Exhibit 10.13
CONSULTING AGREEMENT
This CONSULTING AGREEMENT ("AGREEMENT") made this 18th day of October 2006 by
and between MASTODON VENTURES, INC., a Texas corporation with offices at 000
Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 ("MASTODON") and XA, INC., a
Nevada corporation with offices at 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000 ("XA").
W I T N E S S E T H :
WHEREAS, XA requires strategic advice regarding its plan for refinancing
certain of its existing debt and funding the anticipated growth and expansion in
its business; and
WHEREAS, Mastodon has experience in substantially all aspects of corporate
finance, including the provision of strategic advisory services with regard to
corporate restructurings, financings, mergers, acquisitions and strategic
alliances for private and public companies; and
WHEREAS, XA wishes to engage Mastodon to act as its non-exclusive strategic
advisor in connection with the implementation of its financing plan, and
Mastodon is willing to be so engaged, all on and subject to the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein and other
good and valuable consideration, the receipt and suffieincy of which are hereby
acknoweldged, the parties hereto do hereby agree as follows:
1. XA'S PLAN. XA has determined that it will seek to raise additional
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capital for its business activities and operating plan which will entail
restructuring certain of its outstanding equity and debt securities, obtaining
required consents from its institutional lender, modifying certain of its
executive management agreements, and arranging for the sale of additional equity
and debt securities to implement such operating plan (the "OPERATING PLAN").
The advisory services required of Mastodon in connection with the foregoing
activities and the compensation payable to Mastodon for such services are
hereinafer described.
2. MASTODON'S SERVICES. XA hereby engages Mastodon as a strategic advisor
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on a non-exclusive basis in connection with XA's Operating Plan, and Mastodon
hereby accepts such agreement, on and subject to the terms of this Agreement.
Accordingly, Mastodon will render the following advisory services to XA (the
"SERVICES"):
(i) Assist XA in analyzing and evaluating its business, proposed
operations and financial condition and requirements;
(ii) Assist XA in the preparation and implementation of any
marketing and/or expansion plan;
(iii) Assist XA in connection with the screening of potential
candidates to serve as members of its Board of Directors and
committees thereof;
(iv) Assist XA in the negotiations with the arrangements between
XA and the selling agent in connection with the sale to investors
of the Bridge Notes and Bridge Warrants;
(v) Assist XA with the selection of a broker-dealer or other
selling agent (the "Selling Agent") and the negotiation of the
terms and provisions of the agreement with the Selling Agent
relating thereto and any warrants issued to the Selling Agent in
connection therewith;
(vi) Assist XA with the negotiation of all employment and other
agreements and warrants and/or options required to be entered
into and/or modified as conditions of closing of the PIPE
Financing (hereinafter defined);
(vii) Assist representatives of the Selling Agent, and its
counsel, with all due diligence inquiries relating to XA;
(viii) Assist XA with developing an approved use and application
of the net proceeds from the PIPE Financing to the extent
required by the Selling Agent;
(ix) Assist XA with respect to press releases and other
promotional or public disclosures to financial news and other
media, broker dealers, financial institutions and XA shareholders
in connection with the PIPE Financing;
(x) Assist XA, when required, with the preparation of a profile
of its operations and financial condition for publication in
Standard and Poors and other similar publications;
(xi) Assist XA with the preparation of documents required by it
in connection with the PIPE Financing, including any required
private placement memorandum;
(xii) Assist XA with the preparation of its Registration
Statement (hereinafter defined) with respect to the PIPE
Financing transaction referred to in this Agreement;
(xiii) Meet with the executive officers and Board members of XA
with respect to matters pertaining to the Operating Plan
contemplated by XA hereunder; and
(xiv) Provide such other advisory services in connection with the
Operating Plan as XA shall reasonably request of Mastodon.
MASTODON WILL NOT BE REQUIRED TO RENDER ANY SERVICES HEREUNDER WHICH
INVOLVE THE RAISING OF CAPITAL FOR OR ON BEHALF OF XA, ANY SUCH CAPITAL RAISING
ACTIVITIES TO BE EFFECTED ONLY THROUGH REGISTERED BROKER DEALERS IN COMPLIANCE
WITH APPLICABLE LAW.
XA will provide Mastodon with all financial and business information and
documentation concerning XA which is reasonably requested by Mastodon hereunder
with respect to the Services to be performed by Mastodon hereunder, to the
extent such information and documentation is available without XA incurring any
unreasonable effort or expense therefor. In addition, XA will make its
executive officers and members of its Board of Directors available to Mastodon,
upon reasonable advance notice and request of Mastodon, for the purpose of
providing information to Mastodon in connection with its Services hereunder.
Mastodon will devote such of its time and efforts as it determines is
necessary for the performance of its Services hereunder. XA acknowledges that
Mastodon is acting as an independent contractor and not in any other capacity
hereunder.
Mastodon hereby acknowledges that all decisions relating to the Services
and advice provided to XA by Mastodon hereunder will, except as otherwise
provided elsewhere in this Agreement, be made exclusively by XA, in its sole and
absolute discretion, and Mastodon will have no right or authority to make any
such decisions or to otherwise bind XA to any obligation or commitment without
the written consent of XA. Mastodon shall not be liable under any circumstances
for any damage, liability, cost or expense incurred by XA as a consequence of
any Services performed for Mastodon hereunder, except for any judicially
determined intentional misconduct of Mastodon.
XA further agrees that if Mastodon is asked to provide any other services
to XA relating to this Agreement which are not specifically provided for in this
Agreement, then such services shall constitute separate agreements and the terms
and conditions of any such separate agreements will be subject to and embodied
in one or more separate written agreements containing provisions and terms to be
mutually agreed upon, including without limitation, appropriate indemnification
provisions.
3. MASTODON'S COMPENSATION. Mastodon shall receive payment from XA for all
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actual out-of-pocket costs and expenses incurred by Mastodon (including its
counsel fees), which are pre-approved in writing by XA, in connection with the
negotiation and performance of its Services under this Agreement. Such expense
reimbursements shall be made by XA within fifteen (15) days after XA's receipt
of Mastodon's invoice therefor.
XA has unconditionally issued to Mastodon (and/or its designees), a five
(5) year common stock purchase warrant, entitling it to purchase 666,667 shares
of XA's common stock at an exercise price of $.30 per share (the "First Mastodon
Warrant"). XA has also issued an additional common stock purchase warrant
entitling Mastodon (or its designees) to purchase 1,000,000 shares of XA's
common stock during a five (5) year period (the "Second Mastodon Warrant"), the
right to exercise of which is conditioned upon the consummation of the PIPE
Financing or a Change of Control within one (1) of the date of this Agreement
first written above, as defined below (each a "Vesting Event"). The five (5)
year exercise period of the Second Mastodon Warrant will commence upon a Vesting
Event and such warrant shall be exercisable at an exercise price equal to the
lesser of $1.10 per share or 125% of the offering price of the shares to
investors in the PIPE Financing, or in the event of a Change of Control prior to
the consummation of the PIPE Financing, such common stock purchase warrant will
be exercisable at an exercise price of $1.10 per share. The First and Second
Mastodon Warrants will have the same terms (other than the number of shares,
exercise price, and vesting provisions) as the warrants issued by XA in its
recent private placement of convertible promissory notes, including any
anti-dilution rights. In addition, such warrants will be transferable, Mastodon
having informed XA that it intends to transfer from the First Mastodon Warrant
the right to purchase 82,400 shares thereunder to Gusrae Xxxxxx Xxxxx & Xxxxxxx,
PLLC and the right to purchase 54,933 shares thereunder to Xxxxx Xxxx, Esq.
Mastodon has further informed XA that it intends to transfer from the Second
Mastodon Warrant the right to purchase 150,000 shares thereunder to Gusrae
Xxxxxx Xxxxx & Xxxxxxx, PLLC and the right to purchase 100,000 shares
thereunder to Xxxxx Xxxx, Esq.
XA agrees that Mastodon will have the first right, at its election, to sell
all or a portion of the shares of XA's common stock then owned by Mastodon as a
result of Mastodon's exercise of the First Mastodon Warrant, in the PIPE
Financing to the extent that sales of at least $3,000,000 of XA's securities are
consummated in such financing by the Selling Agent (if any) (i.e., if Mastodon
exercises such right, such shares owned by it will be the next shares sold in
the PIPE Financing following the consummation of $3,000,000 of sales of XA's
securities therein).
A "Change of Control" shall mean the adoption of a plan of merger or
consolidation of XA with any other corporation or entity as a result of which
the holders of the voting capital stock of XA as a group would receive less than
50% of the voting capital stock of the surviving or resulting corporation; or
the approval by the Board of Directors of XA of an agreement providing for the
sale or transfer of substantially all the assets of XA.
Notwithstanding the foregoing, or any other provision of this Agreement to
the contrary, at no time will Mastodon own 5% or more of the issued and
outstanding shares of XA's common stock or otherwise have the right to exercise
control over the operations of XA, except with respect or prior to a Change of
Control.
XA contemplates the sale to Investors, at a per share price to be mutually
agreed upon between XA and the Selling Agent of shares of its common stock in a
private placement, with an aggregate minimum gross offering price of $3,000,000
(the "PIPE Financing"). The PIPE Financing shall also include underwritten
offerings. XA also contemplates that it will file a registration statement (the
"Registration Statement") in connection with the PIPE Financing (which will
include the First and Second Mastodon Warrants and the shares of common stock
underlying same).
Mastodon agrees that if a Vesting Event has not occurred within one (1)
year from the date of this Agreement, neither the First Mastodon Warrant nor the
Second Mastodon Warrant shall vest to Mastodon, and all rights under the First
Mastodon Warrant and Second Mastodon Warrant shall expire.
4. INDEMNIFICATION. Since Mastodon will be acting on behalf of XA in an
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advisory capacity in connection with this Agreement, XA agrees to the indemnity
provisions and other matters set forth in Annex A which is incorporated into
this Agreement herein by reference thereto. The indemnity provisions in Annex A
shall remain in full force and effect regardless of any completion,
modification, termination or expiration of this Agreement.
5. NON-EXCLUSIVITY; FUTURE M&A SERVICES. XA agrees that Mastodon's
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engagement hereunder as XA's strategic advisor with respect to the Operating
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Plan is non-exclusive.
If, at any time during the period commencing on the date hereof and ending
24 months after the effective date of the Registration Statement, XA engages in
any acquisition, merger or similar transaction with a third party that is
introduced by Mastodon (each a "Third Party" and the "Third Party
Introduction"), it will engage Mastodon as an advisor with respect thereto.
Mastodon agrees to provide XA written notice of any proposed Third Party
Introduction prior the first contact of XA with such Third Party, and agrees
that any party contacted by XA for which XA has not previously received a
written Third Party Indroduction from Mastodon shall not be party to or governed
by this agreement.
Mastodon will use its best efforts during the term of this Agreement to
assist XA in connection with XA's Operating Plan, however, XA acknowledges that
there is no assurance that the Services rendered by Mastodon hereunder will
result in the consummation of any transaction contemplated hereby.
6. DUE DILIGENCE. In order to complete the PIPE Financing contemplated
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hereby, XA acknowledges that it will be necessary for the Selling Agent to
complete its due diligence inquiries with respect to XA, including, without
limitation, on site visits, discussions with management, counsel and the
auditors of XA, reviewing actual, historical and projected financial statements
of XA, reviewing XA's capital requirements, financial and other obligations,
reviewing all material contracts of XA, reviewing the competitive environment as
to XA's business and industry, reviewing all key customer and vendor
relationships of XA, and a general corporate and legal review, including
accounting, leases, litigation and other similar matters pertaining to XA.
Additionally, XA will provide audited financial statements for its 2004, and
2005 fiscal years (the "AUDITED FINANCIAL STATEMENTS") not later than 30 days
after the date of this Agreement and will provide any additional stub period
unaudited financial statements that are required pursuant to the terms of the
Selling Agency Agreement. XA will grant the Selling Agent and its authorized
representatives access to XA's books, records and personnel for the purpose of
completing such due diligence inquiries.
7. CONFIDENTIALITY. XA shall not disclose the terms of this Agreement or the
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fact that XA is in discussions with Mastodon with respect to the transactions
contemplated hereby, with any third party other than its key employees,
officers, directors, and shareholders and its counsel and advisors, and, in each
such case, only on a need-to-know basis, at any time prior to the expiration of
the offering period of the PIPE Financing, except as required in any legal
documentation prepared in connection therewith.
8. MASTODON'S OPINIONS. No advice or opinion rendered by Mastodon in
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connection with this Agreement, whether formal or informal, written or
unwritten, may be disclosed, in whole or in part, or summarized, excerpted from
or otherwise referred to by XA without Mastodon's prior written consent. In
addition, Mastodon may not be otherwise referred to by XA without its prior
written consent.
9. POST CLOSING ANNOUNCEMENTS. XA acknowledges that Mastodon may, at its
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option and expense and after the consummation of the PIPE Financing, place
announcements and advertisements or otherwise publicize such financing and
Mastodon's role in it (which may include the reproduction of XA's logo and a
hyperlink to XA's website) on Mastodon's internet website and in such financial
and other newspapers and journals as it may choose, stating that Mastodon has
acted as the exclusive strategic advisor to XA in connection with the PIPE
Financing. Furthermore, if requested by Mastodon, XA shall include a mutually
acceptable reference to Mastodon in any press release or other public
announcement made by XA regarding the PIPE Financing.
10. BINDING AGREEMENT. Each of Mastodon and XA hereby represent and warrant
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to the other that this Agreement, and the transactions contemplated hereby, have
been approved by all requisite corporate action required to create a binding
obligation of each of the parties hereto.
11. MISCELLANEOUS. This Agreement, including the Annex hereto, constitutes
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the sole and entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements, representations,
warranties, arrangements and understandings, whether oral or written, express or
implied, between the parties hereto with respect to the subject matter hereof
and may not be changed or modified except by an instrument in writing signed by
the party to be bound thereby. No course of conduct or dealing or trade usage
or custom or course of performance by the parties hereto shall constitute or be
relied upon as a modification, supplement, or waiver of any provision of this
Agreement. This Agreement has been subject to the mutual consultation,
negotiation and agreement of the parties hereto and shall not be construed for
or against any party hereto on the basis of such party having drafted this
Agreement.
All notices, consents, requests, demands and other communications required
or permitted to be given under this Agreement shall be in writing and delivered
personally, receipt acknowledged, or mailed by registered or certified mail,
postage prepaid, return receipt requested, addressed to the parties hereto as
follows (or to such other addresses as either of the parties hereto shall
specify by notice given in accordance with this provision):
(a) If to Mastodon, to it at:
Mastodon Ventures, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
00 Xxxx Xxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
(b) If to XA, to it at:
XA, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
with a copy to:
Xxxxx X. Xxxx, Attorney at Law
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxx 00000
All such notices, consents, requests, demands and other communications shall be
deemed given when personally delivered as aforesaid, or, if mailed as aforesaid,
on the third business day after the mailing thereof or on the day actually
received, if earlier, except for a notice of a change of address which shall be
effective only upon receipt.
Neither party hereto may assign this Agreement or its or their respective
rights, benefits or obligations hereunder without the written consent of the
other party hereto, except that Mastodon may assign its rights to all or part of
its compensation hereunder to third parties designated by it.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors and permitted assigns. Nothing contained in
this Agreement is intended to confer upon any person or entity, other than the
parties hereto, or their respective successors or permitted assigns (and
Mastodon's designees), any rights, benefits, obligations, remedies or
liabilities under or by reason of this Agreement.
No waiver of any provision of this Agreement or of any breach thereof shall
be effective unless in writing and signed by the party to be bound thereby. The
waiver by either party hereto of a breach of any provision of this Agreement, or
of any representation, warranty, obligation or covenant in this Agreement by the
other party hereto, shall not be construed as a waiver of any subsequent breach
or of any other provision, representation, warranty, obligation or covenant of
such other party, unless the instrument of waiver expressly so provides.
This Agreement shall be governed by and construed in accordance with the
laws of the jurisdiction of the party that brings any such action to enforce the
provisions of this Agreement. In the event XA brings an action, the action
shall be governed by the laws of the State of Illinois with respect to contracts
made and to be fully performed therein, without regard to the conflicts of laws
principles thereof, except as to applicable federal and state securities laws.
In the event Mastodon brings any such action, the action shall be governed by
the laws of the State of Texas with respect to contracts made and to be fully
performed therein, without regard to the conflicts of laws principles thereof,
except as to applicable federal and state securities laws. The parties hereto
hereby agree that any suit or proceeding arising under this Agreement, or in
connection with the consummation of the transactions contemplated hereby, shall
be, brought solely in a federal or state court located in Xxxx County, Illinois
if such action is brought by XA, and Xxxxxx County, Texas if brought by Mastodon
or in any court of competent jurisdiction selected by the mutual consent of the
parties, except for any suit or proceeding seeking an equitable remedy hereunder
which may be brought in any court of competent jurisdiction. By their execution
hereof, XA and Mastodon hereby consent and irrevocably submit to the in personam
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jurisdiction of the federal and state courts located in Xxxx County, Illinois,
or Xxxxxx County, Texas (or any such other court of competent jurisdiction) and
agree that any process in any suit or proceeding commenced in such courts under
this Agreement may be served upon them personally or by certified or registered
mail, return receipt requested, or by Federal Express or other courier service,
with the same force and effect as if personally served upon them in Xxxx County,
Illinois, or Xxxxxx County, Texas (or in the city or county in which such other
court is located). The parties hereto each waive any claim that any such
jurisdiction is not a convenient forum for any such suit or proceeding and any
defense of lack of in personam jurisdiction with respect thereto.
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The parties hereto hereby agree that, at any time and from time to time
after the date hereof, upon the reasonable request of either party hereto, they
shall do, execute, acknowledge and deliver, or cause to be done, executed,
acknowledged and delivered, such further acts, deeds, assignments, transfers,
conveyances, and assurances as may be reasonably required to more effectively
consummate this Agreement and the transactions contemplated thereby or to
confirm or otherwise effectuate the provisions of this Agreement.
Each party hereto represents and warrants to the other that it has been
represented by counsel in connection with the negotiation, preparation, and
consummation of this Agreement. Except as expressly provided in this Agreement,
each of the parties hereto shall bear all of its or their respective costs and
expenses incurred in connection with the negotiation, preparation, execution,
consummation, performance and/or enforcement of this Agreement, including,
without limitation, the fees and disbursements of their respective counsel,
financial advisors and accountants. Notwithstanding the foregoing, in the event
of any action or proceeding instituted by either party hereto to enforce the
provisions of this Agreement, the party prevailing therein shall be entitled to
reimbursement by the other breaching party of the legal costs and expenses
incurred by the prevailing party in connection therewith. For purposes hereof,
"prevailing party" means the party in whose favor final judgment, after appeal
(if any), is rendered with respect to the claims asserted in any such action or
proceeding.
This Agreement may be executed in one or more counterparts, each of which,
when executed and delivered, shall be deemed an original, but all of which when
taken together, shall constitute one and the same instrument.
A copy of this Agreement signed by one party and faxed to another party
shall be deemed to have been executed and delivered by the signing party as
though an original. A photocopy of this Agreement shall be effective as an
original for all purposes.
The Section headings used in this Agreement have been used for convenience
of reference only and are not to be considered in construing or interpreting
this Agreement.
If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision(s) shall be excluded from this Agreement
and the balance of this Agreement shall remain in full force and effect.
No remedy set forth in this Agreement is exclusive of any other available
remedy or remedies, whether legal or equitable, but each remedy is cumulative
and in addition to every other right or remedy provided for under this Agreement
or now or hereafter existing at law or in equity. Either party hereto may pursue
its rights and remedies concurrently or in any sequence and no exercise of one
right or remedy shall be deemed to be an election. No delay by either party
hereto shall constitute a waiver, election or acquiescence by such party.
Unless the context of this Agreement clearly requires otherwise, the plural
includes the singular, the singular includes the plural, the part includes the
whole, "including" is not limiting, and "or" has the inclusive meaning of the
phrase "and/or". The words "hereof", "herein", "hereby", "hereunder" and other
similar terms in this Agreement refer to this Agreement as a whole and not
exclusively to any particular provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals as of the day and year first above written.
WITNESS: MASTODON VENTURES, INC.
/s/ Xxxx Xxxxxxxx By /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, President
Xxxx Xxxxxxxx
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WITNESS: XA, INC.
/s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxxx Xxxxxx
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Xxxxxxx X. Xxxxxxx Xxxxxx Xxxxxx
---------------------------- Chief Executive Officer and
President
ANNEX A
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1. In further consideration of the rights, covenants and obligations contained
in our agreement dated the date hereof (the "agreement"), in the event that
either Mastodon Ventures, Inc. ("Mastodon") or XA, Inc. (the "Company") or any
of their affiliates, their respective directors, officers, partners, agents or
employees or any of their affiliates, or any other person controlling either
such party or any of their affiliates (collectively, the "Indemnified Persons")
becomes involved, in any capacity, in any action, claim, suit, investigation or
proceeding, actual or threatened, brought by or against any person (each such
party being an "Indemnified Party"), including the party to the agreement who is
indemnifying the Indemnified Party (the "Indemnifying Party") and/or the
stockholders of the Indemnifying Party (if any), in connection with or as a
result of or in any way based upon any act or omission of the Indemnifying Party
with respect to the agreement or any matter referred to in the agreement, the
Indemnifying Party will reimburse such Indemnified Person for its reasonable
legal and other expenses (including without limitation the costs and expenses
incurred in connection with investigating, preparing for and responding to third
party subpoenas or enforcing the agreement) incurred in connection therewith as
such expenses are incurred. The Indemnifying Party will also indemnify and hold
harmless any Indemnified Person from and against, and such Indemnifying Party
agrees that no Indemnified Person shall have any liability to the Indemnifying
Party or its owners, parents, affiliates, security holders or creditors for, any
losses, claims, damages or liabilities (including actions or proceedings in
respect thereof) (collectively, "Losses") (A) related to or arising out of (i)
the Indemnifying Party's actions or failures to act (including statements or
omissions made or information provided by the Indemnifying Party or its agents)
or (ii) actions or failures to act by an Indemnified Person with the
Indemnifying Party's consent or in reliance on the Indemnifying Party's actions
or failures to act or (B) otherwise related to or arising out of the agreement,
or Mastodon's or the Company's performance thereof, except that this clause (B)
shall not apply to any Losses that are finally determined by a court or arbitral
tribunal to have resulted primarily from the bad faith or willful misconduct of
such Indemnified Person. If such indemnification is for any reason not available
or insufficient to hold an Indemnified Person harmless, the Indemnifying Party
agrees to contribute to the Losses involved in such proportion as is appropriate
to reflect the relative benefits received (or anticipated to be received) by the
Indemnifying Party, on the one hand, and by the Indemnified Party, on the other
hand, with respect to the agreement or, if such allocation is determined by a
court or arbitral tribunal to be unavailable, in such proportion as is
appropriate to reflect other equitable considerations such as the relative fault
of the Indemnifying Party on the one hand and of the Indemnified Party on the
other hand. Mastodon will not be held responsible or liable for actions whereby
Mastodon relied on or acted based upon information received from the Company.
2. The Indemnified Party will not, without the Indemnifying Party's prior
written consent, settle, compromise, consent to the entry of any judgment in or
otherwise seek to terminate any action, claim, suit, investigation or proceeding
in respect of which indemnification may be sought hereunder (whether or not any
Indemnified Person is a party thereto) unless such settlement, compromise,
consent or termination includes a release of each Indemnified Person from any
liabilities or obligations arising out of such action, claim, suit,
investigation or proceeding. The Indemnifying Party will not permit any such
settlement, compromise, consent or termination to include a statement as to, or
an admission of, fault, culpability or a failure to act by or on behalf of an
Indemnified Person, without such Indemnified Person's prior written consent. No
Indemnified Person seeking indemnification, reimbursement or contribution under
this agreement will, without the Indemnifying Party's prior written consent,
settle, compromise, consent to the entry of any judgment in or otherwise seek to
terminate any action, claim, suit, investigation or proceeding referred to
herein. Any Indemnified Person who or which is required to commence an action
to enforce the indemnification rights granted hereunder shall be entitled to be
reimbursed for the costs and expenses incurred by such Indemnified Person in
connection therewith (including their reasonable counsel fees).
3. Prior to entering into any agreement or arrangement with respect to, or
effecting, any merger, statutory exchange or other business combination or
proposed exchange (including the Merger), dividend or other distribution or
liquidation of all or a significant portion of its assets in one or a series of
transactions or any significant recapitalization or reclassification of its
outstanding securities that does not directly or indirectly provide for the
assumption of the obligations of the Company set forth herein, the Company will
notify Mastodon in writing thereof (if not previously so notified) and, if
requested by Mastodon, shall arrange in connection therewith alternative means
of providing for the obligations of the Company set forth herein, including the
assumption of such obligations by another party, insurance, surety bonds or the
creation of an escrow, in each case in an amount and upon terms and conditions
satisfactory to Mastodon. Similarly, prior to entering into any agreement or
arrangement with respect to, or effecting, any merger, statutory exchange or
other business combination, dividend or other distribution or liquidation of all
or a significant portion of its assets in one or a series of transactions or any
significant recapitalization or reclassification of its outstanding securities
that does not directly or indirectly provide for the assumption of the
obligations of Mastodon set forth herein, Mastodon will notify the Company in
writing thereof (if not previously so notified) and, if requested by the
Company, shall arrange in connection therewith alternative means of providing
for the obligations of Mastodon set forth herein, including the assumption of
such obligations by another party, insurance, surety bonds or the creation of an
escrow, in each case in an amount and upon terms and conditions satisfactory to
the Company.
4. The Indemnifying Party's obligations hereunder shall be in addition to all
other rights that any Indemnified Person may have at common law or otherwise.
The Company acknowledges that in connection with the agreement Mastodon is
acting as an independent contractor and not in any other capacity. This
agreement and any other agreements relating to the agreement shall be governed
by and construed in accordance with the laws of the State of Illinois in the
event an action is brought by the Company hereunder, and in accordance with the
laws of the State of Texas in the event an action is brought by Mastodon
hereunder, applicable to contracts made and to be performed therein and, in
connection therewith, the parties hereto consent to the exclusive jurisdiction
of the Federal and State Courts located in Xxxx County, Illinois or Xxxxxx
County, Texas and the respective appellate courts thereof. Notwithstanding the
foregoing, solely for purposes of enforcing the Company's obligations hereunder,
the Company consents to personal jurisdiction, service and venue in any court
proceeding in which any claim subject to this agreement is brought by or against
any Indemnified Person. MASTODON HEREBY AGREES, AND THE COMPANY HEREBY AGREES
ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF
ITS SECURITY HOLDERS, TO WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
CLAIM, COUNTER-CLAIM OR ACTION ARISING OUT OF THE AGREEMENT OR MASTODON'S
PERFORMANCE THEREOF.
5. The provisions of this agreement shall apply to the agreement (including
related activities prior to the date hereof) and any modification thereof and
shall remain in full force and effect regardless of the completion or
termination of the agreement. If any term, provision, covenant or restriction
herein is held by a court of competent jurisdiction to be invalid, void or
unenforceable or against public policy, the remainder of the terms, provisions
and restrictions contained herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated. The provisions of this
agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns (this agreement shall not be
assignable in the absence of the written consent of the non-assigning party).
6. This agreement may be executed in several counterparts, each of which is an
original. It shall not be necessary in making proof of this agreement or any
counterpart hereof to produce or account for any of the other counterparts. A
copy of this agreement signed by one party and faxed to another party shall be
deemed to have been executed and delivered by the signing party as though an
original. A photocopy of this agreement shall be effective as an original for
all purposes.
7. Notwithstanding any provision of this agreement to the contrary, Mastodon's
liability hereunder shall be limited to the value of the compensation actually
received by Mastodon, such value being determined on the date any claim for
indemnification hereunder is received by Mastodon.
XA, INC.
/s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxxx
Chief Executive Officer and President
ACCEPTED AND AGREED TO AS OF THE DATE HEREOF:
MASTODON VENTURES, INC.
By: /s/ Xxxxxx Xxxxxx
------------------------------------------
Xxxxxx Xxxxxx, President
