PRIVATEEQUITYCONSULTINGAGREEMENT
THIS PRIVATE EQUITY CONSULTING AGREEMENT (hereinafter the
"Agreement"),ismade,enteredintoandeffectiveasofFebruary21,2014,byandbetweenK2 Design&Strategy,Inc.,aDelawarecorporation (hereinafterthe"Company"), and Pathways Financial, LLC, a Nevada limited liability company, (hereinafter "Consultant"). All of the partiestothisAgreementmaybehereafter individuallyreferredtoasa"party,"orcollectively referred to as the "parties."
RECITALS
WHEREAS,theCompanydesirestocontractwithConsultanttosupplyprivateequity consulting servicestoassistCompanywiththefollowing:(i)facilitatingtheregistration of its securities with theSecuritiesand ExchangeCommission,("SEC"), and (ii)facilitatingthe listing of itssecurities on a publicexchange (hereinafterthe"Transaction"or the "Services").
WHEREAS,ConsultantdesirestoenterintoacontractualagreementwiththeCompany touseitsbesteffortstoprovidesuchServices;
WHEREAS,fortheirmutualbenefit,theCompanyandConsultantdesiretosetforth thetermsandconditionsoftheengagementofConsultantbytheCompanyas providedherein; and
WHEREAS,ConsultantdesirestorendertheServicestoCompanyonthetermsand conditionsprovidedinthisAgreement.
AGREEMENTS
NOWTHEREFORE,inconsiderationoftheforegoingrecitals,themutualpromises andcovenantssetforthhereinandforothergoodand valuable consideration, the receiptand sufficiency ofwhich are hereby expresslyacknowledged, theParties agree as follows:
ARTICLEONE DUTIESANDTERMS
1.1Duties.Consultant's serviceswillinclude,ifappropriateorifreasonablyrequestedby theCompany:(a)reviewingtheCompany'sfinancialcondition,operations,competitive environment, prospects, and related mattersforthe Transaction; (b) preparingthe information package or confidentialinformationmemorandum; (c)soliciting, coordinating,and evaluating indications ofinterest and proposals regarding a Transaction; (d)advisingtheCompanyasto the structure of a Transaction; and (e) advising Companyon such other financialadvisory and consulting services reasonably necessarytoaccomplishthe foregoing.The Company hereby authorizes Consultant tosend prospectiveinvestors andthird-party advisorsand vendors information on the Company, Transaction, and otherpertinent information and legal agreements concerningthe Transaction. Consultant agrees to use its bestefforts,consistent with customary practice, toeffect the Transaction as soon as practicable. The Company acknowledges that
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consummationoftheTransaction issubject,amongotherfactors,toacceptableDocumentation, marketconditions,andsatisfactionoftheconditions setforthin oneormore agreements tobe entered into with any financier,lender, investor,or purchaser of securities.Itis expressly understoodthat thisengagement does notconstituteanycommitment,expressor implied,on the part of Consultantto provide,and does notensure the success of theTransaction.
1.2 Term.SubjecttoearlierterminationinaccordancewithArticle1.3ofthisAgreement, thisAgreementshallbecomeeffectiveonthedateset forth above and shallcontinue for a period oftwelve (12) months.
1.3 EarlyTermination.SubjecttotherespectivecontinuingobligationsofCompanyand ConsultantpursuanttothisAgreementandpriortotheTransaction:
1.3.1 theCompanymayterminatethisAgreementwith orwithoutcauseuponthirty
(30)days'priorwrittennoticeandapaymentofTwentyThousandDollars($20,000);
and
1.3.2 theagreementwillautomaticallyterminateuponeitherparty'sdissolutionor insolvency.
ARTICLETWO COMPENSATION
2.1 Compensation.TheCompanyshallcompensateConsultantasfollows:
2.1.1Commission.TheCompanyshallpayConsultantacommissionfeeintheamount ofFortyThousandDollars($40,000)within seven (7)daysof the Company's stock becomingregistered and available for trading ona publicexchange.
2.2 TransactionFee.UpontheconsummationofanyTransactionoccurringafterthe execution ofthisAgreementbutbeforetheendofthetermofthis Agreement as setforth herein, the Company shall pay Consultanta transactionfee ("Transaction Fee")in the aggregateamount ofSix Million (6,000,000) sharesof theCompany's common stockor acash equivalentthereof in the sole discretion of Consultant.
2.3 Expenses.Additionally,andregardlessofwhetheranyTransactionisconsummated, Consultantshallbeentitledtoreimbursementofits reasonable out-of-pocket expenses incurred fromtime to time during the term of thisAgreement in connection with the services tobe providedunderthis Agreement.
ARTICLETHREE WARRANTIES
3.1Information.TheCompanywillfurnishConsultantwithsuchinformationregardingthe businessandfinancialconditionoftheCompanyasisreasonablyrequested,all ofwhich will be, to the Company's best knowledge, accurate and complete in all material respects at the time
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furnished.TheCompanywillpromptlynotifyConsultantifitlearnsofanymaterial misstatementin,ormaterialomissionfrom, any information previouslydelivered to Consultant. Consultant agrees that all nonpublicinformationobtained in connection with its engagement will beheld by it in strict confidence and will be used by it solely for the purposesof performing the Services, provided that nothing hereinshall, prevent Consultantfrom disclosingany such information:(a) in accordancewith an orderofanycourt oradministrativeagencyor in any pendinglegal or administrative proceeding,or (b) to the extentthat suchinformation(i) was or becomes publiclyavailable otherthan by reason of disclosure byConsultantin violationofthis Agreement or (ii) was or becomes available toConsultantor its affiliatesfroma source that is not known by Consultant to be subject toaconfidentiality obligationtothe Company. This undertaking by Consultant shall automatically terminate two (2) years followingthe lastto occur of the completionofthe Transaction or termination of the engagement hereunder. At the request of the Company, Consultantwill execute a commercially reasonablenondisclosureagreement in connectionwiththedeliveryand use of such information. AtCompany's request,Consultant will promptly returnto the Company, ordestroy,any and all materials containing such confidential informationexcept to the extent that Consultant isrequired to maintainsuch information in accordance with legalor regulatory requirements.
3.2ComplianceWithObligations.Consultant representsandwarrantsthatitsexecution anddeliveryandperformanceofitsobligationsunderthisAgreementdo notviolate orconstitute a breach of anyof its contractual obligationswith any third parties.
3.3GoodFaithandFairDealing.ThePartiesrepresentandwarrantsthatConsultant's dealings willbefairandingoodfaithandthat Consultantwillusehonesty infactand will observe reasonable commercial standards of fair dealing.
3.4AuthorizationandEnforceability.Companyrepresentsandwarrantsthat:
3.4.1 ithasallrequisiteindividualandcorporatepowerandauthoritytoenterintothis Agreementandtocarryout the transactions contemplated herein;and
3.4.2 theexecution,deliveryandperformanceofthisAgreementinconsummationof thetransactionscontemplatedherebyhasbeendulyauthorizedby all requisitecorporate actions.
3.5 CorporateMatters.Companyagreestoobtainallnecessaryregulatoryapproval applicabletoitsbusiness,obtainanynecessarypermitsandrequiredconsentsandcomplywith anyregulatory requirement or law applicable to theperformanceof the services in its obligations under this Agreement.
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3.6 RelianceonInformation.CompanyrepresentsandWarrantsthatConsultantmayrely, withoutindependentverification,ontheaccuracyandcompletenessofallinformation furnished by theCompanyorany otherpotentialpartyto any Transaction. The Companyunderstandsthat Consultantwillnot be responsiblefor independentlyverifying theaccuracy ofsuch information, and shall not be liable for any inaccuracies therein. The Company further acknowledges that Consultant hasnotmade andwill not make any physical inspection orappraisalof the properties orassetsoftheCompany,andthat,withrespecttoanyfinancialforecaststhatmaybefurnished toor discussed with Consultant by the Company, Consultant will assume that such forecasts havebeen reasonably prepared and reflect the best then currently availableestimatesand judgments oftheCompany's management as totheexpected future financialperformanceof the Company.
ARTICLEFOUR INDEPENDENTCONTRACTORSTATUS
4.1IndependentContractorRelationship.ThepartiestothisAgreementintendthatthe relationshipbetweenCompanyandConsultantcreatedbythisAgreementis that of an Independent Contractor.Neither Consultant norany agent,subcontractor or servant of Consultant shall be, or shall be deemedto be,an employee, agent orservant ofCompany. Company isinterested only in the results obtainedunder this Agreement; the manner and means of conducting the work and supervision are under the sole control of Consultant. Consultant will besolely and entirely responsible for Consultant's acts during the performanceof this contract. Consultant shall be entirely and solely responsible for the acts of hisagents,assistants, or subcontractors,if any, whileengaged in the performance of services hereunder.Companydoes not agree to use Consultant exclusively. Consultant isfree to contract toperform services for others while he isunder contract withCompany limited by any covenants contained in this Agreement if any.
ARTICLEFIVE INDEMNITY
AsamaterialpartoftheconsiderationfortheagreementofConsultanttofurnishitsservices undertheAgreement,theCompanyagrees immediately defendindemnifyandhold harmless the Consultant and its affiliates,and their respectivepast, present, and future directors, officers, shareholders, employees, agents, and controlling persons within the meaningofeither Section 15 of theSecurities Act of 1933,asamended (15USC§77o), or Section 20 of the Securities Exchange Act of 1934,asamended (15 USC §78t)(collectively, the"IndemnifiedParties"), to the fullest extent lawful, fromandagainst anyandall losses, claims, damages,or liabilities(or actions inrespect thereof), joint or several, arising out of or related totheAgreement, any actions takenoromitted to be takenby anIndemnifiedParty (including actsoromissionsconstituting ordinary negligence) in connection with or relatedto, without limitation, thisAgreement, or any Transaction (orproposed Transaction) contemplated thereby. In addition,the Company agrees to reimburse the Indemnified Parties for any legalorother expenses reasonably incurred by them in respect thereof atthetime suchexpenses areincurred; provided, however, that theCompany shall not be liable under theforegoing indemnityandreimbursement agreement forany loss, claim, damage, or liabilitythatis finally judiciallydetermined to have resulted primarily from the willful misconduct or grossnegligence of any Indemnified Party.
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TheIndemnifiedPartieswillgivepromptwrittennoticetotheCompanyofanyclaimforwhich theyseekindemnificationhereunder,but theomission to so notifytheCompanywill not relieve the Companyfrom any liability that it may otherwisehavehereunderexcept to the extent that the Company is damagedor prejudiced by such omission.TheCompany shall havetheobligation to payforthedefenseofanyactionforwhichtheIndemnifiedPartiesseekindemnification hereunder,andtheIndemnifiedshallhave the right tocounsel of his/her/its/ choosing at prevailing market rates for experience counsel. Afternotice from the Companyto the Indemnified Parties of its election to assume the defense thereof, and so longasthe Company performs its obligations inaccordance with suchelection, theCompanywillnotbe liableto the Indemnified Parties for any legal or other expenses subsequentlyincurred by the Indemnified Partiesinconnectionwith thedefense thereofotherthan reasonable costs of investigation.
IfforanyreasontheforegoingindemnificationisunavailabletoanyIndemnifiedPartyoris insufficienttoholditharmless,theCompanyshall contribute to the amount paidor payableby theIndemnified Party as a result of such losses, claims,damages,liabilities,or expenses in such proportion as is appropriate to reflect the relative benefitsreceived (or anticipated tobe received) bytheCompany, on theonehand,and Consultant, on theother hand, inconnection withthe actual or potentialTransactionand the servicesrenderedby Consultant. If, however, the allocation provided bythe immediately precedingsentenceis not permitted byapplicablelaw or otherwise, thenthe Company shall contribute to such amount paid or payable by any Indemnified Partyinsuch proportion as isappropriate to reflect not only such relative benefits, but also the relative fault ofthe Company, on the one hand, and Consultant,on the other hand, in connection therewith,as well asanyother relevantequitable considerations. Notwithstanding the foregoing, the aggregate contributionof all IndemnifiedParties to any such losses, claims, damages, liabilities, and expenses shall not exceed the amount offees actually received by Consultant under the Agreement.
TheCompanyshallnoteffectanysettlementorreleasefromliabilityinconnectionwithany matterforwhichanIndemnified Party would be entitledto indemnification from the Company, unless such settlement or release contains a release of the Indemnified Parties reasonably satisfactory in form and substance to Consultantand does not includeany admissionof fault on the partof any Indemnified Person. The Company shall not be requiredto indemnify any Indemnified Party for any amountpaid or payable by such party in the settlement or compromise ofanyclaim or action without the Company's prior written consent. TheCompany further agrees that neither Consultant nor any other IndemnifiedParty shall have anyliability,regardless ofthe legaltheory advanced, to the Company orany other person orentity(includingthe Company's equity holders andcreditors)relatedtoor arisingoutof Consultant'sengagement, except for any liability for losses, claims, damages, liabilities, or expenses incurredby the Company that are finally judiciallydetermined to have resulted primarily from the willful misconduct or gross negligence of any IndemnifiedParty.
EachIndemnifiedPersonshallmakereasonableeffortstomitigateitslossesandliabilities.The indemnity,reimbursement,contribution,andotherobligationsandagreementsoftheCompany setforthherein shall apply toanymodifications of theAgreement, shall be in addition to any liability that the Company may otherwise have,andshall be bindingon andinure to thebenefit ofanysuccessors,assigns, heirs,and personal representatives oftheCompany and each IndemnifiedParty.Theforegoingprovisions shallsurvive the consummationof anyTransaction and any termination of the relationship establishedby the Agreement.
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ARTICLE SIX EVENTSOFDEFAULT
6.1 EventsofDefault.Ifanyoneormoreofthefollowingevents(hereinafter"Eventsof Default")shalloccur,thenon-defaultingparty shallhave the remedies set forth inArticle14below:
6.1.1 CompanyshallfailtopayanysumsrequiredtobepaidtoConsultanthereunder, asandwhenthesamebecome due,and suchdefaultshall continueforthirty(30) ormore days (hereinafter a "Monetary Event ofDefault");or
6.1.2 Eitherpartyshalldefaultintheperformanceofitsmaterialobligationshereunder, suchdefaultshallcontinueunremediedfor a period of thirty (30) daysafter writtennotice ofsuchdefaultshall have been given to thedefaulting partyby thenon-defaultingparty.
ARTICLESEVEN REMEDIES
7.1 Remedies.IfanyEventofDefaultshall haveoccurredandbecontinuing,thenon- defaultingpartymaytakeoneoranycombinationofthefollowingsteps:
7.1.1 terminatethisAgreement;
7.1.2 declareanysumsduethenon-defaultingpartytobeimmediatelydueandowing;
7.1.3 takewhateveractionatlaworinequitymayappearnecessaryordesirableto collectanyamountsthendueandthereaftertobecome due under theAgreement,or to enforce performance and observance of any obligation, Agreement or covenant ofthe defaulting party under this Agreement; and
7.1.4 exerciseanyallrightsandremediesinsupportbylaworequityandasotherwise affordedherein.
ARTICLEEIGHT GENERAL
8.1 ControlofServices.ThisAgreementshallnotbeconstruedasconstitutingeitherparty asapartnerofthe other orto create any other form of legal association that would impose liability uponone partyfor the act or failure to act of the other or as providingeither partywith a right of poweror authority to create any duty or obligation of theother party.Each party shall be responsiblefor themanagement,directionand control of its employees andsuch employeesshall not be employeesof the other party.
8.2 Amendments.AnychangesormodificationstothisAgreementmaybemadeonlybya writtenamendmentsignedby both partiesexecutedand deliveredas toeither party.
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8.3 SuccessorsofConsultant.ThisAgreementshallbebindinguponandinuretothe benefitofConsultant,itslegalrepresentatives,successorsandassigns.
8.4 MutualDisclaimers.ThisAgreementdoesnotrendereitherpartyanagentoftheother oreitherpartyliableforanydebts,liabilities,orobligationsoftheother,either now existingor to be incurred in the performance ofthisAgreement and neither party hasany authorityto obligate or represent theother.
8.5 Notices.AnynoticespermittedorrequiredunderthisAgreementshallbedeemedgiven uponthedateofpersonaldelivery orforty-eight (48) hours after deposit intheUnited States Mail, postage fullyprepaid,return receiptrequested, sent to theintended recipient'slast known address or at such otheraddress as any party may,from time to time, designateby noticegiven in compliance with this section.
8.6 LawGovernine::Venue:andDamages.ThisAgreementshallbegovernedbyand construedinaccordancewiththelawsoftheStateofIllinois,withoutgivingeffecttotheconflict oflaw provisions thereof. Anyaction arisingunder this Agreement shallbevenuedin the state or federal courts located in Cook County, Stateof Illinois,and eachpartysubmits tothe personal jurisdiction of said Court.Company's damages shallbelimited tothe fees paidtothe Consultant and shall not be entitledto attorneys fees, compensatory damages, or any equitable remedy. Consultant shallbe entitledto its contractual damages, prejudgment interest,andall of its reasonable attorney'sfees andcostsrelatedto enforcingthisAgreement.
8.7 TitlesandCaptions.AllsectiontitlesorcaptionscontainedinthisAgreementarefor convenienceonlyandshallnotbedeemedpartofthecontext nor effecttheinterpretationof this Agreement.
8.8 EntireAgreement.ThisAgreementand theexhibitsandschedulesattachedhereto containtheentireunderstandingbetweenandamongtheparties andsupersedeany prior understandings andagreements among themrespectingthe subject matterof this Agreement.
8.9 Computationof Time.IncomputinganyperiodoftimepursuanttothisAgreement,the dayoftheact,eventordefaultfromwhichthedesignated period of timebegins to run shallbe included, unless it is a Saturday,Sunday ora legal holiday,in whichevent the periodshall begin torunon thenext daythatisnotaSaturday, Sundayor legal holiday, in whichevent the period shall run untilthe end ofthe next day thereafter whichis not aSaturday, Sunday or legal holiday.
8.10 PronounsandPlurals.Allpronounsandanyvariationsthereofshallbedeemedtorefer tothemasculine,feminine,neuter,singularorpluralasthe identity of thepersonor personsmay require.
8.11 Presumption.ThisAgreementoranysectionthereofshallnotbeconstruedagainstany partyduetothefactthatsaidAgreement oranysection thereofwas draftedbysaid party.
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8.12 Further Action.Thepartiesheretoshallexecuteanddeliveralldocuments,provideall informationandtakeorforbear from all such action as maybenecessary or appropriate to achievethe purposes ofthe Agreement.
8.13 PartiesinInterest.Nothinghereinshallbeconstruedtobetothebenefitofanythird party,norisitintended that anyprovision shall be for thebenefit ofanythird party.
8.14 SavingsClause.IfanyprovisionofthisAgreement,ortheapplicationofsuchprovision toanypersonor circumstance,shallbe heldinvalid,the remainder of thisAgreement,or the application of suchprovision to persons or circumstances otherthan those asto which it isheld invalid, shall notbeaffectedthereby.
8.15 Survival.ThecovenantsandagreementscontainedhereinbytheConsultantshall surviveterminationofthisAgreementwiththeCompanyincludingwithoutlimitationtheright to Indemnification.
8.16 Publicity.FollowingtheannouncementofanyTransactionbytheCompany,Consultant may,atitsownexpense,placeannouncementsinfinancialandother newspapers andperiodicals (such ascustomary "tombstone"advertisements) describing itsservicesinconnection therewith. Consultant shallprovide theCompanywitha draftofanyannouncement thatit proposes to place andshall makesuch revisionsto theannouncement as theCompanyreasonablymayrequest within 2business daysaftertheCompany's receipt of thedraftannouncement.
8.17 Conflicts.TheCompanyacknowledgesthatConsultantanditsaffiliates,without limitation,mayhaveandmaycontinuetohaveotherrelationshipswithpartiesotherthanthe Company, in which Consultant may acquire information of interest to the Company.Consultant shall have no obligationto disclose such information to the Company or to use such information in connection with this Agreement.
8.18 JuryWaiver.THECOMPANYANDTHECONSULTANTHEREBYWAIVEANY ANDALLRIGHTTOTRIALBYJURYINANYACTIONORPROCEEDINGRELATING TO THISAGREEMENTOR ANY TRANSACTION ARISING THEREFROMOR CONNECTEDTHERETO.THE PARTIESEACHREPRESENTTO THE OTHER THAT THISWAIVERISKNOWINGLY,WILLINGLYAND VOLUNTARILY GIVEN.
8.19 Counterparts.ThisAgreementmaybesignedincounterpartsbythepartiesheretowith thesameforceandeffectasiftheabovepartiessignedthesameoriginalagreement. Facsimile copiesand photocopiesofthe parties'signaturesto this Agreement shallbevalid and enforceable to the same extent as original signatures,andthe partieshereby waive any requirement that original signatures be produced as a condition of proving the validity of, or otherwise enforcing this Agreement.
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PRIVATEEQUITYCONSULTINGAGREEMENTSIGNATUREPAGE
INWITNESSWHEREOF,theCompanyandConsultanthavecausedthisAgreementto beexecutedandeffectiveas of theday and yearfirst above written.
K2DESIGN&STRATEGY,INC. ("COMPANY")
Dated: February 21,2014.
PATHWAYSFINANCIAL,LLC ("CONSULTANT")
Dated: February 21,2014.