Document:

Consulting Services Agreement

 

This agreement is made and entered into this 24th day of August, 2006 by and between Avondale Capital Partners, II,  Inc.,  (the “Consultant”), whose principal place of business is 256 South Robertson Blvd., Beverly Hills, CA 90211 and Connected Media Technologies, Inc. (the “Client”), whose principal place of business is 80 Southwest 8th Street, Suite 2230, Miami, Florida  33130.

 

WHEREAS:

 

The Consultant is willing and capable of providing on a “best efforts” basis various forms of services for and on behalf of the client. 

 

The Client desires to obtain such services and wishes to retain Consultant as an independent consultant and the Consultant desires to be retained in that capacity upon the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the promises and mutual covenants set forth herein, it is agreed as follows:

 

Consulting Services. The Client hereby retains the Consultant as an independent consultant to the client, on a non-exclusive basis, and the Consultant hereby accepts and agrees to such retention. The Consultant shall render to the Client such services of an advisory or consultative nature in order to inform the brokerage community, the Client’s shareholders and the general public concerning financial public relations and promotional matters relating to the client and its business. It is the intention of the parties that the Consultant will gather all publicly available information relating to the Client and confers with officers and directors of the Client in an effort to consolidate the information obtained into summary form for dissemination to interested parties. It is intended that the Consultant will then distribute such information concerning the Client to registered
representatives of broker-dealers and other person(s) who the Consultant determines, in its sole discretion, are capable of effectively disseminating such information to the general public. The Consultant will not provide any investment advice or recommendations regarding the Client to anyone; rather, the Consultant will focus on contacting persons, generally via telephonic communications and person-to-person meetings, in order to familiarize them with information concerning the Client, which the Consultant has collected and is otherwise available to the general public. On a non-exclusive basis, the Consultant shall accomplish performance of the consulting services described herein. Not withstanding the foregoing, Consultant, may, in its sole discretion, outsource any or all of the services to be provided herein to other individuals or firms who agree in writing with Consultant to abide by the same (or substantially the same) representations and covenants as set forth in Paragraph 19
below (a “Permitted Subcontractor”). Consultant shall be responsible for the hiring of and the services to be performed by Permitted Subcontractors.. The cost and expenses of Permitted Subcontractors, if any, shall be deemed included in the Compensation as described in Paragraph 4 below.

 

	
            1.
 	
            Time, Place and Manner of Performance. The Consultant shall be available for advice and counsel to the officers and directors of the Client at such reasonable and convenient times and places as may be mutually agreed upon. Except as aforesaid, the time, place and manner of performance of the services hereunder, including the amount of time to be allocated by the Consultant to any specific service, shall be determined in the sole discretion of the Consultant.
 

 

	
            2.
 	
            Term of Agreement. The term of this Agreement shall be three months, commencing upon the execution of this agreement, hereof and terminating one (1) year thereafter, subject, however, to the rights of each party to terminate the Agreement as described herein. Compensation as defined below shall be deemed to be earned over the life of this Agreement.
 

 

 

	
            - 1 -
 

 

 

 

 

 

	
            3.
 	
            Compensation. In consideration of the services to be provided for the Client by the Consultant, the Client hereby agrees to compensate the Consultant as follows. 
 

 

In connection with its SB-2 registration statement to be filed on or about September 9, 2006 (“Registration Statement”). Client will propose to register up to one-hundred million (100,000,000) shares of its common stock (or such other equivalent number after proportionately adjusting for any stock split, stock dividend or similar recapitalization) for the purpose of investor relations activities.

 

 (a)        Promptly after the SEC declares the Registration Statement to be effective (“Effective Date”), and provided that this Agreement is still in effect, Client will issue Consultant the lesser of:

 

 (i) the amount of registered shares equal to the quotient of a fraction, the numerator of which is one hundred and seventy-five thousand dollars ($ 175,000) and the denominator of which is the average closing share price of Client’s common stock for the ten (10) day period immediately preceding the Effective Date; and

 

	
            (ii)
 	
            thirty-three million (33,000,000) registered shares.
 

 

 (b)        On the ninetieth (90th) day after the Effective Date (“Second Payment Date”), and provided this Agreement is still in effect, Client will issue Consultant an additional amount of shares equal to the lesser of:

 

 (i) the amount of registered shares equal to the quotient of a fraction, the numerator of which is one hundred and seventy-five thousand dollars ($ 175,000) and the denominator of which is the average closing share price of Client’s common stock for the ten (10) day period immediately preceding the Second Payment Date; and

 

	
            (ii)
 	
            thirty-three million (33,000,000) registered shares.
 

 

 (c)        On the one hundred eightieth (180th) day after the Effective Date, (“Third Payment Date”), and provided this Agreement is still in effect, Client will issue Consultant an additional amount of shares equal to the lesser of:

 

 (i) the amount of registered shares equal to the quotient of a fraction, the numerator of which is one hundred and fiftysixty-five thousand dollars ($ 150,000) and the denominator of which is the average closing share price of Client’s common stock for the ten (10) day period immediately preceding the Third Payment Date; and

 

	
            (ii)
 	
            thirty-four million (34,000,000) registered shares.
 

 

	
            4.
 	
            Expenses. Neither party shall be responsible for the expenses of the other party in connection with the performance of its obligations under this Agreement.  Notwithstanding the foregoing, all costs and expenses relating to any Permitted Subcontractor shall be deemed included in the Compensation set forth in Paragraph 3.
 

  

	
            5.
 	
            Termination. Notwithstanding any provision contained in this agreement on the contrary, this Agreement may be terminated by the Client in its sole discretion, with ten (10) day’s prior written notice. Any unearned compensation will be immediately returned to the Client.
 

 

	
            6.
 	
            Work Product. It is agreed that, prior to public distribution, all information and materials produced for the Client shall be the property of the Consultant, free and clear of all claims thereto by the Client, and the Client shall retain no claim of authorship therein.
 

 

 

	
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            7.
 	
            Disclosure of Information. The Consultant recognizes and acknowledges that it has and will have access to certain confidential information of the Client and its affiliates that are valuable, special and unique assets and property of the Client and such affiliates. The Consultant will not, during or after the term of this Agreement, disclose, without the prior written consent or authorization of the Client, any of such information to any person, except to authorize representatives of the Consultant or its affiliates, for any reason or purpose whatsoever. In this regard, the Client agrees that such authorization or consent to disclosure may be conditioned upon the disclosure being made pursuant to a secrecy agreement, protective order, provision of statute, rule, regulation or procedure under which the confidentiality of the information is
maintained in the hands of the person to whom the information is to be disclosed or in compliance with the terms of a judicial order or administrative process. Any Permitted Subcontractors hired by Consultant shall be bound by the provisions of this Section 7.
 

 

	
            8.
 	
            Nature of Relationship. It is understood and acknowledged by the parties that the Consultant is being retained by the Client in an independent capacity and that in this connection, the Consultant hereby agrees that it cannot enter into any agreement or incur any obligation on behalf of the Client.
 

 

	
            9.
 	
            Conflict of Interest. The Consultant shall be free to perform services for other persons. The Consultant will notify the Client of its performance of consulting services for any other person, which could conflict with its obligations under this Agreement. Upon receiving such notice, the Client may terminate this Agreement or consent to the Consultant’s outside consulting activities; failure to terminate this Agreement shall constitute the Client’s ongoing consent to the Consultant’s outside consulting activities.
 

 

	
            10.
 	
            Indemnification for Securities Law Violations. The Client agrees to indemnify, hold harmless, and defend the Consultant and each officer, director and controlling person of the Consultant against any losses, claims, damages, liabilities and/or expenses (including any legal or other expenses reasonably incurred in investigating or defending any action or claim in respect thereof) to which the Consultant or such officer, director or controlling person may become subject under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, because of actions of the Client or its agent(s). This indemnification to Consultant shall be null and void if, as a result of any investigation it is determined that the actions of the Consultant or Permitted Subcontractor have caused any violation of the Securities Act of
1933, as amended or any other applicable state law or regulation. Consultant shall indemnify, hold harmless and defend Client and each of Client’s officers and directors against any losses, claims, damages, liabilities and/or expenses (including any legal or other expenses reasonably incurred in investigating or defending any action or claim in respect thereof) to which the Client or such officer, director or controlling person may become subject under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, because of actions of the Consultant or a Permitted Subcontractor. This indemnification to Client shall be null and void if, as a result of any investigation it is determined that the actions of the Client have caused any violation of the Securities Act of 1933, as amended or any other applicable state law or regulation.
 

 

	
            11.
 	
            Notices. Any notices required or permitted to be given under this Agreement shall be sufficient if in writing and delivered or sent by registered or certified mail to the principal office of each party.
 

 

	
            12.
 	
            Waiver of Breach. Any waiver by the Consultant of a breach of any provision of this Agreement by the Client shall not operate or be construed as a waiver of any subsequent breach by the Client.
 

 

	
            13.
 	
            Assignment. Assignment shall only be made upon the approval of both parties in writing. Should such an assignment be agreed to, this Agreement and the rights and obligations of the parties hereunder shall inure to the benefit of and shall be binding upon their successors and assigns.
 

 

	
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            14.
 	
            Jurisdiction and Venue. It is the intention of the parties hereto that this Agreement and the performance hereunder and all suits and special proceedings hereunder be construed in accordance with and under and pursuant to the laws of the State of Florida. Therefore, each of the parties hereto hereby consents to the jurisdiction and venue of the courts of the State of Florida.
 

 

	
            15.
 	
            Entire Agreement. This Agreement constitutes and embodies the entire understanding and agreement of the parties in regards to Management/Financial Consulting services and supercedes and replaces all prior understandings, agreements and negotiations between the parties with respect to the subject matter contained herein.
 

 

	
            16.
 	
            Waiver and Modification. Any waiver, alteration or modification of any of the provisions of this Agreement shall be valid only if made in writing and signed by the parties hereto. Each party hereto, from time to time, may waive any of its rights hereunder without affecting a waiver with respect to any subsequent occurrences or transactions hereof.
 

 

	
            17.
 	
            Invalid Provisions. In the event that any provision of this Agreement is found to be invalid or otherwise unenforceable under any applicable law, such invalidity or unenforceability shall not be construed as rendering any other provisions contained herein invalid or unenforceable, and all such other provisions shall be given full force and affect to the same extent as though the invalid or unenforceable provision were not contained herein.
 

 

	
            18.
 	
            Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but both of which taken together shall constitute but one and the same document. 
 

 

19.         Consultant’s Warranties and Covenants. (a) Consultant represents and warrants that he: (1) possesses all necessary licenses, permits and qualifications necessary to perform the services hereunder; and (2) is not currently, and has not been in the past five (5) years, the subject of any criminal or civil action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body relating to an allegation of fraud or a violation of any securities laws or any of Consultant’s business practices; and has no knowledge of the basis for any such matter; and (b) Consultant agrees that the representations and warranties set forth in subsection 19(a) herein will remain true, accurate and complete in all material
respects throughout the term of this Agreement.

 

20.        Press Releases.               Neither party shall issue any press release concerning the nature of the relationship set forth herein without the advance written consent of the other party. Nothing in this paragraph shall be construed to limit either party’s right to make any such filings concerning this agreement that it reasonably believes is required by law.

 

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the day and year first above written.

 

	
            CONSULTANT:
 	
            CLIENT:
 

 

	
            Avondale Capital Partners II, Inc.
 	
            Connected Media Technologies, Inc.
 

 

	
            By: __/s/ Andrew Baum_____________
 	
            By: ___/s/ Jeffrey Sass_____________
 	
             

	
             
	
            Andrew Baum, CEO
 	
             

	
            Its: ______________________________
 	
            Its: ___CEO______________________
 
					

 

	
            Date: __August 23, 2006______________
 	
            Date: ___August 24, 2006____________
 

 

 

	
            - 4 -EX-10.1

August 21, 2006

Joseph F. Morris

1324 Cinnamon Drive

Fort Washington, PA 19034

Dear Joe:

This letter is to acknowledge your decision to voluntarily resign as President of United America
Indemnity Group, Incorporated (“UAIGI”) and President of United America Indemnity, Ltd. (“UAI”) and
each company’s acceptance of your resignation. We appreciate your years of service at
Penn-America, UAIGI and UAI and we are sorry to see you go. You have indicated an effective
resignation date of August 25, 2006 (the “Resignation Date”) and a representative of UAIGI will
follow up with you regarding the anticipated transition period. We also appreciate your
willingness to assist with transition matters.

As a result of your resignation (and as provided for under Sections 3.06 and Article 4 of your
executive employment agreement with UAIGI made as of February 15, 2006, as amended (the
“Agreement”)), as of the Resignation Date, UAI, UAIGI and all their affiliates shall have no
further payment obligations to you and you will be subject to your post-termination obligations
under the Agreement, including your duty to cooperate, and certain confidentiality, non-competition
and non-solicitation obligations. You will receive forms under separate cover by which you may
elect COBRA continuation coverage; and, until the Resignation Date, you will not be assessed
vacation days for those business days during which your physical presence in the office is not
necessary.

You, the Boards of Directors of UAI (“UAI Board”) and UAIGI have agreed that, in return for the UAI
Board waiving the transfer restrictions on the shares constituting the “First Tranche” (as defined
in the Agreement) (the “Waiver”), you will deliver the release attached hereto as Annex A. The
Waiver shall be effective as of the expiration of the revocation period referenced in Annex A. The
effectiveness of the Waiver shall be subject in all events to your continued compliance with the
Agreement and Annex A.

Please indicate your agreement to the foregoing by signing below and returning this letter to me.

	 	 	 
	Sincerely,

	 	ACKNOWLEDGED AND AGREED:
	 
	 	 
	/s/ Garland P. Pezzuolo

	 	

	 

	 	

	Garland P. Pezzuolo

	 	/s/ Joseph F. Morris
	
 
	 	 
	Senior Vice President, General Counsel

United America Indemnity Group, Inc.

United America Indemnity, Ltd.

	 	Joseph F. Morris

Date: 8/25/2006
	 
	 	 

1

ANNEX A

RELEASE

R-1. Effective as of August 25, 2006, Joseph F. Morris (“Executive”) on behalf of himself and
his affiliates, heirs, executors and successors, hereby remises, releases and forever discharges,
and by these present does release and forever discharge United America Indemnity Group,
Incorporated (“UAIGI”) and its subsidiaries, parents, affiliates and their respective heirs,
divisions, parents, affiliates and related entities, including without limitation, United America
Indemnity, Ltd. (“UAI”), Fox Paine & Company, LLC (“Fox Paine”), Fox Paine Capital Fund, L.P., FPC
Investors, L.P., Fox Paine Capital, LLC, Fox Paine Capital Fund II GP, LLC, Fox Paine Capital Fund
II, L.P., Fox Paine Capital Fund II International, L.P., Fox Paine Capital Fund II Co-Investors
International, L.P., FPC Investment GP, and each of their past and present directors, members,
managers, officers, employees, divisions and successors (including, without limitation, Saul A.
Fox, W. Dexter Paine, III, Troy W. Thacker and Justin Reyna) (for purposes of this Release,
collectively, the “Company”) from any and all claims, charges, complaints, liens, demands, causes
of action, obligations, damages and liabilities (including legal expenses) (all hereinafter
referred to as “Claims”), known or unknown, arising through the date of this Release with respect
to any matter whatsoever, including without limitation, any Claims arising directly or indirectly
out of, or in any way connected with, based upon, or related to, Executive’s employment with the
Company, Executive’s rights as a shareholder of UAI in a derivative action, or any claim to
compensation or benefits from Executive’s employment with the Company, including any Claims, under
local, state, or federal law based on:

(i) claims of discrimination on the basis of race, age, religion, sex, sexual harassment,
sexual orientation, national origin, marital status, or disability including without
limitation, any claims arising under the Age Discrimination in Employment Act of 1967
(“ADEA”), as amended, the Older Workers Benefit Protection Act, the Civil Rights Act of
1866, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans
with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Pennsylvania
Human Relations Act, Pennsylvania Human Relations Commission rules, including, without
limitation, the Handicap Discrimination rules, the Pennsylvania Wage Payment and Collection
Law, the Pennsylvania Equal Pay Law, the Pennsylvania Minimum Wage Act, the Pennsylvania
Whistleblower Law, the Pennsylvania Labor Relations Act, and the Pennsylvania Worker and
Community Right to Know Act, each as amended;

(ii) infliction of any tort (including wrongful discharge);

(iii) breach of contract, whether actual or implied, written or oral; and

(iv) any violation of any pension or welfare plans or any other benefit plan or arrangement
(including without limitation, ERISA);

provided that the foregoing release shall not apply to claims by Executive
(i) to enforce the Employment Agreement (as defined below) with respect to any obligations
which survive the termination of Executive’s employment, (ii) for any unpaid base salary
earned up to and including August 25th, for 20 days’ accrued but unpaid vacation
as of August 25, 2006, and other benefits to which he was entitled up until the date hereof,
(iii) that UAI and/or UAIGI have breached their obligations pursuant to this Release or the
cover letter hereto, (iv) for unreimbursed business expenses incurred as of the date hereof
and for which reimbursement sought in accordance with UAIGI policy, (v) for Executive’s
vested benefits under any pension or welfare plan maintained by the Company or its
affiliates, (vi) with respect to Executive’s rights with respect to outstanding equity
awards or incentives held by Executive, (vii) with respect to any right Executive may have
to receive unemployment compensation, or (viii) with respect to any right to be indemnified
by the Company pursuant to charter, certificate, by-laws or other constituent documents of
the Company, or under any insurance maintained by or for the benefit of the Company (and/or
its predecessor), for any liability, cost or expense for which Executive would have been
indemnified for actions taken by Executive on behalf of the Company prior to the date of
this Release.

R-2. Executive further represents that Executive has not, at any time up to and including the
date Executive executed this Release, commenced, and will not in the future commence, to the full
extent permitted by law, any action or proceeding, or file any charge or complaint, of any nature
against the Company relating to the matters released above and Executive waives to the full extent
permitted by law, any right to any monetary or equitable relief in any proceeding that may relate
to the matters released above. Notwithstanding the foregoing, Executive understands and confirms
that Executive is entering into this Release (with its covenant not to sue and waiver and release)
voluntarily and knowingly, and the foregoing covenant not to sue shall not affect Executive’s right
to claim otherwise with respect to Executive’s rights under ADEA.

R-3. Executive agrees that in the event of a breach by Executive or Executive’s heirs or
executors of this Release, and in addition to any other rights or remedies the Company may have
hereunder or otherwise: (i) the Company will be irreparably damaged and will have no adequate
remedy at law, and will be entitled to request an injunction restraining any further breach of this
Release; and (ii) the Company will be indemnified and held harmless from and against any and all
damages or losses incurred by the Company (including reasonable attorneys’ fees and expenses) as a
result of such breach; and (iii) the Company may offset against any amounts otherwise owed
Executive damages or losses incurred as a result of a breach of this Release. Executive further
agrees that this Release may and shall be pleaded as a full and complete defense to any action,
suit or other proceeding covered by the terms of this Release that is or may be instituted,
prosecuted or maintained by Executive or Executive’s heirs or executors.

R-4. Executive understands that any payments and benefits provided to Executive under the
terms of this Release, the cover letter hereto and/or the employment agreement between Executive
and UAIGI made as of February 15, 2006 (the “Employment Agreement”) do not constitute an admission
by the Company or any affiliate that they have violated any law or legal obligation with respect to
Executive’s employment or its termination.

R-5. Executive agrees that Executive will not at any time disparage or encourage or induce
others to disparage the Company or call into question the business operations, status or reputation
of the Company. For the purposes of this paragraph R-5, the term “disparage” includes, without
limitation, comments or statements to the press and/or media or any individual or entity with whom
the Company has a business relationship that may adversely affect in any manner (a) the conduct of
the business of the Company (including, without limitation, any business plans or prospects) or (b)
the business reputation of the Company or the quality, standing or character of any of the
Company’s products or services. Similarly, the members of the Company’s “Designated Group” (as
defined below) agree that they will not at any time disparage or encourage or induce others to
disparage Executive or call into question Executive’s status or reputation. For purposes of this
Release, “Designated Group” shall mean the representatives of Fox Paine who were specifically
listed in paragraph R-1, the directors of UAI, and each member of the senior management team of
UAIGI and UAI with the title of senior vice-president or above as of the date of this Release, to
the extent actively employed or in active service as a member or director by such entities
following the date hereof.

R-6. Executive has reviewed the terms of this Release and confirms that Executive has had the
opportunity to confer with an attorney of Executive’s own choosing with respect to the terms of
this Release. Executive acknowledges that Executive was advised that Executive could take up to
twenty-one (21) days from the date this Release was given to Executive to review this Release and
decide whether Executive would enter into this Release. To the extent that Executive has elected
to enter into this Release prior to such time, Executive has done so voluntarily, and has knowingly
waived such twenty-one (21) day review period. Executive may revoke Executive’s assent to the
terms of this Release for a period of seven (7) calendar days after its execution (the “Revocation
Period”) by delivering, by hand or overnight carrier, a written notice of revocation prior to 5:00
p.m. EDT on the last day comprising the Revocation Period to the Company. This Release shall
become irrevocable automatically upon the expiration of the Revocation Period if Executive does not
revoke it in the aforesaid manner.

In witness whereof, this release is executed as of August 25, 2006.

	 	 	 
	/s/ Joseph F Morris

	 	/s/ Garland P. Pezzuolo
	 

	 	 
	Joseph F. Morris

	 	By: Garland P. Pezzuolo

General Counsel
	 
	 	 

2

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