Document:

Exhibit
      10.3

     

    SEPARATION
      AND TRANSITION SERVICES AGREEMENT

     

    This
      Separation and Transition Services Agreement is made by and between
      Arbinet-thexchange, Inc., a Delaware corporation with its headquarters located
      in New Brunswick, New Jersey (the “Company”), and William M. Freeman (the
“Executive”), effective as of the Effective Date (as that term is defined in
      Section 8, below). This agreement summarizes the severance, transition and
      other
      arrangements between the Executive and the Company (the “Separation
      Agreement”). In consideration of the mutual covenants contained in this
      Separation Agreement, the Company and the Executive agree as
      follows:

    

    1. Termination.
      The
      Executive’s employment with the Company is hereby terminated without cause as of
      the Effective Date in accordance with Section 6(c) of that certain Employment
      Agreement (the “Employment Agreement”) made as of November 16, 2007, by and
      between the Company and the Executive and the parties hereby acknowledge and
      agree that the Employment Agreement is terminated as of the Effective
      Date.

     

    2. Transition
      Services.
      Subject
      to the terms and conditions of this Separation Agreement, the Executive shall
      serve the Company as the Chairman of the Board of Directors of the Company
      (the
“Board of Directors”) through the Company’s 2009 Annual Meeting of Stockholders
      (the “2009 Annual Meeting”). The Executive shall also provide the Company with
      such additional transition assistance incidental to such position as the
      Executive may be reasonably requested by the Board of Directors, including,
      but
      not limited to, working on various matters related to (a) evaluating potential
      merger, stock purchase, asset purchase, recapitalization, reorganization,
      consolidation, amalgamation or other transaction opportunities for the Company
      and (b) significant members of the Company’s exchange. In such capacity or
      capacities, the Executive shall provide such transition services in connection
      with the business, affairs and operations of the Company as may be reasonably
      assigned or delegated to the Executive from time to time by or under the
      authority of the Board of Directors.

     

    3. Transition
      Period.
      The
      Executive agrees to serve as a Class I Director until the 2009 Annual Meeting
      (the “Transition Period”). The Executive further agrees that, effective as of
      the date of the 2009 Annual Meeting, the Executive shall no longer be a member
      of the Board of Directors and Chairman of the Board of Directors, and such
      resignation shall be effective as of that date.

     

    4. Severance
      Payments; Director Compensation; Benefits:
      

     

    (a) Severance
      Payments.
      The
      Company shall pay you severance pay in the aggregate of Four Hundred
      Seventy-Eight Thousand One Hundred Twenty Five Dollars ($478,125), which is
      comprised of:

     

    (i) Aggregate
      payments of Thirty-One Thousand Two Hundred Fifty ($31,250), which is equal
      to
      the salary which would otherwise be payable under the Employment Agreement
      from
      the date hereof until October 1, 2008 (the “Initial Transition Period”), at the
      annual rate of Three Hundred Seven-Five Thousand Dollars ($375,000) (the
“Initial Severance Payment”) payable in periodic installments during the Initial
      Transition Period in accordance with the Company’s ordinary payroll
      periods;

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (ii) One
      (1)
      lump sum payment the salary which would otherwise be payable under the
      Employment Agreement from October 2, 2008 and November 16, 2008, equal
      to Forty-Six Thousand Eight Hundred Seventy-Five ($46,875), payable within
      ten
      (10) days of execution of this Separation Agreement;

     

    (iii) One
      (1)
      lump sum payment of Four Hundred Dollars ($400,000) (the “Severance Payment”
and, together with the Initial Severance Payment, the “Severance Payments”)
      payable on the earlier of (A) six (6) months and one (1) day following October
      1, 2008 and (B) the death of the Executive consisting of:

     

    (1) Twelve
      (12) months’ base salary, equal to Three Hundred Seventy-Five Hundred Dollars
      ($375,000); and

     

    (2) Reimbursement
      for payments under the Consolidated Omnibus Budget Reconciliation Act of 1985
      (“COBRA”) for a period of one (1) year following the Effective Date, plus an
      amount equal to potential employer contributions to Arbinet’s retirement plan
      for one year, which amount cannot exceed Twenty-Five Thousand Dollars
      ($25,000).

     

    (b) Director
      Compensation.
      The
      Executive hereby waives the right to any compensation under the Company’s
      non-employee director compensation policy during the Transition
      Period.

     

    (c) Benefits.
      The
      Company will present the Executive with information on COBRA under separate
      cover. If the Executive timely elects continuation of coverage under COBRA,
      the
      Executive shall be entitled to coverage under the Company’s group medical and
      dental plans in which the Executive is currently participating (“Group Health
      Plans”) at the coverage levels that currently apply to the Executive, subject to
      payment solely by the Executive of any premiums at the then current rate
      required for active employees with the same coverage levels, effective until
      the
      COBRA continuation period ends. 

     

    (d) Additional
      Benefits.
      The
      Company shall provide the following additional benefits to the Executive during
      the Transition Period:

     

    (i) Reimbursement
      of Business Expenses.
      The
      Company shall reimburse the Executive for all reasonable expenses incurred
      by
      him in performing services during the Transition Period, including any expenses
      resulting from any travel at the direction of and/or preapproved by the
      Company’s Chief Executive Officer, including but not limited to travel to New
      Jersey, all such reimbursements to be made in accordance with the Company’s
      policies and procedures for its senior executive officers, as in effect from
      time to time. 

     

    (ii) Reimbursement
      of Living Expenses.
      In
      addition to reimbursements pursuant to Section 4(d)(i) above, the Company shall
      also reimburse the Executive for the cost of temporary housing in the New Jersey
      area, which amounts shall not exceed One Thousand Five Hundred Dollars ($1,500)
      per month.

    
      
        
        

      

      
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    (iii) Indemnification.
      During
      the Transition Period, Executive will be included under the Company’s directors
      and officers liability insurance policy, with the same coverage as is provided
      to other directors or officers of the Company in respect of their service to
      the
      Company, and such coverage will continue thereafter without interruption for
      so
      long as the Company, or its successors and assigns, maintains such coverage
      or
      any similar coverage for its officers and directors.

     

    (iv) Legal
      Fees.
      The
      Company shall reimburse the Executive for all reasonable and documented attorney
      and professional fees incurred by the Executive in connection with the
      negotiation and review of the terms of this Separation Agreement.

     

    (v) Options.
      During
      the Transition Period (and for so long as the Executive continues to serve
      as an
      employee, officer or director, or consultant or advisor to, the Company), the
      Executive shall be deemed an “Eligible Participant” under the terms of the
      Executive’s Non-Qualified Stock Option Agreement granted under the Company’s
      2004 Stock Inventive Plan and the options granted thereunder shall continue
      to
      vest during such period in accordance with the terms thereunder.

     

    (e) Exclusivity
      of Payments and Benefits.
      During
      the Transition Period, the Executive shall not be entitled to any payments
      or
      benefits other than those provided under this Separation Agreement.

     

    5. Extent
      of Service.
      The
      Executive shall, subject to the direction and supervision of the Chief Executive
      Officer of the Company, devote (a) during the Initial Transition Period, the
      Executive’s full business time and (b) from expiration of the Initial Transition
      Period until the expiration of the Transition Period, no minimum amount of
      time,
      but in any event not to exceed five (5) hours a week or, in the aggregate,
      20%
      of the average weekly hours worked by the Executive under the Employment
      Agreement, including service as a member of the Board of Directors, in each
      case, as well as his best efforts and business judgment, skill and knowledge,
      to
      the discharge of the Executive’s duties and responsibilities under this
      Separation Agreement; provided
      that
      nothing in this Agreement shall be construed as preventing the Executive
      from:

     

    (a) investing
      the Executive’s assets in any company or other entity in a manner not prohibited
      by Section 6(d) and, during the Initial Transition Period, in such form or
      manner as shall not require any material activities on the Executive’s part in
      connection with the operations or affairs of the companies or other entities
      in
      which such investments are made;

     

    (b) engaging
      in religious, charitable or other community or non-profit activities that do
      not
      impair the Executive’s ability to fulfill the Executive’s duties and
      responsibilities under this Agreement; or

     

    (c) serving
      as a member of the board of directors of the companies listed on Exhibit
      A
      attached
      hereto or any other one or more private companies, subject to Section 6(d)
      below.

    
      
        
        

      

      
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    6. Confidential
      Information, Noncompetition and Cooperation.

     

    (a) Confidential
      Information.
      As used
      in Separation Agreement, “Confidential Information” means information belonging
      to the Company which is of value to the Company in the course of conducting
      its
      business and the disclosure of which could result in a competitive or other
      disadvantage to the Company. Confidential Information includes, without
      limitation, financial information, reports, and forecasts; inventions,
      improvements and other intellectual property; trade secrets; know-how; designs,
      processes or formulae; software; market or sales information or plans; customer
      lists; and business plans, prospects and opportunities (such as possible
      acquisitions or dispositions of businesses or facilities) which have been
      discussed or considered by the management of the Company. Confidential
      Information includes information developed by the Executive in the course of
      the
      Executive’s employment under Employment Agreement (the “Employment Services”)
      and the performance of the Executive’s performance of the services under this
      Separation Agreement (the “Transition Services,” and together with the
      Employment Services, the “Services”), as well as other information to which the
      Executive may have access in connection with the Services. Confidential
      Information also includes the confidential information of others with which
      the
      Company has a business relationship. Notwithstanding the foregoing, Confidential
      Information does not include (i) information in the public domain, unless due
      to
      breach of the Executive’s duties under Section 6(b) or (ii) otherwise known
      by the Executive other than by reason of his employment with the Company under
      the Employment Agreement or performing obligations hereunder; provided
      that the
      source of such information is not known by the Executive to have disclosed
      such
      information in violation of an obligation of confidentiality owed to the
      Company.

     

    (b) Confidentiality.
      The
      Executive understands and agrees that the Executive’s performance of the
      Services creates a relationship of confidence and trust between the Executive
      and the Company with respect to all Confidential Information. At all times,
      both
      during the Executive’s employment with the Company under the Employment
      Agreement or performing obligations hereunder, and, in each case, after its
      termination, the Executive will keep in confidence and trust all such
      Confidential Information, and will not use or disclose any such Confidential
      Information without the written consent of the Company, except as may be
      necessary in the ordinary course of performing the Executive’s duties to the
      Company.

     

    (c) Documents,
      Records, etc.
      All
      documents, records, data, apparatus, equipment and other physical property,
      whether or not pertaining to Confidential Information, which are furnished
      to
      the Executive by the Company or are produced by the Executive in connection
      with
      the Executive’s performance of the Services will be and remain the sole property
      of the Company. The Executive will return to the Company all such materials
      and
      property as and when requested by the Company. In any event, the Executive
      will
      return all such materials and property immediately upon expiration of the
      Transition Period. The Executive will not retain any such material or property
      or any copies thereof after such Transition Period.

    
      
        
        

      

      
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    (d) Noncompetition
      and Nonsolicitation.
      During
      the Transition Period and for six (6) months thereafter, the Executive (i)
      will
      not, directly or indirectly, whether as owner, partner, shareholder, consultant,
      agent, employee, co-venturer or otherwise, engage, participate, assist or invest
      in any Competing Business (as defined below); (ii) will refrain from directly
      or
      indirectly employing, attempting to employ, recruiting or otherwise soliciting,
      inducing or influencing any person to leave employment with the Company (other
      than terminations of employment of subordinate employees undertaken in the
      course of the Executive’s performance of the Services); and (iii) will refrain
      from soliciting or encouraging any customer or supplier to terminate or
      otherwise modify adversely its business relationship with the Company. The
      Executive understands that the restrictions set forth in this Section 6(d)
      are
      intended to protect the Company’s interest in its Confidential Information and
      established employee, customer and supplier relationships and goodwill, and
      agrees that such restrictions are reasonable and appropriate for this purpose.
      For purposes of this Separation Agreement, the term “Competing Business” shall
      mean a business conducted anywhere in any jurisdiction where the Company and/or
      its affiliates conduct such business as of the expiration of the Transition
      Period, and shall be deemed to include, without limitation, any business
      activity or jurisdiction which is covered by or included in a written proposal
      or business plan existing on the date of the expiration Transition Period with
      the Company, which is competitive with any business which the Company or any
      of
      its affiliates conducts or proposes to conduct at any time during the Executives
      performance of the Services. Notwithstanding the foregoing, (i) the Executive
      may own up to one percent (1%) of the outstanding stock of a publicly held
      corporation which constitutes or is affiliated with a Competing Business, and
      (ii) the companies listed on Exhibit
      A
      hereto
      shall not be deemed to be a Competing Business.

     

    (e) Third-Party
      Agreements and Rights.
      The
      Executive hereby confirms that the Executive is not bound by the terms of any
      agreement with any previous Company or other party which restricts in any way
      the Executive’s use or disclosure of information or the Executive’s engagement
      in any business. The Executive represents to the Company that the Executive’s
      execution of this Separation Agreement, the Executive’s position with the
      Company and the performance of the Executive’s proposed duties for the Company
      will not violate any obligations the Executive may have to any such previous
      Company or other party. In the Executive’s work for the Company, the Executive
      will not disclose or make use of any information in violation of any agreements
      with or rights of any such previous Company or other party, and the Executive
      will not bring to the premises of the Company any copies or other tangible
      embodiments of non-public information belonging to or obtained from any such
      previous employment or other party.

     

    (f) Litigation
      and Regulatory Cooperation.
      During
      and after the Transition Period, the Executive shall cooperate fully with the
      Company in the defense or prosecution of any claims or actions now in existence
      or which may be brought in the future against or on behalf of the Company which
      relate to events or occurrences that transpired while the Executive was employed
      by the Company under the Employment Agreement or performing obligations
      hereunder. The Executive’s full cooperation in connection with such claims or
      actions shall include, but not be limited to, being available to meet with
      counsel to prepare for discovery or trial and to act as a witness on behalf
      of
      the Company at mutually convenient times. During and after the Transition
      Period, the Executive also shall cooperate fully with the Company in connection
      with any investigation or review of any federal, state or local regulatory
      authority as any such investigation or review relates to events or occurrences
      that transpired while the Executive was employed by the Company under the
      Employment Agreement or performing obligations hereunder. The Company shall
      reimburse the Executive for any reasonable out-of-pocket expenses incurred
      in
      connection with the Executive’s performance of obligations pursuant to this
      Section 6(f).

     

    (g) Injunction.
      The
      Executive agrees that it would be difficult to measure any damages caused to
      the
      Company which might result from any breach by the Executive of the promises
      set
      forth in this Section 6, and that in any event money damages would be an
      inadequate remedy for any such breach. Accordingly, the Executive agrees that
      if
      the Executive breaches, or proposes to breach, any portion of this Separation
      Agreement, the Company shall be entitled, in addition to all other remedies
      that
      it may have, to an injunction or other appropriate equitable relief to restrain
      any such breach without showing or proving any actual damage to the
      Company.

    
      
        
        

      

      
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    7. Release.
      

     

    (a) In
      exchange for the Company’s promises set forth herein, and other good and
      valuable consideration, the sufficiency of which is hereby acknowledged, the
      Executive and the Executive’s representatives, agents, estate, heirs, successors
      and assigns, absolutely and unconditionally hereby release, remise, discharge,
      indemnify and hold harmless the Company and/or any of its parents, subsidiaries
      or affiliates, predecessors, successors or assigns, and its and their respective
      current and/or former partners, directors, shareholders/stockholders, officers,
      employees, attorneys and/or agents, all both individually and in their official
      capacities (collectively, the “Company Releasees”), from any and all actions or
      causes of action, suits, claims, complaints, contracts, liabilities, agreements,
      promises, torts, debts, damages, controversies, judgments, rights and demands,
      whether existing or contingent, known or unknown, suspected or unsuspected,
      which arise out of the Employment Agreement, the Executive’s employment with,
      change in employment status with, and/or separation of employment from, the
      Company up to the date of this Separation Agreement. This release is intended
      by
      the Executive to be all encompassing and to act as a full and total release
      of
      any claims, whether specifically enumerated herein or not, that the Executive
      may have or have had against the Company Releasees arising from conduct
      occurring up to and through the date of this Separation Agreement, including,
      but not limited to, any claims arising from any federal, state or local law,
      regulation or constitution dealing with either employment, employment benefits
      or employment discrimination such as those laws or regulations concerning
      discrimination on the basis of race, color, creed, religion, age (including,
      but
      not limited to the Age Discrimination in Employment Act, 29 U.S.C. § 634), sex,
      sex harassment, sexual orientation, national origin, ancestry, genetic carrier
      status, handicap or disability, veteran status, any military service or
      application for military service, or any other category protected under federal
      or state law; any contract, whether oral or written, express or implied,
      including without limitation, any letter offering employment and any stock
      option agreement(s); any tort; any claim for equity or other benefits; or any
      other statutory and/or common law claim. The Executive not only releases and
      discharges the Company Releasees from any and all claims as stated above that
      the Executive could make on the Executive’s own behalf or on behalf of others,
      but also those claims that might be made by any other person or organization
      on
      the Executive’s behalf, and the Executive specifically waives any right to
      recover any damage awards as a member of any class in a case in which any
      claim(s) against the Company Releasees are made involving any
      matters.

     

    (b) The
      Executive acknowledges that he has read the contents of this Section 7,
      that he has had the opportunity to review such Section 7 and this Separation
      Agreement with counsel of his choice, that he understands the same and that
      he
      has given such general release of his own free act and deed.

     

    (c) Notwithstanding
      anything contained in this Section 7 to the contrary, nothing herein shall
      be
      deemed to release or waive any claims arising from this Separation Agreement
      or
      any claims or rights arising under any directors’ and officers’ liability
      insurance coverage maintained by the Company or any indemnification to which
      the
      Executive may be entitled under the Company’s certificate of incorporation,
      bylaws or other instrument.

    
      
        
        

      

      
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    8. Period
      for Consideration.
      Executive acknowledges that he has been given the opportunity to consider this
      Separation Agreement for a period of at least twenty-one (21) days. In the
      event
      that the Executive has executed this Separation Agreement within fewer than
      twenty-one (21) days of the date of its delivery to the Executive, he
      acknowledges that such decision was entirely voluntary and that he had the
      opportunity to consider this Separation Agreement for the entire twenty-one
      (21)
      day period. For a period of seven (7) days from the date of the execution
      of this Agreement (the “Revocation Period”), the Executive shall retain the
      right to revoke this Agreement by providing written notice to the Board of
      Directors. Provided that this Agreement is not revoked pursuant to the preceding
      sentence, this Separation Agreement shall become effective and enforceable
      on
      the date immediately following the last day of the Revocation Period (the
“Effective Date”).

     

    9. Consent
      to Jurisdiction.
      The
      parties hereby consent to the jurisdiction of the Superior Court of the State
      of
      New Jersey and the United States District Court for the District of New Jersey.
      Accordingly, with respect to any such court action, the parties (a) submit
      to
      the personal jurisdiction of such courts; (b) consent to service of process;
      and
      (c) waive any other requirement (whether imposed by statute, rule of court,
      or
      otherwise) with respect to personal jurisdiction or service of
      process.

     

    10. Integration.
      This
      Separation Agreement constitutes the entire agreement between the parties with
      respect to the subject matter hereof and supersedes all prior agreements between
      the parties with respect to any related subject matter.

     

    11. Assignment;
      Successors and Assigns, etc.
      Neither
      the Company nor the Executive may make any assignment of this Separation
      Agreement or any interest herein, by operation of law or otherwise, without
      the
      prior written consent of the other party; provided
      that the
      Company may assign its rights under this Separation Agreement without the
      consent of the Executive in the event that the Company shall effect a
      reorganization, consolidate with or merge into any other corporation,
      partnership, organization or other entity, or transfer all or substantially
      all
      of its properties or assets to any other corporation, partnership, organization
      or other entity. This Separation Agreement shall inure to the benefit of and
      be
      binding upon the Company and the Executive, their respective successors,
      executors, administrators, heirs and permitted assigns.

     

    12. Enforceability.
      If any
      portion or provision of this Separation Agreement (including, without
      limitation, any portion or provision of any section of this Separation
      Agreement) shall to any extent be declared illegal or unenforceable by a court
      of competent jurisdiction, then the remainder of this Separation Agreement,
      or
      the application of such portion or provision in circumstances other than those
      as to which it is so declared illegal or unenforceable, shall not be affected
      thereby, and each portion and provision of this Separation Agreement shall
      be
      valid and enforceable to the fullest extent permitted by law.

     

    13. Waiver.
      No
      waiver of any provision hereof shall be effective unless made in writing and
      signed by the waiving party. The failure of any party to require the performance
      of any term or obligation of this Separation Agreement, or the waiver by any
      party of any breach of this Separation Agreement, shall not prevent any
      subsequent enforcement of such term or obligation or be deemed a waiver of
      any
      subsequent breach.

    
      
        
        

      

      
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    14. Notices.
      Any
      notices, requests, demands and other communications provided for by this
      Separation Agreement shall be sufficient if in writing and delivered in person
      or sent by a nationally recognized overnight courier service or by registered
      or
      certified mail, postage prepaid, return receipt requested, to the Executive
      at
      the last address the Executive has filed in writing with the Company or, in
      the
      case of the Company, at its main offices, attention of the Chief Executive
      Officer, and shall be effective on the date of delivery in person or by courier
      or three (3) days after the date mailed.

     

    15. Amendment.
      This
      Separation Agreement may be amended or modified only by a written instrument
      signed by the Executive and by a duly authorized representative of the
      Company.

     

    16. Governing
      Law.
      This is
      a New Jersey contract and shall be construed under and be governed in all
      respects by the laws of the State of New Jersey, without giving effect to the
      conflict of laws principles of such State. With respect to any disputes
      concerning federal law, such disputes shall be determined in accordance with
      the
      law as it would be interpreted and applied by the United States Court of Appeals
      for the Third Circuit.

     

    17. Counterparts.
      This
      Separation Agreement may be executed in any number of counterparts, each of
      which when so executed and delivered shall be taken to be an original; but
      such
      counterparts shall together constitute one and the same document.

    

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    IN
      WITNESS WHEREOF, this Separation Agreement has been executed as a sealed
      instrument by the Company, by its duly authorized officer, and by the Executive,
      as of the Effective Date.

    

    
      	
              ARBINET-THEXCHANGE,
                INC.

            
	 	 
	
              By:

            	/s/
              John B. Penney
	
              Name:
                John B. Penney

            
	
              Title:
                Director

            
	 	 
	
              /s/
                William M. Freeman

            
	
              William
                M. Freeman

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    Board
      of Directors 

    

    
      	
              1.

            	
              CIT
                Group, Inc.

            
	 	 
	
              2.

            	
              Terrestar
                Corp.

            
	 	 
	
              3.

            	
              Drew
                University Trustee

            
	 	 
	
              4.

            	
              Value
                Added CommunicationsEX10-1

CONSULTING AGREEMENT

 

            THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into as of August 27, 2008 (the "Effective Date") by and between Power Air Corporation, a Nevada corporation have an address for notice and delivery and executive offices located at 4777 Bennett Drive, Suite E, Livermore, CA 94551 ("PowerAir"), and Minnie Wright, having an address for notice and delivery located at 6 Gleneagle, Moraga, CA  94556 (the "Consultant"; and PowerAir and the Consultant being hereinafter also referred to, individually and collectively, as a "Party" or the "Parties" as the context so requires).

            WHEREAS, PowerAir desires the Consultant to perform certain consulting and related services for and at the direction of PowerAir and including, without limitation, as PowerAir's proposed Chief Financial Officer going forward;

            AND WHEREAS, the Consultant is capable of and willing to perform such services in accordance with the terms and conditions of this Agreement;

            NOW, THEREFORE, in consideration of the mutual benefits and obligations accruing to each of the Parties hereunder, the Parties hereby agree as follows:

A.        Scope of Services, duties and direction

            The Consultant shall render all services which are required by PowerAir in order to accomplish the services and tasks which are described in Exhibit A, captioned "Services", which is incorporated herein by reference and which forms a material part of this Agreement (collectively, the "Services"); and which Services may be modified, from time to time, by the mutual written agreement of each of the Parties; however, which Services shall remain, at all times, subject to the prior approval of PowerAir in its sole and absolute discretion acting reasonably.

            During the Initial Term (as hereinafter defined) and during the continuance of this Agreement the Consultant hereby agrees to be subject to the direction and supervision of, and to have the authority as is delegated to the Consultant by, the Board of Directors of PowerAir consistent with the Consultant's position with and Services for PowerAir, and the Consultant also agrees to accept such position in order to provide such related Services as the Board of Directors of PowerAir shall, from time to time, reasonably assign to the Consultant and as may be necessary for the ongoing maintenance and development of the Company's various business interests during the Initial Term and during the continuance of this Agreement; it being expressly acknowledged and agreed by the Parties hereto that the Consultant shall initially commit and provide to the Company the Services on not less than a two full working days' basis during the Initial Term and during the continuance of this Agreement for which PowerAir, as more particularly set forth hereinbelow, hereby agrees to pay and provide to the order and direction of the Consultant each of the proposed compensation amounts as set forth herein below.

Page 1 of 15

            All Services to be performed pursuant to this Agreement shall be performed with the standard care, skill and diligence normally provided by professional persons performing consulting services similar to those to be performed hereunder and including, without limitation, the services and duties generally required of the Chief Financial Officer of a U.S. reporting company.

            In this regard it is hereby acknowledged and agreed that the Consultant shall be entitled to communicate with and shall rely upon the immediate advice, direction and instructions of the President of PowerAir, or upon the advice or instructions of such other director or officer of PowerAir as the President of PowerAir shall, from time to time, designate in times of the President's absence, in order to initiate, coordinate and implement the Services as contemplated herein subject, at all times, to the final direction and supervision of the Board of Directors of PowerAir.

            Without in any manner limiting the generality of the Services to be provided, it is hereby also acknowledged and agreed that Consultant will, during the Initial Term (as hereinafter defined) and during the continuance of this Agreement, devote a significant portion of the Consultant's consulting time to the Services of the Consultant as may be determined and required by the Board of Directors of PowerAir for the performance of said Services faithfully, diligently, to the best of the Consultant's abilities and in the best interests of PowerAir and, furthermore, that the Consultant's consulting time will be prioritized at all times for PowerAir in that regard.

            The Consultant hereby acknowledges and agrees to abide by the reasonable rules, regulations, instructions, personnel practices and policies of PowerAir and any changes therein which may be adopted from time to time by the same as such rules, regulations, instructions, personnel practices and policies may be reasonably applied to the Consultant as a consultant and as the Chief Financial Officer of PowerAir.

            The Consultant hereby authorizes PowerAir to use the Consultant's name and position, where required by applicable corporate and securities legislation or regulatory policy, in each of PowerAir's public and regulatory filings.

B.         Initial Term and termination of this Agreement

            The initial term of this Agreement (the "Initial Term") is for a period of six months commencing on the Effective Date hereof.

            Subject to the following provisions, this Agreement shall renew automatically if not specifically terminated in accordance with the following provisions.  PowerAir agrees to notify the Consultant in writing at least 30 calendar days prior to the end of the Initial Term of its intent not to renew this Agreement (the "Non-Renewal Notice").  Should PowerAir fail to provide a Non-Renewal Notice this Agreement shall automatically renew on a one-month to one-month term renewal basis after the Initial Term until otherwise specifically renewed in writing by each of the Parties hereto for the next one-month term of renewal or, otherwise, terminated upon delivery by PowerAir of a corresponding and follow-up 30 calendar day Company's Non-Renewal Notice in connection with and within 30 calendar days prior to the end of any such one-month term renewal period.  Any such renewal on a one-month basis shall be on the same terms and conditions contained herein unless modified and agreed to in writing by the Parties in advance.

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            Notwithstanding any other provision of this Agreement, this Agreement may be terminated by either Party at any time after the Effective Date and during the Initial Term and during the continuance of this Agreement upon a Party's delivery to the other Party of prior written notice of its intention to do so (the "Notice of Termination") at least 30 calendar days prior to the effective date of any such termination (the end of such 30-day period from such Notice of Termination being the "Effective Termination Date").  In any such event the Consultant's ongoing obligation to provide the Services will continue only until the Effective Termination Date and PowerAir's ongoing obligation to provide and to pay to the Consultant all of the amounts otherwise payable to the Consultant under this Agreement will continue only until the Effective Termination Date.

            Notwithstanding any other provision of this Agreement, this Agreement may be terminated by any Party hereto at any time upon written notice to the other Party of such Party's intention to do so (the "Notice of Termination" herein) at least 10 calendar days prior to the effective date of any such termination (the end of such 10-day period from such Notice of Termination being the "Effective Termination Date" herein), and damages sought, if:

(a)        the other Party fails to cure a material breach of any provision of this Agreement within 10 calendar days from its receipt of written notice from said Party (unless such material breach cannot be reasonably cured within said 10 calendar days and the other Party is actively pursuing to cure said material breach);

(b)        the other Party is willfully non-compliant in the performance of its respective duties under this Agreement within 10 calendar days from its receipt of written notice from said Party (unless such willful non-compliance cannot be reasonably corrected within said 10 calendar days and the other Party is actively pursuing to cure said willful non-compliance);

(c)        the other Party commits fraud or serious neglect or misconduct in the discharge of its respective duties hereunder or under the law; or

(d)         the other Party becomes adjudged bankrupt or a petition for reorganization or arrangement under any law relating to bankruptcy, and where any such involuntary petition is not dismissed within 10 calendar days.

            In any such event the Consultant's ongoing obligation to provide the Services will continue only until the Effective Termination Date and PowerAir shall continue to pay to the Consultant all of the amounts otherwise payable to the Consultant under this Agreement until the Effective Termination Date.

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            Notwithstanding any other provision of this Agreement, this Agreement may be terminated at any time by any Party within 30 calendar days after the death or disability of the Consultant, as a without fault termination (the resulting effective date of any such termination being herein also the "Effective Termination Date").  For the purposes of this Agreement the term "disability" shall mean the Consultant shall have been unable to provide the Services contemplated under this Agreement for a period of 30 calendar days, whether or not consecutive, during any 360 calendar day period, due to a physical or mental disability.   A determination of disability shall be made by a physician satisfactory to both the Consultant and PowerAir; provided that if the Consultant and PowerAir do not agree on a physician, the Consultant and the Company shall each select a physician and these two together shall select a third physician whose determination as to disability shall be binding on all Parties.  In the event that the Consultant's employment is terminated by death or because of disability pursuant to this Agreement, PowerAir shall pay to the estate of the Consultant or to the Consultant, as the case may be, all amounts to which the Consultant would otherwise be entitled under this Agreement until the Effective Termination Date.

            Terms of this Agreement relating to accounting, payments, confidentiality, accountability for damages or claims and all other matters reasonably extending beyond the terms of this Agreement and to the benefit of the Parties hereto or for the protection of the business interests of PowerAir Company shall survive the termination of this Agreement, and any matter of interpretation thereto shall be given a wide latitude in this regard.

 

            PowerAir shall not be liable for any Services or expenses incurred after the receipt of any Notice of Termination hereunder.  In the event that PowerAir terminates the Agreement while the Consultant is traveling for PowerAir, the Consultant shall be compensated for the reasonable expenses incurred by the Consultant for returning to her residence.  Upon the termination of this Agreement for any reason the Consultant shall turn over to PowerAir all data, reports, drawings and specifications prepared prior to such Effective Date of Termination.

C.         Compensation

            It is hereby acknowledged and agreed that the Consultant shall render the Services as defined hereinabove during the Initial Term and during the continuance of this Agreement and shall thus be compensated from the Effective Date of this Agreement to the termination of the same by way of the payment by PowerAir to the Consultant, or to the further order or direction of the Consultant as the Consultant may determine, in the Consultant's sole and absolute discretion, and advise PowerAir of prior to such payment, of the monthly fee of U.S. $8,333.33 (collectively, the "Fees").  All such Fees will be due and payable by PowerAir to the Consultant, or to the further order or direction of the Consultant as the Consultant may determine, in the Consultant's sole and absolute discretion, and advise PowerAir of prior to any such Fee payment, bi-monthly and on or about the fifteenth and thirtieth day of each month of the then monthly period of service during the continuance of this Agreement.

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            It is hereby acknowledged and agreed that the Consultant shall also be reimbursed for all pre-approved, direct and reasonable expenses actually and properly incurred by the Consultant for the benefit of PowerAir (collectively, the "Expenses"); and which Expenses, it is hereby acknowledged and agreed, shall be payable by PowerAir to the order, direction and account of the Consultant as the Consultant may designate in writing, from time to time, in the Consultant's sole and absolute discretion, as soon as conveniently possible after the prior delivery by the Consultant to PowerAir of written substantiation on account of each such reimbursable Expense.

            It is hereby also acknowledged and agreed that, during the continuance of this Agreement, the Consultant shall be entitled to two weeks paid vacation (collectively, the "Vacation") during each and every year during the continuance of this Agreement.  In this regard it is further understood hereby that the Consultant's entitlement to any such paid Vacation during any year (including the initial year) during the continuance of this Agreement will be subject, at all times, to the Consultant's entitlement to only a pro rata portion of any such paid Vacation time during any year (including the initial year) and to the effective date upon which this Agreement is terminated prior to the end of any such year for any reason whatsoever.

            It is hereby also acknowledged and agreed that the Consultant will be classified as a non-taxable consultant of PowerAir for all purposes, such that all compensation which is provided by PowerAir to the Consultant under this Agreement, or otherwise, will be calculated on the foregoing and gross basis and otherwise for which no statutory taxes will first be deducted by PowerAir.

            The Consultant shall submit invoices monthly for all Fees and Expenses.  Each invoice shall be supported by schedules of days worked and receipts for Expenses claimed.  PowerAir's internal auditing staff or a public accounting firm designated to represent PowerAir shall be afforded access, at all reasonable times, to the Consultant's facilities, personnel, books, records, receipts, vouchers, and other writings relating to payments made by PowerAir to the Consultant; and the Consultant and its subcontractors shall preserve all such records for a period of two years after final payment.

D.        Additional provisions

            This Agreement is supplemented by and subject to the additional terms, conditions and provisions which are set forth in Exhibit B, captioned "Additional Agreement Provisions", which are incorporated herein by reference herein and which form a material part of this Agreement.

            IN WITNESS WHEREOF, the Parties hereto have caused the Agreement to be executed and effective as of the Effective Date first above written.

	 	
MINNIE WRIGHT

"Minnie Wright"                    

Signature

Dated:  August 27, 2008
	

By:

Title:

Dated:
	
POWER AIR CORPORATION

"Don Ceci" 

Authorized Signatory

President and CEO

August27, 2008

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Exhibit A

 

            This is Exhibit A to that certain Consulting Agreement as entered into between Minnie Wright and Power Air Corporation.

Services

            Each of the following capitalized terms have the same meanings as set forth in the within Agreement.

            During the Initial Term and during the continuance of the Agreement the Consultant hereby agrees to be subject to the direction and supervision of, and to have the authority as is delegated to the Consultant by, the Board of Directors of PowerAir consistent with the Consultant's position with and Services for PowerAir, and the Consultant also agrees to accept such position in order to provide such related Services as the Board of Directors of PowerAir shall, from time to time, reasonably assign to the Consultant and as may be necessary for the ongoing maintenance and development of the Company's various business interests during the Initial Term and during the continuance of the Agreement; it being expressly acknowledged and agreed by the Parties hereto that the Consultant shall initially commit and provide to PowerAir the Services on not less than a two full working days' basis during the Initial Term and during the continuance of the Agreement.

            Without in any manner limiting the generality of the Services to be provided by the Consultant as set forth in the Agreement hereinabove, it is hereby also acknowledged and agreed that the Consultant will provide the following specific financial and management consulting services to the Company and as may be determined by the Board of Directors of PowerAir, from time to time, in its sole and absolute discretion, on a part-time consulting basis during the Initial Term and during continuance of the Agreement subject, at all times, to the direction of the Board of Directors of PowerAir:

(a)        assistance in the filing of all U.S. regulatory filings for the PowerAir;

(b)        assistance in the initiation, coordination, implementation and management of all aspects of any program or project in connection with the maintenance and development of PowerAir' various business interests;

(c)       assistance in the organization and preparation of any and all financial statements, business plans, technical reports, news releases and special shareholder or investment reports for PowerAir, or for any of PowerAir's respective subsidiaries, as the case may be and as may be determined by the Board of Directors of PowerAir, from time to time, in its sole and absolute discretion, and in connection with the maintenance and development of PowerAir's various business interests;

(d)        assistance in the liaison with and the setting up of all corporate alliances and regulatory associations for PowerAir, or for any of PowerAir's respective subsidiaries, as the case may be and as may be determined by the Board of Directors of PowerAir, from time to time, in its sole and absolute discretion, and in connection with the maintenance and development of PowerAir's various business interests; and

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(e)        assistance in all other matters as may be determined by the Board of Directors of PowerAir, from time to time, in its sole and absolute discretion, and in connection with the maintenance and development of PowerAir's various business interests.

            In this regard it is hereby acknowledged and agreed that the Consultant shall be entitled to communicate with and shall rely upon the immediate advice, direction and instructions of the President of PowerAir, or upon the advice or instructions of such other director or officer of PowerAir as the President of PowerAir shall, from time to time, designate in times of the President's absence, in order to initiate, coordinate and implement the Services as contemplated herein subject, at all times, to the final direction and supervision of the Board of Directors of PowerAir.

__________

 

 

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Exhibit B

 

            This is Exhibit B to that certain Consulting Agreement as entered into between Minnie Wright and Power Air Corporation.

Additional Agreement Provisions

            The Agreement is hereby supplemented by and subject to the following additional terms, conditions and provisions which are incorporated in the Agreement by reference herein and which form a material part of the Agreement.  Unless the context otherwise requires as set forth below, each of the following capitalized terms have the same meanings as set forth in the within Agreement.

1.        Additional obligations of the Consultant

            Reporting.   At such time or times as may be required by the Board of Directors of PowerAir, acting reasonably, the Consultant will provide the Board of Directors of PowerAir with such information concerning the results of the Consultant's Services and activities hereunder for the previous month as the Board of Directors of PowerAir may reasonably require.

            Opinions, reports and advice of the Consultant.   The Consultant acknowledges and agrees that all written and oral opinions, reports, advice and materials provided by the Consultant to PowerAir in connection with the Consultant's engagement hereunder are intended solely for PowerAir's benefit and for PowerAir's uses only, and that any such written and oral opinions, reports, advice and information are the exclusive property of PowerAir.  In this regard the Consultant covenants and agrees that PowerAir may utilize any such opinion, report, advice and materials for any other purpose whatsoever and, furthermore, may reproduce, disseminate, quote from and refer to, in whole or in part, at any time and in any manner, any such opinion, report, advice and materials in PowerAir's sole and absolute discretion.  The Consultant further covenants and agrees that no public references to the Consultant or disclosure of the Consultant's role in respect of PowerAir may be made by the Consultant without the prior written consent of the Board of Directors of PowerAir in each specific instance and, furthermore, that any such written opinions, reports, advice or materials shall, unless otherwise required by the Board of Directors of Power Air, be provided by the Consultant to PowerAir in a form and with such substance as would be acceptable for filing with and approval by any regulatory authority having jurisdiction over the affairs of PowerAir from time to time.

            Consultant's business conduct.   The Consultant warrants that the Consultant shall conduct the business and other activities in a manner which is lawful and reputable and which brings good repute to PowerAir, to PowerAir's business interests and the Consultant.  In particular, and in this regard, the Consultant specifically warrants to provide the Services in a sound and professional manner such that the same meets superior standards of performance quality within the standards of the industry or as set by the specifications of PowerAir.   In the event that the Board of Directors of PowerAir has a reasonable concern that the business as conducted by the Consultant is being conducted in a way contrary to law or is reasonably likely to bring disrepute to the business interests or to PowerAir's or the Consultant's reputation, PowerAir may require that the Consultant make such alterations in the Consultant's business conduct or structure, whether of management or Board representation or employee or sub-licensee representation, as the Board of Directors of PowerAir may reasonably require, in its sole and absolute discretion.

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            Right of ownership to the business and related Property.   The Consultant hereby acknowledges and agrees that any and all PowerAir business interests, together with any products or improvements derived therefrom and any trade marks or trade names used in connection with the same (collectively, the "Property"), are wholly owned and controlled by PowerAir.  Correspondingly, neither the Agreement, nor the operation of the business contemplated by the Agreement, confers or shall be deemed to confer upon the Consultant any interest whatsoever in and to any of the Property.  In this regard the Consultant hereby further covenants and agrees not to, during or after the Initial Term and the continuance of the Agreement, contest the title to any of the Property interests, in any way dispute or impugn the validity of the Property interests or take any action to the detriment of PowerAir's interests therein.  The Consultant acknowledges that, by reason of the unique nature of the Property interests, and by reason of the Consultant's knowledge of and association with the Property interests during the Initial Term and during the continuance of the Agreement, the aforesaid covenant, both during the Initial Term of the Agreement and thereafter, is reasonable and commensurate for the protection of the legitimate business interests of PowerAir.  As a final note, the Consultant hereby further covenants and agrees to immediately notify PowerAir of any infringement of or challenge to the any of the Property interests as soon as the Consultant becomes aware of the infringement or challenge.

            In addition, and for even greater certainty, the Consultant hereby assigns to PowerAir the entire right, title and interest throughout the world in and to all work performed, writings, formulas, designs, models, drawings, photographs, design inventions, and other inventions, made, conceived, or reduced to practice or authored by the Consultant or the Consultant's employees, either solely or jointly with others, during the performance of the Agreement, or which are made, conceived, or reduced to practice, or authored with the use of information or materials of PowerAir either received or used by the Consultant during the performance of the Agreement or any extension or renewal thereof.  The Consultant shall promptly disclose to PowerAir all works, writings, formulas, designs, models, photographs, drawings, design inventions and other inventions made, conceived or reduced to practice, or authored by the Consultant or the Consultant's employees as set forth above.  The Consultant shall sign, execute and acknowledge, or cause to be signed, executed and acknowledged without cost to PowerAir or its nominees, patent, trademark or copyright protection throughout the world upon all such works, writings, formulas, designs, models, drawings, photographs, design inventions and other inventions; title to which PowerAir acquires in accordance with the provisions of this section.  The Consultant has acquired or shall acquire from each of the Consultant's employees, if any, the necessary rights to all such works, writings, formulas, designs, models, drawings, photographs, design inventions and other inventions made by such employees within the scope of their employment by the Consultant in performing the Services under the Agreement.  The Consultant shall obtain the cooperation of each such employee to secure to PowerAir or its nominees the rights to such works, writings, formulas, designs, models, drawings, photographs, design inventions and other inventions as PowerAir may acquire in accordance with the provisions of this section.  The work performed and the information produced under the Agreement are works made for hire as defined in 17 U.S.C. Section  101.

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2.        Additional obligations of the Parties

            No conflict, no competition and non-circumvention.   During the continuance of the Agreement neither Party hereto shall engage in any business or activity which reasonably may detract from or conflict with that Party's respective duties and obligations to the other Party as set forth in the Agreement without the prior written consent of the other Party hereto.  In addition, during the continuance of the Agreement, and for a period of at least one year following the termination of the Agreement for any reason hereunder, the Consultant shall not engage in any business or activity whatsoever which reasonably may be determined by the Board of Directors of PowerAir, in its sole and absolute discretion, to compete with any portion of PowerAir's various business interests as contemplated hereby without the prior written consent of PowerAir.  Furthermore, each of the Parties hereby acknowledges and agrees, for a period of at least one year following the termination of the Agreement, not to initiate any contact or communication directly with either of the other Party or any of its respective subsidiaries, as the case may be, together with each of the other Party's respective directors, officers, representatives, agents or employees, without the prior written consent of the other Party hereto and, notwithstanding the generality of the foregoing, further acknowledges and agrees, even with the prior written consent of the other Party to such contact or communication, to limit such contact or communication to discussions outside the scope of any confidential information (as hereinafter determined).  For the purposes of the foregoing the Parties hereby recognize and agree that a breach a Party of any of the covenants herein contained would result in irreparable harm and significant damage to the other Party that would not be adequately compensated for by monetary award.  Accordingly, each of the Parties agrees that, in the event of any such breach, in addition to being entitled as a matter of right to apply to a Court of competent equitable jurisdiction for relief by way of restraining order, injunction, decree or otherwise as may be appropriate to ensure compliance with the provisions hereof, a Party will also be liable to the other Party hereto, as liquidated damages, for an amount equal to the amount received and earned by that Party as a result of and with respect to any such breach.  The Parties hereby acknowledge and agree that if any of the aforesaid restrictions, activities, obligations or periods are considered by a Court of competent jurisdiction as being unreasonable, the Parties agree that said Court shall have authority to limit such restrictions, activities or periods as the Court deems proper in the circumstances.   In addition, the Parties further acknowledge and agree that all restrictions or obligations in the Agreement are necessary and fundamental to the protection of their respective business interests and are reasonable and valid, and all defenses to the strict enforcement thereof by the Parties are hereby waived.

            Confidentiality.   Each Party will not, except as authorized or required by its respective duties and obligations hereunder, reveal or divulge to any person, company or entity any information concerning the respective organization, business, finances, transactions or other affairs of the other Party hereto, or of any of the other Party's respective subsidiaries, which may come to the Party's knowledge during the continuance of the Agreement, and each Party will keep in complete secrecy all confidential information entrusted to the Party and will not use or attempt to use any such information in any manner which may injure or cause loss either directly or indirectly to the other Party's respective business interests.   This restriction will continue to apply after the termination of the Agreement without limit in point of time but will cease to apply to information or knowledge which may come into the public domain.

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            Compliance with applicable laws.   Each Party will comply with all U.S., Canadian and foreign laws, whether federal, provincial or state, applicable to its respective duties and obligations hereunder and, in addition, hereby represents and warrants that any information which the Party may provide to any person or company hereunder will, to the best of the Party's knowledge, information and belief, be accurate and complete in all material respects and not misleading, and will not omit to state any fact or information which would be material to such person or company.

3.        Indemnification and legal proceedings

            The Parties hereto hereby each agree to indemnify and save harmless the other Party hereto and including, where applicable, their respective subsidiaries and affiliates and each of their respective directors, officers, employees and agents (each such party being an "Indemnified Party") harmless from and against any and all losses, claims, actions, suits, proceedings, damages, liabilities or expenses of whatever nature or kind and including, without limitation, any investigation expenses incurred by any Indemnified Party, to which an Indemnified Party may become subject by reason of the terms and conditions of the Agreement.

            This indemnity will not apply in respect of an Indemnified Party in the event and to the extent that a Court of competent jurisdiction in a final judgment shall determine that the Indemnified Party was grossly negligent or guilty of willful misconduct.

            The Parties hereto agree to waive any right they might have of first requiring the Indemnified Party to proceed against or enforce any other right, power, remedy, security or claim payment from any other person before claiming this indemnity.

            In case any action is brought against an Indemnified Party in respect of which indemnity may be sought against either of the Parties hereto, the Indemnified Party will give both Parties hereto prompt written notice of any such action of which the Indemnified Party has knowledge and the relevant Party will undertake the investigation and defense thereof on behalf of the Indemnified Party, including the prompt employment of counsel acceptable to the Indemnified Party affected and the relevant Party and the payment of all expenses.  Failure by the Indemnified Party to so notify shall not relieve the relevant Party of such relevant Party's obligation of indemnification hereunder unless (and only to the extent that) such failure results in a forfeiture by the relevant Party of substantive rights or defenses.

            No admission of liability and no settlement of any action shall be made without the consent of each of the Parties hereto and the consent of the Indemnified Party affected, such consent not to be unreasonable withheld.

            Notwithstanding that the relevant Party will undertake the investigation and defense of any action, an Indemnified Party will have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel will be at the expense of the Indemnified Party unless:

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(a)        such counsel has been authorized by the relevant Party;

(b)        the relevant Party has not assumed the defense of the action within a reasonable period of time after receiving notice of the action;

(c)        the named parties to any such action include that any Party hereto and the Indemnified Party shall have been advised by counsel that there may be a conflict of interest between any Party hereto and the Indemnified Party; or

(d)        there are one or more legal defenses available to the Indemnified Party which are different from or in addition to those available to any Party hereto.

            If for any reason other than the gross negligence or bad faith of the Indemnified Party being the primary cause of the loss claim, damage, liability, cost or expense, the foregoing indemnification is unavailable to the Indemnified Party or insufficient to hold them harmless, the relevant Party shall contribute to the amount paid or payable by the Indemnified Party as a result of any and all such losses, claim, damages or liabilities in such proportion as is appropriate to reflect not only the relative benefits received by the relevant Party on the one hand and the Indemnified Party on the other, but also the relative fault of relevant Party and the Indemnified Party and other equitable considerations which may be relevant.  Notwithstanding the foregoing, the relevant Party shall in any event contribute to the amount paid or payable by the Indemnified Party, as a result of the loss, claim, damage, liability, cost or expense (other than a loss, claim, damage, liability, cost or expenses, the primary cause of which is the gross negligence or bad faith of the Indemnified Party), any excess of such amount over the amount of the fees actually received by the Indemnified Party hereunder.

4.        Arbitration

            Except for matters of indemnity or in the case of urgency to prevent material harm to a substantive right or asset, the Parties agree that all questions or matters in dispute with respect to the Agreement shall be submitted to arbitration pursuant to the terms hereof.  This provision shall not prejudice a Party from seeking a Court order or assistance to garnish or secure sums or to seek summary remedy for such matters as counsel may consider amenable to summary proceedings.

            It shall be a condition precedent to the right of any Party to submit any matter to arbitration pursuant to the provisions hereof that any Party intending to refer any matter to arbitration shall have given not less than five business days' prior written notice of its intention to do so to the other Parties together with particulars of the matter in dispute.  On the expiration of such five business days the Party who gave such notice may proceed to refer the dispute to arbitration as provided for hereinbelow.

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            The Party desiring arbitration shall appoint one arbitrator, and shall notify the other Parties of such appointment, and the other Parties shall, within five business days after receiving such notice, appoint an arbitrator, and the two arbitrators so named, before proceeding to act, shall, within five business days of the appointment of the last appointed arbitrator, unanimously agree on the appointment of a third arbitrator, to act with them and be chairperson of the arbitration herein provided for.  If the other Parties shall fail to appoint an arbitrator within five business days after receiving notice of the appointment of the first arbitrator, and if the two arbitrators appointed by the Parties shall be unable to agree on the appointment of the chairperson, the chairperson shall be appointed in accordance with the American Arbitration Rules, as amended from time to time (collectively, the "Arbitration Rules").  Except as specifically otherwise provided in this section, the arbitration herein provided for shall be conducted in accordance with such Arbitration Rules.  The chairperson, or in the case where only one arbitrator is appointed, the single arbitrator, shall fix a time and place for the purpose of hearing the evidence and representations of the Parties, and the chairperson shall preside over the arbitration and determine all questions of procedure not provided for by the Arbitration Rules or this section.  After hearing any evidence and representations that the Parties may submit, the single arbitrator, or the arbitrators, as the case may be, shall make an award and reduce the same to writing, and deliver one copy thereof to each of the Parties.  The expense of the arbitration shall be paid as specified in the award.

            The Parties agree that the award of a majority of the arbitrators, or in the case of a single arbitrator, of such arbitrator, shall be final and binding upon each of them.

5.        General provisions

            Entire agreement.   The Agreement constitutes the entire agreement to date between the Parties hereto and supersedes every previous agreement, expectation, negotiation, representation or understanding, whether oral or written, express or implied, statutory or otherwise, between the Parties with respect to the subject matter of the Agreement.

            No assignment.   The Agreement may not be assigned by any Party hereto except with the prior written consent of the other Party.

            Notice.   Each notice, demand or other communication required or permitted to be given under the Agreement shall be in writing and shall be sent by prepaid registered mail deposited in a recognized post office and addressed to the Party entitled to receive the same, or delivered to such Party, at the address for such Party specified on the front page of the Agreement.  The date of receipt of such notice, demand or other communication shall be the date of delivery thereof if delivered, or, if given by registered mail as aforesaid, shall be deemed conclusively to be the third business day after the same shall have been so mailed, except in the case of interruption of postal services for any reason whatsoever, in which case the date of receipt shall be the date on which the notice, demand or other communication is actually received by the addressee.  Any Party may at any time and from time to time notify the other Party in writing of a change of address and the new address to which notice shall be given to it thereafter until further change.

            Time of the essence.   Time will be of the essence of the Agreement.

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            Enurement.   The Agreement will endure to the benefit of and will be binding upon the Parties hereto and their respective heirs, executors, administrators and assigns.

            Further assurances.   The Parties will from time to time after the execution of the Agreement make, do, execute or cause or permit to be made, done or executed, all such further and other acts, deeds, things, devices and assurances in law whatsoever as may be required to carry out the true intention and to give full force and effect to the Agreement.

            Representation and costs.   It is hereby acknowledged by each of the Parties hereto that Lang Michener LLP, Lawyers - Patent & Trade Mark Agents, acts solely for PowerAir, and, correspondingly, that the Consultant has been required by each of Lang Michener LLP and PowerAir to obtain independent legal advice with respect to its review and execution of the Agreement.  Each Party to the Agreement will also bear and pay its own costs, legal and otherwise, in connection with its respective preparation, review and execution of the Agreement and, in particular, that the costs involved in the preparation of the Agreement, and all documentation necessarily incidental thereto, by Lang Michener LLP, shall be at the cost of PowerAir.

            Applicable law.   The situs of the Agreement is Livermore, California, U.S.A., and for all purposes the Agreement will be governed exclusively by and construed and enforced in accordance with the laws and Courts prevailing in the State of California, U.S.A..

            Severability and construction.   Each Article, section, paragraph, term and provision of the Agreement, and any portion thereof, shall be considered severable, and if, for any reason, any portion of the Agreement is determined to be invalid, contrary to or in conflict with any applicable present or future law, rule or regulation in a final unappealable ruling issued by any court, agency or tribunal with valid jurisdiction in a proceeding to which any Party hereto is a party, that ruling shall not impair the operation of, or have any other effect upon, such other portions of the Agreement as may remain otherwise intelligible (all of which shall remain binding on the Parties and continue to be given full force and effect as of the date upon which the ruling becomes final).

            Captions.   The captions, section numbers and Article numbers appearing in the Agreement are inserted for convenience of reference only and shall in no way define, limit, construe or describe the scope or intent of the Agreement nor in any way affect the Agreement.

            Counterparts.   The Agreement may be signed by the Parties hereto in as many counterparts as may be necessary, and via facsimile if necessary, each of which so signed being deemed to be an original and such counterparts together constituting one and the same instrument and, notwithstanding the date of execution, being deemed to bear the Effective Date as set forth on the front page of the Agreement.

            No partnership or agency.   The Parties have not created a partnership and nothing contained in the Agreement shall in any manner whatsoever constitute any Party the partner, agent or legal representative of the other Parties, nor create any fiduciary relationship between them for any purpose whatsoever.

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            Consents and waivers.   No consent or waiver expressed or implied by either Party in respect of any breach or default by the other in the performance by such other of its obligations hereunder shall:

(a)        be valid unless it is in writing and stated to be a consent or waiver pursuant to this section;

(b)        be relied upon as a consent to or waiver of any other breach or default of the same or any other obligation;

(c)        constitute a general waiver under the Agreement; or

(d)        eliminate or modify the need for a specific consent or waiver pursuant to this section in any other or subsequent instance.

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