy Blvd., Suite 3700

Tampa, FL  33602

Attention: Christopher J. Stephens

Facsimile:  (813) 221-2900

 

if to Purchaser:

DF Institute, Inc.

332 Front Street South, Suite 501

La Crosse, WI 54601

Attention: Andrew Temte, President

Facsimile:  (608) 779-5140

 

With a copy (which copy shall not constitute notice) to:

 

Kaplan, Inc.

Legal Department

888 Seventh Avenue, 23rd Floor

New York, New York 10106

Attention: Johan de Muinck Keizer, Senior Vice President and General Counsel

Facsimile:  (212) 489-2301

6.5 Headings.  The headings contained in this Agreement are for convenience of reference only, shall not be deemed to be a part of this Agreement and shall not be referred to in connection with the construction or interpretation of this Agreement.

 

6.6 Counterparts; Facsimile.  This Agreement may be executed in one or more counterpart signature pages, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement, which shall be binding upon all of the parties hereto notwithstanding the fact that all parties are not signatory to the same counterpart. The exchange of copies of this Agreement and of signature pages by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

  

28

  

 

6.7 Governing Law; Venue. This Agreement shall be construed in accordance with, and governed in all respects by, the internal laws of the State of New York.  Each party to this Agreement expressly and irrevocably (i) consents that any legal action or proceeding against him, her or it under, arising out of or in any manner relating to, this Agreement, or any other document delivered in connection herewith, shall be brought exclusively in any court of the State of Florida or in the United States District Court for the Middle District of Florida, (ii) consents and submits to the personal jurisdiction of any of such courts in any such action or proceeding, (iii) waives any claim or defense in any such action or proceeding based on any alleged lack of personal jurisdiction, improper venue or forum non conveniens or any similar basis and (iv) waives all rights, if any, to trial by jury with respect to any such action or proceeding to the extent permitted under applicable Law.

 

6.8 Successors And Assigns; Parties In Interest.

 

(a) This Agreement shall be binding upon and inure to the benefit of Purchaser, Seller, the Shareholder and their respective successors and assigns, as applicable.  No party shall be permitted to assign any of their rights or delegate any of their obligations under this Agreement without the other party’s prior written consent; provided that Purchaser may assign this Agreement to one or more of its Affiliates without the prior written consent of the Selling Parties.

 

(b) Except for the provisions of Section 5 hereof, none of the provisions of this Agreement is intended to provide any rights or remedies to any Person other than the parties to this Agreement and their respective successors and assigns.  Without limiting the generality of the foregoing, (i) no employee of Seller or its Affiliates shall have any rights under this Agreement or under any of the other Transaction Agreements and (ii) no creditor of the Selling Parties or any of their Affiliates shall have any rights under this Agreement or any of the other Transaction Agreements.

 

6.9 Remedies Cumulative; Specific Performance.  Subject to Section 5.7, the rights and remedies of the parties hereto shall be cumulative and not alternative.  The parties hereto agree that (a) in the event of any Breach or threatened Breach by any party hereto of any covenant, obligation or other provision set forth in Sections 4.3, 4.4 or 4.5 of this Agreement, the other party shall be entitled (in addition to any other remedy that may be available to it) to (i) a decree or order of specific performance or mandamus to enforce the observance and performance of such covenant, obligation or other provision and (ii) an injunction restraining such Breach or threatened Breach and (b) neither such other party nor any other Indemnitee shall be required to provide any bond or other security in connection with any such decree, order or injunction or in connection with any related action or Proceeding.

 

6.10 Waiver.

 

(a) No failure on the part of any Person to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of any Person in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy.

 

(b) No Person shall be deemed to have waived any claim arising out of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of such Person; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given.

  

29

  

 

6.11 Amendments.  This Agreement may not be amended, modified, altered or supplemented other than by means of a written instrument duly executed and delivered on behalf of the party to be charged.

 

6.12 Severability.  In the event that any provision of this Agreement, or the application of any such provision to any Person or set of circumstances, shall be determined to be invalid, unlawful, void or unenforceable to any extent, the remainder of this Agreement, and the application of such provision to Persons or circumstances other than those as to which it is determined to be invalid, unlawful, void or unenforceable, shall not be impaired or otherwise affected and shall continue to be valid and enforceable to the fullest extent permitted by law.

 

6.13 Entire Agreement.  This Agreement contains the entire agreement of the parties respecting the sale and purchase of the Acquired Assets and supersedes all prior agreements among the parties respecting the sale and purchase of the Acquired Assets.  The parties each hereby acknowledge that this Agreement embodies the justifiable expectations of sophisticated parties derived from arm’s-length negotiations; all parties to this Agreement specifically acknowledge that no party has any special relationship with another party that would justify any expectation beyond that of an ordinary buyer and an ordinary seller in an arm’s-length transaction.  Except as expressly provided otherwise in this Agreement, the sole and exclusive remedies for any breach of the terms and provisions of this Agreement are set forth in Section 5.7 hereof.

 

6.14 Construction.

 

(a) For purposes of this Agreement, including the Exhibits hereto, whenever the context requires the singular number shall include the plural, and vice versa, the masculine gender shall include the feminine and neuter genders, the feminine gender shall include the masculine and neuter genders and the neuter gender shall include the masculine and feminine genders.

 

(b) The parties hereto agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in the construction or interpretation of this Agreement.

 

(c) As used in this Agreement, the words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation.”

 

(d) Except as otherwise indicated, all references in this Agreement to “Sections” and “Exhibits” are intended to refer to Sections of this Agreement and Exhibits to this Agreement.

  

30

  

 

6.15 No Consequential Damages.  Notwithstanding anything in this Agreement to the contrary, no party hereto shall be liable to any other party for any consequential (including but not limited to lost profits, lost savings or other economic losses), indirect, incidental, speculative or special damages, even if such party has been advised of the possibility of or could have foreseen such damages.

 

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

  

31

  

 

The parties to this Agreement have caused this Agreement to be executed and delivered as of the date first written above.

	 	 	PURCHASER:	 
	 	 	 	 	 
	 	 	
DF Institute, Inc.,

an Illinois corporation

	 
	 	 	 	 	 
	
 

	 	By:  	
/s/ Andrew Temte

	 
	
 

	 	 	
Name 

	 
	
 

	 	 	
Title

	 

 

	 	 	 	 	 
	 	 	SELLER:	 
	 	 	 	 	 
	 	 	
Real Estate School Online Inc.,

a Florida corporation

	 
	 	 	 	 	 
	
 

	 	By:  	
/s/ Wallace Ruiz 

	 
	
 

	 	 	
Name 

	 
	
 

	 	 	
Title

	 
	 	 	 	 	 

	 	 	 	 	 
	 	 	SHAREHOLDER:	 
	 	 	 	 	 
	 	 	
Inuvo, Inc.  

a Nevada corporation

	 
	 	 	 	 	 
	
 

	 	By:  	
/s/ Wallace Ruiz 

	 
	
 

	 	 	
Name 

	 
	
 

	 	 	
Title

	 

 

 

 

 

32ex1009.htm - Generated by SEC Publisher for SEC Filing

 

Exhibit 10.9

NEW ENERGY TECHNOLOGIES INC.

3905 National Drive, Suite 110

Burtonsville, MD 20866

 

Telephone: (800) 213-0689 • Facsimile (240) 390-0603

 

 

August 9, 2010 

 

 

John A. Conklin

3489 Pennsylvania Avenue

Apalachin, New York 13732

 

Re:       Your At-Will Employment With New Energy Technologies, Inc.

 

Dear John:

 

            This letter sets forth the terms and conditions of your continued employment by New Energy Technologies, Inc. (the “Company”).  For the purposes of this Agreement, capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed thereto in Paragraph 22 hereof.

 

1.        Position and Duties.

 

            (a)        Executive Positions.  You shall be employed by the Company as its President and Chief Executive Officer and/or such other positions as the Company’s Board of Directors (the “Board”) may from time to time designate (collectively, the “Executive Positions”); in performance of your duties, you shall be subject to the direction of, and be reporting directly to, the Company's Board of Directors; anything herein to the contrary notwithstanding, if requested by the Board, you will immediately resign from the Executive Positions.

 

            (b)        Full Time Efforts. Except during vacations, holidays and other leave time, you agree to devote your full time efforts, professional attention, knowledge, and experience as may be necessary to carry on your duties pursuant to this agreement and the fulfillment of your responsibilities in accordance with the Executive Positions.  For purposes of clarity, except with respect to subsidiaries of the Company, you may not render executive services to, or serve as a director of, any other Person without the prior approval of the Board.  However, nothing in this Paragraph 1(a) shall be construed as preventing you from pursuing any of the following:  (i) investing and managing your personal assets and investments, so long as such assets and investments are not in businesses which are in direct competition with the Company or otherwise present a conflict of interest with the Company; and (ii) participating in civic, charitable, religious, industry and professional organizations and functions.

 

            (c)        Board Membership.  Subject to shareholder approval if required, you may also be requested to serve as a Director on the Board; if so appointed to the Board and subsequently requested by the Board, you will immediately resign as a member of the Board.   

 

            (d)        Travel. You shall be available to travel as the needs of the Company’s Business require. 

 

            (e)        Code of Ethics.  During your employment with the Company you agree to adhere to the Company’s Code of Ethics and Business Conduct, a copy of which is attached hereto as Appendix A.

 

1

 

 

 

2.        At-Will Employment.

 

         Anything herein to the contrary notwithstanding, your employment with and by the Company is “at-will employment” and may be terminated by you or the Company at any time, with or without cause, and for any reason whatsoever, upon written notice as provided in Paragraph 10 hereof.

 

3.          Compensation.

 

             You shall be compensated by the Company for your services hereunder as follows:

 

                        (a)        Salary.  Commencing August 9, 2010 (the “Start Date”), you shall be paid a monthly salary of $12,500.00 (and as modified from time to time hereunder, the “Monthly Payment”) ($150,000.00 per year), subject to applicable tax withholding, the salary is payable in 24 installments of $6,250 each on the 15th and last day of each calendar month during the term of this Agreement.  Your salary shall be subject to periodic review and adjustment in accordance with the Company's salary review policies and practices then in effect for its senior management.

 

                        (b)         Stock Options.

 

            As an incentive to enter into and undertake employment pursuant to this Agreement, and to meet certain Company milestones you will be granted stock options as follows:

 

                                    (i)         Number, Vesting and Exercise Price. Subject to your execution and delivery of this Agreement and the definitive Stock Option Agreement substantially in the form of Appendix B hereto (the “Stock Option Agreement”) you shall receive a total of 2,000,000 options (the “Options”) to purchase up to an aggregate of 2,000,000 shares of the Company’s common stock; the Options are subject to and shall have such further restrictions, vesting requirements and exercise provisions as are set forth in the Stock Option Agreement. Subject to the foregoing the Option shall vest:

                                                1. as to 500,000 shares or such portion thereof as may be determined by the Board at its sole discretion, when one or more of the following items related the development, production, manufacturing, and sale of any commercially viable product have been successfully executed: 

: 

(a) completion of final design and/or engineering; 

(b) the establishment of manufacturing facilities, whether in-house or outsourced; and 

(c) the initial filing of any product safety approval applications, if required, in order to allow for the commercial sale of products by the Company;

 

                                                2. as to 500,000 shares upon commencing commercial sales of any of the Company’s products, as reported in the Company's financial statements, whether to retail customers or wholesale customers;

 

                                                3. 100,000 shares for each calendar year of service in an Executive Position for the next five years (500,000 shares in the aggregate), which shall become exercisable as follows:

 

(a)  as to 100,000 shares on August 9, 2011;

(b)  as to 100,000 shares on August 9, 2012;

(c)  as to 100,000 shares on August 9, 2013;

 

2

 

 

(d)  as to 100,000 shares on August 9, 2014; and

(e)  as to 100,000 shares on August 9, 2015.

 

                                                4. as to 500,000 shares when, to the Board’s satisfaction, the Company enters into a favorable business partnership with a third-party commercial organization in the industry segment related to the Company’s product development and sales efforts, under any of the following conditions:

 

(a) a product development relationship whereby the third-party partner makes a significant financial investment, as determined at the Board’s discretion, directed towards the development of the Company’s products; or 

(b) a product development relationship whereby the third-party partner invests significant research and development resources, as determined at the Board’s discretion, directed towards the development of the Company’s products; or

(c) a strategic partnership with the third-party partner where, as determined at the Board’s discretion, such a partnership provides significant business advantages to the Company which it would otherwise not have, whether related to product development, commercial sales, industry position, or business reputation.     

                  

All determinations and calculations with respect hereto shall be made by the Board or any committee thereof to which the Board has delegated such authority, in good faith in accordance with applicable law, the Articles of Incorporation and By-laws of the Company, in its sole discretion, and shall be final, conclusive and binding on all persons, including you and the personal representative of your estate.

                        (ii)        Term of the Options.  Subject to the earlier termination provisions set forth in the Stock Option Agreement, the Option shall have a term of ten (10) years from the date hereof.  The granting of the Options shall be effective only upon delivery of a fully executed Stock Option Agreement. 

            

4.    Additional Benefits. 

 

            (a)        Vacation.  You shall be entitled to two weeks of paid vacation each calendar year.  Vacation will accrue on August 9 of each year, except that in 2010, vacation will accrue on the Start Date.  No compensation shall be paid for accrued but untaken vacation.

 

            (b)        Medical Insurance.  During the term of this Agreement, the Company agrees to pay you a monthly stipend of $1,000.00 per month in addition to your annual salary to cover medical insurance premiums until such time that the Company can make available an alternative medical insurance plan.

 

             (c)       Other Expenses.  You shall be entitled to reimbursement for reasonable travel and other out-of-pocket expenses necessarily incurred in the performance of your duties hereunder, upon submission and approval of written statements and bills in accordance with the then regular procedures of the Company (collectively, “Business Expense Reimbursement”).

 

            (e)        Miscellaneous.  In addition to the other benefits set forth in this Paragraph 4, you may also participate, subject to Board approval, in all other present and future employee benefit plans of the Company for its senior executive staff, provided that you meet the eligibility requirements for participation in any such plans.  The Company shall use commercially reasonable efforts to provide you with directors’ and officers’ liability insurance under the policies for such insurance arranged by the Company from time to time upon such terms and in such amounts as the Board may reasonably determine in its discretion.  The Company shall, to the full extent permitted by, and subject to, applicable law, 

 

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defend you, indemnify you and hold you harmless as to all suits, actions, and claims made against you arising out of your actions as an officer and/or employee of the Company.

 

5.         Your Representations and Warranties.

 

            You represent and warrant to the Company that: 

 

            (a)        The execution, delivery and performance by the Executive of this Agreement do not conflict with or result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default under any contract, agreement or understanding, whether oral or written, to which you are a party or of which you or should be aware and that there are no restrictions, covenants, agreements or limitations on his right or ability to enter into and perform the terms of this Agreement, and agrees to indemnify and save the Company and its affiliates harmless from any liability, cost or expense, including attorney’s fees, based upon or arising out of any such restrictions, covenants, agreements, or limitations that may be found to exist;   

 

            (b)        You are under no physical or mental disability that would hinder your performance of duties under this Agreement; 

 

            (c)        Except as set forth in Appendix C attached hereto, you are not party to any ongoing civil or criminal proceedings, and have not been party such proceedings within the past ten years, and do not know of any such proceeding that may be threatened or pending against you; and

 

            (d)        You are not currently engaged in activities and will not knowingly engage in future activities that may cause embarrassment to the Company or tarnish the reputation or public image of the Company, including but not necessarily limited to association with or party to:  any criminal behavior(s) such as drug use, theft, or any other potential or active violation of law; political controversy, civil disobedience, or public protest; lewd, lascivious behavior.

 

6.         Discoveries and Works. 

             

            All Discoveries and Works which are made or conceived by you during your employment by the Company, solely, jointly or with others, that relate to the Company's present or anticipated activities, or are used or useable by the Company within the scope of this Agreement shall be owned by the Company.  You shall (a) promptly notify, make full disclosure to, and execute and deliver any documents requested by the Company, as the case may be, to evidence or better assure title to Discoveries and Works in the Company, as so requested, (b) renounce any and all claims, including but not limited to claims of ownership and royalty, with respect to all Discoveries and Works and all other property owned or licensed by the Company, (c) assist the Company in obtaining or maintaining for itself at its own expense United States and foreign patents, copyrights, trade secret protection or other protection of any and all Discoveries and Works, and (d) promptly execute, whether during his employment with the Company or thereafter, all applications or other endorsements necessary or appropriate to maintain patents and other rights for the Company and to protect the title of the Company thereto, including but not limited to assignments of such patents and other rights.  Any Discoveries and Works which, within one year after the expiration or termination of your employment with the Company, are made, disclosed, reduced to tangible or written form or description, or are reduced to practice by you and which pertain to the business carried on or products or services being sold or delivered by the Company at the time of such termination shall, as between you and, the Company, be presumed to have been made during your employment by the Company.  You acknowledge that all Discoveries and Works shall be deemed “works made for hire” under the U.S. Copyright Act of 1976, as amended 17 U.S.C. Sect. 101.            

 

 

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7.         Intellectual Property. 

 

            (a)        Assignment.    

 

                        (i)         You agree to make full written disclosure to the Company and will hold in trust for the sole right and benefit of the Company, and hereby assign to the Company, or its designee, all of your right, title and interest in and to any Intellectual Property.  Without limiting the foregoing, all copyrightable works that you create during your employment with the Company shall be considered “work made for hire.”  

 

                        (ii)        Any interest in Intellectual Property which you now, or hereafter during the period you are employed by the Company, may own or develop relating to the fields in which the Company may then be engaged shall belong to the Company; you hereby assign and agree to assign to the Company (or as otherwise directed by the Company) all of your right, title and interest in and to all Work Product, including without limitation all patent, copyright, trademark and other intellectual property rights therein and thereto.  If you have any such rights that cannot be assigned to the Company, you waive the enforcement of such rights, and if you have any rights that cannot be assigned or waived, you hereby grant to the Company an exclusive, irrevocable, perpetual, worldwide, fully paid license, with right to sublicense through multiple tiers, to such rights.  Such rights shall include the right to make, use, sell, improve, commercialize, reproduce, distribute, perform, display, transmit, manipulate in any manner, create derivative works based on, and otherwise exploit or utilize in any manner the subject intellectual property.

 

                        (iii)       Your obligation to assign your rights to Intellectual Property under this Paragraph 7 shall not apply to any inventions and all Discoveries and Works expressly identified in the attached Appendix D attached hereto which were developed prior to the your  performance of services hereunder for the Company, provided however that inventions to be developed by the you during the term of the Consultant's agreement may be subsequently added to the Schedule upon the mutual agreement of the you and the Company that such inventions are outside the scope of the Agreement.  You acknowledges that there are, and may be, future rights that the Company may otherwise become entitled to with respect to the Intellectual Property that do not yet exist, as well as new uses, media, means and forms of exploitation throughout the universe exploiting current or future technology yet to be developed, and you specifically intends the foregoing assignment of rights to the Company to include all such now known or unknown uses, media and forms of exploitation.  You agree to cooperate with the Company, both during and after the term of your employment , in the procurement and maintenance of the Company’s rights to the Intellectual Property and to execute, when requested, any and all applications for domestic and foreign patents, copyrights and other proprietary rights or other documents  and to do such other acts (including without limitation the execution and delivery of instruments of further assurance or confirmation) requested by the Company to assign the Intellectual Property to the Company, to permit the Company to enforce any patents, copyrights or other proprietary rights to the Intellectual Property and to otherwise carry out the purpose of this Agreement. 

 

                        (iv)       If the Company is unable because of your mental or physical incapacity or for any other reason to secure any signature for any of the assignments, licenses or other reasonably requested documents pertaining to the intellectual property rights referenced herein within ten (10) days of the delivery of said documents to you, then you hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as your agent and attorney in fact, to act for and on your behalf and stead and to execute and file said documents and do all other lawfully permitted acts to further the perfection, defense and enjoyment of the Company’s rights relating to the subject Intellectual Property with the same legal force and effect as if executed by you.  You stipulate and agree that such appointment is a right coupled with an interest, and will survive your incapacity or unavailability at any future time.

 

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    (b)        Maintenance of Records.  You agree to keep and maintain adequate and current written records of all Intellectual Property made by you (solely or jointly with others) during the term of your employment with the Company.  The records will be in the form of notes, sketches, drawings, electronic or digital data, and any other format that may be specified by the Company.  The records will be available to, and remain the sole property of, the Company at all times.

    (c)        Patent and Copyright Registrations.  You agree to assist the Company, or its designee, at the Company’s expense, in every proper way to secure the Company’s rights in the Intellectual Property Items and any copyrights, patents, mask work rights or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto and the execution of all applications, specifications, oaths, assignments and all other instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive rights, title and interest in and to such Intellectual Property Items, and any copyrights, patents, mask work rights or other intellectual property rights relating thereto.

 

8.         Non-competition and Non-Solicitation and Non-Circumvention. 

 

(a)               Non-competition.  Except as authorized by the Board, during your employment by the Company and for a period of one (1) year thereafter, you will not (except as an officer, director, stockholder, employee, agent or consultant of the Company or any subsidiary or affiliate thereof) either directly or indirectly, whether or not for consideration, (i) in any way, directly or indirectly, solicit, divert, or take away the business of any person who is or was a customer of the Company, or in any manner influence such person to cease doing business in part or in whole with Company; (ii) engage in a Competing Business; (iii) except for investments or ownership in public entities, mutual funds and similar investments, none of which constitute more than 5% of the ownership or control of such entities, own, operate, control, finance, manage, advise, be employed by or engaged by, perform any services for, invest or otherwise become associated in any capacity with any person engaged in a Competing Business; or (iv) engage in any practice the purpose or effect of which is to intentionally evade the provisions of this covenant.  For purposes of this section, “Competing Business” means any company or business which is engaged directly or indirectly in any business carried on or planned to be carried on (if such plans were developed while you were employed by the Company) by the Company or any of its subsidiaries or affiliates

(b)               The following activities shall not be deemed to be Competitive to the Company’s business, unless the parties mutually agree to modify based upon developments within the Company:

(i)     A renewable energy design and installation business which shall not make use of the Company’s products and technologies or the Company’s products and technologies under development and shall not compete against the Company.  You may engage in design and installation businesses which include but are not limited to the installation of solar photovoltaic modules, thermal panels, or wind turbines.

 

(ii)   A renewable energy operating business (i.e. owner, operator or management of any renewable energy installation) which shall not make use of the Company’s products and technologies or the Company’s products and technologies under development and shall not compete against the Company.

 

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(iii) Notwithstanding, Company acknowledges that you may have other existing outside interests.  Provided such:

 

a.             interests do not affect your ability to competently perform obligations hereunder, and

 

b.            Entities do not compete with any Company business, Company hereby consents to allow you to continue to provide services to such other entities.  You agree to not compete with any Company business, or with the Company’s current products and technologies and technologies under development.

 

            (c)        Non-Solicitation and Non-Circumvention.  For a period of one year following your employment with the company, you will not directly or indirectly, whether for your account or for the account of any other individual or entity, solicit or canvas the trade, business or patronage of, or sell to, any individuals or entities that were investors, customers or employees of the Company during the period during which you were employed by the Company, or prospective customers with respect to whom a sales effort, presentation or proposal was made by the Company or its affiliates, during the one year period prior to the termination of your employment.  Without limiting the foregoing, you shall not, directly or indirectly, (i) solicit, induce, enter into any agreement with, or attempt to influence any individual who was an employee or consultant of the Company at any time during the time you were employed by the Company, to terminate his or her employment relationship with the Company or to become employed you or any individual or entity by which you are employed or (ii) interfere in any other way with the employment, or other relationship, of any employee or consultant of the Company or its affiliates.  

 

             (d)       Requirement to Safeguard Confidential Information.  All Confidential Information of the Company is expressly acknowledged by you to be the sole property of the Company, and the disclosure of the Confidential Information shall not be deemed to confer any rights with respect to such Confidential Information on you.  You will exercise reasonable care to ensure the confidentiality of the Confidential Information.  All confidential information which you may now possess, or may obtain or create prior to the end of the period you are employed by the Company, relating to the business of the Company, or any customer or supplier of the Company, or any agreements, arrangements, or understandings to which the Company is a party, shall not be disclosed or made accessible by you to any other person or entity either during or after the termination of your employment or used by Executive except during your employment by the Company in the business and for the benefit of the Company, without the prior written consent of the Company.  Nothing herein shall be construed as an obligation of the Company to consent to the terms and conditions of any such request and under no circumstances shall any such approval be deemed to waive, alter or modify the terms and conditions of this Agreement. You shall return all tangible evidence of such confidential information to the Company prior to or at the termination of your employment.  

 

9.         Enforcement.  

            (a)        Provisions Reasonable.  It is acknowledged and agreed that:

 

                        (i)         both before and since the Start Date the Company has operated and competed and will operate and compete in a global market, with respect to the Company’s Business;

 

                        (ii)        competitors of the Company are located in countries around the world;

 

 

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                        (iii)       in order to protect the Company adequately, any enjoinder of competition would have to apply world-wide;

 

                        (iv)       during the course of your employment by the Company, both before and after the Start Date, on behalf of the Company, you have acquired and will acquire knowledge of, and you have come into contact with, initiated and established relationships with and will come into contact with, initiate and establish relationships with, both existing and new clients, customers, suppliers, principals, contacts and prospects of the Company, and that in some circumstances you have been or may well become the senior or sole representative of the Company dealing with such persons; and

 

                        (v)        in light of the foregoing, the provisions of  Paragraphs 6, 7 and 8 are reasonable and necessary for the proper protection of the business, property and goodwill of the Company and the Company’s Business.

 

            (b)        Enforcement.  Nothing herein contained shall be construed as prohibiting the Company or you from pursuing any remedies available for any breach or threatened breach of this Agreement.  A waiver by the Company or you of any breach of any provision hereof shall not operate or be construed as a waiver of a breach of any other provision of this Agreement or of any subsequent breach.

 

10.       Termination.

 

            (a)        Manner of Termination.  The Company and you may terminate this Agreement, with or without cause, for any reason whatsoever, by providing written notice, in accordance with Paragraph 17,  to the other specifying the date of termination (the “Termination Date”). 

 

            (b)        Effect of Termination.  

 

                        (i)         Payments.       In the event this Agreement is terminated pursuant to Paragraph 10 (a) your rights and the Company's obligations hereunder shall cease as of the effective date of the termination; provided, however, that  the Company shall pay the you  (i) your Monthly Salary, prorated through the Termination Date, (ii) your Business Expense Reimbursements through the Termination Date, (iii) your Medical Insurance and any other benefits due to you, prorated through the Termination Date, (iv) and, if terminated by the Company, and subject to your compliance with the requirements of Paragraph 10 (b)(iii), the “Severance Payment” as defined and calculated pursuant to Paragraph 10 (b)(ii) and (v) your accrued but unused vacation.  All payments (other than the Severance Payment, which will be made as set forth in Paragraph 10(b) (ii), will be made in accordance with the Company’s regular payroll procedures through the Termination Date; and the full payment all of payments and benefits due to you upon termination shall completely and fully discharge and constitute a release by you of any and all obligations and liabilities of the Company to you, including, without limitation, the right to receive Base Salary, options and all other compensation or benefits provided for in this Agreement, and you shall not be entitled to any further compensation, options, or severance compensation of any kind, and shall have no further right or claim to any compensation, options, benefits or severance compensation under this Agreement or otherwise against the Company or its affiliates, from and after the date of such termination, except as provided by the terms of the Stock Option Agreement, any benefit plan under which you are participating.  

 

                        (ii)        Severance.      In the event of a termination of this Agreement by the Company you will be entitled to a severance payment (the “Severance Payment”) equal to one Monthly Payment, in effect on the date of the Company’s Termination Notice, for every four (4) months that you have been employed by the Company pursuant to this Agreement up to a maximum aggregate of four (4) Monthly Payments, provided that  (a) you have delivered to the Company the General Release substantially in the 

 

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form of Appendix E hereto and (b) a written statement of your compliance with the provisions of this Paragraph 10, including but not limited to clauses (iii) and (iv) hereof .

 

                        (iii)       Resignation. The termination of this Agreement pursuant to this Paragraph 10 shall constitute your resignation from any and all Executive Positions and, if applicable, as a Director of the Company effective as of the Termination Date.

         

            

                        (iv)       Return of Documents and Property.  Upon the expiration or termination of your employment with the Company, or at any time upon the request of the Company, you (or your heirs or personal representatives) shall deliver to the Company in good order (a) all documents and materials (including, without limitation, computer files) containing Trade Secrets and Confidential Information relating to the business and affairs of the Company or its affiliates; (b) all documents, materials, equipment and other property (including, without limitation, computer files, computer programs, computer operating systems, computers, printers, scanners, pagers, telephones, credit cards and ID cards) belonging to the Company or its affiliates, which in either case are in the possession or under the your control (or the control of your heirs or personal representatives); and (c) all corporate records of the Company, including minute books, accounting related materials, audit related materials, attorney correspondence, and any other such records which may be in your possession.

 

                        (v)        Survival of Certain Provisions.  Notwithstanding anything to the contrary contained herein, if this Agreement is terminated the provisions of Paragraphs 5, 6, 7, 8, 9, 10, 12 and 13 of this Agreement shall survive such termination and continue in full force and effect.

 

                        (vi)       Relinquishment of Authority.  Notwithstanding anything to the contrary set forth herein, upon written notice to you, the Company may immediately relieve you of all your duties and responsibilities hereunder and may relieve you of authority to act on behalf of, or legally bind, the Company.  However, such action by the Company shall not alter the Company’s obligations to you with regard to the procedure for a termination.

 

11.       Successors and Assigns.

 

            This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. In view of the personal nature of the services to be performed under this Agreement by you, you shall not have the right to assign or transfer any of your rights, obligations or benefits under this Agreement, except as otherwise noted herein.

 

12.       No Reliance on Representations.

 

            You acknowledge that you are not relying, and have not relied, on any promise, representation or statement made by or on behalf of the Company which is not set forth in this Agreement.

 

13.       Entire Agreements; Amendments.

 

            This Agreement and the Stock Option Agreement set forth our entire understanding with respect to your employment by the Company, supersede all existing agreements between you and the Company concerning such employment, and may be modified only by a written instrument duly executed by each of you and the Company.

 

14.       Waiver.

 

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            Any waiver by either party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement.  The failure of a party to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.  Any waiver must be in writing.

 

15.       Construction.

 

            You and the Company have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by you and the Company and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.  Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise.  The word “including” shall mean including without limitation.  Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa.  The headings in this Agreement are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Agreement.

 

16.       Severability.

 

            Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

 

17.       Notices.

 

            All notices, demands or requests made pursuant to, under or by virtue of this Agreement must be in writing and sent to the party to which the notice, demand or request is being made by (i) certified mail, return receipt requested, (ii) nationally recognized overnight courier delivery, (iii) by facsimile transmission provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party or (iv) hand delivery as follows:

 

To the Company:

 

New Energy Technologies, Inc. 

3905 National Drive, Suite 110 

Burtonsville, MD 20866 

Fax: (240) 390-0603

 

With a copy to:

 

Joseph Sierchio, Esq. 

Sierchio & Company, LLP 

430 Park Avenue, Suite 702 

New York, NY 10022 

Fax: (212) 246-3039

 

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To you: 

 

John A. Conklin

3489 Pennsylvania Avenue

Apalachin, New York  13732

 

or to such other address, facsimile number, or email address, as is specified by a party by notice to the other party given in accordance with the provisions of this Paragraph 17.  Any notice given in accordance with the provisions of this Paragraph 17 shall be deemed given (i) three (3) business days after mailing (if sent by certified mail), (ii) one (1) business day after deposit of same with a nationally recognized overnight courier service (if delivered by nationally recognized overnight courier service), or (iii) on the date delivery is made if delivered by hand or facsimile.

 

18.       Counterparts; Delivery by Facsimile.

 

      (a)        This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by you and the Company and delivered to the other, it being understood that you and the Company need not sign the same counterpart.  This Agreement may be executed by facsimile signature and a facsimile signature shall constitute an original for all purposes.

 

            (b)        This Agreement, the agreements referred to herein, and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties.  No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.

 

19.       Disclosure and Avoidance of Conflicts of Interest. 

 

            During your employment with the Company, you will promptly, fully and frankly disclose to the Company in writing: 

 

            (a)        the nature and extent of any interest you or your Affiliates (as hereinafter defined) have or may have, directly or indirectly, in any contract or transaction or proposed contract or transaction of or with the Company or any subsidiary or affiliate of the Company;

 

            (b)        every office you may hold or acquire, and every property you or your Affiliates may possess or acquire, whereby directly or indirectly a duty or interest might be created in conflict with the interests of the Company or your duties and obligations under this Agreement; 

 

            (c)        the nature and extent of any conflict referred to in subsection (b) above; and

 

            (d)        You acknowledge that it is the policy of the Company that all interests and conflicts of the sort described herein be avoided, and you agree to comply with all policies and directives of the Board 

 

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from time to time regulating, restricting or prohibiting circumstances giving rise to interests or conflicts of the sort described herein.  During your employment with the Company, without Board approval, in its sole discretion, you shall not enter into any agreement, arrangement or understanding with any other person or entity that would in any way conflict or interfere with this Agreement or your duties or obligations under this Agreement or that would otherwise prevent you from performing your obligations hereunder, and you represent and warrant that you or your Affiliates have not entered into any such agreement, arrangement or understanding.

 

20.       Code Section 409A. 

 

            This Agreement shall be interpreted, construed and administered in a manner that satisfies the requirements of Sections 409A of the Internal Revenue Code of 1986, as amended from time to time and the Treasury Regulations thereunder (the “Code”), and any payment scheduled to be made hereunder that would otherwise violate Section 409A of the Code shall be delayed to the extent necessary for this Agreement and such payment to comply with Section 409A of the Code.

 

21.       Termination of Consulting Agreement and Forfeiture of Options.

 

            Each of the Consulting Agreement between you and the Company (the “Consulting Agreement”) and the Stock Option Agreement between you and the Company dated (the “Initial SOA”) are hereby terminated effective as of the Start Date; and, you further agree and acknowledge that (i) all payments required to be made by the Company to you pursuant to the Consulting Agreement, through the Start Date,  have been made and (ii) the stock purchase options granted to you pursuant to the Initial SOA, none of which have vested, are terminated and forfeited as of the Start Date.

 

22.       Definitions.

 

For purposes of this Agreement, the following terms shall have the meanings ascribed to them below:

 

            “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person. 

 

“Company’s Business” means the Company’s Business as conducted during the term of this Agreement and all products planned, researched, developed, tested, manufactured, sold, licensed, leased or otherwise distributed or put into use by the Company or any of its Affiliates, together with all services provided or planned by the Company or any of its Affiliates, during your relationship with the Company.

 

“Confidential Information” shall mean any and all information in addition to Trade Secrets used by, or which is in the possession of the Company and relating to the Company’s business or assets specifically including, but not limited to, information relating to the Company’s products, services, strategies, pricing, customers, representatives, suppliers, distributors, technology, finances, employee compensation, computer software and hardware, inventions, developments, in each case to the extent that such information is not required to be disclosed by applicable law or compelled to be disclosed by any governmental authority.  Notwithstanding the foregoing, the terms “Trade Secrets” and “Confidential Information” do not include information that (i) is or becomes generally available to or known by the public (other than as a result of a disclosure by the Executive), provided, that the source of such information is not known by you to be bound by a confidentiality agreement with the Company; or (ii) is independently developed by you without violating this Agreement.

 

“Discoveries and Works” includes, by way of example but without limitation, Trade Secrets and other Confidential Information, patents and patent applications, service marks, and service mark 

 

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registrations and applications, trade names, copyrights and copyright registrations and applications and all materials, information, inventions, discoveries, developments, methods, compositions, concepts, ideas, writings, computer code and the like (whether or not patentable or copyrightable or constituting trade secrets) conceived, made, created, developed or reduced to practice by you (whether alone or with others, whether or not during normal business hours and whether on or off Company premises) during the term of this Agreement that relate to either the Company’s Business or any prospective activity of the Company or any of its Affiliates.

 

 “Intellectual Property” means with respect to the Company’s Business, all U.S. and foreign (a) patents and patent applications and all reissues, renewals, divisions, extensions, provisional patents, continuations and continuations in part thereof, (b) inventions (regardless of whether patentable), invention disclosures, trade secrets, proprietary information, industrial designs and registrations and applications, mask works and applications and registrations, (c) copyrights and copyright applications and corresponding rights, (d) trade dress, trade names, logos, URLs, common law trademarks and service marks, registered trademarks and trademark applications, registered service marks and service mark applications, (e) domain name rights and registrations, (f) databases, customer lists, data collections and rights therein, (g) confidentiality rights or other intellectual property rights of any nature, in each case throughout the world; (h) ideas, processes, trademarks, service marks, inventions, designs, technologies, computer hardware or software, original works of authorship, formulas, discoveries, patents, copyrights, copyrightable works, products, marketing and business ideas, and all improvements, know-how, data, rights, and claims related to the foregoing; and (i) Discoveries and Works.

 

“Person” means any natural person, corporation, company, limited or general partnership, joint stock company, joint venture, association, limited liability company, trust, bank, trust company, land trust, business trust or other entity or organization.

 

“Trade Secrets” shall mean all confidential and proprietary information belonging to the Company (including current client lists and prospective client lists, ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, copyrightable works, financial and marketing plans and customer and supplier lists and information.

 

23.       Further Assurances.  The parties will execute such further instruments and take such further actions as may be reasonably necessary to carry out the intent of this Agreement.

 

24.       Governing Law.  All other questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, County of New York for the adjudication of any dispute hereunder or in connection herewith or therewith, or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

13

 

 

 

24.       Effective Date of Agreement.

 

            The effective date of this Agreement shall be August 9, 2010, regardless of the date it is signed by you. If you find the foregoing acceptable, please acknowledge your acceptance of, and agreement with, the terms and conditions set forth above by signing the enclosed copy of this letter in the space provided and returning the same to the undersigned.

 

 

 

14

 

 

Sincerely,

 

New Energy Technologies, Inc.

 

 

 

By: /s/ Meetesh Patel

          Meetesh V. Patel 

          President & CEO, Authorized Signatory

 

 

 

 

Acceptance

 

On this 9th day of August, 2010, I, John A. Conklin agree to and accept employment with New Energy Technologies, Inc. on the terms and conditions set forth in this Agreement.

 

 

 

/s/ John A. Conklin

John A. Conklin

 

 

15

 

 

Appendix A

Company Code of Ethics and Business Conduct

 

OVERVIEW

New Energy Technologies, Inc. (“New Energy”) has adopted a Code of Ethics that applies to all Officers, Directors, and Employees of the company and its affiliates (herein collectively referred to as, “Employee” or “Employees”).  

 

In so doing, this Code of Ethics demands the highest standards of business conduct required of all Employees.  

 

The Code is part of New Energy’s ongoing effort to comply with applicable laws and have an effective program in place to prevent and detect violations of law; this code is an effort to train and educate New Energy Employees about ethical business practices.

 

OBJECTIVE

A key New Energy objective is to conduct business operations in the most ethical manner possible. New Energy cares about its Employees, shareholders, clients, suppliers and the communities in which it conducts business operations. During the course of meeting its business objectives, New Energy believes that it is essential for all Employees to understand and comply with the Code of Ethics and in so doing, participate in New Energy’s way of operating its business.

 

STANDARD OF CONDUCT

New Energy insists that all aspects of its business operations be conducted with honesty, integrity, fairness and with respect for those affected by its business activities. Similarly, New Energy expects the same in its relationships among those with whom it does business.

 

All Employees are expected to maintain and promote integrity and honesty in all business transactions. Employees must conduct themselves according to the highest ethical standards and are expected to apply ethical business practices in the administrative and financial affairs of New Energy business operations. 

 

There is no Code of Ethics that can expect to define suitable behavior for each situation, nor should it seek to do so. As such, Employees are expected to exercise vigilance and make considered judgment of what is right and proper in any particular situation.

 

While carrying out the business operations of New Energy, Employees are expected to be accountable, truthful, trustworthy, conscientious, and committed to the highest standards of ethical business practices. As such, Employees are required to avoid all impropriety as well as the appearance of impropriety when conducting New Energy business operations.

 

ACCURACY AND COMPLETENESS OF ACCOUNTING RECORDS

New Energy’s accounting and supporting documents must accurately and completely describe and represent the nature and result of New Energy’s business operations. The results and activities of New Energy’s operations must be presented in a fair and unbiased manner.

 

New Energy business transactions must be appropriately authorized as well as completely and accurately recorded on the Company’s books. Proposed budgets, financial assessments, evaluations and fiscal presentations must fairly present all information relevant to the business transaction. Furthermore, at no time will the Company establish or maintain cash funds or asset accounts which are unrecorded.

 

Misappropriation, wrongful allocation, or improper use of the Company’s assets and property, or the false 

 

16

 

 

entry to records and reports by any Employee or by others must be reported to Board of New Energy.

 

ACCURATE AND TIMELY COMMUNICATION

New Energy expects Employees to be completely truthful and forthright in all internal and external interactions and communications, whether with shareholders, clients, government agencies, or others. 

 

Employees will ensure that all statements are accurate and complete with no misrepresentations which may mislead or misinform. In all cases, Employees are expected to provide full, prompt and accurate disclosure to governmental agencies.

 

MAINTAINING AND RETAINING RECORDS

In order to maintain the security and integrity of New Energy’s record-keeping and reporting systems, all Employees must adhere to applicable records retention procedures and fully understand how to document and transact entries that fall within their jurisdiction.

 

All Employees are expected to comply fully with audits and provide timely response to requests for records or other materials from or on behalf of New Energy auditors or management.

 

COMPLYING WITH THE LAW

New Energy Employees are expected to fully comply with both the letter and the spirit of the laws and regulations of the countries in which the Company conducts business.

 

New Energy Employees are expected to act in accordance with the accepted business practices in commercial markets and adhere to the contractual terms and conditions applicable to any business transaction.

 

All Employees must commit to abiding by all applicable laws and regulations.

 

The breach of rules, regulations, ethical standards, and laws cannot be justified by the pursuit of profit or the departure from acceptable practice by competitors.

 

INSIDER TRADING

New Energy Employees are strictly prohibited by law from buying or selling the Company’s shares or any other public security as a result of inside information.

 

Furthermore, it is against the law and unethical to provide such information about New Energy to other individuals or companies so that they may gain.

In accordance with the Code of Ethics, Employees are strictly prohibited from trading in shares of New Energy, clients or suppliers as a result of any inside information.

 

ENVIRONMENTAL ISSUES

New Energy is committed to running its business in an environmentally sound and sustainable manner. New Energy’s objective is to ensure that its business operations have the minimum adverse environmental impact commensurate with the legitimate needs of its business operations.

 

DISCLOSURE OF PERSONAL INTEREST

New Energy Employees are expected to fully disclose any personal interest(s) which could impinge or might reasonably be considered by others to conflict with their business dealings with industry.

 

New Energy Employees must not engage in personal activities and financial interests that may conflict with their responsibilities and obligations to the Company or give assistance to competitors, in conflict 

 

17

 

 

with the interests of New Energy or its clients.

 

Under all circumstances, Employees must obtain the formal consent of New Energy management if they intend to become partners, shareholders, or Directors, or participants in companies outside the New Energy corporate structure.

 

PERSONAL DISCRETION AND CONFIDENTIALITY

At all times, Employees are expected to respect the confidentiality of information received during the course of business dealings and must never use such information for personal benefit or gain.

 

Employees are expected to give information during the course of business which is truthful, complete and fair and never intended to mislead.

Employees cannot disclose New Energy trade secrets, confidential or proprietary information, or any other such information without the written, formal authorization of management. Such information may not be disclosed as a means of making profit, gains or benefits.

 

At no time can Employees use Internet bulletin boards, chat rooms, messaging services, or other electronic systems to discuss issues, affairs, or opinions related to New Energy or any of its industries, or to respond to comments about the Company. New Energy considers electronic postings to be the same as “speaking to the media”.

 

FAIR COMPETITION

New Energy is committed to vigorous yet fair competition and supports the development of appropriate competition laws. Each Employee must avoid any business arrangement that might prevent the effective operation of fair competition.

 

COMPLIANCE WITH THE COMPANY’S CODE OF ETHICS

New Energy’s Board of Directors is responsible for ensuring that the standards outlined in the Code of Ethics are fully communicated to all Employees and are similarly understood and adhered to.

 

Should the Company experience loss of business as a result of adhering to the Code of Ethics, the Board of Directors will not criticize, condemn or complain.

 

Likewise, should a real or suspected breach of the Company’s Code of Ethics be brought to the attention of the Company, the Board of Directors will ensure that the reporting Employee does not suffer as a consequence of doing so.

 

The Company’s Code of Ethics are reflective of New Energy’s ethical standards and expectations. Accordingly, Employees are expected to fulfill the Company’s ethical commitments in a way that is clearly visible to all those with whom New Energy conducts its business.

 

At all times, Employees are expected to fully comply with the standards established in the Code of Ethics and ensure that their personal conduct is always above reproach.

 

New Energy expects each Employee to ensure that the conduct of others around him or her is in compliance with the Code of Ethics and that any breach of the same is duly reported to management.

 

All breaches of the law or violations of regulations and the standards of conduct listed in this Code of Ethics may lead to serious consequences for the Employee concerned; New Energy Employees have a legal, moral, and ethical duty to report any such real or suspected violation to the Board of Directors and regulatory authorities.

 

18

 

 

 

“CODE OF ETHICS” ENFORCEMENT

New Energy Employees understand and acknowledge that a breach of the Code of Ethics can result in severe disciplinary action, including but not necessarily limited to termination.

 

The Company’s Code of Ethics will be fairly enforced at all levels, without prejudice.

 

ANNUAL ACKNOWLEDGEMENT

Each Employee will be required to sign a statement annually that he or she has read and understands New Energy’s Code of Ethics. This statement will also require that the Employee state that he or she is in full compliance with the Code.

 

EMPLOYEE CERTIFICATION AND ACKNOWLEDGEMENT

I acknowledge and certify that I have read and understood the information set forth in the Code of Ethics of New Energy Technologies, Inc. and will comply with these principles in my daily work activities. I am not aware of any violation of the standards of New Energy’s Code of Ethics.

 

Date:___________________________________

Name (print):___________________________________

Position:___________________________________

Address:___________________________________

Signature:___________________________________

 

 

19

 

 

Appendix B

 

            THIS NONSTATUTORY STOCK OPTION AGREEMENT (“Agreement”) is made and entered into as of August 9, 2010, by and between New Energy Technologies, Inc. a Nevada corporation (the “Company”), and John A. Conklin (“Recipient”):

 

            This Stock Option Agreement has been executed and delivered pursuant to the Employment Amendment dated August 9, 2010 (the “Employment Agreement, between the Recipient and the Company (the “Employment Agreement”). 

 

            In consideration of the covenants herein set forth, the parties hereto agree as follows:

 

            1.         Option Grant

 

            (a)        Date option grant authorized:  August 9, 2010 (the “Grant Date”)

            (c)        Number of shares:                               2,000,000  

            (d)        Exercise Price:                                     $0.55

 

            2.         Acknowledgements.

 

            (a)        Recipient is the President and Chief Executive Officer of the Company (collectively, the “Company/Recipient Relationship”).

 

            (b)        The Board has this day approved the granting of this Option subject to the execution of this Agreement; and

 

             (c)       The Board has authorized the granting to Recipient of a non-statutory stock option (“Option”) to 2,000,000 purchase shares (the “Option Shares”) of common stock of the Company (“Common Stock”) upon the terms and conditions hereinafter stated and pursuant to an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”). 

 

            3.         Option Shares; Price. 

 

The Company hereby grants to Recipient the right to purchase, upon and subject to the terms and conditions herein stated, the Option Shares for cash (or other consideration as is authorized hereunder) at the price per Option Share set forth in Section 1 above (the “Exercise Price”), such price being not less than [e.g., 100%] of the fair market value per share of the Option Shares covered by this Option as of the date of grant.  

 

            4.         Term of Option; Continuation of Service. 

 

Subject to the early termination provisions set forth in Sections 7 and 8 of this Agreement, this Option shall expire, and all rights hereunder to purchase the Option Shares shall terminate 10 years from the Grant Date. Nothing contained herein shall be construed to interfere in any way with the right of the Company, or its shareholders, or the Board, to remove or not elect Recipient as an officer and or a director of the Company, or to increase or decrease the compensation of Directors from the rate in effect at the date hereof.

             5.        Vesting of Option. 

 

Subject to the provisions of Sections 7 and 8 of this Agreement, this Option shall become exercisable during the term that Recipient serves in the Company/Recipient Relationship as follows:

 

20

 

 

            

	

 
	

Number of Option Shares as to which the Option may vest:
	

 

Milestone that must be achieved in order for vesting to occur:

	

a.
	

500,000
	

Or such portion thereof as may be determined by the Board at its sole discretion, when one or more of the following items related the development, production, manufacturing, and sale of any commercially viable product have been successfully executed: 

 

(i) completion of final design and/or engineering; 

(ii) the establishment of manufacturing facilities, whether in-house or outsourced; and 

(iii) the initial filing of any product safety approval applications, if required, in order to allow for the commercial sale of products by the Company;

	

 
	

 
	

 

	

b.
	

500,000
	

Upon commencing commercial sales of any of the Company’s products, as reported in the Company's financial statements, whether to retail customers or wholesale customers;

	

 
	

 
	

 

	

c.
	

500,000
	

As follows:

 

(i)  as to 100,000 shares on August 9, 2011;

(ii)  as to 100,000 shares on August 9, 2012;

(iii) as to 100,000 shares on August 9, 2013;

(iv) as to 100,000 shares on August 9, 2014; and

(v)  as to 100,000 shares on August 9, 2015;

	

 
	

 
	

 

	

d.
	

500,000
	

When, to the Board’s satisfaction, the Company enters into a favorable business partnership with a third-party commercial organization in the industry segment related to the Company’s product development and sales efforts, under any of the following conditions:

 

(i) a product development relationship whereby the third-party partner makes a significant financial investment, as determined at the Board’s discretion, directed towards the development of the Company’s products; or 

(ii) a product development relationship whereby the third-party partner invests significant research and development resources, as determined at the Board’s discretion, directed towards the development of the Company’s products; or

(iii) a strategic partnership with the third-party partner where, as determined at the Board’s discretion, such a partnership provides significant business advantages to the Company which it would otherwise not have, whether related to product development, commercial sales, industry position, or business reputation.

 

	

 
	

 
	

 

 

 

 

21

 

 

            All determinations and calculations with respect hereto shall be made by the Board or any committee thereof to which the Board has delegated such authority, in good faith in accordance with applicable law, the Articles of Incorporation and By-laws of the Company. This Option is an uncertificated security. Accordingly, the Company shall maintain an option registry, consistent with its current practices, for recording the vesting, exercise and termination of the Option.  

 

            6.         Exercise.

 

            (a)        This Option shall be exercised, as to the vested shares, by delivery to the Company of (a) written notice of exercise stating the number of Option Shares being purchased (in whole shares only) and such other information set forth on the form of Notice of Exercise attached hereto as Exhibit A hereto, (b) a check or cash in the amount of the Exercise Price of the Option Shares covered by the notice, unless Recipient elects to exercise the cashless exercise option set forth in Section 6(b) below, in which case no payment will be required (or such other consideration as has been approved by the Board of Directors consistent with the Plan) and (c) a written investment representation as provided for in Section 13 hereof. This Option shall not be assignable or transferable, except by will or by the laws of descent and distribution, and shall be exercisable only by Recipient during his or her lifetime.

 

  (b) Anything herein to the contrary notwithstanding, to the extent and only to the extent vested, the Option may also be exercised (as to the Option Shares vested) at such time by means of a “cashless exercise” in which the Recipient shall be entitled to receive a certificate for the number of Option Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:     

 

              (A) equals the average of the closing price of the Company’s Common Stock, as reported (in order of priority) on the Trading Market on which the Company’s Common Stock is then listed or quoted for trading on the Trading Date preceding the date of the election to exercise; or, if the Company’s Common Stock is not then listed or traded on a Trading Market, then the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Recipient and the Company, the fees and expenses of which shall be paid by the Company for the three (3) Trading Days immediately preceding the date of such election;

 

              (B) equals the Exercise Price of the Option, as adjusted from time to time in accordance herewith; and

 

              (X) equals the number of vested Option Shares issuable upon exercise of this Option in accordance with the terms of this Option by means of a cash exercise rather than a cashless exercise (or, if the Option is being exercised only as to a portion of the shares as to which it has vested, the portion of the Options being exercised at the time the cashless exercise is made pursuant to this Section 6).

  

For purposes of this Agreement:

 

 “Trading Day” means a day on which the Common Stock is traded on a Trading Market.

 

“Trading Market” means, in order of priority, the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTC Bulletin Board or the Pink Sheets.

 

               (c)           No fractional shares shall be issued upon exercise of this Option.  The Company shall, in lieu of issuing any fractional share, pay the Recipient entitled a sum in cash equal to such fraction multiplied by the then effective Exercise Price.

 

22

 

 

 

            7.         Termination of Service. 

 

If the Employment Agreement is terminated, unless the parties thereto otherwise agree in writing, as of the date of the termination of the Employment Agreement (the “Termination Date”), no further installments of the Option shall vest pursuant to Section 5, and the maximum number of Option Shares that Recipient may purchase pursuant hereto shall be limited to the number of Option Shares that were vested as of the Termination Date. Thereupon, Recipient shall have the right, subject to Section 8 hereof, at any time within 120 days of the Termination Date (the “Termination Exercise Period”) to exercise this Option to the extent vested and purchase Option Shares, to the extent, but only to the extent, that Recipient could have exercised this Option as of the Termination Date; following the expiration of the Termination Exercise Period the remaining unexercised vested Options shall terminate and this Agreement shall be of no further force or effect.  

 

              8.       Death of Recipient. 

 

If the Recipient shall die during the term of the Employment Agreement, Recipient’s personal representative or the person entitled to Recipient’s rights hereunder may at any time within the then remaining exercise period, exercise this Option and purchase Option Shares to the extent, but only to the extent, that Recipient could have exercised this Option as of the date of Recipient’s death; following the expiration of the aforesaid then remaining exercise period, this Agreement shall terminate in its entirety and be of no further force or effect.

            

            9.         No Rights as Shareholder. 

 

Recipient shall have no rights as a shareholder with respect to the Option Shares covered by any installment of this Option until the effective date of issuance of the Option Shares following exercise of this Option, and no adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificate or certificates.

            

            10.       Recapitalization.   

 

(a)        Subdivision or consolidation of shares. Subject to any required action by the shareholders of the Company, the number of Option Shares covered by this Option, and the Exercise Price thereof, shall be proportionately adjusted for any increase or decrease in the number of issued shares resulting from a subdivision or consolidation of shares or the payment of a stock dividend, or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company; provided however that the conversion of any convertible securities of the Company shall not be deemed having been “effected without receipt of consideration by the Company”.

 

            (b)        Reorganizations, Mergers etc. 

 

                        (i)         In the event of a proposed dissolution or liquidation of the Company, a merger or consolidation in which the Company is not the surviving entity, or a sale of all or substantially all of the assets or capital stock of the Company (collectively, a “Reorganization”):

 

                                    (1) then, subject to Clause (b)(ii) below, any and all shares as to which the Option had not yet vested shall vest upon the date (the “Reorganization Vesting Date”) that the Company provides the Recipient with the Reorganization Notice (as defined below); and provided, however, that there has been no termination of the Employment Agreement Recipient shall have the right to exercise this Option to the extent of all shares subject to the Option, for a period commencing on the 

 

23

 

 

Reorganization Vesting Date and terminating on the date of the consummation of such Reorganization.  Unless otherwise agreed to by the Company. The Option shall terminate upon the consummation of the Reorganization and may not be exercised thereafter as to any shares subject thereto. The Company shall notify Recipient in writing (the “Reorganization Notice”), at least 30 days prior to the consummation of such Reorganization, of its intention to consummate a Reorganization. 

 

                                    (2) anything herein to the contrary notwithstanding, the exercise of the Option or any portion thereof pursuant to this Section 10(b) will be consummated simultaneously with the consummation of the Reorganization.  If after the Company provides the Reorganization Notice to the Recipient the Company provides the Recipient with a further written notice notifying the Recipient that the Reorganization will not be consummated, then the Option will return to its status prior to the Reorganization Notice and the shares as to which the Option vested solely by virtue of this Section 10(b) (i) will revert to an unvested status.

 

                        (ii)        Subject to any required action by the shareholders of the Company, if the Company shall be the surviving entity in any merger or consolidation, this Option thereafter shall pertain to and apply to the securities to which a Recipient of Option Shares equal to the Option Shares subject to this Option would have been entitled by reason of such merger or consolidation, and the installment provisions of Section 5 shall continue to apply.

 

                        (iii)       In the event of a change in the shares of the Company as presently constituted, which is limited to a change of all of its authorized Stock without par value into the same number of shares of Stock with a par value, the shares resulting from any such change shall be deemed to be the Option Shares within the meaning of this Option.

 

                        (iv)       To the extent that the foregoing adjustments relate to shares or securities of the Company, such adjustments shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as hereinbefore expressly provided, Recipient shall have no rights by reason of any subdivision or consolidation of shares of Stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class, and the number and price of Option Shares subject to this Option shall not be affected by, and no adjustments shall be made by reason of, any dissolution, liquidation, merger, consolidation or sale of assets or capital stock, or any issue by the Company of shares of stock of any class or securities convertible into shares of stock of any class.

 

                        (v)        The grant of this Option shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes in its capital or business structure or to merge, consolidate, dissolve or liquidate or to sell or transfer all or any part of its business or assets.

 

            11.       Taxation upon Exercise of Option. 

 

Recipient understands that, upon exercise of this Option, Recipient may recognize income, for Federal and state income tax purposes, in an amount equal to the amount by which the fair market value of the Option Shares, determined as of the date of exercise, exceeds the Exercise Price. The acceptance of the Option Shares by Recipient shall constitute an agreement by Recipient to report such income in accordance with then applicable law and to cooperate with Company in establishing the amount of such income and corresponding deduction to the Company for its income tax purposes. Withholding for federal or state income and employment tax purposes will be made, if and as required by law, from Recipient’s then current compensation, or, if such current compensation is insufficient to satisfy withholding tax liability, the Company may require Recipient to make a cash payment to cover such liability as a 

 

24

 

 

condition of the exercise of this Option.

 

            12.       Modification, Extension and Renewal of Options. 

 

The Board or a duly appointed committee thereof, may modify, extend or renew this Option or accept the surrender thereof (to the extent not theretofore exercised) and authorize the granting of a new option in substitution therefore (to the extent not theretofore exercised), subject at all times to the Code and applicable securities laws. Notwithstanding the foregoing provisions of this Section 12, no modification shall, without the consent of the Recipient, alter to the Recipient’s detriment or impair any rights of Recipient hereunder.

 

            13.       Investment Intent; Restrictions on Transfer.

 

             (a)       Recipient represents and agrees that if Recipient exercises this Option in whole or in part, Recipient will in each case acquire the Option Shares upon such exercise for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof; and that upon such exercise of this Option in whole or in part Recipient (or any person or persons entitled to exercise this Option under the provisions of Sections 7 and 8 of this Agreement) shall furnish to the Company a written statement to such effect, satisfactory to the Company in form and substance. If the Option Shares represented this Option are registered under the Securities Act, either before or after the exercise this Option in whole or in part, the Recipient shall be relieved of the foregoing investment representation and agreement and shall not be required to furnish the Company with the foregoing written statement.

 

                        (b)        Recipient further represents that Recipient has had access to the financial statements or books and records of the Company, has had the opportunity to ask questions of the Company concerning its business, operations and financial condition, and to obtain additional information reasonably necessary to verify the accuracy of such information.

 

                         (c)       Unless and until the Option Shares represented by this Option are registered under the Securities Act, all certificates representing the Option Shares and any certificates subsequently issued in substitution therefore and any certificate for any securities issued pursuant to any stock split, share reclassification, stock dividend or other similar capital event shall bear legends in substantially the following form:

 

            “THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE SECURITIES ACT OF 1933 (THE ‘SECURITIES ACT’) OR UNDER THE APPLICABLE OR SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM.

 

            THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT CERTAIN NONSTATUTORY STOCK OPTION AGREEMENT DATED MARCH 25, 2010 BETWEEN THE COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN CONDITIONS.”

 

and/or such other legend or legends as the Company and its counsel deem necessary or appropriate. Appropriate stop transfer instructions with respect to the Option Shares have been placed with the Company’s transfer agent.

 

25

 

 

 

             14.      Stand-off Agreement.  Recipient agrees that, in connection with any registration of the Company’s securities under the Securities Act, and upon the request of the Company or any underwriter managing an underwritten offering of the Company’s securities, Recipient shall not sell, short any sale of, loan, grant an option for, or otherwise dispose of any of the Option Shares (other than Option Shares included in the offering) without the prior written consent of the Company or such managing underwriter, as applicable, for a period (the “Restrictive Period”) as may be specified by the Company or such underwriter or managing underwriter; provided, however, that the Restrictive Period shall not exceed one year following the effective date of registration of such offering.

 

            15.       Transfer Restrictions.  This Option is not transferable by the Recipient, except as contemplated by Section 8 of this Agreement.

 

            16.       Notices.  Any and all notices (including, but not limited to the Notice of Exercise) or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the 2nd  Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

            17.       Agreement Subject to Plan; Applicable Law. This Option is made pursuant to the Plan and shall be interpreted to comply therewith. A copy of such Plan is available to Recipient, at no charge, at the principal office of the Company. Any provision of this Option inconsistent with the Plan shall be considered void and replaced with the applicable provision of the Plan. This Option has been granted, executed and delivered in the State of Nevada, and the interpretation and enforcement shall be governed by the laws thereof and subject to the exclusive jurisdiction of the courts therein.

 

[SIGNATURE PAGE FOLLOWS]

 

 

26

 

 

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

 

             New Energy Technologies, Inc.  

 

            

 

            By: /s/ Meetesh Patel

            Name:  Meetesh Patel

            Title:    President and Chief Executive Officer

 

            Address and Facsimile For Notices:     

		3905 National Drive, Suite 110, Burtonsville,  
Maryland 20866
800-213-0689

                  

                                                                                         

            Recipient  

 

 

            /s/ John A. Conklin

            John A. Conklin

 

            

3489 Pennsylvania Avenue

Apalachin, New York 13732

 

 

 

 

 

 

(One of the following, as appropriate, shall be signed):

 

	

I certify that as of August 9, 2010, I am not married.

 
	

By his or her signature, the undersigned spouse of the Recipient named herein hereby agrees, as of August 9, 2010, to be bound by the provisions of   the foregoing NONSTATUTORY STOCK OPTION AGREEMENT.

 

	

 

 

 

__________________________

John A. Conklin, Recipient  
	

Recipient’s Spouse:  

 

 

_____________________________

Print Name:      

 

 

 

27

 

 

            

Exhibit  A

 

NOTICE OF EXERCISE OF STOCK OPTION

 

To:     NEW ENERGY Technologies, Inc.

            3905 National Drive

             Suite 110, 

            Burtonsville, Maryland 20866

            800-213-0689

 

 

            Attention: 

            

            The undersigned hereby elects to purchase ______________ shares (the “Purchased Option Shares”) of the Company pursuant to the terms of the Stock Option Agreement Dated August 9, 2010 between the undersigned and New Energy Technologies, Inc. and the undersigned (the “Option Agreement”), herewith tenders payment of the aggregate exercise price in full, together with all applicable transfer taxes, if any, for the Purchased Option Shares, by (check applicable box):

 

[  ] in lawful money of the United States; or

[  ] [if permitted] the cancellation of such number of Option Shares as is necessary, in accordance with the formula set forth in Section 6(b) of the Option Agreement with respect to the maximum number of Option Shares purchasable pursuant to the cashless exercise procedure set forth Section 6(b).

 

            Please issue a certificate or certificates representing said Option Shares in the name of the undersigned as is specified below and forward the same to the address set forth below.

 

__________________________________

Signature of Recipient 

 

Print Name of Recipient: _______________________________________

 

Address For Delivery of Option Shares:

___________________________________

___________________________________

___________________________________

___________________________________

 

 

            

Appendix C

Litigation List

 

 

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Appendix D

List of Prior Works and Discoveries

 

Prior to the execution of this Employment Agreement, Mr. John A. Conklin has been actively designing a technology(ies) related to the delivery of electricity, under specific conditions, generated by solar photovoltaic systems for thermal application(s).  Such technology(ies) may constitute Works and Discoveries which result in the issuance of a patent(s).

 

 

 

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Appendix E

FORM OF EXECUTIVE RELEASE

Certain capitalized terms used in this Release are defined in the Employment Agreement dated as of August 9, 2010 between New Energy Technologies, and John A. Conklin (the “Agreement”) which I have executed and of which this Release is a part.

I hereby confirm my obligations under Paragraphs 6, 7 and 8 of the Agreement.

Except as otherwise set forth in this Release, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Company), arising out of or in any way related to agreements, events, acts or conduct at any time prior to the date I execute this Release, including, but not limited to: all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment, including but not limited to, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of disputed compensation; claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended (“ ADEA ”); the federal Employee Retirement Income Security Act of 1974, as amended; the federal Americans with Disabilities Act of 1990; tort law; contract law; statutory law; common law; wrongful discharge; discrimination; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing;  provided ,  however, that nothing in this paragraph shall be construed in any way to release the Company from its obligation to indemnify me pursuant to the Company’s indemnification obligation pursuant to agreement or applicable law.

I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under ADEA. I also acknowledge that the consideration given under the Agreement for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (A) my waiver and release do not apply to any rights or claims that may arise on or after the date I execute this Release; (B) I have the right to consult with an attorney prior to executing this Release; (C) I have twenty-one (21) days to consider this Release (although I may choose to voluntarily execute this Release earlier); (D) I have seven (7) days following the execution of this Release by the parties to revoke the Release; and (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after this Release is executed by me.

 

Executive

 

_____________________

John A. Conklin

Acknowledgement

 

 

30

 

 

State of ____________________________________} 
County of __________________________________} SS. 

On this _____________ day of __________, 20____before me _________________ the undersigned officer, personally appeared John A. Conklin to me personally known and known to me to be the same person(s) whose name(s) is (are) signed to the foregoing instrument, and acknowledged the execution thereof for the used and purposed therein set forth. 

IN WITNESS WHEREOF I have hereunto set my hand and official seal. 

_______________________________________________ 

Notary Public/Commissioner of Oaths 

(SEAL) 

My Commission Expires 

 

 

 

 

 

 

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