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EXHIBIT 10.11
MAYFLOWER
RESOURCES, INC.
CONTRACTOR AGREEMENT
THIS Contractor AGREEMENT (this "Agreement") is made and entered into as of
the 30th day of August, 1999 (the "Effective Date"), by and between NewsReal,
Inc., a Delaware corporation, with its principal address at 00 Xxxxx Xxxxxx
Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000 (hereinafter the "Company"), and
Mayflower Resources, Inc., whose principal address is 0 Xxxxxx Xx., Xxxxxxxxx,
X.X. 00000 (hereinafter "Contractor").
SECTION 1
SCOPE OF SERVICES
1.1 SERVICES., Contractor, through its sole shareholder and employee, S.
Xxxxx Xxxxxxx, agrees to provide, and Company agrees to accept, the contracting
services described in Exhibit A hereto.
1.2 CONDUCT OF SERVICES. All work shall be performed in a workmanlike and
professional manner.
1.3 METHOD OF PERFORMING SERVICES. Contractor shall have the right to
determine the method, details, and means of performing the work to be performed
by Company; provided, however, that all such work to be performed hereunder
shall be performed by Contractor's sole shareholder and employee, S. Xxxxx
Xxxxxxx. Company shall, however, be entitled to exercise general power of
supervision and control over the results of work performed by Contractor to
ensure satisfactory performance, including the right to inspect, the right to
stop work, the right to make suggestions or recommendations as to the details of
the work, and the right to purpose modifications to the work.
1.4 SCHEDULING. The services provided by Contractor are expected to
require no less than fifty percent (50%) of Xx. Xxxxxxx'x available business
time and availability during the term of this Agreement.
1.5 REPORTING. Company and Contractor shall develop appropriate
administrative procedures for coordinating with each other. Company shall
periodically provide Contractor with evaluations of Contractor's performance.
1.6 PLACE OF WORK. Contractor will perform his work for Company either at
Contractor's place of business or at the Company's principal place of business,
as Contractor may determine from time to time.
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SECTION 2
TERM AND TERMINATION
2.1 TERM AND TERMINATION.
(a) This Agreement may be terminated by either party upon written
notice, if the other party breaches any obligation provided hereunder and the
breaching party fails to cure such breach within thirty (30) days of such notice
if such breach is capable of being cured; provided, however, that the cure
period for any failure of Company to pay fees and charges due hereunder shall be
fifteen (15) days from the date of receipt by Company of notice of such failure.
(b) Unless earlier terminated by either party as set forth in Section
2.1(a), the term of Contractor's engagement under this Agreement shall end six
(6) months from the Effective Date ("Scheduled Termination Date").
(i) The Company agrees that, in the event Contractor's
engagement hereunder is earlier terminated by the Company without Cause (as
defined below) or by Contractor pursuant to Section 2.1(a) as a result or the
breach of a representation, warranty, or covenant or other agreement of the
Company hereunder, Company shall pay Contractor at the time of such termination
the sum of (A) a termination fee in cash equal to the monthly fee payable to
Contractor under Exhibit A hereto times the number of months (including any
portion of a month) from the actual termination date until the Scheduled
Termination Date, (B) the Base Fee (as defined in Exhibit A) due and payable
hereunder through the actual termination date, and (C) full reimbursement of all
of Contractor's costs and expenses incurred through the actual termination date
as contemplated hereby.
(ii) In addition, if Contractor's engagement is terminated on the
Scheduled Termination Date or earlier than the Scheduled Termination Date as
contemplated by Section 2.1(b)(i), and within twelve (12) months following the
actual termination date the Company completes any financing with a Schedule A
Investor (as defined below), whether or not Contractor is involved in such
financing, the Company will pay to Contractor a fee on the closing of such
financing equal to the amount of the fee that would have been payable pursuant
to paragraph 2(b) of Exhibit A if the engagement had not been terminated.
(iii) Further, if Contractor's engagement is terminated earlier
than the Scheduled Termination Date as contemplated by Section 2.1(b)(i) hereof,
Company shall provide the additional compensation equal to the amount that would
have been payable pursuant to paragraph 2(c) of Exhibit A if the engagement had
not been terminated.
(iv) For purposes of this Agreement, the term "Cause" shall
mean: (A) the willful or continual neglect by Contractor or Xx. Xxxxxxx of
its/his duties or obligations hereunder, provided that such neglect remains
uncured for a period of thirty (30) days after written notice describing the
same is given to Contractor or Xx. Xxxxxxx, and provided further that isolated
or insubstantial failures shall not constitute Cause hereunder; (B) Contractor's
or Xx. Xxxxxxx'x conviction (which is not subject to further appeal) of any
felony or crime of moral turpitude or any crime or offense involving money or
other property of the Company or any
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subsidiaries or other affiliates thereof; (C) Contractor's or Xx. Xxxxxxx'x
performance of any act or failure to act which, if Contractor or Xx. Xxxxxxx
were prosecuted and convicted therefor, would constitute a crime or offense
either involving money or property of the Company or any subsidiaries or other
affiliates thereof or constituting a felony in the jurisdiction involved; (iv)
any attempt by Contractor or Xx. Xxxxxxx to improperly secure any personal
profit in connection with the business of the Company or any subsidiaries or
other affiliates thereof; (v) chronic alcoholism or the use of illegal drugs; or
(vi) any breach by Contractor or Xx. Xxxxxxx of the terms of Section 5 or 6
hereof, provided such breach continues uncured for 10 days after written notice
of such breach is given by the Company to Contractor or Xx. Xxxxxxx. All
determinations of Cause shall be made by the vote of a majority of the entire
Board of Directors of the Company.
(v) For purposes of this Agreement, the term "Schedule A
Investor" refers to investors with whom Contractor or Xx. Xxxxxxx had
substantive involvement on behalf of the Company during the Term and which are
listed on Schedule A hereto, as it may be amended and signed by both parties
hereto from time to time. For purposes hereof, "substantive involvement" means
that Xx. Xxxxxxx had contacted such investors, participated in presentations to
such investors with other members of the Company's management team, and was
involved in exchanging information and materials to such investors on behalf of
the Company.
(vi) The obligations of the Company as set forth in this Section
2.1(b) shall survive any termination or completion of the engagement
contemplated hereby.
(c) Except as provided in Section 2.1(b)(ii), in the event that
Contractor's employment is terminated (i) on the Scheduled Termination Date,
(ii) by the Company for Cause or (iii) death or disability of Xx. Xxxxxxx, the
Company shall pay Contractor the sum of the amounts payable, if any, under
Sections 2.1(b)(i)(B) and (C) hereof, and the Company shall have no further
obligations to pay or provide any incentive or additional compensation to
Contractor hereunder.
2.2 REMAINING PAYMENTS. Within thirty (30) days of termination of this
Agreement for any reason, Contractor shall submit to Company an itemized invoice
for any fees or expenses theretofore accrued under this Agreement.
SECTION 3
FEES, EXPENSES, AND PAYMENT
3.1 FEES. In consideration of the services to be performed by Contractor,
Contractor shall be entitled to compensation as described in Section 2 and
Exhibit A hereto. Compensation shall be paid semi-monthly, at the same time the
Company disburses payroll to its employees. All other compensation shall be paid
to Contractor within ten (10) days after receipt of Contractor's invoice, except
as otherwise provided herein.
3.2 REIMBURSEMENT OF EXPENSES. In addition to the foregoing, Company shall
pay Contractor a non-accountable expense allowance equal to four percent (4%) of
the Base Fee as reimbursement for its actual out-of-pocket expenses as
reasonably incurred by Contractor for
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telephone, facsimile, computer charges, photocopying and postage charges, plus
actual out-of-pocket expenses as reasonably incurred by Contractor for travel,
local transportation, meals, lodging or and other related costs in furtherance
of its performance hereunder. Contractor agrees to provide Company with access
to such receipts, ledgers, and other records as may be reasonably appropriate
for Company or its accountants to verify the amount and nature of any such
expenses for which actual reimbursement is sought. The monthly non-accountable
allowance shall be paid with the Base Fee; actual out-of-pocket expenses shall
be reimbursed by the date on which the Company disburses its payroll to
employees following the date of receipt of Contractor's invoice for such
expenses.
SECTION 4
RESPONSIBILITIES OF CONTRACTOR FOR TAXES AND OTHER MATTERS
4.1 TAXES. As an independent contractor, Contractor shall pay and report
all federal and state income tax withholding, Social Security taxes, and
unemployment insurance applicable to Contractor. Contractor shall not be
entitled to participate in health or disability insurance, retirement benefits,
or other welfare or pension benefits (if any) to which employees of Company may
be entitled.
SECTION 5
CONFIDENTIALITY
5.1 RESTRICTIONS. Contractor acknowledges that in order to perform the
services called for in this Agreement, it shall be necessary for Company to
disclose to Contractor certain Trade Secret(s) of Company. Contractor agrees
that she shall not disclose, transfer, use, copy, or allow access to any such
Trade Secrets to any third parties, except as authorized by Company.
5.2 TRADE SECRETS DEFINED. As used herein, the term "Trade Secret(s)"
shall mean any business plans, projections, contracts, agreements, business
processes, marketing plans or materials, spreadsheets of Company information,
books and records of the Company and underlying documentation, and financial,
management or technical data, information, designs, diagrams, processes,
procedures, formulae, or improvements that are commercially valuable to Company
and not known to the general public or the industry.
SECTION 6
RIGHTS IN WORK PRODUCT
6.1 OWNERSHIP OF WORK PRODUCT. All Work Product shall be considered
work(s) made by Contractor for hire for Company and shall belong exclusively to
Company and its designees. If by operation of law, any of the Work Product,
including all related intellectual property rights, is not owned in its
entirety by Company automatically upon creation thereof, then Contractor agrees
to assign, and hereby assigns, to Company and its designees the ownership of
such Work Product, including all related intellectual property rights.
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6.2 INCIDENTS AND FURTHER ASSURANCES. Company may obtain and hold in its
own name copyrights, registrations, and other protection that may be available
in the Contractor. Contractor agrees to provide any assistance required to
perfect such protection. Contractor agrees to take such further actions and
execute and deliver such further agreements and other instruments as Company may
reasonably request to give effect to this Section 6.
6.3 PREEXISTING MATERIALS. Contractor may include in the Work Product
preexisting work or materials only if either they are provided by Company or if
they are owned or licensable without restriction by Contractor. To the extent
that preexisting work or materials owned or licensed by Contractor are included
in the Work Products, Contractor shall identify any such work or materials
prior to commencement of the Services involving such work or materials.
Contractor grants to Company (as an exception to the transfer and assignment
provided in Paragraph 6.1) an irrevocable, nonexclusive, worldwide,
royalty-free right and license to use, execute, reproduce, display, perform,
and distribute (internally and externally) copies of, and prepare derivative
works based on, such work and materials, and the right to authorize others to
do any of the foregoing.
6.4 "WORK PRODUCT" DEFINED. As used herein, the term "Work Product" shall
mean any documentation, spreadsheets, workbooks, data compilations,
projections, forecasts, business plans, financial statements, reports, and any
other media, materials, or other objects produced as a result of Contractor's
work or delivered by Contractor in the course of performing that work.
SECTION 7
ASSURANCES
7.1 NO CONFLICT. Contractor represents and warrants that he has no
obligations to any third party that will in any way limit or restrict his
ability to perform contracting services to Company hereunder. Contractor agrees
that she will not disclose to Company, nor make use in the performance of any
work hereunder, any trade secrets, or other proprietary information of any
third party, unless Contractor may do so without Contractor or Company
incurring any obligation (past or future) to such third party for such work or
any future application thereof.
7.2 NO RECRUITING. During the term of this Agreement and for a period of
two (2) years thereafter, Contractor shall not knowingly solicit, entice, or
persuade any employees of Company to terminate their employment with Company
for any reason.
SECTION 8
MISCELLANEOUS
8.1 FORCE MAJEURE. Contractor shall not be liable to Company for any
failure or delay caused by events beyond Contractor's control, including,
without limitation, Company's failure to furnish necessary information;
sabotage, failure, or delays in transportation or communication; failures or
substitutions of equipment; labor disputes; accidents; shortages of labor,
fuel, raw materials, or equipment; or technical failures.
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8.2 GOVERNING LAW. This Agreement shall be governed and construed in all
respects in accordance with the laws of the Commonwealth of Virginia as they
apply to a contract entered into and performed in Virginia.
8.3 INDEPENDENT CONTRACTORS. The parties are and shall be independent
contractors to one another, and nothing herein shall be deemed to cause this
Agreement to create an agency, partnership, or joint venture between the
parties. Nothing in this Agreement shall be interpreted or construed as creating
or establishing the relationship of employer and employee between Company and
either Contractor or any employee or agent of Contractor.
8.4 NOTICES. All notices required or permitted hereunder shall be in
writing addressed to the respective parties as set forth herein, unless another
address shall have been designated, and shall be delivered by hand or by
registered or certified mail, postage prepaid.
8.5 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties hereto and supersedes all prior representations, proposals,
discussions, and communications, whether oral or in writing. This Agreement may
be modified only in writing and shall be enforceable in accordance with its
terms when signed by the party sought to be bound.
8.6 INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless Contractor and
its affiliates, counsel and other professional advisors, the respective
directors, officers, agents and employees of each of the foregoing, and each
other person controlling Contractor or any of its affiliates within the meaning
of either Section 15 of the Securities Act of 1933, as amended, or Section 20 of
the Securities and Exchange Act of 1934, as amended, (individually, and
"Indemnified Party" and collectively, the "Indemnified Parties"), from and
against all losses, claims, damages, expenses or liabilities resulting from,
relating to, or arising out of action taken or omitted to be taken (i) by the
Company or (ii) by an Indemnified Party in good faith pursuant to the terms of,
or in connection with, services rendered pursuant to this Agreement or any of
the transactions covered thereby. In addition, the Company agrees to reimburse
each Indemnified Party for all reasonable out-of-pocket expenses (including
reasonable fees and expenses of counsel) as they are incurred by such
Indemnified Party in connection with investigating, preparing or defending any
such action or claim, whether or not in connection with litigation in which any
Indemnified Party is a named party.
(b) Notwithstanding the foregoing, the Company shall not be liable to
an Indemnified Party in respect of an loss, claim, damage, liability or expense
to the extent the same is determined, in a final judgment by a court of
competent jurisdiction, to have resulted primarily and directly from the gross
negligence, willful misconduct or bad faith of the Indemnified Party.
(c) In the event of the assertion against any Indemnified Party of any
claim or the commencement of any action or proceeding, the Company shall be
entitled to participate in such action or proceeding, and in the investigation
of such claim, and after written notice from the Company, to assume the
investigator or defense of such claim, action or proceeding with counsel
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of its choice at its own expense; provided that such counsel shall be reasonably
satisfactory to Contractor. Notwithstanding the Company's election to assume the
defense or investigation of such claim, action or proceeding, Contractor shall
have the right to employ separate counsel (and local counsel, if necessary) and
to participate in the defense or investigation of such claim, action or
proceeding and the Company shall advance and bear the expense (including
reasonable fees and disbursement) of such separate counsel, if (i) in the
written opinion of counsel, use of counsel chosen by the Company could
reasonably be expected to give rise to a conflict of interest; (ii) the Company
shall not have employed counsel reasonably satisfactory to Contractor to
represent the Indemnified Party within a reasonable time after notice of the
institution of any such litigation or proceeding, or (iii) the Company shall
authorize Contractor to employ separate counsel at the Company's expense.
(d) If for any reason the foregoing indemnification is unavailable
to an Indemnified Party or is insufficient to hold it harmless as contemplated
herein then the indemnified party shall contribute to the amount paid or payable
by the Indemnified Party as a result of such loss, claim, liability or expense
in such proportion as is appropriate to reflect not only the relative benefits
received by the Company and their affiliates, on the one hand, but also the
relative fault of the Company and their affiliates and Contractor or any
Indemnified Party, as the case may be, as well as any other relevant equitable
considerations, subject to the limitation that in any event the aggregate
contribution of all Indemnified Parties to all losses, claims, liabilities,
damages and expenses shall not exceed the amount of fees actually received by
Contractor pursuant to the Agreement.
(e) No Indemnified Party shall have any liability to the Company
or any person in connection with the services rendered pursuant to the
Agreement, except for the liability for losses, claims, damages or liabilities
finally judicially determined to have resulted solely from such Indemnified
Party's gross negligence, willful misconduct or bad faith. The indemnity,
contribution and expense reimbursement obligations set forth herein shall be in
addition to any liability the Company may have to an Indemnified Party at common
law or otherwise, and shall survive the expiration of the term of the Agreement.
(f) If any personnel of an Indemnified Party appears as a witness,
are deposed or are otherwise involved in the defense of any action against any
Indemnified Party, the Company or any officer or director of the Company, the
Company will reimburse such Indemnified Party for all reasonable out-of-pocket
expenses (including the reasonable fees and expenses of counsel for such
Indemnified Party) incurred by it by reason of any of its personnel being
involved in any such action and will compensate Contractor for time spent by its
employees preparing for and testifying as witnesses in any deposition or
proceeding at Contractor's customary daily rates.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized representative and Contractor has executed this
Agreement on the date and year first above-written.
NEWSREAL, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: President & CEO
Contractor:
MAYFLOWER RESOURCES INC.
By: /s/ S. Xxxxx Xxxxxxx
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Name: S. Xxxxx Xxxxxxx
Title: President
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EXHIBIT A
SCOPE OF SERVICES TO BE RENDERED AND FEES PAYABLE UNDER CONTRACTING AGREEMENT
1. Scope of services to be rendered:
Contractor's sole shareholder and employee, Xxxxx Xxxxxxx, will
serve as Acting CFO of the Company during the Term of this Agreement. His
duties and responsibilities will include:
a. Review and augment the Company's business plan as the Company deems
appropriate.
b. Perform and oversee financial analysis and Treasury functions
necessary to support management decisions.
c. Lead negotiations with existing potential investors and, as
appropriate, augment the list with new potential investors.
d. Direct the retention of investment bankers as may be required to
complete the Company's financings.
e. Supervise existing finance and administration personnel.
f. Oversee the development of systems, controls and MIS reports
necessary to support the Company's business plan.
g. Perform all other functions required of a CFO.
2. Fees and payment terms:
a. Base Fee -- Company shall pay Contractor $9,000 per month ("Base
Fee") during the Term of the Agreement. The Base Fee shall be paid
in accordance with Section 3.1 of the Agreement.
b. Incentive Compensation -- Subject to the terms and conditions set
forth in Sections 2.1(b) and (c) of the Agreement, Contractor shall
be entitled to receive, and the Company shall be required to pay,
incentive compensation on the following terms and conditions:
(1) Except as provided in (3) below, Contractor shall be entitled to
receive incentive compensation in an amount equal to three
percent (3%) of the gross proceeds (before commissions and
expenses) raised by the Company in a private placement offering
of its equity securities. For purposes hereof, "equity
securities" refers to the Company's common stock, preferred
stock or any security that is convertible into the Company's
common or preferred stock.
(2) Contractor shall be entitled to receive incentive compensation
in an amount equal to one and one-half percent (1.5%) of the
gross proceeds (before commissions and expenses) raised by the
Company in a private placement or offering of its debt
securities or in an initial public offering of its securities
(debt or equity), or one and one-half percent (1.5%) of the
aggregate consideration (before commissions and
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expenses) generated by the Company and/or its stockholders in a transaction
involving a Change of Control (as defined below). For purposes hereof, a
"Change of Control" refers to any of the following:
(A) the direct sale, exchange or transfer by the stockholders of the
Company of all or substantially all of the stock and/or assets of the
Company, where the stockholders of the Company before such sale or exchange
do not retain, directly or indirectly, at least a majority of the
beneficial interests in the voting stock of the acquiring entity after such
sale or exchange;
(B) a merger or consolidation in which the Company is not the
surviving corporation, other than a merger or consolidation with a
wholly-owned subsidiary, reincorporation of the Company in a different
jurisdiction from its current state of incorporation or other transaction
in which there is no substantial change in the stock ownership of the
Company; or
(C) a merger or consolidation in which the Company is the surviving
corporation, where the stockholders of the Company before such merger or
consolidation do not retain, directly or indirectly, at least a
super majority (67%) of the voting stock of the successor entity after such
merger or consolidation.
(3) The percentage set forth in (1) above shall be reduced to two percent (2%)
in the event and to the extent the Company issues any of its equity securities
in a private placement offering to any one or more of the following companies
or any of their affiliates: Knight Ridder, Network Solutions, Inc., or Intel.
(4) Of the total amount of incentive compensation earned by Contractor with
respect to the offering of equity securities by the Company under paragraph
2(b)(1) of this Exhibit A, no more than fifty percent (50%) of such total shall
be paid in cash and no less than fifty percent (50%) of such total shall be
paid in a combination of a promissory notes and stock options of the Company,
which options shall bear an exercise price equal to, the average price per
share received by the Company in such equity offering. The face value of the
promissory notes will equal the proportion of the fee not otherwise paid in
cash. The number of shares underlying the options granted in combination with
the promissory note will equal the face value of the promissory note divided by
the per share exercise price of the options. Any incentive compensation payable
with respect to the transactions described in paragraph 2(b)(2) of this Exhibit
A shall be payable in cash. The cash payable, promissory notes and stock
options issuable to Contractor for incentive compensation hereunder shall be
paid/issued to Contractor immediately following the closing of the offering to
which such incentive compensation relates. Contractor in its sole discretion
shall determine the extent to which (a) incentive compensation payable in a
combination of promissory notes and stock options on the Company's stock shall
exceed fifty percent (50%) of the total consideration payable to Contractor,
and (b) incentive compensation payable in cash shall be given to Contractor.
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c. Additional Compensation in Warrants -- In addition to the Base Fee set
forth in paragraph 2a above and the incentive compensation set forth in
paragraph 2b above and following Contractor's completion of each month of
service (or part of a month of service) hereunder, the Company shall
provide additional compensation to Contractor in the form of a warrant to
purchase 0.5% (or pro rata portion based upon the number of days in the
month prior to the date of actual termination) of the sum of (a) the
aggregate number of the then issued and outstanding shares of the Company's
Common Stock, (b) the aggregate number of shares of the Company's Common
Stock issuable upon exercise of the then outstanding options and warrants
to purchase the Company's Common Stock or upon conversion of the then
outstanding debt or equity securities of the Company, and (c) the aggregate
number of any other shares of the Company's Common Stock issuable to any
other party upon exercise or conversion of any other right or security
whatsoever; provided, however, that the Company's obligation to issue
warrants hereunder shall cease on the earlier of (w) the Scheduled
Termination Date, as defined in Section 2.1(b) of this Agreement, (x) the
date on which Contractor is terminated with Cause (as defined in Section
2.1(b)(iv)), (y) the date of Xx. Xxxxxxx'x death or disability, or (z) the
date on which Contractor voluntarily terminates the engagement hereunder.
Moreover, in the event Contractor is terminated with Cause, any warrants
previously issued to Contractor shall immediately expire and shall be
cancelled by the Company. The exercise price for the warrants being granted
under this paragraph 2c shall equal 150% of the average price per share
received by the Company in its most recent private placement equity
offering. The warrants shall be subject to the terms and conditions of the
attached warrant agreement, which agreement shall include a schedule
indicating the number of shares issuable to Contractor upon exercise of the
warrant, the date on which each such warrant was issued to Contractor, and
the expiration date of each such warrant.
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SCHEDULE A
LIST OF INVESTORS
FOR WHICH CONTRACTOR
MAY BE ENTITLED TO RECEIVE INCENTIVE COMPENSATION
UNDER SECTION __ OF THE CONTRACTOR AGREEMENT
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