Document:

Unassociated Document

EXHIBIT 10.3

 

 

EXECUTION COPY

 

SIDE LETTER (PREFERRED SUPER MAJORITY)

This Side Letter (the "Side Letter") is entered into on November 21, 2012, by and among Midway Gold Corp.(the "Company") and the Investors.  Reference is made to those certain Share Purchase Agreements, dated as of the date hereof (the "Purchase Agreements"), by and among the Company and the investors listed on the signature pages attached thereto (the “Investors”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Purchase Agreements or the Company’s Articles.

1.           From the Closing Date and for so long as the Preferred Governance Majority exists (the “Designation Period”), the Preferred Governance Majority shall have the right to designate one (1) director nominee for election to be a member of the Board of Directors of the Company (the "Board") at each annual or special meeting of shareholders of the Company or action by written consent of shareholders at which directors will be elected (each director to the Board designated pursuant to this Side Letter, a "Preferred Holder Director"). The Preferred Holder Director shall be qualified to serve as a director of the Company.  Each Preferred Holder Director elected shall be a member of the Board until the next annual shareholders meeting or until such Preferred Holder Director ceases to hold office by reason of death, resignation, removal, or disqualification, in each case in accordance with the Company's Articles and the provisions set forth in this Side Letter that are not inconsistent with the Company’s Articles.  The Preferred Governance Majority shall not be deemed to owe any fiduciary duties to the Company or any of its shareholders by reason of any terms of this Side Letter.

2.           Nathaniel Klein shall be nominated as the initial Preferred Holder Director to be elected to the Board at the next annual shareholders meeting.

3.           During the Designation Period, the Company shall include the designee of the Preferred Governance Majority as a Preferred Holder Director as the Company's nominee for election as a director at each annual or special meeting of shareholders of the Company or action by written consent of stockholders at which directors will be elected.  The Company shall recommend that the Company's shareholders vote, and shall solicit proxies, in favor of the election of the designee by the Preferred Governance Majority for a Preferred Holder Director at such annual or special meeting or by such written consent, and the Company shall otherwise support such designee for election in a manner no less rigorous and favorable than the manner in which the Company supports its other nominees.  The Preferred Governance Majority shall not be subject to compliance with any advance notice requirements set forth in the Company's Articles in connection with the terms and provisions set forth in this Side Letter.

4.           Any vacancy created by the death, resignation, removal or disqualification of any Preferred Holder Director shall only be filled by an eligible person designated by the Preferred Governance Majority to be a nominee in accordance with this Side Letter unless the Preferred Super Majority agrees otherwise.  If a person designated by the Preferred Governance Majority to be a Preferred Holder Director is not a Preferred Holder Director because of such person's death, disability, disqualification, withdrawal as a Preferred Holder Director or is for any other reason unavailable or unable to serve on the Board, the Preferred Governance Majority shall be entitled to promptly designate another person to be a Preferred Holder Director in accordance with the applicable provisions of this Side Letter and such vacancy shall not be filled prior to the designation of an individual by the Preferred Governance Majority.  The Preferred Holder Director may resign from the Board at any time without notice.  If the position of Preferred Holder Director is vacant and the Preferred Governance Majority designates a person for a Preferred Holder Director, the Board shall appoint such person to the Board as the Preferred Holder Director to serve on the Board until his or her term expires at the next annual shareholders meeting.

5.           Each Preferred Holder Director that satisfies applicable criteria and requirements (if any) under applicable law and listing standards of the Company’s Primary Eligible Market or, if the Primary Eligible Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the shares of Common Stock are then traded in respect of a 

 

  

  

  

 

Board committee or sub-committee, shall have the right to serve on such committee and sub-committee of the Board.

6.           The Company hereby renounces, to the extent permitted by applicable law, any interest, expectancy or right of the Company in, or in being offered an opportunity to participate in, any Excluded Opportunity.  An "Excluded Opportunity" is any matter, transaction, interest or opportunity that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of, (a) any Preferred Holder Director who is not an employee of the Company or any of its Subsidiaries, or (b) the Preferred Governance Majority or any direct or indirect partner, member, director, shareholder, employee or agent of the Preferred Super Majority, other than someone who is an employee of the Company or any of its Subsidiaries (collectively, "Covered Persons"), unless (i) such matter, transaction, interest or opportunity is presented to, or acquired, created or developed by, or otherwise comes into the possession of, a Covered Person expressly and solely in such Covered Person's capacity as a Preferred Holder Director or (ii) where the Covered Person is not the Preferred Holder Director, such matter, transaction, interest or opportunity is presented to, or acquired, created or developed by, or otherwise comes into the possession of, the Preferred Holder Director expressly and solely in its capacity as a Preferred Holder Director and its existence is disclosed or conveyed to the Covered Person expressly and solely by the Preferred Holder Director.

7.           During such time and as long as the Preferred Governance Majority has designated a Preferred Holder Director to the Board and such Preferred Holder Director is a member of the Board, in each case, in accordance with and pursuant to the terms of this Side Letter, the Board shall approve the declaration and issuance of any securities, including without limitation any Preferred Shares, Conversion Shares and Dividend Shares, pursuant to and in accordance with Rule 16b-3 promulgated under the 1934 Act, as amended, (or a successor rule thereto) for the purpose of making such securities exempt from the provisions of Section 16(b) of the 1934 Act.

8.           In the event the size of the Board is increased beyond 7 members, the Preferred Governance Majority shall have the right to designate one additional (1) director nominee for each increase beyond 7 members for election to be a member of the Board (each such director to the Board designated pursuant to this Side Letter, an "Additional Preferred Holder Director").  Increases to the Board beyond seven members shall occur in increments of two where one of the new Directors shall be a nominee designated by the Preferred Governance Majority. The provisions of this Side Letter shall apply mutatis mutandis to such Additional Preferred Holder Director as thought they were a Preferred Holder Director.

 

9.           At the next annual or special meeting of shareholders of the Company, the Company shall seek shareholder approval (the "Shareholder Approval") of those provisions of the Company’s Articles that will permit the Preferred Super Majority to (a) formally elect a Class A Preferred Director as provided in Article 26.2(4) of the Company’s Articles and (b) have the preferential board nomination and election rights as provided in Article 26.7(3) of the Company’s Articles ((a) and (b), collectively, the “Preferred Resolutions”).  The Company shall use commercially reasonable efforts to obtain Shareholder Approval to the Preferred Resolutions, including but not limited to soliciting proxies therefor, and ensuring that the Board supports and recommends the Preferred Resolutions in all statements (either written or oral), at each annual or special meeting of shareholders of the Company until such Preferred Resolutions have been adopted.  For greater certainty, in the event the Preferred Resolutions do not receive Shareholder Approval at the next annual or special meeting of the Company, the Company shall seek Shareholder Approval for the Preferred Resolutions at each annual or special meeting of shareholders of the Company until such Preferred Resolutions have been adopted, and the Company shall otherwise support such Preferred Resolutions in a manner no less rigorous and favorable than the manner in which the Company supports other resolutions proposed by the Board.

10.           The Company agrees to select Martin Hale or his designee as a member of the nominating committee and compensation committee of the Board of Directors until the earlier of (i) his no longer serving on the Board or (ii) all obligations under this Side Letter shall have been satisfied in full.  The Company hereby undertakes to strike a committee of the Board as and from Closing made up of 

 

 

- 2 -

  

  

 

three non executive directors, one of whom will be either Martin Hale or upon his election to the board the Preferred Holder Director, and the Chief Executive Officer of the Company (CEO), whose mandate shall be to review and approve the annual business and financing plans and capital and operating budgets (and any modifications of, or deviations from such plans or budgets). The mandate of the committee shall stipulate that any and all approvals of the committee relating to such plans and budgets must be unanimous. The mandate shall further provide that in the event that unanimous approval of the committee is not obtained Martin Hale or the Preferred Holder Director, as the case may be, and the CEO of the Company shall cooperate and work together in good faith to resolve any issues that the committee has identified as an impediment to their unanimous approval.

11.           To facilitate the appointment on Closing of Martin Hale as a director, Nathanial Klein shall resign as a director on the Closing Date and Martin Hale shall be appointed as a director by the Board in his place. Mr. Klein shall serve as an observer to the Board from his resignation until his election as the initial Preferred Holder Director at the next annual general meeting of the Company.

12.           This Side Letter shall be governed by and construed in accordance with the 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 of the parties hereto irrevocably consents to the exclusive jurisdiction of all courts, federal and state, located in the City of New York for the adjudication of any dispute arising hereunder.  This Side Letter may not be amended or waived except in writing, by a document executed by the Company and the Investors.

13.           This Side Letter may be executed in two (2) or more counterparts, together constituting one (1) agreement, and may be executed by facsimile, having the same force as if originally executed.

[Signature Pages Follow]

 

 

 

 

- 3 -

  

  

IN WITNESS WHEREOF, each party to this Side Letter has caused their respective signature page to this Side Letter to be duly executed as of the date first written above.

 

	 	COMPANY:
	 	 
	 	MIDWAY GOLD CORP.
	 	 
	 	By:	                    
	 	 	Name:  Kenneth Brunk
	 	 	Title:    Chief Executive Officer

 

 

 

 

 

 

[Signature Page to Side Letter]

  

  

IN WITNESS WHEREOF, each party to this Side Letter has caused their respective signature page to this Side Letter to be duly executed as of the date first written above.

 

 

 

	 	BUYER:
	 	 
	 	HCP-MID, LLC
	 	 
	 	By:	                    
	 	 	Name:  Martin M. Hale, Jr.
	 	 	Title:    Hale Fund Management, LLC,
	 	 	 
Managing Member

 

 

 

 

 

 

[Signature Page to Side Letter]

  

  

IN WITNESS WHEREOF, each party to this Side Letter has caused their respective signature page to this Side Letter to be duly executed as of the date first written above.

 

 

	 	BUYER:
	 	 
	 	EREF-MID II, LLC
	 	 
	 	By:	                    
	 	 	Name:  Martin M. Hale, Jr.
	 	 	Title:    Hale Fund Management, LLC,
	 	 	 
Managing Member

 

 

 

 

[Signature Page to Side Letter]

  

  

IN WITNESS WHEREOF, each party to this Side Letter has caused their respective signature page to this Side Letter to be duly executed as of the date first written above.

 

	 	BUYER:
	 	 
	 	INV-MID, LLC
	 	 
	 	By:	                    
	 	 	Name:  Martin M. Hale, Jr.
	 	 	Title:    Hale Fund Management, LLC,
	 	 	 
Managing Member

 

 

 

 

 

[Signature Page to Side Letter]FORM OF INDEPENDENT DIRECTOR AGREEMENT

EXHIBIT 10.1

INDEPENDENT DIRECTOR AGREEMENT

This INDEPENDENT DIRECTOR AGREEMENT is dated ______, 201___ (the “Agreement”) by and between DIVINE SKIN, INC, a Florida corporation (the “Company”), and ________________, an individual resident of the State of ___________ (the “Director”).

WHEREAS, the Company appointed the Director effective as of the date hereof (the “Effective Date”) and desires to enter into an agreement with the Director with respect to such appointment; and

WHEREAS, the Director is willing to accept such appointment and to serve the Company on the terms set forth herein and in accordance with the provisions of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows:

1.

Position.  Subject to the terms and provisions of this Agreement, the Company shall cause the Director to be appointed, and the Director hereby agrees to serve the Company in such position upon the terms and conditions hereinafter set forth, provided, however, that the Director’s continued service on the Board of Directors of the Company (the “Board”) after the initial one-year term on the Board shall be subject to any necessary approval by the Company’s stockholders.

2.

Duties.

(a)

During the Directorship Term (as defined herein), the Director make reasonable business efforts to attend all Board meetings and quarterly pre-scheduled Board and Management conference calls, serve on appropriate subcommittees as reasonably requested and agreed upon by the Board, make himself available to the Company at mutually convenient times and places, attend external meetings and presentations when agreed on in advance, as appropriate and convenient, and perform such duties, services and responsibilities, and have the authority commensurate to such position.

(b)

The Director will use his best efforts to promote the interests of the Company. The Company recognizes that the Director (i) is or may become a full-time executive employee of another entity and that his responsibilities to such entity must have priority and (ii) sits or may sit on the board of directors of other entities, subject to any limitations set forth by the Sarbanes-Oxley Act of 2002 and limitations provided by any exchange or quotation service on which the Company’s common stock is listed or traded.  Notwithstanding the same, the Director will provide the Company with prior written notice of any future commitments to such entities and use reasonable business efforts to coordinate his respective commitments so as to fulfill his obligations to the Company and, in any event, will fulfill his legal obligations as a Director. Other than as set forth above, the Director will not, without the prior notification to the Board, engage in any other business activity which could materially interfere with the performance of his duties, services and responsibilities hereunder or which is in violation of the reasonable policies established from time to time by the Company, provided that the foregoing shall in no way limit his activities on behalf of (i) any current employer and its affiliates or (ii) the board of directors of any entities on which he currently sits.  At such time as the Board receives such notification, the Board may require the resignation of the Director if it determines that such business activity does in fact materially interfere with the performance of the Director’s duties, services and responsibilities hereunder.

3.

Compensation.

(a)

Restricted Stock.  The Director shall receive fifty thousand (50,000) shares of the Company’s common stock, pursuant and subject to the Company’s 2009 Equity Incentive Plan.  Such shares shall vest in four (4) equal amounts over a period of twelve (12) months, the initial amount vesting on ________________, 201___.  Notwithstanding the foregoing, if the Director ceases to be a member of Board at any time during the vesting period for any reason (such as resignation, withdrawal, death, disability or any other reason), then any unvested shares shall be irrefutably forfeited.  Furthermore, the Director agrees that the shares shall be subject to any “lock up” agreement required to be signed by the Company’s officers in connection with any financing.

Independent Director Agreement Form

(b)

Independent Contractor.  The Director’s status during the Directorship Term shall be that of an independent contractor and not, for any purpose, that of an employee or agent with authority to bind the Company in any respect. All payments and other consideration made or provided to the Director under this Section 3 shall be made or provided without withholding or deduction of any kind, and the Director shall assume sole responsibility for discharging all tax or other obligations associated therewith.

(c)

Expense Reimbursements.  During the Directorship Term, the Company shall reimburse the Director for all reasonable out-of-pocket expenses incurred by the Director in attending any in-person meetings, provided that the Director complies with the generally applicable policies, practices and procedures of the Company for submission of expense reports, receipts or similar documentation of such expenses. Any reimbursements for allocated expenses (as compared to out-of-pocket expenses of the Director in excess of $500.00) must be approved in advance by the Company.

4.

Directorship Term.  The “Directorship Term,” as used in this Agreement, shall mean the period commencing on the Effective Date and terminating on the earlier of the date of the next annual stockholders meeting and the earliest of the following to occur: (a) the death of the Director; (b) the termination of the Director from his membership on the Board by the mutual agreement of the Company and the Director; (c) the removal of the Director from the Board by the majority stockholders of the Company; and (d) the resignation by the Director from the Board.

5.

Director’s Representation and Acknowledgment.  The Director represents to the Company that his execution and performance of this Agreement shall not be in violation of any agreement or obligation (whether or not written) that he may have with or to any person or entity, including without limitation, any prior or current employer. The Director hereby acknowledges and agrees that this Agreement (and any other agreement or obligation referred to herein) shall be an obligation solely of the Company, and the Director shall have no recourse whatsoever against any stockholder of the Company or any of their respective affiliates with regard to this Agreement.

6.

Director Covenants.

(a)

Unauthorized Disclosure.  The Director agrees and understands that in the Director’s position with the Company, the Director has been and will be exposed to and receive information relating to the confidential affairs of the Company, including, but not limited to, technical information, business and marketing plans, strategies, customer information, other information concerning the Company’s products, promotions, development, financing, expansion plans, business policies and practices, and other forms of information considered by the Company to be confidential and in the nature of trade secrets. The Director agrees that during the Directorship Term and thereafter, the Director will keep such information confidential and will not disclose such information, either directly or indirectly, to any third person or entity without the prior written consent of the Company; provided, however, that (i) the Director shall have no such obligation to the extent such information is or becomes publicly known or generally known in the Company’s industry other than as a result of the Director’s breach of his obligations hereunder and (ii) the Director may, after giving prior notice to the Company to the extent practicable under the circumstances, disclose such information to the extent required by applicable laws or governmental regulations or judicial or regulatory process. This confidentiality covenant has no temporal, geographical or territorial restriction. Upon termination of the Directorship Term, the Director will promptly return to the Company and/or destroy at the Company’s direction all property, keys, notes, memoranda, writings, lists, files, reports, customer lists, correspondence, tapes, disks, cards, surveys, maps, logs, machines, technical data, other product or document, and any summary or compilation of the foregoing, in whatever form, including, without limitation, in electronic form, which has been produced by, received by or otherwise submitted to the Director in the course or otherwise as a result of the Director’s position with the Company during or prior to the Directorship Term, provided that the Company shall retain such materials and make them available to the Director if requested by him in connection with any litigation against the Director under circumstances in which (i) the Director demonstrates to the reasonable satisfaction of the Company that the materials are necessary to his defense in the litigation and (ii) the confidentiality of the materials is preserved to the reasonable satisfaction of the Company.

(b)

Non-Solicitation.  During the Directorship Term and for a period of three (3) years thereafter, the Director shall not interfere with the Company’s relationship with, or endeavor to entice away from the Company, any person who, on the date of the termination of the Directorship Term and/or at any time during the one 

2

year period prior to the termination of the Directorship Term, was an employee or customer of the Company or otherwise had a material business relationship with the Company.

(c)

Non-Compete. The Director agrees that during the Directorship Term and for a period of three (3) years thereafter, he shall not in any manner, directly or indirectly, through any person, firm or corporation, alone or as a member of a partnership or as an officer, director, stockholder, investor or employee of or consultant to any other corporation or enterprise; engage in the business of developing, marketing, selling or supporting technology to or for businesses in which the Company engages in or in which the Company has an actual intention, as evidenced by the Company's written business plans, to engage in, within any geographic area in which the Company is then conducting such business.  Nothing in this Section 6 shall prohibit the Director from being (i) a stockholder in a mutual fund or a diversified investment company or (ii) a passive owner of not more than three percent of the outstanding stock of any class of securities of a corporation, which are publicly traded, so long as the Director has no active participation in the business of such corporation.

(d)

Insider Trading Guidelines.  Director agrees to execute the Company’s Insider Trading Guidelines in the form attached hereto.

(e)

Remedies.  The Director agrees that any breach of the terms of this Section 6 would result in irreparable injury and damage to the Company for which the Company would have no adequate remedy at law; the Director therefore also agrees that in the event of said breach or any threat of breach, the Company shall be entitled to an immediate injunction and restraining order to prevent such breach and/or threatened breach and/or continued breach by the Director and/or any and all entities acting for and/or with the Director, without having to prove damages or paying a bond, in addition to any other remedies to which the Company may be entitled at law or in equity. The terms of this paragraph shall not prevent the Company from pursuing any other available remedies for any breach or threatened breach hereof, including, but not limited to, the recovery of damages from the Director. The Director acknowledges that the Company would not have entered into this Agreement had the Director not agreed to the provisions of this Section 6.

(f)

The provisions of this Section 6 shall survive any termination of the Directorship Term, and the existence of any claim or cause of action by the Director against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements of this Section 6.

7.

Indemnification.  The Company agrees to indemnify the Director for his activities as a member of the Board to the fullest extent permitted under applicable law and shall use its best efforts to maintain Directors and Officers Insurance benefitting the Board.

8.

Non-Waiver of Rights.  The failure to enforce at any time the provisions of this Agreement or to require at any time performance by the other party hereto of any of the provisions hereof shall in no way be construed to be a waiver of such provisions or to affect either the validity of this Agreement or any part hereof, or the right of either party hereto to enforce each and every provision in accordance with its terms. No waiver by either party hereto of any breach by the other party hereto of any provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions at that time or at any prior or subsequent time.

9.

Notices.  Every notice relating to this Agreement shall be in writing and shall be given by personal delivery or by registered or certified mail, postage prepaid, return receipt requested; to:

If to the Company:

Divine Skin, Inc.

1680 Meridian Avenue, Suite 301

Miami Beach, Florida 33139

Attn:   President

Facsimile: 

3

If to the Director:

___________________

___________________

___________________

Facsimile: ____________

Either of the parties hereto may change their address for purposes of notice hereunder by giving notice in writing to such other party pursuant to this Section 9.

10.

Binding Effect/Assignment.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, personal representatives, estates, successors (including, without limitation, by way of merger) and assigns. Notwithstanding the provisions of the immediately preceding sentence, neither the Director nor the Company shall assign all or any portion of this Agreement without the prior written consent of the other party.

11.

Entire Agreement.  This Agreement (together with the other agreements referred to herein) sets forth the entire understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, written or oral, between them as to such subject matter.

12.

Severability.  If any provision of this Agreement, or any application thereof to any circumstances, is invalid, in whole or in part, such provision or application shall to that extent be severable and shall not affect other provisions or applications of this Agreement.

13.

Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, without reference to the principles of conflict of laws. All actions and proceedings arising out of or relating to this Agreement shall be heard and determined in any court in Miami-Dade County, Florida and the parties hereto hereby consent to the jurisdiction of such courts in any such action or proceeding; provided, however, that neither party shall commence any such action or proceeding unless prior thereto the parties have in good faith attempted to resolve the claim, dispute or cause of action which is the subject of such action or proceeding through mediation by an independent third party.

14.

Legal Fees.  The parties hereto agree that the non-prevailing party in any dispute, claim, action or proceeding between the parties hereto arising out of or relating to the terms and conditions of this Agreement or any provision thereof (a “Dispute”), shall reimburse the prevailing party for reasonable attorney’s fees and expenses incurred by the prevailing party in connection with such Dispute; provided, however, that the Director shall only be required to reimburse the Company for its fees and expenses incurred in connection with a Dispute if the Director’s position in such Dispute was found by the court, arbitrator or other person or entity presiding over such Dispute to be frivolous or advanced not in good faith.

15.

Modifications.  Neither this Agreement nor any provision hereof may be modified, altered, amended or waived except by an instrument in writing duly signed by the party to be charged.

16.

Tense and Headings.  Whenever any words used herein are in the singular form, they shall be construed as though they were also used in the plural form in all cases where they would so apply. The headings contained herein are solely for the purposes of reference, are not part of this Agreement and shall not in any way affect the meaning or interpretation of this Agreement.

17.

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

4

IN WITNESS WHEREOF, the Company has caused this Director Agreement to be executed by authority of its Board of Directors, and the Director has hereunto set his hand, on the day and year first above written.

				
	 
	 
	DIVINE SKIN, INC.

	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	Daniel Khesin

	 

	 
	 
	Chief Executive Officer 

	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	DIRECTOR

	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	Name:

	 

5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00210-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00210-of-00352.parquet"}]]