1450 Broadway, 26thFloor

The purpose of this engagement letter (the “Engagement Letter”) is to outline our agreement in principle pursuant to which Tripoint Global Equities, LLC (“Tripoint” or “Selling Agent”) along with its division BANQ, will act as the lead managing selling agent and book runner in connection with the proposed registered primary offering of up to $10,000,0000 by the Company (the “Offering”) of the preferred stock, (collectively referred herein as the “Securities”) of Youngevity International, Inc. (collectively with its subsidiaries the “Company”), on a “best efforts” basis.

 

This Engagement Letter states certain conditions and assumptions upon which the Offering is premised. Except as expressly provided for herein under Section 15, this Engagement Letter is not intended to be a binding legal document.

 

The terms of our agreement in principle are as follows:

 

1. The Company hereby engages Tripoint, for the period beginning on the date hereof and ending on October 31, 2017 (the “Engagement Period”), to act as the Company’s financial advisor and investment banker in connection with the proposed Offering. During the Engagement Period or until the consummation of the Offering, whichever is earlier to occur, the Company agrees not to solicit, negotiate with or enter into any agreement with any other source of financing (whether equity, debt or otherwise), any underwriter or potential underwriter, selling agent, financial advisor or any other person or entity for the Offering with exception for its current discussions with Northland and Joseph Gunnar. However, if Tripoint should determine for any reason that Tripoint shall not proceed with conducting the Offering, then the Engagement Period shall automatically terminate and this Engagement Letter shall no longer be of force or effect.

 

2. Tripoint will act as the exclusive, lead managing Selling Agent and book runner of the Offering of a syndicate, subject to, among other things, completion of Tripoint’s due diligence examination of the Company and its affiliates and the execution of a definitive selling agency agreement between the Company and Tripoint in connection with the Offering (the “Selling Agency Agreement”) and other documentation that is customary with regard to an offering of the type contemplated herein.

 

3. The actual size of the Offering, the precise number of Securities to be offered by the Company, and the offering price per Securities shall be the subject of continuing negotiations between the Company and Tripoint which will include, but not be limited to, the capitalization of the Company (at the time of the Offering) being acceptable to Tripoint, general market and economic conditions, a review and finalization of audited financial statements and formal financial projections of the Company, as well as other factors which Tripoint deems relevant in its discretion. Tripoint may with the Company’s approval (not to be unreasonably withheld, conditioned or delayed), (i) create a selling syndicate for the Offering comprised of broker-dealers who are members of the Financial Industry Regulatory Authority (“FINRA”) and/or (ii) rely on soliciting dealers who are FINRA members to participate in placing a portion of the Offering.

 

4. If applicable, the Selling Agency Agreement will provide that the Company will grant to Tripoint an option, exercisable within 45 days after the closing of the Offering (the “Closing”), to offer and sell up to an additional 15% of the total number of Securities to be offered by the Company, solely for the purpose of covering over-allotments related to the Offering (the “Over- allotment Securities”).

 

5. Tripoint shall be entitled to a placement fee of four percent (4.0%) of the gross proceeds of the Offering price, which shall be allocated by Tripoint to members of the selling syndicate and soliciting dealers in its sole discretion.

 

6. The Company shall, as soon as practicable following the date of execution of the Selling Agency Agreement, prepare and file with the Securities and Exchange Commission (the “Commission”) and the appropriate state securities authorities, a Registration Statement on Form S-1 (the “Registration Statement”) under the Securities Act of 1933, as amended (the “Act”), and a prospectus included therein (the “Prospectus”) covering the Securities to be sold in the Offering the Over-allotment Securities and the Securities underlying the Selling Agent’s Warrants (as defined below). The Registration Statement (including the Prospectus therein), and all amendments and supplements thereto, will be in form satisfactory to Tripoint and counsel to Tripoint and will contain such interim and other financial statements and schedules as may be required by the Act and rules and regulations of the Commission thereunder. Tripoint and its counsel shall be given the opportunity to make such review and investigation in connection with the Registration Statement and the Company as they deem desirable. Tripoint and the Company shall mutually agree on the use of proceeds of the Offering, which shall be described in detail within the Prospectus, it being further understood and agreed that, except as may expressly approved by Tripoint, no proceeds from the Offering will be used to pay outstanding loans owed by the Company to any Company officers, directors or stockholders.

 

7. The Registration Statement filing will include as an exhibit a proposed form of Selling Agency Agreement. The final Selling Agency Agreement will be in form satisfactory to the Company and Tripoint and will include indemnification provisions and other terms and conditions customarily found in Selling Agency Agreements for self directed primary public offerings. Without limiting the generality of the foregoing, the Selling Agency Agreement shall contain customary representations and warranties of the Company and shall further provide that: (i) the Company, the Company’s directors and officers and any other holder(s) of 5.0% or more of the outstanding Securities as of the effective date of the Registration Statement (and all holders of securities exercisable for or convertible into Securities) shall enter into customary“lock-up” agreements in favor of Tripoint pursuant to which such persons and entities shall agree, for a period of 6 months after the Offering is completed, that they shall neither offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any securities of the Company without Tripoint’s prior written consent, which consent shall not be unreasonably withheld.

8. Concurrently with or as soon as practicable after the filing of the Registration Statement with the Commission, the Company shall make all necessary state “blue sky” securities law filings with respect to the Securities to be sold in the Offering (including the Over-allotment Securities). The Company and Tripoint will cooperate in obtaining the necessary approvals and qualifications in such states as Tripoint deems necessary and/or desirable.

 

9. The Company agrees to pay a non-accountable $20,000 due diligence fee upon signing of this Engagement Letter. The Company shall be responsible for and pay all expenses relating to the Offering, including, without limitation, all filing fees and communication expenses relating to the registration of the Securities to be sold in the Offering (including the Over-allotment Securities) with the Commission and the filing of the offering materials with FINRA; if applicable all fees and expenses relating to the listing of such Securities on the OTCQX, Nasdaq market system, NYSE or NYSE MKT as the Company and Tripoint together determine; all fees, upon the execution of the Engagement Letter, the Company at its own expense will conduct background checks, by a background search firm acceptable to Tripoint, for the Company’s senior management; all fees, expenses and disbursements relating to the registration or qualification of such Securities; if the Offering requires “blue sky” registration, the Company shall issue an initial payment of $10,000 to such counsel performing such work and a payment to cover all filing fees upon the commencement of “blue sky” work by such counsel, with the balance of such counsel fees and expenses to be due on the Closing)); the costs of all mailing and printing of the Offering documents (including the Selling Agency Agreement, any Blue Sky Surveys and, if appropriate, any Agreement Among Selected Dealers’ Agreement and Selling Agent’s Questionnaire), Registration Statements, Prospectuses and all amendments, supplements and exhibits thereto and as many preliminary and final Prospectuses as Tripoint may reasonably deem necessary; the costs of preparing, printing and delivering certificates representing such Securities; fees and expenses of the transfer agent for such Securities; stock transfer taxes, if any, payable upon the transfer of securities from the Company to Tripoint; the fees and expenses of the Company’s accountants and the fees and expenses of the Company’s legal counsel and other agents and representatives. Upon Tripoint’s and the Company’s mutual agreement, the Company shall provide funds to pay all such fees, expenses and disbursements in advance. It is understood and agreed that the Company shall be responsible for Tripoint’s legal costs detailed in this Section 9 up to a maximum of $45,000 and if the Offering is not consummated, legal fees shall be capped at $20,000.

 

10. While the Commission is reviewing the Registration Statement, Tripoint may plan and arrange one or more “road show” marketing trips for the Company’s management to meet with prospective investors. Such trips will include visits to a number of prospective institutional and retail investors. The Company shall pre-approve all such road shows and all Tripoint expenses in excess of $1,000, alone or in the aggregate and pay for such pre-approved expenses, including, without limitation, travel and lodging expenses, associated with such trips. During the 45-day period prior to the filing of the Registration Statement with the Commission, and at all times thereafter prior and following to the effectiveness of the Registration Statement, both the Company, Tripoint and their respective officers, directors and related parties will abide by all rules and regulations of the Commission relating to public offerings, including, without limitation, those relating to public statements (i.e., “gun jumping”) and disclosures of material non-public information.

11. At such time as the Company and Tripoint are mutually satisfied that it is appropriate to commence the Offering, the final terms of the Selling Agency Agreement will be negotiated and the Company will request the Commission to make the Registration Statement effective.

12. The Selling Agency Agreement shall provide that, at the Closing, the Company shall grant to Tripoint (or its designated affiliates) share purchase warrants (the “Selling Agent’s Warrants”) covering a number of Securities equal to five percent (5.0%) of the total number of Securities being sold in the Offering. The Selling Agent’s Warrants will be non- exercisable for six (6) months after the date of the Closing and will expire five years after such date. The Selling Agent’s Warrants will be exercisable at a price equal to 120.0% of the public offering price in connection with the Offering. The Selling Agent’s Warrants shall not be redeemable. The Company will register the Common Stock underlying the Selling Agent’s Warrants under the Act and will file all necessary undertakings in connection therewith. The Selling Agent’s Warrants may not be transferred, assigned or hypothecated for a period of six (6) months following the Closing, except that they may be assigned, in whole or in part, to any successor, officer, manager, registered representative or member of Tripoint (or to officers, managers or members of any such successor or member), and to members of the syndicate or selling group. The Selling Agent’s Warrants may be exercised as to all or a lesser number of Securities, will provide for cashless exercise. The Selling Agent’s Warrants shall further provide for adjustment in the number and price of such warrants (and the Common Stock underlying such warrants) to prevent dilution in the event of a stock dividend, stock split or other reclassification of the Common Stock.

13.             The Offering shall be conditioned upon, among other things, the following:

 

a. Satisfactory completion by Tripoint of its due diligence investigation and analysis of: (i) the Company’s arrangements with its officers, directors, employees, affiliates, customers and suppliers, and (ii) the audited historical financial statements of the Company as required by the SEC (including any relevant stub periods);

 

b. The execution by the Company and Tripoint of a definitive Selling Agency Agreement containing all applicable terms and conditions provided for in this Engagement Letter;

 

c. Neither the Company nor any of its affiliates has, either prior to the initial filing or the effective date of the Registration Statement, made any offer or sale of any securities which are required to be “integrated” pursuant to the Act or the regulations thereunder with the offer and sale of the Securities pursuant to the Registration Statement;

d. The Company’s registration of the Securities under the provisions of Section 12(b) or (g), as applicable, of the Securities Exchange Act of 1934 on or prior to the effective date of the Offering;

 

e. The Company maintaining the retention of a PCAOB registered firm of independent certified public accountants acceptable to Tripoint and the Company, including, without limitation, the Company’s existing auditor, which will have responsibility for the preparation of the financial statements and the financial exhibits, if any, to be included in the Registration Statement, it being agreed that the Company will continue to engage a PCAOB registered accounting firm of comparable quality (as may be determined by the Company’s audit committee) for a period of at least three years after the Closing;

 

f. The Company retaining a transfer agent for the Company’s Securities reasonably acceptable to Tripoint and continuing to retain such transfer agent for a period of two (2) years after the Closing;

 

g. The Company registering with the Corporation Records Service (including annual report information) published by Standard & Poor’s Corporation, or such other similar service as determined by the Company, and covenanting to maintain such registration for a period of three (3) years from the Closing;

 

14. Notwithstanding any provision to the contrary in this Engagement Letter, the Selling Agent agrees that the Company may conduct and complete private financings, whether through debt, equity or a combination of both, prior to and subsequent to the closing of the Offering (the "Private Placements"). Selling Agent may act as the placement agent for such Private Placements as mutually agreed to in writing by the Company and Tripoint, and it shall allow other broker-dealers who are members of the FINRA to participate in and place any and all such financings it acts as placement agent; provided, however, that the Company must inform the Selling Agent before it agrees to employ any such broker-dealers and the Selling Agent maintains the right to reject any such selected broker-dealers in the Selling Agent's sole, reasonable, discretion. For each investor that the Selling Agent introduces to the Company for a Private Placement, whether directly or indirectly, and invests in the Private Placement (collectively, the "SA Investors"), upon completion of such Private Placement, the Company shall pay, in the case of an equity or convertible debt offering, the Selling Agent a fee in an amount equal to (i) ten percent (10%) the amount of gross proceeds and (ii) ten percent (10%) in warrants to purchase shares of the Company's securities issued in the Private Placement at the same price per share and on the same terms as the warrants or other convertible security issued to the investors of the Private Placement, sold to the SA Investors. Other than as contemplated in this paragraph 14, none of the other fees payable to the Selling Agent pursuant to the Selling Agency Agreement, shall be payable to the Selling Agent upon the closing of a Private Placement.

 

15. Except for Paragraphs 9, 10, 15, 16, 17, 18, 19, 20, 21 and 22 (and Exhibit A attached hereto) hereof (which Paragraphs are intended be legally binding and enforceable on and against the Company and Tripoint), this Engagement Letter is not intended to be a binding legal document, as the agreement between the parties hereto on these matters will be embodied in the Selling Agency Agreement. Until the Selling Agency Agreement has been finally negotiated and signed, but subject to the last sentence of this Paragraph, the Company or Tripoint may at any time terminate its further participation in the proposed transactions and the party so terminating shall have no liability to the other on account of any matters provided for herein, except that regardless of which party elects to terminate, the Company agrees to reimburse Tripoint for, or otherwise pay and bear, the expenses and fees to be paid and borne by the Company as provided for in Paragraphs 9 and 10 above and to reimburse Tripoint for the full amount of its accountable expenses incurred to such date (which shall include, but shall not be limited to, all fees and disbursements of Tripoint’s counsel, travel, lodging and other “road show” expenses, mailing, printing and reproduction expenses, and any expenses incurred by Tripoint in conducting its due diligence) and;

 

16. The Company represents and warrants to Tripoint that the entry into this Engagement

 

Letter or any other action of the Company in connection with the proposed Offering will not violate any existing agreement between the Company and any other selling agent and/or placement agent.

 

17. The Company and Tripoint agree that neither party will issue press releases or engage in any other publicity, without the other party’s prior written consent, commencing on the date hereof and continuing for a period of forty (40) days from Closing of the Offering, other than normal and customary releases issued in the ordinary course of the Company’s business. The Company and Tripoint covenant to adhere to all “gun jumping” and “quiet period” rules and regulations of the Commission prior to, during and following the filing of the Registration Statement and the consummation of the Offering.

 

18. During the Engagement Period or until the Closing, the Company agrees to cooperate with Tripoint and to furnish, or cause to be furnished, to Tripoint, any and all information and data concerning the Company, its subsidiaries and the Offering that Tripoint deems appropriate, including, without limitation, the Company’s acquisition plans and plans for raising capital or additional financing (the “Information”). The Company shall provide Tripoint reasonable access during normal business hours from and after the date of execution of this Engagement Letter until the date of the Closing to all of the Company’s and its subsidiaries assets, properties, books, contracts, commitments and records and to the Company’s and its subsidiaries officers, directors, employees, appraisers, independent accountants, legal counsel and other consultants and advisors. The Company represents and warrants to Tripoint that all Information: (i) made available by the Company to Tripoint or its agents, representatives and any potential syndicate or selling group member, (ii) contained in any preliminary or final Prospectus prepared by the Company in connection with the Offering, and (iii) contained in any filing by the Company with any court or governmental regulatory agency, commission or instrumentality, will be complete and correct in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading in the light of the circumstances under which such statements are made. The Company further represents and warrants to Tripoint that all such Information will have been prepared by the Company in good faith and will be based upon assumptions which, in light of the circumstances under which they were made, are reasonable. The Company acknowledges and agrees that in rendering its services hereunder, Tripoint will be using and relying on such Information (and information available from public sources and other sources deemed reliable by Tripoint) without independent verification thereof by Tripoint or independent appraisal by Tripoint of any of the Company’s assets. The Company acknowledges and agrees that the specific terms of this Engagement Letter are confidential and will not be disclosed to anyone other than the officers and directors of the Company and the Company’s accountants and legal counsel. Except as contemplated by the terms hereof or as required by applicable law, the Company and Tripoint shall keep strictly confidential all non-public Information concerning the Company provided to Tripoint. No obligation of confidentiality shall apply to Information that: (a) is in the public domain as of the date hereof or hereafter enters the public domain without a breach by Tripoint, (b) was known or became known by Tripoint prior to the Company’s disclosure thereof to Tripoint, (c) becomes known to Tripoint from a source other than the Company, and other than by the breach of an obligation of confidentiality owed to the Company, (d) is disclosed by the Company to a third party without restrictions on its disclosure or (e) is independently developed by Tripoint as evidenced by written documentation.

19. This Engagement Letter shall be deemed to have been made and delivered in New York City and both this Engagement Letter and the transactions contemplated hereby shall be governed as to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of New York, without regard to the conflict of laws principles thereof.

 

20. The Company agrees that any and all decisions, acts, actions, or omissions with respect to the Offering shall be the sole responsibility of the Company, and that the performance by Tripoint of services hereunder will in no way expose Tripoint to any liability for any such decisions, acts, actions or omissions of the Company.

 

21. Tripoint reserves the right to reduce any item of its compensation or adjust the terms thereof as specified herein in the event that a determination and/or suggestion shall be made by FINRA to the effect that the Selling Agent’s aggregate compensation is in excess of FINRA rules or that the terms thereof require adjustment; provided, however, the aggregate compensation otherwise to be paid to the Selling Agent by the Company may not be increased above the amounts stated herein without the approval of the Company in writing.

 

22. Tripoint and the Company: (i) agree that any legal suit, action or proceeding arising out of or relating to this Engagement Letter and/or the transactions contemplated hereby shall be instituted exclusively in New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, (ii) waive any objection which they may have or hereafter to the venue of any such suit, action or proceeding, and (iii) irrevocably consent to the jurisdiction of the New York Supreme Court, County of New York, and the United States District Court for the Southern District of New York in any such suit, action or proceeding. Tripoint and the Company further agree to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding in the New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York and agree that service of process upon the Company mailed by certified mail to the Company’s address shall be deemed in every respect effective service of process upon the Company, in any such suit, action or proceeding, and service of process upon Tripoint mailed by certified mail to Tripoint’s address shall be deemed in every respect effective service process upon Tripoint, in any such suit, action or proceeding. Notwithstanding any provision of this Engagement Letter to the contrary, the Company agrees that neither Tripoint nor its affiliates, and the respective officers, directors, employees, agents and representatives of Tripoint, its affiliates and each other person, if any, controlling Tripoint or any of its affiliates, shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with the engagement and transaction described herein except for any such liability for losses, claims, damages or liabilities incurred by us that are finally judicially determined to have resulted from the bad faith or gross negligence of such individuals or entities. Tripoint will act under this Engagement Letter as an independent contractor with duties to the Company. Because Tripoint will be acting on the Company’s behalf in this capacity, it is Tripoint’s practice to receive indemnification. A copy of Tripoint’s standard indemnification form is attached to this Engagement Letter as Exhibit A, which is incorporated herein and shall be deemed to be a part of this Engagement Letter.

In connection with the engagement letter to which this Exhibit A is attached (the “Engagement Letter”), the Company (the “Indemnitor”) agrees to indemnify and hold harmless Tripoint and its affiliates, and the respective officers, directors, employees, agents and representatives of Tripoint, its affiliates and each other person, if any, controlling Tripoint or any of its affiliates (Tripoint and each such other person being an “Indemnified Person”) from and against any losses, claims, damages or liabilities related to, arising out of or in connection with the engagement (the “Engagement”) under the Engagement Letter, and will reimburse each Indemnified Person for all expenses (including fees and expenses of counsel) as they are incurred in connection with investigating, preparing, pursuing or defending any action, claim, suit, investigation or proceeding related to, arising out of or in connection with the Engagement, whether or not pending or threatened and whether or not any Indemnified Person is a party. The Indemnitor will not, however, be responsible for any losses, claims, damages or liabilities (or expenses relating thereto) that are judicially determined in a judgment not subject to appeal to have resulted from the bad faith or gross negligence of any Indemnified Person.

 

The Indemnitor will not, without Tripoint’s prior written consent, settle, compromise, consent to the entry of any judgment in or otherwise seek to terminate any action, claim, suit 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 arising out of such action, claim, suit or proceeding. No Indemnified Person seeking indemnification, reimbursement or contribution under this Exhibit A will, without the prior written consent of the Indemnitor, which consent will not be unreasonably withheld, settle, compromise, consent to the entry of any judgment in or otherwise seek to terminate any action, claim, suit, investigation or proceeding referred to in the preceding paragraph.

 

If the indemnification provided for in the first paragraph of this Exhibit A is judicially determined to be unavailable (other than in accordance with the third sentence of the first paragraph hereof) to an Indemnified Person in respect of any losses, claims, damages or liabilities referred to herein, then, in lieu of indemnifying such Indemnified Person hereunder, the Indemnitor shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (and expense relating thereto): (i) in such proportion as is appropriate to reflect the relative benefits to the applicable Indemnified Person, on the one hand, and the Indemnitor, on the other hand, of the Engagement or (ii) if the allocation provided by clause (i) above is not available, in such proportion as is appropriate to reflect not only the relative benefits referred to in such clause (i) but also the relative fault of each of the applicable Indemnified Person and the Indemnitor, as well as any other relevant equitable considerations; provided, however, that in no event shall any Indemnified Person’s aggregate contribution to the amount paid or payable exceed the aggregate amount of fees actually received by Tripoint under the Engagement Letter. Assuming that the Indemnitor has fully satisfied the amount of their obligations provided for herein to the Indemnified Persons, and the Indemnified Persons shall have no further liabilities in connection therewith, then the Indemnitor may take control of any pending action or litigation in order to reduce the expenses in connection therewith. For the purposes of this Exhibit A, the relative benefits to the Indemnitor and the applicable Indemnified Person of the Engagement shall be deemed to be in the same proportion as: (a) the total value paid or contemplated to be paid or received or contemplated to be received by the Indemnitor and its affiliates (including the Company’s stockholders), as the case may be, in the transaction or transactions that are the subject of the Engagement, whether or not any such transaction is consummated, bears to (b) the fees paid to Tripoint in connection with the Engagement.

Procedure. Upon obtaining knowledge of any claim which may give rise to indemnification not involving a Third Party Claim, the Indemnified Person shall, as promptly as practicable following the date the Indemnified Person has obtained such knowledge, give written notice (which may be delivered by facsimile transmission, with confirmation of receipt by the receiving party) of such claim for which indemnification is sought (each, a “Claim”) to the Indemnitor, but no failure to give such notice shall relieve the Indemnitor of any liability hereunder (except to the extent that the Indemnitor has suffered actual, irreversible and material economic prejudice thereby). The Indemnified Person, at its cost, shall furnish to the Indemnitor in good faith and in reasonable detail such information as the Indemnified Person may have with respect to such Claim.

 

Promptly after receipt by an Indemnified Person of notice of the commencement of any action, suit or proceeding involving a Claim by a third party (each, a “Third Party Claim”) against it, such Indemnified Person will give written notice to the Indemnitor of the commencement of such Third Party Claim, and shall give the Indemnifying Party such information with respect thereto as the Indemnitor may reasonably request, but no failure to give such notice shall relieve the Indemnitor of any liability hereunder (except to the extent the Indemnitor has suffered actual, irreversible and material economic prejudice thereby). The Indemnitors shall have the right, but not the obligation, to assume the defense and control the settlement of such Third Party Claim, at their cost and expense (and not as a reduction in the amount of indemnification available hereunder), using counsel selected by the Indemnitor and reasonably acceptable to the Indemnified Person. If the Indemnitor satisfies the requirements of this Exhibit A and desire to exercise our right to assume the defense and control the settlement of such Third Party Claim, the Indemnitor shall give written notice (the “Notice”) to the Indemnified Person within fourteen (14) calendar days of receipt of notice from the Indemnified Person of the commencement of or assertion of any Third Party Claim stating that the Indemnitors shall be responsible for such Third Party Claim. Notwithstanding the foregoing, the Indemnified Person shall have the right: (i) to assume the defense and control the settlement of a Third Party Claim and (ii) to employ separate counsel at our reasonable expense (provided that the Indemnitor shall not be required to reimburse the expenses and costs of more than one law firm) and control its own defense of a Third Party Claim if (x) the named parties to any such action (including any impleaded parties) include both the Indemnified Person and the Indemnitor, and the Indemnified Person shall have been advised by counsel that there are one or more legal or equitable defenses available to the Indemnified Person that are different from those available to the Indemnitor, (y) such Third Party Claim involves equitable or other non-monetary damages or in the reasonable judgment of the Indemnified Person, such settlement would have a continuing material adverse effect on the Indemnified Person’s business (including any material impairment of its relationships with customers and suppliers) or (z) or in the reasonable judgment of the Indemnified Person, the Indemnitor may not be able to satisfy fully such Third Party Claim. In addition, if the Indemnitors fail to give the Indemnified Person the Notice in accordance with the terms hereof, the Indemnified Person shall have the right to assume control of the defense of and settle the Third Party Claim and all costs incurred in connection therewith shall constitute damages of the Indemnified Person. For the avoidance of doubt, the Indemnitor acknowledges that they will advance any retainer fees required by legal counsel to an Indemnified Person simultaneously with the engagement by such Indemnified Person of such counsel, it being understood and agreed that the amount of such retainer shall not exceed $30,000 and that such retainer shall be credited to fees incurred with the balance (if any) refundable to the Indemnitors.

Notwithstanding the foregoing, the Indemnitor or the Indemnified Person, as the case may be, shall have the right to participate, at the Indemnitor’s or the Indemnified Person’s own expense, in the defense of any Third Party Claim that the other party is defending.

If the Indemnitor assumes the defense of any Third Party Claim in accordance with the terms hereof, the Indemnitor shall have the right, upon 30 calendar days’ prior written notice to the Indemnified Person, to consent to the entry of judgment with respect to, or otherwise settle such Third Party Claim; provided, however, that with respect to such consent to the entry of judgment or settlement, the Indemnified Person will not have any liability and will be fully indemnified with respect to all Third Party Claims. Notwithstanding the foregoing, the Indemnitor shall not have the right to consent to the entry of judgment with respect to, or otherwise settle a Third Party Claim if: (i) the consent to judgment or settlement of such Third Party Claim involves equitable or other non-monetary damages against the Indemnified Person, or (ii) in the reasonable judgment of the Indemnified Person, such settlement would have a continuing effect on the Indemnified Person’s business (including any material impairment of its relationships with customers and suppliers), without the prior written consent of the Indemnified Person. In addition, the Indemnified Person shall have the sole and exclusive right to settle any Third Party Claim on such terms and conditions as it deems reasonably appropriate, (x) if the Indemnitor fails to assume the defense in accordance with the terms hereof, or (y) to the extent such Third Party Claim involves only equitable or other non-monetary relief, and shall have the right to settle any Third Party Claim involving monetary damages with our consent, which consent shall not be unreasonably withheld.

 

The provisions of this Exhibit A shall apply to the Engagement and any modification thereof and shall remain in full force and effect regardless of any termination or the completion of Tripoint’s services under the Engagement Letter.