EXHIBIT 10.22
EXCLUSIVE ADVISORY AGREEMENT
THIS AGREEMENT (the "Agreement") dated as of May 18, 2004, by and between
NS8 Corporation and its subsidiaries (the "Company"), and Maximum Ventures, Inc.
(the "Advisor.")
W I T N E S S E T H:
WHEREAS, the Company desires to retain the Advisor and the Advisor
desires to be retained by the Company pursuant to the terms and conditions
hereinafter set forth:
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained, it is hereby agreed as follows:
SECTION 1. Retention.
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(a) The Company hereby retains the Advisor on an exclusive basis to
perform the services set forth in Section 1 (b) below during the one (1) year
period, which shall be renewable upon written agreement of the parties for
additional six-month periods (the initial one-year period and any renewals
thereof, the "Term"), commencing on the date hereof, and the Advisor hereby
accepts such retention and shall perform for the Company the duties described
herein, faithfully and to the best of its ability. During the Term, the Advisor
shall report directly to the CEO of the Company unless the Board of Directors of
the Company designates another senior officer in place of the CEO to perform
that function.
(b) The Advisor shall serve as a business advisor to the Company and
render such advice and services to the Company as may be reasonably requested by
the Company including, without limitation, equity and/or debt financings,
strategic planning, merger and acquisition possibilities and business
development activities including, without limitation, the following:
(i) Study and review of the business, operations, and historical
financial performance of the Company (based upon management's forecast of
financial performance) so as to enable the Advisor to provide advice to the
Company;
(ii) Assist the Company in attempting to formulate the best strategy to
meet the Company's working capital and capital resource needs;
(iii) Assist in the formulation of the terms and structure of any
reasonable proposed business combination transaction involving the Company;
(IV) ASSIST IN THE PRESENTATION TO THE BOARD OF DIRECTORS OF THE
COMPANY OF ANY PROPOSED TRANSACTION;
(V) ADVISE THE COMPANY IN THE PREPARATION OF PRESS RELEASES AND OTHER
COMMUNICATIONS WITH THE FINANCIAL AND INVESTMENT COMMUNITIES;
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(vi) Assist the Company in its efforts to have its securities listed on
a nationally listed stock exchange by analyzing the quantitative and
qualitative requirements as required by any exchange, including but not limited
to (A) net tangible assets or market capitalization or shareholders equity or
net income, (B) public float of the Company's common stock, (C) market-makers,
(D) shareholders, (E) corporate governance requirements, (F) independent
directors, (G) audit and compensation committees and (H) assist, where
necessary, in an effort to enable the Company to obtain an exchange listing and
to be in a position to remain continuously listed thereafter; and
(vii) Introduce the Company to potential lenders of funds as well as to
potential investors (whether such investment is in the form of debt and/or
equity financing or some combination thereof). Currently, Maximum Ventures Inc.
has introduced Cornell Capital Group, who has provided term sheets for funding
("Cornell Funding").
SECTION 2. Compensation.
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(a) If the Advisor introduces the Company to any provider of an equity
financing (the "Equity Financing") which the Company closes, the Company shall
pay the Advisor a fee consisting of (i) cash in an amount equal to ten percent
(10%) of the total gross cash proceeds of the Equity Financing and (ii) warrants
to purchase such number of shares of the Company's common stock (the "Common
Stock") as shall equal ten percent (10%) of the shares of the Common Stock
issued or to be issued upon conversion and/or exercise in the Equity Financing
on a post-financing, fully-diluted basis at an exercise price of $0.01 per share
and exercisable, in whole or in part, during the five (5) year period commencing
on the issuance date of such warrants (the "Warrant Fee"). This Section 2(a)
does not apply to the current Cornell Funding.
(b) If the Advisor introduces the Company to any merger candidate or
facilitates a merger or acquisition with a public or private company (the
"Merger"), which the Company closes, the Company shall pay the Advisor a fee
consisting of (i) cash in an amount equal to ten percent (10%) of the total
gross cash proceeds of the Merger and (ii) a Warrant Fee equal to ten percent
(10%) of the shares of the Common Stock issued or to be issued upon conversion
and/or exercise in the Merger on a post-financing, fully-diluted basis. The
Warrant Fee, at the option of the Advisor, may be paid for in cash or by an
exchange as a "cashless exercise." In the event the Company is not the
surviving entity of the Merger, then the Warrant Fee shall be issued and
convertible into the common stock of such surviving entity.
(c) If the Advisor introduces the Company to sources (individually, the
"Advisor Source") who provide any of the following capital related instruments
for the Company (each a "Transaction"), the Company shall pay the Advisor a cash
fee at closing based upon the total face value of the Transaction in accordance
with the following schedule: (i) ten percent (10%) of any and all consideration
received by the Company in any convertible preferred and/or debt financing; (ii)
six percent (6%) of any debt instrument not convertible into equity; (iii) three
percent (3%) of any revolving credit line; (iv) two percent (2%) of any credit
enhancement instrument, including on an insured or guaranteed basis; and (v) ten
percent (10%) of any revenue-producing contract, fee-sharing arrangement, or
similar agreement. This obligation shall survive for a period of three (3)
years from the date of execution of the agreement for each Transaction.
(d) In the event the Company closes a Transaction with a third-party
agent, but not with an Advisor Source, that is entitled to earn a fee in
connection with the Transaction (and therefore, such investors are not included
on Schedule A), the Company may enter into such transaction provided, however,
that Advisor shall be entitled to receive the greater of one half (1/2) of the
total of any and all fees paid to aforesaid third-party agent or the fee Advisor
would have earned if Advisor had introduced the Transaction through an Advisor
Source. Notwithstanding the foregoing provisions of this Section 2 (d), the
Advisor acknowledges and agrees that the Company has certain existing contacts
for opportunities relating to mergers, acquisitions, strategic alliances,
financing and investment in respect of the Company and its business that are
independent of the Advisor and pre-date this Agreement (collectively, the
"Company's Contacts"). The Company's Contacts on the date of this Agreement are
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listed in Schedule B annexed hereto and made a part hereof. Accordingly, the
Advisor acknowledges and agrees that with respect to the Company's Contacts
listed in Schedule B and any merger, acquisition, strategic alliance, financial
or investment transaction of any nature or kind whatsoever (or transactions of a
similar nature or purpose) that might arise there from, are specifically
excluded from this Agreement and the Company will not have any obligations to
the Advisor whatsoever in respect of any of the Company's Contacts or any of
their respective opportunities notwithstanding any other provision of this
Agreement. For the purpose of this Agreement, the shareholders of the Company
at the date of this Agreement shall be deemed to be Company's Contacts
notwithstanding that such shareholders are not expressly listed in Schedule B.
(e) Each Advisor Source introduced to the Company under Section 2 (c)
on the date of this Agreement shall be listed in Schedule A annexed hereto and
made a part hereof. Subsequent to the date of this Agreement and immediately
upon the Advisor's introduction of an Advisor Source to the Company, the Advisor
shall amend Schedule A to include each additional Advisor Source and deliver
such amended Schedule A to the Company and the Escrow Agent within ten (10) days
of such introduction.
(f) Company shall upon signing of the Agreement, immediately issue to
Advisor warrants to purchase such number of shares of the Company's common stock
(the "Common Stock") as shall equal four and 99/100ths percent (4.99%) of the
shares of the Common Stock issued and outstanding on a fully-diluted basis.
These warrants shall have an exercise price of two dollars $2.00 per share and
exercisable, in whole or in part, during the five (5) year period commencing on
the issuance date of such warrants.
(g) Except as otherwise provided for herein:
(i) All fees due to the Advisor hereunder shall have no offsets, are
non-refundable, non-cancelable and shall be free and clear of any and all
encumbrances.
(ii) All cash fees due the Advisor hereunder shall be paid to the
Advisor immediately upon closing of any Equity Financing, Merger, and
Transaction (collectively, the "Fee Transaction") by wire transfer of
immediately available funds from the proceeds of the Fee Transaction, either
directly or from the formal or informal escrow arrangement established for the
Fee Transaction (collectively, the "Closing Agent"), pursuant to the written
wire transfer instructions of the Advisor to the Closing Agent.
(iii) All securities fees due the Advisor hereunder shall be made via
DTC or the DWAC system, or by certified certificates, as applicable, and shall
be delivered to the Advisor from the Closing Agent immediately upon closing of
any Fee Transaction.
(iv) All securities fees due the Advisor hereunder shall be duly
issued, fully-paid (exclusive of warrants or options) and non-assessable and
shall be in the same form, with the same terms and conditions as the securities
provided to the Company pursuant to any Fee Transaction.
(v) All fees due the Advisor hereunder shall be paid in shares of
the Common Stock and warrants and/or options to purchase shares of the Common
Stock (collectively, the "Registerable Stock") shall be duly issued, fully-paid
(exclusive of warrants or options), non-assessable. Notwithstanding anything
otherwise contained herein, the Company agrees that it shall provide piggyback
registration rights and register the Registerable Stock, on Form XX-0, X-0, X-0
or similar registration statement and in compliance with any and all federal and
state securities laws, in the name(s) of and to the account(s) designated by the
Advisor. The Advisor agrees to pay all costs associated with registering the
Registerable Stock for resale.
(h) The Company authorizes and directs the Closing Agent to distribute
directly or from escrow any and all fees due the Advisor hereunder. The Company
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agrees that such fees and the manner of payment and delivery as herein provided
shall be included in the documentation of any Fee Transaction.
SECTION 3. Expenses. The Company shall reimburse the Advisor for
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all out-of-pocket expenses incurred by the Advisor in connection with its duties
hereunder, including but not limited to the Advisor's due diligence activities
with respect to the Company. Any such expenses shall require the prior written
approval of the Company and shall be evidenced by written documentation prior to
reimbursement. Reimbursement by the Company to the Advisor will be made within
thirty (30) days of the Company's receipt of said documentation.
SECTION 4. Termination Fee. Provided that the Advisor is proceeding in
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good faith at all times, the Company warrants that it will not terminate this
Agreement for any reason unless such termination is made pursuant to Section 5
of this Agreement. The Company also warrants that it will not terminate, cancel
or rescind any agreements, term sheets or letters of intent pursuant to any
Equity Financing, Merger, Transaction or Other Transaction the Company enters
into that was facilitated by the Advisor unless such cancellation is made
pursuant to pertinent "out clauses" of those respective documents ("Just
Cause"). In the event the Company elects not to proceed with a Equity Financing,
Merger, Transaction or Other Transaction that was facilitated by the Advisor
without just cause, the Company shall immediately pay to the Advisor a
termination fee equal to fifty percent (50%) of the total fees that would have
been paid to the Advisor had the transaction been effected.
SECTION 5. Termination. This Agreement and the Advisor's engagement
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hereunder shall not be terminated by Company under any circumstances nor for any
reason whatsoever, unless all compensation due to Advisor pursuant to Section 2
above has been distributed to the Advisor from the Closing Agent. Subject to
the foregoing provisions of this Section 5, this Agreement and the Advisor's
engagement hereunder may be terminated by Company during the Term or any
extention thereof without cause upon thirty (30) days written notice. The
Company agrees that in the event a transaction is consummated during the Term of
this Agreement or during the Residual Period with any party (or any other party
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formed by or affiliated with such party identified to and approved by the
Company) identified by Advisor and included on Schedule A annexed hereto, or
which completes a transaction provided by an agreement in principle or a
definitive agreement which is entered into during the Term of this Agreement or
during the Residual Period, then the Company shall pay to the Advisor, a
transaction fee equal to the appropriate percentage specified Section 2 above.
For the purposes of this Agreement, the term "Residual Period" shall mean that
period extending for 36 months after the earlier of (i) the date of the
expiration of Advisor's engagement or (ii) the date of the termination of
Advisor's engagement, as the case may be. Notwithstanding anything to the
contrary contained herein, the provisions concerning confidentiality and
indemnification and the Company's obligations to pay fees accrued prior to the
termination of this Agreement, and to reimburse expenses incurred prior to the
termination of this Agreement and the Indemnification Provisions (as hereinafter
defined) shall survive any such expiration or termination.
SECTION 6. Confidential Information. The Advisor agrees that during and
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after the Term, it will keep in strictest confidence, and will not disclose or
make accessible to any other person without the written consent of the Company,
the Company's products, services and technology, both current and under
development, promotion and marketing programs, lists, trade secrets and other
confidential and proprietary business information of the Company or any of its
clients and third parties including, without limitation, Proprietary Information
(as defined in Section 7) (all of the foregoing is referred to herein as the
"Confidential Information"). The Advisor agrees (a) not to use any such
Confidential Information for himself or others; and (b) not to take any such
material or reproductions thereof from the Company's facilities at any time
during the Term except, in each case, as required in connection with the
Advisor's duties hereunder.
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Notwithstanding the foregoing, the parties agree that the Advisor is
free to use (a) information in the public domain not as a result of a breach of
this Agreement, (b) information lawfully received form a third party who had the
right to disclose such information and (c) the Advisor's own independent skill,
knowledge, know-how and experience to whatever extent and in whatever way he
wishes, in each case consistent with his obligations as the Advisor and that, at
all times, the Advisor is free to conduct any research relating to the Company's
business but excluding any research or access to any confidential information or
documents regarding the Company's technology and research and development
activities.
SECTION 7. Ownership of Proprietary Information. The Advisor agrees that
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all information that has been created, discovered or developed by the Company,
its subsidiaries, affiliates, licensors, licensees, successors or assigns
(collectively, the "Affiliates") (including, without limitation, information
relating to the development of the Company's business created, discovered,
developed by the Company or any of its affiliates during the Term, and
information relating to the Company's customers, suppliers, advisors, and
licensees) and/or in which property rights have been assigned or otherwise
conveyed to the Company or the Affiliates, shall be the sole property of the
Company or the Affiliates, as applicable, and the Company or the Affiliates, as
the case may be, shall be the sole owner of all patents, copyrights and other
rights in connection therewith, including without limitation the right to make
application for statutory protection. All the aforementioned information is
hereinafter called "Proprietary Information." By way of illustration, but not
limitation, Proprietary Information includes trade secrets, processes,
discoveries, structures, inventions, designs, ideas, works of authorship,
copyrightable works, trademarks, copyrights, formulas, improvements, inventions,
product concepts, techniques, marketing plans, merger and acquisition targets,
strategies, forecasts, blueprints, sketches, records, notes, devices, drawings,
customer lists, patent applications, continuation applications,
continuation-in-part applications, file wrapper continuation applications and
divisional applications and information about the Company's Affiliates, its
employees and/or advisors (including, without limitation, the compensation, job
responsibility and job performance of such employees and/or advisors).
SECTION 8. Indemnification. The Company represents that all materials provided
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or to be provided to the Advisor or any third party regarding the Company's
financial affairs or operations are and shall be truthful and accurate and in
compliance with any and all applicable federal and state securities laws. The
Company agrees to indemnify and hold harmless the Advisor and its advisors,
professionals and affiliates, the respective directors, officers, partners,
members, managers, agents and employees and each other person, if any,
controlling the Advisor or any of its affiliates to the full extent lawful, from
and against all losses, claims, damages, liabilities and expenses incurred by
them (including reasonable attorneys' fees and disbursements) that result from
actions taken or omitted to be taken (including any untrue statements made or
any statement omitted to be made) by the Company, its agents or employees which
relate to the scope of this Agreement and the performance of the services by the
Advisor contemplated hereunder. The Advisor will indemnify and hold harmless
the Company and the respective directors, officers, agents, affiliates and
employees of the Company from and against all losses, claims damages,
liabilities and expenses that result from bad faith, gross negligence or
unauthorized representations of the Advisor. Each person or entity seeking
indemnification hereunder shall promptly notify the Company, or the Advisor, as
applicable, of any loss, claim, damage or expense for which the Company or the
Advisor, as applicable, may become liable pursuant to this Section 8. No party
shall pay, settle or acknowledge liability under any such claim without consent
of the party liable for indemnification, and shall permit the Company or the
Advisor, as applicable, a reasonable opportunity to cure any underlying problem
or to mitigate actual or potential damages. The scope of this indemnification
between the Advisor and the Company shall be limited to, and pertain only to
certain transactions contemplated or entered into pursuant to this Agreement.
The Company or the Advisor, as applicable, shall have the opportunity
to defend any claim for which it may be liable hereunder, provided it notifies
the party claiming the right to indemnification in writing within fifteen (15)
days of notice of the claim.
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The rights stated pursuant to this Section 8 shall be in addition to
any rights that the Advisor, the Company, or any other person entitled to
indemnification may have in common law or otherwise, including, but not limited
to, any right to contribution.
SECTION 9. Notices. Any notice or other communication under this
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Agreement shall be in writing and shall be deemed to have been duly given: (a)
upon facsimile transmission (with written transmission confirmation report) at
the number designated below; (b) when delivered personally against receipt
therefore; (c) one day after being sent by Federal Express or similar overnight
delivery; or (d) five (5) business days after being mailed registered or
certified mail, postage prepaid. The addresses for such communications shall be
as set forth below or to such other address as a party shall give by notice
hereunder to the other party to this Agreement.
If to the Company: NS8 Corporation
000 -0000 Xxxx Xxxxxx
Xxxxxxxxx, XX XXXXXX X0X 0X0
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxx Xxxxxxxxxx, CEO
With copies to: NS8 Corporation
Two Union Square
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, PhD, President
If to the Advisor: Maximum Ventures, Inc.
0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxxxx "Avi" Xxxxxx, President
With copies to: Gottbetter & Partners, LLP
000 Xxxxxxx Xxx.
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xx. Xxxx X. Xxxxxxxxxx, Managing
Partner
SECTION 10. Status of Advisor. The Advisor shall be deemed to be an
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independent contractor and, except as expressly provided or authorized in this
Agreement, shall have no authority to act for on behalf of or represent the
Company. This Agreement does not create a partnership or joint venture.
SECTION 11. Other Activities of Advisor. The Company recognizes that
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the Advisor now renders and may continue to render financial consulting and
other investment banking services to other companies that may or may not conduct
business and activities similar to those of the Company. The Advisor shall not
be required to devote its full time and attention to the performance of its
duties under this Agreement, but shall devote only so much of its time and
attention as it deems reasonable or necessary for such purposes.
SECTION 12. Successors and Assigns. This Agreement and all of the
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provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. This Agreement
and any of the rights, interests or obligations hereunder may be assigned by the
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Advisor without the prior written consent of the Company. This Agreement and any
of the rights, interests or obligations hereunder may not be assigned by the
Company without the prior written consent of the Advisor, which consent shall
not be unreasonably withheld.
SECTION 13. Severability of Provisions. If any provision of this
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Agreement shall be declared by a court of competent jurisdiction to be invalid,
illegal or incapable of being enforced in whole or in part, the remaining
conditions and provisions or portions thereof shall nevertheless remain in full
force and effect and enforceable to the extent they are valid, legal and
enforceable, and no provision shall be deemed dependent upon any other covenant
or provision unless so expressed herein.
SECTION 14. Entire Agreement; Modification. This Agreement and the
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schedule hereto contains the entire agreement of the parties relating to the
subject matter hereof, and the parties hereto and thereto have made no
agreements, representations or warranties relating to the subject matter of this
Agreement which are not set forth herein. No amendment or modification of this
Agreement shall be valid unless made in writing and signed by each of the
parties hereto.
SECTION 15. Non-Waiver. The failure of any party to insist upon the
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strict performance of any of the terms, conditions and provisions of this
Agreement shall not be construed as a waiver or relinquishment of future
compliance therewith; and the said terms, conditions and provisions shall remain
in full force and effect. No waiver of any term or condition of this Agreement
on the part of any party shall be effective for any purpose whatsoever unless
such waiver is in writing and signed by such party.
SECTION 16. Remedies For Breach. The Advisor and Company mutually agree
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that any breach of Sections 2, 4, 5, 6, 7, 8 or 9 of this Agreement by the
Advisor or the Company may cause irreparable damage to the other party and/or
their affiliates, and that monetary damages alone would not be adequate and, in
the event of such breach or threat of breach, the damaged party shall have, in
addition to any and all remedies at law and without the posting of a bond or
other security, the right to an injunction, specific performance or other
equitable relief necessary to prevent or redress the violation of either party's
obligations under such Sections. In the event that an actual proceeding is
brought in equity to enforce such Sections, the offending party shall not urge
as a defense that there is an adequate remedy at law nor shall the damaged party
be prevented from seeking any other remedies that may be available to it. The
defaulting party shall pay all attorney's fees and costs incurred by the other
party in enforcing this Agreement.
SECTION 17. Governing Law. The parties hereto acknowledge that
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the transactions contemplated by this Agreement bear a reasonable relation to
the state of New York. This Agreement shall be governed by, and construed and
interpreted in accordance with, the internal laws of the state of New York
without regard to such state's principles of conflicts of laws. The parties
irrevocably and unconditionally agree that the exclusive place of jurisdiction
for any action, suit or proceeding ("Actions") relating to this Agreement shall
be in the state and/or federal courts situate in the county and state of New
York. Each party irrevocably and unconditionally waives any objection it may
have to the venue of any Action brought in such courts or to the convenience of
the forum.
Final judgment in any such Action shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment, a certified or true copy of which
shall be conclusive evidence of the fact and the amount of any indebtedness or
liability of any party therein described. Service of process in any Action by
any party may be made by serving a copy of the summons and complaint, in
addition to any other relevant documents, by commercial overnight courier to any
other party at their address set forth in this Agreement.
SECTION 18. Headings. The headings of the Sections are inserted for
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convenience of reference only and shall not affect any interpretation of this
Agreement.
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SECTION 19. COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED IN
COUNTERPART SIGNATURES, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL, BUT ALL OF
WHICH, WHEN TAKEN TOGETHER, SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT, IT
BEING UNDERSTOOD THAT BOTH PARTIES NEED NOT SIGN THE SAME COUNTERPART. IN THE
EVENT THAT ANY SIGNATURE IS DELIVERED BY FACSIMILE TRANSMISSION, SUCH SIGNATURE
SHALL CREATE A VALID AND BINDING OBLIGATION OF THE PARTY EXECUTING (OR ON WHOSE
BEHALF SUCH SIGNATURE IS EXECUTED) THE SAME WITH THE SAME FORCE AND EFFECT AS IF
SUCH FACSIMILE SIGNATURE PAGE WERE AN ORIGINAL THEREOF.
[Signature Page Immediately Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement of
nine (9) pages as of the day and year first written above.
NS8 CORPORATION
By: /s/ Xxxxx Xxxxxxxxxx
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Xx. Xxxxx Xxxxxxxxxx, CEO
MAXIMUM VENTURES, INC.
By: /s/ Xxxxx Xxxx
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Xxxxx Xxxx, President
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