Exhibit 10.8
MEMORANDUM OF AGREEMENT ("MoA")
between
xxxxXxx.xxx Corporation ("thinWeb")
and
Agritek Bio Ingredients Corporation ("AGK")
Dated September 10, 1999
WHEREAS thinWeb has developed and exclusively owns free and clear of all
encumbrances certain software technologies collectively known as thinAccess (the
"Technology") more fully described in Appendix A hereto;
AND WHEREAS AGK wishes to share in the opportunities and costs of developing the
Technology for application to the wireless database access market (the
"Opportunity");
AND WHEREAS the parties have agreed to form a joint venture to develop said
Opportunity;
AND WHEREAS it is in the interests of both parties that development work on the
Opportunity commence as quickly as possible notwithstanding the inability of the
parties to have prepared all necessary formal documentation;
AND WHEREAS the parties have agreed that this memorandum shall constitute a
binding statement of principles and obligations between them which shall be
supplemented by more formal documentation to be entered into between them which
shall contain all of the customary terms and conditions normally found in
documents of this type in Canada;
AND WHEREAS the parties have further agreed that if for any reason they are
unable to complete the formal documentation because of disputes as to intentions
or for any other reasons then either of the parties may submit the matter to
final and binding arbitration under the provisions of the Ontario Arbitration
Act before one arbitrator selected in conformity therewith. Such arbitrator
shall have all necessary power and authority to complete the documentation, fill
in any gaps and generally do what is required to complete all the documentation
foreseen by this and which documentation shall then be binding upon the parties
hereto;
NOW THEREFORE THE PARTIES HAVE AGREED AS FOLLOWS:
1. thinWeb has heretofore caused to be incorporated a new corporation
("Newco") under the laws of Canada and Newco shall be the joint venture
vehicle in which each party shall have an equal and undivided interest (the
"JV");
2. thinWeb shall transfer to Newco concurrently with the signing of this MoA
an exclusive perpetual license (the "License") to the Technology for the
purposes of developing the Opportunity;
Initial here _______ _______
Memorandum of Agreement between thinWeb and AGK - September 8, 1999 page 2
3. New technologies developed by Newco shall become the exclusive intellectual
property of the JV. The parties hereto agree that if such new technologies
have application outside of the Opportunity being pursued by the JV then
Newco shall mandate thinWeb to exploit such new technologies. Should such
new technologies be licenced or sold to third parties Newco shall receive
the royalties and /or proceeds of sale and same shall be distributed from
time to time to Newco's shareholders, with thinWeb being entitled to
compensation to be agreed upon through negotiations between the JV members
for its services in commercializing such licences or sales. Should such new
technologies be embedded in thinWeb products then the JV members shall at
such time or times negotiate fair and reasonable royalties for the use
thereof by thinWeb;
4. Applications developed for the Opportunity by Newco and any revenues from
sales fees, or royalties shall also be for the benefit of Newco and subject
to distribution between the parties;
5. thinWeb shall be the manager (the "Manager") of Newco and shall as the
Manager act in a prudent and workmanlike manner;
6. The Manager shall report to a management committee consisting of two
representatives from each party to the JV, said committee to be governed by
such procedures as are customary in joint ventures including a provision to
arbitrate differences;
7. Operating expenses of Newco shall be funded by advances to be furnished by
each of the parties as per budgets to be prepared by Newco. Each party
shall make such advances when required pursuant to the budget. Should a
party be unable or unwilling to continue furnishing its portion of the
operating expenses then such party's (the "Unable Party") interest in Newco
shall be subject to dilution by the other party or a third party which is
prepared to fund the Unable Party's share of operating expenses. Such
dilution to be calculated on the basis of Newco having as a value an amount
equal to the aggregate of the sum of $2,500,000 together with the total of
all advances made between the parties to Newco to fund operating expenses,
to the time when the Unable Party ceases making advances. For example:
i. At the time the Unable Party ceases to make advances, if the total
advances made by both parties is $1,200,000 then value of the Unable
Party's shareholdings shall be equal to the quotient of ($2,500,000 +
$1,200,000) x 50% or $3,700,000 x 50%, which is $1,8500,000. For every
dollar advanced thereafter by the other or a third party, $0.50 will
be applied to the dilution of the Unable Party's shareholdings as
follows:
a. If a total of $300,000 is subsequently advanced by the other party
or a third party, the Unable Party's interest shall be equal to
the quotient of $1,850,000 / ($3,700,000 + ($300,000 x 50%) or
48.1%.
b. If a total of $300,000 is subsequently advanced by the other party
or a third party, the Unable Party's interest shall be equal to
the quotient of $1,850,000 / ($3,700,000 + $150,000 + ($500,000 x
48.1%) or 45.2%.
Initial here _______ _______
Memorandum of Agreement between thinWeb and AGK - September 8, 1999 page 3
7.1 Notwithstanding the foregoing dilution shall not take place after the
Unable Party's shareholder interest in Newco has been diluted to 10%
of Newco's issued and outstanding shareholdings.
8. thinWeb employees assigned to the JV by thinWeb shall continue to be the
employees of thinWeb and the severance costs for such employees shall be
borne by thinWeb. While seconded to Newco such employees "discoveries"
shall be the exclusive intellectual property of Newco. Each of said
employees shall enter into the appropriate agreements with Newco in regard
to confidentiality and ownership of "discoveries" relating to the
Opportunity;
COMPENSATION
9. In exchange for thinWeb assigning the License to Newco:
9.1 AGK shall pay to thinWeb the amount of C$1,000,000 (one million
Canadian dollars), payable as to C$500,000 upon signing of this MoA
and C$500,000 on the signing of the definitive JV agreement;
9.2 Subject to regulatory approval, AGK shall deliver to thinWeb 500,000
(five hundred thousand) units of the capital stock of AGK upon the
signing of the JV agreement, each unit consisting of one freely
tradeable common share and one non-transferable share purchase
warrant, such warrant to be exercisable by the holder for a period of
two years from the signing of the JV agreement at an exercise price of
C$0.50 (fifty cents Canadian);
9.3 A royalty payable by the JV to thinWeb of 5% of the net revenues
(revenues from all sources less returns) realized by the JV, paid
quarterly in arrears. Such royalty payments to commence, however only
subsequent to Newco having reimbursed to the parties all advances made
to Newco for development and other expenses;
10. Provided thinWeb shall not charge back to Newco management time for
supervising Newco's activities, as compensation for its role as Manager,
Agritek shall pay a surcharge of 2.5% on its share of Newco's costs to
thinWeb, such fee to be invoiced monthly in arrears;
11. thinWeb shall issue to AGK 100,000 (one hundred thousand) non-transferable
share purchase warrants conferring the right to the holder to purchase an
equal number of common shares of thinWeb for a period of two years, such
warrants to be exercisable at the lower of US$5.00 per share and the price
at which thinWeb next issues equity pursuant to a financing;
12. This MoA and the definitive JV agreement shall be subject to the laws of
Ontario.
13. Miscellaneous
Initial here _______ _______
Memorandum of Agreement between thinWeb and AGK - September 8, 1999 page 4
13.1 The Preamble shall form part hereof as though incorporated herein;
13.2 The parties agree that as it is not the intention of Newco to build
up cash resources as a consequence of royalties or sales and that
distributions shall be made to the parties on a regular basis of cash
flow which is surplus to its needs;
13.3 All disputes between the parties arising out of this MoA or the
definitive JV agreement shall be finally resolved by arbitration
under the provisions of the Arbitration Act (Ontario). The seat of
the Arbitration shall be Toronto. If the parties cannot agree upon
the choice of one arbitrator then each party shall select an
arbitrator and the two so selected shall choose the third.
IN WITNESS WHEREOF the parties hereto have affixed their signatures as follows:
__________________________________ _____________________________________
Xxxx Xxxxxx, President Xxxx Xxxxxxx, Chairman and CEO
xxxxXxx.xxx Corporation Agritek Bio Ingredients Corporation
