Document:

ex10-25.htm

Exhibit 10.25

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of the 7th day of January 2014 (the “Effective Date”), by and between Internet Media Services, Inc., a Delaware corporation (the “Company”), and Paul Neelin, an individual (the “Employee”).

 

1.           Employment Period.  The Company hereby agrees to employ the Employee as its Founder and Chief Operations Officer, and the Employee, in such capacity, agrees to provide services to the Company for the term beginning on the Effective Date (the “Commencement Date”) and ending on December 31, 2016, unless earlier terminated in accordance with this Agreement (the “Initial Term”).

 

This Agreement shall be extended for additional one year terms (each such term, a “Renewal Term”)], unless either the Board of Directors of the Company (the “Board”) or the Employee objects to such extension by delivering written notice to the other party at least [ninety (90) days] prior to the expiration of the Initial Term or the applicable Renewal Term.  Such notice, if given by either party and not withdrawn prior to the end of the applicable year, shall be deemed a termination of Employee’s employment by the party who delivered such notice under this Agreement.  The Initial Term and each Renewal Term shall be collectively referred to herein as the “Employment Period”.

 

2.           Performance of Duties.  The Employee agrees that during the Employment.  Period, while he is employed by the Company, he shall devote 100% of his full working time, energies and talents performing the duties assigned to him by the Board faithfully, efficiently and in a professional manner.  During the Employment Period, the Employee may not engage, undertake or be interested in (whether directly or indirectly) any other employment, business or occupation or become a director or employee or agent or consultant or partner of any other person, officer or company which either individually or in the aggregate would violate the immediately preceding sentence without the prior written consent of the Board.

 

3.           Compensation.  Subject to the terms and conditions of this Agreement, during the Employment Period, the Employee shall be compensated by the Company for his services as follows:

 

(a)           He shall receive, for the Initial Term and each Renewal Term, if any, a rate of salary that is not less than $10,000 (USD) Dollars per month (the “Salary”), payable monthly and subject to normal and customary tax withholding and other deductions, all on a basis consistent with the Company’s normal payroll procedures and policies.  During (i) the thirty (30) day period prior to the expiration of each successive twelve (12) month period during the Initial Term, and (ii) the thirty (30) day period prior to the commencement of any Renewal Term, the Employee’s salary rate shall be reviewed by the Board to determine whether an increase in his rate of compensation is appropriate, which determination shall be within the sole discretion of the Board.

 

(b)           He shall be eligible to receive, for the Initial Term and each Renewal Term, if any, an annual bonus (the “Bonus”), based on performance goals as established and approved by the Board.  [The performance goals and the target amount of the Bonus for the calendar years ending December 31, 2014, 2015 and 2016 respectively,  is as set forth on Schedule A attached hereto.]  The Board shall review the amount of the Bonus during the sixty (60) day period prior to the expiration of each calendar year during the Employment Period, in order to determine whether the target Bonus amount for the subsequent calendar year should be adjusted based on market compensation for similar positions.  The performance goals and the target Bonus amount for the Employee shall be established by the Board within thirty (30) days following the commencement of each calendar year during the Employment Period (beginning with the calendar year 2015); provided, however, that the target amount of the Bonus for each calendar year shall be not less than a sum equal to twenty percent 20%) of Employee’s then applicable Salary.  The Bonus shall be computed and paid to Employee at such time and in such manner as the Board shall determine, but the Company shall make reasonable efforts to pay such Bonus promptly after completion of the applicable calendar year and in no event later than sixty (60) days following the end of the preceding calendar year.  Should the Employee resign or be terminated, he will not be entitled to receive any Bonus for the calendar year during which Employee was terminated or resigned.  Unless mutually agreed.

  

  

  

 

(c)           He shall be reimbursed by the Company for all reasonable business, promotional, travel and entertainment expenses incurred or paid by him during the employment period in the performance of his services under this Agreement that are consistent with the Company’s policies in effect from time to time, provided that the Employee furnishes to the Company appropriate documentation in a timely fashion required by the Internal Revenue Code in connection with such expenses and shall furnish such other documentation and accounting as the Company may from time to time reasonably request.

 

(d)           He shall be entitled to all scheduled holidays of the Company, and a minimum of fifteen (15) days of paid vacation per year (subject to increase in the sole discretion of the Board).

 

(e)           He shall be eligible to participate in the benefits made generally available by the Company to the Employee management team, in accordance with the benefit plans established by the Company, and as may be amended from time to time in the Company’s sole discretion. 

 

(f)            He shall be entitled to a monthly car allowance of $500.

 

4.           Termination.  The Employee’s employment hereunder may be terminated prior to the expiration of the Employment Period under the following circumstances:

 

(a)           Death.  The Employee’s employment hereunder shall terminate upon his death.

 

(b)           Total Disability. The Company may terminate Employee’s employment upon the Employee becoming “Totally Disabled.”  For purposes of this Agreement, “Totally Disabled” means any physical or mental ailment or incapacity as determined by a licensed physician in good standing, which has prevented, or is reasonably expected (as determined by a licensed physician in good standing) to prevent, the Employee from performing the duties incident to the Employee’s employment hereunder which has continued for a period of either (A) one hundred twenty (120) consecutive days or (B) two hundred ten (210) total days in any twelve (12) month period; provided, however, that the Employee receives at least thirty (30) days written notice prior to such termination.

 

(c)           Termination by the Company for Cause.  The Company may terminate Employee’s employment hereunder for “Cause.” For purposes of this Agreement, “Cause” shall mean:

 

(i)           any act or omission that constitutes a material breach by the Employee of any of his obligations under this Agreement;

 

(ii)          the refusal or failure by the Employee to carry out specific reasonable directions of the Board, which are of a material nature and consistent with the Employee’s position;

 

(iii)         the refusal or failure by the Employee to satisfactorily perform the duties reasonably required of him by the Company in his capacity as Founder and Chief Operations Officer of the Company;

 

(iv)         in any calendar year where the gross revenue of the Company reported on a GAAP basis has not exceeded $500,000;

 

(v)         the Employee engaging in any misconduct, fraud or dishonest action (including, without limitation, theft or embezzlement), violence, threat of violence, or any activity that could result in any violation of federal securities laws, in each case that is injurious to the Company or any of its subsidiaries or affiliates;

 

(vi)        the Employee’s material breach of a written policy of the Company;

 

(vii)       the conviction of the Employee of, or plea of nolo contendere to, a felony under federal or state law, or a crime involving dishonesty or moral turpitude or which could reflect negatively upon the Company or otherwise impair or impede its operations (as determined in the reasonable discretion of the Board); or

  

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(viii)      any other willful misconduct by the Employee which is materially injurious to the financial condition or business reputation of the Company or any of its affiliates.

 

(ix)         insolvency of the Company through the protection of the bankruptcy codes, assignment for the benefit of creditors (ABC), or any and all public or private insolvency options available to the Company.

Notwithstanding the foregoing, “Cause” for termination shall not be deemed to exist with respect to the Employee’s acts as described in subsections (i), (ii), (iii), (iv) or (vi) above, unless the Company shall have given written notice to the Employee within a period not to exceed fifteen (15) days of the Company’s knowledge of the initial existence of the occurrence, specifying the “Cause” with reasonable particularity and, within thirty (30) days after such notice, the Employee shall not have cured or eliminated the problem or thing giving rise to such “Cause;” provided, however, no more than two (2) cure periods need be provided during any twelve (12) month period.  For the avoidance of doubt, Employee shall not be afforded any cure period with respect to the acts described in subsections (v), (vii),(viii) or (ix) above.

 

(d)           Termination by Employee for Good Reason.  Employee may terminate his employment with the Company for Good Reason.  For purposes of this Agreement, “Good Reason” shall mean a termination by the Employee of his employment with the Company due to a breach by the Company of its material obligations under this Agreement, or any other agreement to which Employee and Company are both parties; provided, however, that (i) the Employee provides written notice to the Company specifying in reasonable detail the circumstances claimed to provide the basis for such termination within thirty (30) days following the occurrence of such events, without the Employee’s consent, (n) if such circumstances are correctable, the Company fails to correct the circumstances set forth in Employee’s notice of termination within thirty (30) days of receipt of such notice, and (iii) the Employee actually terminates employment within sixty (60) days following such occurrence:

 

(e)           Voluntary Termination by the Employee other than for Good Reason.  The Employee may terminate his employment hereunder at any time by providing written notice to the Company at least thirty (30) days prior to his voluntary termination of employment.

 

(f)            Notice of Termination.  Any termination by the Company or by the Employee under this Agreement shall be communicated by written notice to the other party.

 

For avoidance of doubt, the Company may not terminate the Employee’s employment hereunder for any reason except for the reasons described in this Section 4.

 

5.           Obligations and Compensation Following Termination of Employment.  In the event that Employee’s employment hereunder is terminated, Employee shall have the following obligations and shall be entitled to the following compensation and benefits upon such termination, and nothing else:

 

(a)           In the event that (A) Employee terminates his employment for Good Reason in accordance with Section 4(d) above, or (B) the Company terminates his employment in any manner other than pursuant to Section 4(a), Section 4(b) or Section 4(c), above, in any case, but subject to the Employee’s compliance with the provisions contained in Sections 5(d), 5(e), the Company shall pay to the Employee: (.i) any accrued but unpaid Salary for services rendered to the date of termination; and (ii) an amount equal to the Salary at the time of such termination, payable for the remainder of the then-current term (i.e., the Initial Term or any Renewal Term).

 

(b)           Termination due to Death or Total Disability.  In the event that the Employee’s employment is terminated due to the Employee’s death or by the Company as a result of the Employee being deemed to be Totally Disabled, the Company shall pay to the Employee the following amounts and nothing else: (i) any accrued but unpaid Salary for services rendered to the date of termination; and (ii) an amount equal to the Salary at the time of such termination, payable each month, over a six month period beginning thirty (30) days after the date of such termination in accordance with Section 3(a) above.

  

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(c)           Termination by the Company for Cause or Voluntary Termination by Employee other than for Good Reason.  In the event that Employee’s employment is terminated by the Company for Cause pursuant to Section 4(c) above, or due to the Employee’s voluntary resignation other than for Good Reason pursuant to Section 4(e) above, the Company shall pay to the Employee any accrued but unpaid Salary for services rendered to the date of termination and nothing else.

 

(d)           Employee’s Obligation to Execute a General Release.  In the event that Employee’s employment is terminated for any reason, the Company’s obligation to pay the Employee the amounts set forth above in this Section 5 (with the exception of any accrued but unpaid Salary for services rendered on the date of termination) shall be conditioned upon the Employee (or his estate or beneficiary, as applicable) executing, and the effectiveness within ninety (90) days after such termination of employment of, a valid waiver and release of all claims that the Employee may have against the Company, Board of Directors, consultants, advisors, etc. under this Agreement in a form reasonably satisfactory to the Company (which waiver and release of all claims shall not waive or release claims for amounts payable pursuant to this Agreement or claims Employee may have as a shareholder of the Company).  Notwithstanding the above, Employee agrees not to bring, or cause to bring, any type of legal action against any member of the Company’s board of  directors, past or present, for any reason.  Employee acknowledges that by being a member of the board of directors they have the ability to influence and approve actions that require board of directors approval and, as such, have an equal voice related to all board of directors decisions.

 

(e)           Return of Company Property.  In the event that Employee’s employment is terminated for any reason, the Employee (or his estate or legal representative, as the case may be) shall be obligated to immediately return all properly of the Company or any of its affiliates in his (or their) possession as of the date of termination, including, but not limited to, (i) cell phones, personal computers or other electronic devices provided by the Company, including all files resident on such devices; (ii) all memoranda, notes, records, files or other documentation, whether made or compiled by the Employee alone or in conjunction with others (regardless of whether such persons are employed by the Company); (iii) all proprietary or other information of the Company and its affiliates (originals and all copies) which is in the Employee’s control or possession (or that of his estate or legal representative, as the case may be); and (iv) any and all other property of the Company and its affiliates which is in the Employee’s control or possession (or that of his estate or legal representative, as the case may be), whether directly or indirectly.

 

(f)            Transition Services.  In the event that either (i) the Employee terminates his employment without Good Reason in accordance with Section 4(e) above, or (ii) the Employment Period expires pursuant to either party’s non-renewal thereof, the Employee agrees that after the date of such termination or expiration, as applicable, he shall, for a period not to exceed ninety (90) days from the effective date of his termination, take all actions as reasonably requested by the Company in order to transition all of his former job duties and responsibilities to his successor, and the Company shall compensate the Employee for such services at the pro rata hourly rate of the Employee’s Salary as of the date of the date of the Employee’s termination.

 

6.           Covenants of Employee.  The Employee covenants and agrees that:

 

(a)            Confidential Information.  During the Employment Period and at all times thereafter, the Employee shall keep secret and retain in strictest confidence, and shall not use for his benefit or the benefit of others, except in connection with the business and affairs of the Company and its affiliates, all confidential matters relating to the Company’s business or to the Company and its affiliates learned by the Employee heretofore or hereafter directly or indirectly from the Company and its affiliates, including, without limitation, information with respect to (a) operations, (b) sales figures, (c) profit or loss figures and financial data, (d) costs, (e) customers, clients, and customer lists (including, without limitation, credit history, repayment history, financial information and financial statements), and (f) plans (collectively, the “Confidential Information”) and shall not disclose such Confidential Information to anyone outside of the Company and its affiliates except with the Company’s express written consent and except for Confidential Information which (1) is at the time of receipt or thereafter becomes publicly known through no wrongful act of the Employee or (2) is received from a third party not under an obligation to keep such information confidential and without breach of this Agreement.  The Employee further agrees that he shall not make any statement or disclosure that (a) would be prohibited by applicable Federal or state laws or (b) is intended or reasonably likely to be detrimental to the Company or any of its subsidiaries or affiliates.

  

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(b)           Non-Solicitation.  During the Employment Period and for a six-month period thereafter (the “Restricted Period”), the Employee shall not, without the Company’s prior written consent, directly or indirectly, knowingly solicit or encourage any employee of the Company to leave the employment of the Company or hire or participate in hiring any employee who has left the employment of the Company during the Restricted Period or the six (6) month period prior to the beginning of the Restricted Period.

 

(c)            Non-Compete.

 

(i)           During the Employment Period and, in the event (A) the Employee’s employment with the Company is terminated for “Cause,” (B) the Employee resigns from the Company without “Good Reason,” or (C) the Employee elects for the Employment Period to expire in accordance with Section 1 above, then, also during the Restricted Period, the Employee expressly shall not, directly or indirectly, without the prior written consent of the Board, own, manage, operate, join, control, franchise, license, receive compensation or benefits from, or participate in the ownership, management, operation, or control of, or be employed or be otherwise connected in any manner with, a Competitive Business; provided, however, that the foregoing shall not prohibit the Employee from acquiring, solely as an investment and through market purchases, securities of any entity which are registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934 and which are publicly traded, so long as the Employee is not part of any control group of such entity and such securities, alone or if converted, do not constitute more than five percent (5%) of the outstanding voting power of that entity.  For purposes of this Section 6(c), “Competitive Business” means any enterprise in the business that markets, sells, or distributes, via vending kiosks, products or services that are the same or similar to the products or services the Company markets, sells, or distributes.

(ii)          Employee recognizes that Employee’s services hereunder are of a special, unique, unusual, extraordinary and intellectual character giving them a peculiar value, the loss of which cannot be reasonably or adequately compensated for in damages, and in the event of a breach of this Agreement by Employee (particularly, but without limitation, with respect to the provisions hereof relating to the exclusivity of Employee’s services), the Company shall, in addition to all other remedies available to it, be entitled to equitable relief by way of an injunction and any other legal or equitable remedies.  Anything to the contrary herein notwithstanding, the Company may seek such equitable relief in any federal or state court in New York and Employee hereby submits to exclusive jurisdiction in those courts for purposes of this Section (6)(c)(ii).  Such exclusive jurisdiction of courts in New York shall not affect a court’s ability to award equitable relief as provided in Section 7(a) of this Agreement.

 

(d)           Records.  All memoranda, notes, lists, records and other documents (and all copies thereof) made or compiled by the Employee or made available to the Employee by the Company concerning the Company’s business or the Company shall be the Company’s property and shall be delivered to the Company at any time on request.

 

(e)           Acknowledgment.  Employee acknowledges and agrees that the restrictions set forth in this Section 6 are critical and necessary to protect the Company’s legitimate business interests (including the protection of its Confidential Information); are reasonably drawn to this end with respect to duration, scope, and otherwise; are not unduly burdensome; are not injurious to the public interest; and are supported by adequate consideration.  Employee also acknowledges and agrees that, in the event that Employee breaches any of the provisions in this Section 6, the Company shall suffer immediate, irreparable injury and will, therefore, be entitled to injunctive relief, in addition to any other damages to which it may be entitled, as well as the costs and reasonable attorneys’ fees it incurs in enforcing its rights under this Section 6.  Employee further acknowledges that any breach or claimed breach of the provisions set forth in this Agreement will not be a defense to enforcement of the restrictions set forth in this Section 6.

 

(f)           Cessation of Payments and Benefits Upon Breach.  Company’s obligations to make any payments or confer any benefit under this Agreement, other than to pay for all compensation and benefits accrued but unpaid up to the date of termination, will automatically and immediately terminate in the event that Employee breaches any of the restrictive covenants in this Section 6; provided, however, that Company provides written notice to Employee specifying in reasonable detail the circumstances claimed to provide the basis for such breach without Company’s consent, of such events.

  

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7.           Rights and Remedies Upon Breach of Restrictive Covenants.  If the Employee breaches, or threatens to commit a breach of, any of the provisions of Section 6 (the “Restrictive Covenants”), the Company shall have the following rights and remedies (upon compliance with any necessary prerequisites imposed by law upon the availability of such remedies), each of which rights and remedies shall be independent of the other and severally enforceable, and all of which rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity:

 

(a)           The right and remedy to have the Restrictive Covenants specifically enforced by any court having equity jurisdiction, including, without limitation, the right to an entry against the Employee of restraining orders and injunctions (preliminary, mandatory, temporary and permanent) against violations, threatened or actual, and whether or not then continuing, of such covenants, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company; and

 

(b)           The right and remedy to require the Employee to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits (collectively, “Benefits”) derived or received by him as the result of any transactions constituting a breach of the Restrictive Covenants, and the Employee shall account for and pay over such Benefits to the Company.

 

8.           Indemnification.

 

(a)           The Company shall indemnify Employee to the fullest extent permitted by Delaware against all claims, actions, costs, expenses, liabilities, and losses (including without limitation, attorneys’ fees, judgments, fines, penalties, and ERISA excise taxes), incurred by Employee in connection with an Identifiable Proceeding that arises from or relates to any acts, events, or omissions that occur on or after the Effective Date of this Agreement.  For purposes of this Section 8, “Identifiable Proceeding” shall mean any identifiable action, suit, or proceeding, whether civil or criminal, administrative or investigative, in which Employee is made a party to, or a witness in, such action, suit, or proceeding by reason of the fact that Employee is or was an officer, director or employee of the Company or is or was serving as an officer, director, shareholder, employee, trustee, or agent of any other entity at the request of the Company.  To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, agents or fiduciaries of the Company, Employee shall be covered by such policy or policies in accordance with its or their terms.

 

(b)           The Company shall advance to Employee all reasonable costs and expenses incurred in connection with an Identifiable Proceeding within twenty (20) days after receipt by the Company of a written request for such advance.  Such request shall include an itemized list of the costs and expenses expected to be incurred in connection with the Identifiable Proceeding.  Employee shall promptly repay the amount of such advance if ultimately it shall be determined that Employee is not permitted to be indemnified against such costs and expenses under applicable law.  If Employee has commenced or commences legal proceedings in a court of competent jurisdiction to secure a determination that Employee should be indemnified under applicable law, as provided in this Section 8. then Employee shall not be required to reimburse the Company for any expense or cost advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or have lapsed).  Employee’s obligation to reimburse the Company, for expense advances shall be unsecured and no interest shall be charged thereon.

 

(c)           The Company shall not settle any Identifiable Proceeding or claim in any manner which would impose on Employee any penalty or limitation without Employee’s prior written consent.  Employee will not withhold consent to any proposed settlement of an Identifiable Proceeding unreasonably.

 

9.           Successors; Assignment.  This Agreement shall be binding on, and inure to the benefit of, each of the parties and their permitted successors and assigns.  This Agreement may be assigned by the Company to a successor in interest in connection with a sale of all or substantially all of the assets or securities of the Company.

 

10.         Severability; Blue Penciling.

  

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(a)           The Employee acknowledges and agrees that (i) he has had an opportunity to seek advice of counsel in connection with this Agreement and (ii) the Restrictive Covenants are reasonable in geographical and temporal scope and in all other respects.  If it is determined that any of the provisions of this Agreement, including, without limitation, any of the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the remainder of the provisions of this Agreement shall not thereby be affected and shall be given full effect, without regard to the invalid portions.

 

(b)           If any court determines that any of the covenants contained in this Agreement, including, without limitation, any of the Restrictive Covenants, or any part thereof, is unenforceable because of the duration or geographical scope of such provision, the duration or scope of such provision, as the case may be shall be reduced so that such provision becomes enforceable and, in its reduced form, such provision shall then be enforceable and shall be enforced.

 

11.         Waiver of Breach.  The waiver by either the Company or the Employee of a breach of any provision of this Agreement shall not operate as or be deemed a waiver of any subsequent breach by either the Company or the Employee.

 

12.         Notice.  Any notice to be given hereunder by a party hereto shall be in writing and shall be deemed to have been given when deposited in the U.S. mail, certified or registered mail, postage prepaid:

 

(a)           to the Employee addressed as follows:

 

___________________

___________________

___________________

(b)           to the Company addressed as follows:

 

Internet Media Services, Inc.

1507 7th Street, #425

Santa Monica, CA 90401

 

13.         Amendment.  This Agreement may be amended only by mutual agreement of the parties in writing without the consent of any other person and no person, other than the parties thereto (and the Employee’s estate upon his death), shall have any rights under or interest in this Agreement or the subject matter hereof.

 

14.         Applicable Law.  The provisions of this Agreement shall be governed by and construed in accordance with the internal laws of the State of  Delaware without regard to the conflicts of laws principles thereof.  Any dispute is to be resolved exclusively in the courts of the State of California.

 

15.         Interpretation.  This Agreement shall be construed as a whole, according to its fair meaning, and not in favor of or against any party.  Sections and section headings contained in this Agreement are for reference purposes only, and shall not affect in any manner the meaning or interpretation of this Agreement.  Whenever the context requires, references to the singular shall include the plural and the plural the singular.

 

16.         Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original of this Agreement, but all of which together shall constitute one and the same instrument.

 

17.         Authority.  Each party represents and warrants that such party has the right, power and authority to enter into and execute this Agreement and to perform and discharge all of the obligations hereunder; and that this Agreement constitutes the valid and legally binding agreement and obligation of such party and is enforceable in accordance with its terms.

  

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18.         Entire Agreement.  This Agreement is intended to be the final, complete, and exclusive statement of the terms of Employee’s employment by the Company and may not be contradicted by evidence of any prior or contemporaneous statements or agreements, except for agreements specifically referenced herein.  To the extent that the practices, policies or procedures of the Company, now or in the future, apply to Employee and are inconsistent with the terms of this Agreement, the provisions of this Agreement shall control.  Any subsequent change in Employee’s duties, position, or compensation will not affect the validity or scope of this Agreement.

 

[remainder of page intentionally left blank; signature page to follow]

 

  

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IN WITNESS WHEREOF, the Employee and the Company have executed this Employment Agreement as of the Effective Date.

 

	  	
“Employee”

	  
	  	  	  
	  	
/s/ Paul Neelin

	  
	  	
Name

	  
	  	  	  
	  	
“Company”

	  
	  	  	  
	  	
INTERNET MEDIA SERVICES, INC.

	  
	  	  	  
	  	
/s/ Alex Orlando

	  
	  	
Name: Alex Orlando

	  
	  	
Title: BOARD MEMBER

 

 

	  
	  	  	  
	  	
/s/ Patrick White

	  
	  	
Name: Patrick White

Title: BOARD MEMBER

 

 

	  
	  	  	  
	  	
/s/ Philip Jones

	  
	  	
Name: Philip Jones

Title: BOARD MEMBER

	  

[Signature Page to Employment Agreement]

 

  

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Schedule A

 

Bonus Structure

 

	
PERIOD

	
CASH BONUS

	
CRITERIA FOR CASH BONUS

	
1/1/2014 – 12/31/2014

	
Minimum 20 PERCENT OF SALARY

	
GROSS REVENUE FOR THE PERIOD OVER

$1,000,000

	
1/1/2015 – 12/31/2015

	
Minimum 20 PERCENT OF SALARY

	
GROSS REVENUE FOR THE PERIOD OVER

$2,000,000

	
1/1/2016 – 12/31/2016

	
Minimum 20 PERCENT OF SALARY

	
GROSS REVENUE FOR THE PERIOD OVER

$3,000,000

 

SHOULD REVENUE EXCEED THE YEARLY TARGET AND MEET FUTURE YEAR TARGETS

THEN THE BONUS WILL BE ACCELERATED TO INCLUDE THE FUTURE YEARS BONUS.

 

Gross revenue is calculated on a GAAP basis.ex10-26.htm

Exhibit 10.26

 

	 	  
ESTABLISHED 1947

Member FINRA/SIPC

 

 

April 10, 2014

 

Paul Neelin

Chairman & Chief Executive Officer

U-Vend, Inc.

312 Grays Road

PO box 56013

Fiesta RPO, Stoney Creek

Ontario L8G-5C9

Dear Paul:

 

National Securities Corp. (“National”) is pleased to act as exclusive financial advisor to U-Vend, Inc. (the “Company” ) with respect to (i) advising the Company regarding its strategy and financial alternatives, (ii) providing investment banking services to the Company, which may include representing the Company on a “best efforts” basis to obtain financing in the form of equity, debt, convertible securities or any other securities (a “Capital Raising Transaction”) (iii) advising the Company in the review of a potential acquisition of various targeted companies (the “Targeted Companies”) (in one or a series of transactions), by purchase, merger, consolidation and other business combination involving all, or a substantial amount of, the business, securities, or assets of the Targeted Companies (an “Acquisition Transaction”) (iv) assisting the Company in identifying acquirers (the “Acquirer”) and evaluating, prioritizing and negotiating proposals to sell the Company, in whole or parts by sale, merger, consolidation and other business combinations involving all or substantial amount of the business, securities, or assets of the Company (a “Sale Transaction”). It is understood that during the term of this engagement, the Company or National may add additional companies to the list of Targeted Companies or Acquirers. The company is free, at its sole discretion, to accept or reject the terms of any proposed capital raising, acquisition or sale transaction, and may modify, postpone or abandon the transaction(s) at its sole discretion for any reason or no reason at all.

 

1.           Services. In connection with this engagement, National will perform the following services:

 

a.           Capital Raising Services. National will assist the Company in a Capital Raising Transaction(s). National will introduce the Company to potential investors who may have an interest in financing the Company and will advise the Company with respect to the proposed structure and terms and conditions of the Capital Raising Transaction. National will help the Company prepare for investor meetings, management presentations, responses to requests for data, negotiating and closing the Capital Raising Transaction. This includes reviewing proposals from potential financing sources, analyzing the terms of such proposals and

 

  

  

  

U-Vend, Inc.

April 10, 2014

Page 2

 

participating in presentations to the Company’s Board of Directors regarding any proposals, as well as reviewing the transaction documentation and other customary closing activities.

 

b.           Advisory Services. National will advise the Company with respect to its strategy and financial options, Acquisition Transaction(s) or Sale Transaction(s). We will participate in presentations to the Company’s Board of Directors relating to our advisory work, assess the proposed structures for a transaction and offer the Company guidance in negotiating the terms of the transaction and will assist the Company in the closing of the transaction, including formulating and presenting responses and counteroffers, conducting due diligence, and documenting the transaction.

 

2.           Information Provided to National. In connection with our engagement, the Company has agreed to furnish to National, on a timely basis, all relevant information needed by National to perform our obligations under the terms of this agreement. During our engagement, it may be necessary for us: to interview the management of, the auditors for, and the consultants and advisors to, the Company and/or the Targeted Companies or Acquirers; to rely (without independent verification) upon data furnished to us by you and by them; and to review any financial and other reports relating to the business and financial condition of the Company and/or Targeted Companies or Acquirers as we may determine to be relevant under the circumstances. In this connection, the Company will make available to us such information as we may request, including information with respect to the assets, liabilities, earnings, earning power, financial condition, historical performance, future prospects and financial projections and the assumptions used in the development of such projections of the Company. We agree that all non-public information obtained by us in connection with our engagement will be held by us in strict confidence and will be used by us solely for the purpose of performing our obligations relating to our engagement.

 

We do not assume any responsibility for, or with respect to, the accuracy, completeness or fairness of the information and data supplied to us by the Company and/or Targeted Companies or Acquirers or their representatives. In addition, the Company acknowledges that we will assume, without independent verification, that all information supplied to us with respect to the Company and/or Targeted Companies or Acquirers will be true, correct and complete in all material respects and will not contain any untrue statements of material fact or omit to state a material fact necessary to make the information supplied to us not misleading. If at any time during the course of our engagement the Company becomes aware of any material change in any of the information previously furnished to us, it will promptly advise us of the change. Notwithstanding the foregoing, in its dealings and communications with third parties on behalf of the Company, and subject to its right to rely on the veracity and completeness of all information provided to it by or on behalf of the Company, National shall not make any untrue statements of material fact or fail to state a material fact necessary to make the statements and information contained therein, in light of the circumstances under which they are made, not false or misleading.

 

 

	 

  

  

  

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3.          Scope of Engagement. The Company acknowledges that we will not make, or arrange for others to make, an appraisal of any physical assets of the Targeted Companies, or the Company. Nonetheless, if we determine that any such appraisal is necessary or desirable, we will so advise the Company and, if approved by the Company in writing, the costs incurred in connection with such appraisal(s) will be borne by the Company. No additional persons or entities, including co-underwriters, co-placement agents, co-initial purchasers or co-arrangers shall participate in any transaction in any capacity without the prior written consent of National and the Company.

 

National is being engaged by the Company only in connection with the matters described in this letter agreement and for no other purpose. We have not made, and will assume no responsibility to make any representation in connection with our engagement as to any legal matter. National shall not be required to render any advice or reports in writing or to perform any other services.

 

4.           Term of Engagement. Our representation will continue for a period of twelve (12) months from the date first set forth above; however National’s engagement hereunder may be terminated at any time by either National or the Company upon written notice thereof to the other party, with or without cause, without liability or continuing obligation on the part of the Company or National, provided, however, that no termination or expiration of this letter agreement shall affect the matters set forth in Sections 2, 6, 9 and 14 and the indemnification provisions of this Agreement. Notwithstanding the foregoing, in the event of termination or expiration of this agreement, other than as a result of National’s willful misconduct or gross negligence, National will be entitled to a Financing Completion Fee and/or Advisory Completion Fee (as defined under Section 5) if a transaction is Consummated (as defined below) by the Company during the twelve (12) month period following expiration or termination of this letter agreement with any Targeted Companies, Acquirers and/or investors contacted during the term of this letter agreement (“Tail Period”). Upon termination or expiration of this letter agreement National and the Company will compile a list which shall serve as the final definitive list of investors, Targeted Companies and identified Acquirers which shall include any and all companies that were introduced to the Company directly or indirectly by National or contacted directly by the Company or approached National or the Company directly or indirectly during the term of this letter agreement. A transaction shall be deemed “Consummated” by the Company upon execution of the definitive agreements for such transaction by the Company.

 

5.           Fees and Expenses. As compensation for our professional services, National will receive compensation payable under clause 5(a) through 5(c) below. The Company also agrees to reimburse any reasonable out-of-pocket expenses actually incurred by National during the term of its engagement hereunder, with any expenditure greater than $500 requiring prior approval. The Company also agrees to reimburse National for all reasonably necessary legal expenses

 

 

	 

  

  

  

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actually incurred by National for services provided by outside counsel, whether or not a Capital Raising, Acquisition, or Sale Transaction occurs.

 

Compensation for our services will be as follows:

 

a. Strategic Advisory.

 

The Company shall pay National a non-refundable advisory fee in the amount of five thousand dollars ($5,000) (the “Strategic Advisory Fee”) upon execution of this agreement.

 

b.           Capital Raising.

 

(i)           Financing Completion Fee. During the term of this agreement and the Tail Period, at the time the Capital Raising Transaction closes, National will be paid a cash fee (the “Financing Completion Fee”) equal to 8.0% of the total amount of cash received by the Company in an equity or equity-linked transaction and 3.0% of the total amount of debt received by the Company, upon the sale of its securities to investors introduced to the Company by National during the term of this agreement. For those investors introduced by the Company, the fee shall be reduced by half.

 

(ii)           Warrants. As part of the Financing Completion Fee, National will receive warrants to purchase common stock in an amount equal to 8.0% of the number of shares of securities purchased by investors in a Capital Raising Transaction and that the investors obtain a right to acquire through purchase, conversion, or exercise of convertible securities issued by the Company in a Capital Raising Transaction that closes during the term of this agreement and the Tail Period. The warrants will include piggyback registration rights, a net exercise provision, as well as other customary conditions, and will have a term of five years from the closing date of the Capital Raising Transaction. The warrants will be immediately exercisable at the price per share at which the investor can acquire the common stock, adjusted for conversion, stock splits or other dilutive events. In the event there is no public market for the Company’s common stock and investors do not receive warrants in a Capital Raising Transaction, the exercise price of the warrants due National will be equal to the price per share that investors in the Capital Raising Transaction are able to purchase securities from the Company.

 

c.           Merger & Acquisition Advisory Services.

 

(i)           Advisory Completion Fee. During the term of this agreement (and thereafter as provided in Section 4 above) at the time an Acquisition or Sale Transaction closes, the Company will pay National a fee (the “Advisory Completion Fee”) equal to the greater of (i) 2.0% times the Transaction Value (as defined in Appendix A) and (ii) $100,000 (one hundred thousand US dollars), at the closing of the Acquisition or Sale Transaction; as and when actually received by the Company.  Such completion fee shall be paid in the same form and in the same ratios as the consideration in the Acquisition or Sale Transaction. In the event the Transaction is a Reverse Takeover (“RTO”), the Company shall issue to NHLD and/or its designees 4% of

 

 

	 

 

  

  

  

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the total post-transaction shares outstanding (“RTO Shares”) for its services. For the purpose of calculating total shares outstanding, any equity issued in conjunction with a simultaneous funding transaction shall be excluded from the calculation.

 

(ii)           If an Acquisition or Sale Transaction is Consummated whereby, directly or indirectly, less than a 50% interest in the Company or the targeted companies, as the case may be, or any of their securities, businesses or assets are transferred for consideration, or if a transaction is consummated consisting of a minority investment, the formation of a joint venture, partnership or other business entity or entry into a strategic alliance (such as an agreement, relationship or arrangement involving supply, distribution or sales representation of products or services, research and development, technology, product licensing or similar arrangement), the Company will pay National a fee equal to the greater of (i) 3.0% times the Transaction Value (as defined in Appendix A) and (ii) $100,000 (one hundred thousand US dollars), upon the occurrence of such event.  Such completion fee shall be paid in the same form and in the same ratios as the consideration in the Acquisition or Sale Transaction.

 

(iii)           If an Acquisition or Sale Transaction is not Consummated and the Company is entitled to receive a termination or break-up or topping fee (the “Break-up Fee”) or any other form of compensation, then the Company shall pay National, upon receipt of the Break-up Fee an amount equal to 30% of the Break-up Fee in the same form of compensation as received by the Company.

 

6.           Indemnity and Contribution. The parties agree to the terms of National’s indemnification agreement, which is attached hereto as Appendix B and incorporated herein by reference. The provisions of this paragraph 6 shall survive any termination of this agreement.

 

7.           Other Business. Except in the event this agreement is terminated by the Company due to National’s breach of this agreement, the Company grants National  a right of first refusal to provide investment banking services to the Company on an exclusive basis in all matters for which investment banking services are sought by the Company during the term of this engagement letter and for a period of twelve (12) months from the expiration or termination of this letter agreement in the case that a Capital Raising, Acquisition or Sale Transaction is consummated as contemplated by this Engagement Letter (such right, the “Right of First Refusal”). For these purposes, investment banking services shall include, without limitation, (i) acting as sole bookrunner and lead manager for any underwritten public offering of securities, including equity, equity-linked or senior, senior subordinated or junior debt securities with a minimum of 60% economics; (ii) acting as exclusive placement agent and/or financial advisor in connection with any private offering of securities, including equity, equity-linked or debt securities of the Company; (iii) acting as exclusive financial advisor in connection with any acquisition, merger, consolidation and other business combination involving all or substantial amount of the business, securities, assets of another entity; and (iv) acting as exclusive financial advisor in connection with any sale or other transfer by the Company, directly or indirectly, of a majority or controlling portion of its capital stock or assets to another entity, any purchase or other transfer by another entity, directly or indirectly, of a majority or controlling portion of the

 

 

	 

  

  

  

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capital stock or assets of the Company, and any merger or consolidation of the Company with another entity. National shall notify the Company of its intention to exercise the Right of First Refusal within 10 business days following notice in writing by the Company of its intention to retain a financial advisor/agent/underwriter. Any decision by National to act in any such capacity shall be contained in separate agreements, which agreements would contain, among other matters, provisions for customary fees for transactions of similar size and nature, as may be mutually agreed upon, and indemnification of National and its affiliates and shall be subject to general market conditions. If National declines to exercise the Right of First Refusal, the Company shall have the right to retain any other person or persons to provide such services on terms and conditions which are not materially more favorable to such other person or persons than the terms declined by National. As compensation for any of the foregoing services, National will be paid customary fees to be mutually agreed upon at the appropriate time.

 

8.           Other National Activities. National is a full service securities firm engaged in securities trading and brokerage activities as well as investment banking and financial advisory services. In the ordinary course of our trading and brokerage activities, National or its affiliates may hold positions, for its own account or the accounts of customers, in equity, debt or other securities of the Company or any other company that may be involved in an Acquisition or Sale Transaction. The Company also acknowledges that National and its affiliates are in the business of providing financial services and consulting advice to others. Nothing herein contained shall be construed to limit or restrict National in conducting such business with respect to others, or in rendering such advice to others, except as such advice may relate to matters relating to the Company’s business and properties and that might compromise confidential information delivered by the Company to National.

 

9.           Confidentiality of Advice. Except as otherwise provided in this paragraph, any written or other advice rendered by National pursuant to its engagement hereunder is solely for the use and benefit of the Board of Directors of the Company and shall not be publicly disclosed in whole or in part, in any manner or summarized, excerpted from or otherwise publicly referred to or made available to third parties, other than representatives and agents of the Board of Directors, without National’s prior written approval, unless such disclosure is required by law. In addition, National may not be otherwise publicly referred to without its prior written consent.

 

10.           Compliance with Applicable Law. In connection with this engagement, the Company will comply with all applicable federal, state and foreign securities laws and rules promulgated thereunder, and other applicable laws, rules and regulations.

 

11.           Independent Contractor. National is and at all times during the term hereof will remain an independent contractor, and nothing contained in this letter agreement will create the relationship of employer and employee or principal and agent as between the Company and National or any of its employees. Without limiting the generality of the foregoing, all final decisions with respect to matters about which National has provided services hereunder shall be solely those of the Company, and National shall have no liability relating thereto or arising therefrom. National shall have no authority to bind or act for the Company in any respect. It is understood that National responsibility to the Company is solely contractual in nature and that

 

 

	 

  

  

  

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National does not owe the Company, or any other party, any fiduciary duty as a result of its engagement.

 

12.           Successors and Assigns. This letter agreement and all obligations and benefits of the parties hereto shall bind and shall inure to their benefit and that of their respective successors and assigns. The indemnity and contribution provisions incorporated into this letter agreement are for the express benefit of the officers, directors, employees, consultants, agents and controlling persons of National and their respective successors, assigns and parent companies.

 

13.           Announcements. Upon completion of a Capital Raising, Acquisition or Sale Transaction, the Company grants to National the right to place customary announcement(s) of this engagement in certain newspapers and to mail announcement(s) to persons and firms selected by National, the whole subject to the Company’s prior approval and all costs of such announcement(s) will be borne by National.

 

14.           Governing Law and Arbitration. This agreement shall be governed by and construed under the laws of the State of New York applicable to contracts made and to be performed entirely within the State of New York. Any dispute, claim or controversy arising out of or relating to this agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by binding arbitration in the City and County of New York, before one arbitrator. The arbitration shall be administered by JAMS. Judgment on the award may be entered in any court having jurisdiction. This clause shall not preclude parties from seeking provisional remedies in aid of arbitration from a court of appropriate jurisdiction. Each party will bear its own costs for arbitration. The prevailing party in arbitration shall be entitled to reasonable attorneys’ fees. The provisions of this paragraph 14 shall survive any termination of this agreement.

 

EACH OF NATIONAL AND THE COMPANY (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY LAW, ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND CREDITORS) HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.

 

15.           General Provisions. No purported waiver or modification of any of the terms of this letter agreement will be valid unless made in writing and signed by the parties hereto. Section headings used in this letter agreement are for convenience only, are not a part of this letter agreement and will not be used in construing any of the terms hereof. This letter agreement constitutes and embodies the entire understanding and agreement of the parties hereto relating to the subject matter hereof, and there are no other agreements or understandings, written or oral, in effect between the parties relating to the subject matter hereof. No representation, promise, inducement or statement of intention has been made by either of the parties hereto which is to be embodied in this letter agreement, and none of the parties hereto shall be bound by or liable for any alleged representation, promise, inducement or statement of intention, not so set forth herein. No provision of this letter agreement shall be construed in favor of or against either of the parties

 

 

	 

  

  

  

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hereto by reason of the extent to which either of the parties or its counsel participated in the drafting hereof. If any provision of this letter agreement is held by a court of competent jurisdiction to be invalid, illegal or unenforceable, the remaining provisions hereof shall in no way be affected and shall remain in full force and effect. This letter agreement may be executed in any number of counterparts and by facsimile signature.

 

If the foregoing correctly sets forth your understanding of our agreement, please sign the enclosed copy of this letter and return it to National.

 

 

	
Very truly yours,

	  
	
NATIONAL SECURITIES CORP.

	  
	  
	
By:                                                                          

	
Jonathan C. Rich

	
EVP – Director of Investment Banking

The undersigned hereby accepts, agrees to and becomes party to the foregoing letter agreement, effective as of the date first written above.

 

U-VEND, INC.

By:                                                                

Paul Neelin

Chairman & Chief Executive Officer

 

 

	 

  

  

  

 

	 	  
ESTABLISHED 1947

Member FINRA/SIPC

 

 

APPENDIX A —DEFINITION OF TRANSACTION VALUE

 

In the context of this Agreement, “Transaction Value” means the aggregate value of all cash, cash equivalents, securities, and any other forms of payment  paid to  and actually received, directly or indirectly, by the Company or the Targeted Companies, as the case may be, and its share, option, warrant and debt holders including, without limitation payments for stock or assets sold, funds loaned to the Company or the Targeted Companies, prepaid royalties, advances against sales, licensing agreements, reimbursed NRE (non-recurring engineering) and any and all other payments that may be construed as advanced payments for products or services to be delivered in the future. In addition, the Transaction Value shall include (A) the aggregate amount of any dividends or other distributions to the shareholders of the Company or the Targeted Companies following the date of this Agreement, other than normal recurring cash dividends in amounts not materially greater than currently paid; and (B) the fair market value at the time of payment of the fees of (i) any of the Company’s or the Targeted Companies’ consolidated debt (both long-term and short-term, including capitalized leases and excluding trade liabilities or obligations, which is repaid, retired, extinguished (other than by the Company or its affiliates and/or control persons) assumed or refinanced at the closing or in anticipation of an Acquisition or Sale Transaction, as the case may be; (ii) all options, warrants, stock purchase rights or stock appreciation rights, whether or not vested, purchased or assumed by an acquirer in connection with a transaction.

 

If part or all of the Transaction Value in an Acquisition or Sale Transaction is represented by securities, the value thereof for the purpose of computing the fees shall be determined as follows:

 

(i)           For securities which are publicly traded prior to the consummation of such transaction, the average last sale price for such securities for the ten trading days prior to the consummation of such transaction;

 

(ii)           For newly-issued, publicly-traded securities, the average last sale price for such securities for ten trading days subsequent to the consummation of such transaction, with such portion of the fees being payable the eleventh trading day subsequent to the consummation of such transaction; and

 

(iii)           For securities for which no market exists, the mutual agreement of the Company and National as determined prior to the closing of such transaction.

 

If part or all of the Transaction Value is fixed amounts of cash or other consideration payable in the future, including any non-competition, but excluding employment contracts, consulting agreements, employee benefit plans or similar arrangements, then the calculation of the fees will be based on the present value of those payments discounted using Bank of America’s reference rate as the discount rate.

 

  

  

  

 

	 	  
ESTABLISHED 1947

Member FINRA/SIPC

 

 

APPENDIX B — INDEMNIFICATION AGREEMENT

 

The Company agrees to indemnify and hold harmless National and its officers, directors, employees, consultants, attorneys, agents, affiliates, parent company and controlling persons (within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as amended) (National and each such other persons are collectively and individually referred to below as an "Indemnified Party") from and against any and all loss, claim, damage, liability and expense whatsoever, as incurred, including, without limitation, reasonable costs of any investigation, legal and other fees and expenses incurred in connection with, and any amounts paid in settlement of, any action, suit or proceeding or any claim asserted, to which the Indemnified Party may become subject under any applicable federal or state law (whether in tort, contract or on any other basis) or otherwise, (i) arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the private placement memorandum, registration statement (including documents, incorporated by reference) (the “Registration Statement”) or in any other written or oral communication provided by or on behalf of the Company to any actual or prospective purchaser of the securities or arising out of or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (ii) related to the performance by the Indemnified Party of the services contemplated by this letter agreement (including, without limitation, the offer and sale of the securities) and will reimburse the Indemnified Party for all expenses (including legal fees and expenses) in connection with the investigation of, preparation for or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not the Indemnified Party is a party.  The Company will not be liable under clause (ii) of the foregoing indemnification provision to the extent that any loss, claim, damage, liability or expense is found in a final judgment by a court or arbitrator, not subject to appeal or further appeal, to have resulted directly from the Indemnified Party's willful misconduct or gross negligence.  The Company also agrees that the Indemnified Party shall have no liability (whether direct or indirect, in contract, tort or otherwise) to the Company related to, or arising out of, the engagement of the Indemnified Party pursuant to, or the performance by the Indemnified Party of the services contemplated by, this letter agreement except to the extent that any loss, claim, damage, liability or expense is found in a final judgment by a court or arbitrator, not subject to appeal or further appeal, to have resulted directly from the Indemnified Party's willful misconduct or gross negligence.

 

If the indemnity provided above shall be unenforceable or unavailable for any reason whatsoever, the Company, its successors and assigns, and the Indemnified Party shall contribute to all such losses, claims, damages, liabilities and expenses (including, without limitation, all costs of any investigation, legal or other fees and expenses incurred in connection with, and any amounts paid in settlement of, any action, suit or proceeding or any claim asserted) (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and National under the terms of this letter agreement or (ii) if the allocation provided for by clause (i) of this sentence is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i), but also the relative fault of the Company and National in connection with the matter(s) as to which contribution is to be made.  The relative benefits

 

  

  

  

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received by the Company and National shall be deemed to be in the same proportion as the fee the Company actually pays to National bears to the total value of the consideration paid or to be paid by the Company and/or the Company's shareholders in the Capital Raising, Acquisition or Sale Transaction.  The relative fault of the Company and National shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by National and the Company’s and National’s relative intent, knowledge, access to information and opportunity to correct.  The Company and National agree that it would not be just or equitable if contribution pursuant to this paragraph were determined by pro rata allocation or by any other method of allocation which does not take into account these equitable considerations. Notwithstanding the foregoing, to the extent permitted by law, in no event shall the Indemnified Party's share of such losses, claims, damages, liabilities and expenses exceed, in the aggregate, the fee actually paid to the Indemnified Party by the Company. The Company further agrees that, without National’s prior written consent, which consent will not be unreasonably withheld, it will not enter into any settlement of a lawsuit, claim or other proceeding arising out of the transactions contemplated by this agreement unless such settlement includes an explicit and unconditional release from the party bringing such lawsuit, claim or other proceeding of all such lawsuits, claims, or other proceedings against the Indemnified Parties.

 

The Indemnified Party will give prompt written notice to the Company of any claim for which it seeks indemnification hereunder, but the omission to so notify the Company will not relieve the Company from any liability which it may otherwise have hereunder except to the extent that the Company is damaged or prejudiced by such omission or from any liability it may have other than under this Appendix B. The Company shall have the right to assume the defense of any claim, lawsuit or action (collectively an "action") for which the Indemnified Party seeks indemnification hereunder, subject to the provisions stated herein with counsel reasonably satisfactory to the Indemnified Party. After notice from the Company to the Indemnified Party of its election to assume the defense thereof, and so long as the Company performs its obligations pursuant to such election, the Company will not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of investigation. The Indemnified Party shall have the right to employ separate counsel in any such action and to participate in the defense thereof at its own expense; provided, however, that the reasonable fees and expenses of such counsel shall be at the expense of the Company if (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) the named parties to any such action (including any impleaded parties) include both the Indemnified Party and the Company and the Indemnified Party shall have reasonably concluded, based on advice of counsel, that there may be legal defenses available to the Indemnified Party which are different from, or in conflict with, any legal defenses which may be available to the Company (in which event the Company shall not have the right to assume the defense of such action on behalf of the Indemnified Party, it being understood, however, that the Company shall not be liable for the reasonable fees and expenses of more than one separate firm of attorneys for all Indemnified Parties in each jurisdiction in which counsel is needed). Despite the foregoing, the Indemnified Party shall not settle any claim without the prior written approval of the Company, which approval shall not be unreasonably

  

  

  

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withheld, so long as the Company is not in material breach of this Appendix B. Also, each Indemnified Party shall make reasonable efforts to mitigate its losses and liabilities. In addition to the Company's other obligations hereunder and without limitation, the Company agrees to pay monthly, upon receipt of itemized statements therefore, all reasonable fees and expenses of counsel incurred by an Indemnified Party in defending any claim of the type set forth in the preceding paragraphs or in producing documents, assisting in answering any interrogatories, giving any deposition testimony or otherwise becoming involved in any action or response to any claim relating to the engagement referred to herein, or any of the matters enumerated in the preceding paragraphs, whether or not any claim is made against an Indemnified Party or an Indemnified Party is named as a party to any such action.

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