STRATEGIC ALLIANCE AGREEMENT
EXHIBIT
10.1
THIS
STRATEGIC ALLIANCE AGREEMENT
is made
as of January 1, 2007 (the “Effective Date”) by and between
GOFISH TECHNOLOGIES, INC,
a
California corporation (“GoFish”), GOFISH
CORPORATION,
a
Nevada corporation of which GoFish is a wholly-owned subsidiary (the “Company”)
and KALEIDOSCOPE,
INC.,
a
Delaware corporation, acting through its wholly owned subsidiary, Kaleidoscope
Sports and Entertainment LLC (“KSE”).
BACKGROUND
STATEMENT
GoFish
is
engaged in the business of providing one or more websites, including
xxx.xxxxxx.xxx (the “Websites”) that serve as a medium for user-generated,
amateur, licensed, and professional content as a vehicle for targeted, value
added advertising. KSE is in the business of providing developing, distributing
and producing entertainment properties and providing consulting services in
the
development of specialty television programs. This Agreement sets forth the
terms and conditions under which KSE will provide certain Content to GoFish
and
GoFish and KSE will jointly participate in connection with the procurement,
sale, delivery and support of the Content on the Websites.
AGREEMENT
NOW,
THEREFORE, in
consideration of the foregoing, the mutual covenants herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
ARTICLE
I
DEFINITIONS
Section
1.01 Definitions.
When
used as a capitalized term in this Agreement, the following terms shall have
the
meanings set forth below:
“Acquisition
Finder’s Fee”
means
the amount payable by the Company or GoFish to KSE as set forth in Section
4.04(b).
“Acquisition
by the Company”
means,
in a single transaction or a series of related transactions, the purchase of
all
or substantially all of the outstanding capital stock or assets of a Person
who
is not, immediately prior to such transaction (or the first of such series
of
related transactions) an Affiliate of the Company or GoFish, whether by stock
purchase, asset purchase, merger, consolidation, share exchange or otherwise.
“Acquisition
by the Company Consideration” means
the
total net proceeds to a Person acquired by the Company or its stockholders
or
GoFish, as the case may be, in an Acquisition by the Company, after deduction
of
all taxes, transaction costs and expenses (excluding the Acquisition Finder’s
Fee).
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“Affiliate”
means,
with respect to a Person, any other Person directly or indirectly controlling,
controlled by or under direct or indirect common control with such Person.
A
Person shall be deemed to control another Person if such Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the ownership
of
voting securities, by contract or otherwise. For purposes of Section 3.04,
an
“Affiliate” of KSE shall be deemed to include any and all of KSE’s directors,
officers, employees, independent contractors, consultants, representatives
and
professional advisors, in each case having knowledge of this Agreement or the
subject matter hereof and/or performing services to or on behalf of KSE in
connection herewith.
“Agreement”
means
this Agreement between the Parties, as the same may be amended, modified or
supplemented from time to time.
“Award
Show” means
a
televised award show to be designed and developed by KSE and GoFish reflecting
the concepts and approach to be discussed with and agreed to by GoFish, as
contemplated by this Agreement.
“Award
Show Warrants”
means
warrants to purchase shares of Common Stock pursuant to a written warrant
agreement, in a form determined by the Company but including the following
terms: (i) an exercise price equal to the opening bid price of the Common Stock
on the date of issuance of the Warrants, (ii) fully vesting upon the initial
televised network broadcast of the Award Show if the Award Show is televised
by
network broadcast prior to March 30, 2008 and (iii) expiration automatically
(1)
if the Award Show is not televised by network broadcast prior to March 30,
2008,
on March 30, 2008, (2) if the underlying agreement between KSE and the Award
Show broadcast network sponsor is terminated, on the date of termination of
such
agreement, and (3) if the Award Show is televised by network broadcast prior
to
March 30, 2008, the fifth anniversary of the Effective Date.
“Base
Warrants”
means
warrants to purchase up to Five Hundred Thousand (500,000) shares of Common
Stock pursuant to a written warrant agreement, in a form determined by the
Company but including the following terms: (i) an exercise price of $3.00 per
share, (ii) vesting monthly in arrears commencing at the end of the sixth month
following the Effective Date (as to one third (1/3) of the underlying number
shares of Common Stock) and continuing at the end of each subsequent month
during the term hereof at a rate of one eighteenth (1/18) of the number of
underlying shares of Common Stock and (iii) expiration automatically (1) if
this
Agreement is terminated prior to six (6) months following the effective date,
the date of termination of this Agreement, (2) if this Agreement is terminated
after this Agreement has been in effect for at least six (6) months but less
than eighteen (18) months, six (6) months following the date of termination
and
(3) if this Agreement is in effect for at least eighteen months, the fifth
anniversary of the Effective Date .
“Business”
has the
meaning set forth in Section 3.04.
“Client”
has the
meaning set forth in Section 3.04.
“Common
Stock”
means
the common stock, par value $0.001 per share, of the Company.
2
“Commission”
has the
meaning set forth in Section 4.02.
“Commission
Warrants”
means
warrants to purchase shares of Common Stock pursuant to a written warrant
agreement, in a form determined by the Company but including the following
terms: (i) an exercise price equal to the opening bid price of the Common Stock
on the date of issuance of the Warrants, (ii) vesting immediately upon issuance
and (iii) expiration automatically (1) if this Agreement is terminated prior
to
six (6) months following the effective date, the date of termination of this
Agreement, (2) if this Agreement is terminated after this Agreement has been
in
effect for at least six (6) months but less than eighteen (18) months, six
(6)
months following the date of termination and (3) if this Agreement is in effect
for at least eighteen months, the fifth anniversary of the Effective Date
.
“Copyrightable
Work”
has the
meaning set forth in Section 3.04.
“Covenant
Period”
has the
meaning set forth in Section 3.04.
“Covered
Products and Services”
means
the products and services provided by KSE to GoFish hereunder related to the
generation of Sales, the Award Show and those items described on the attached
Exhibit
A.
“Distribution
Warrants”
means
warrants to purchase up to Thirty Thousand (30,000) shares of Common Stock
pursuant to a written warrant agreement, in a form determined by the Company
but
including the following terms: (i) an exercise price equal to the opening bid
price of the Common Stock on the date of issuance of the Warrants, (ii) vesting
following the determination after the first anniversary of the Effective Date,
in a time period and manner as is reasonably practicable, at a rate of Two
Hundred Fifty (250) underlying shares per One Million (1,000,000) page views
on
the Websites during the first year following the Effective Date (with any
remaining unvested right to acquire underlying shares being automatically
cancelled upon such termination) and (iii) expiration automatically upon the
earlier of the fifth anniversary of the Effective Date or the termination of
this Agreement.
“GoFish
Group”
has the
meaning set forth in Section 3.04.
“Governmental
Authority”
means
any national, federal, state, county, municipal or other government or
governmental, quasi-governmental or regulatory authority, agency, board, body,
commission, instrumentality, court or tribunal.
“Intellectual
Property”
means
all inventions, ideas, data, customer lists, pricing information, marketing
analyses, concepts, designs, schematics, layouts, Patents, trademarks, trademark
applications, service marks, trade names, logos, copyrights, software, source
code, object code, programming language, Know-how, Technical Data, licenses
and
other similar rights by whatever name, whether or not patentable, copyrighted
or
copyrightable, registered or registrable, and any and all improvements or
derivatives thereof, whether reduced to tangible form or otherwise, and whether
registered with or recognized by any governmental or regulatory body or
otherwise.
3
“Know-how”
means
those currently existing ideas, designs, concepts, compilations of information,
methods, techniques, procedures and processes of KSE, whether or not patentable,
that are used by KSE in connection with the design, manufacture and use of
the
Covered Products and Services.
“Patents”
means
any
rights to exclude any Person from making, using, selling or otherwise exploiting
any product or service incorporating any invention, business method or device,
as recognized or recognizable by any governmental or regulatory body in any
jurisdiction (including without limitation the United States Patent and
Trademark Office), whether granted, applied for or otherwise, and together
with
any patent that claims priority from such application, including any
continuation, continuation-in-part and divisional, together with any foreign
counterpart thereof.
“Participation
Fee” means
the
amounts payable to KSE under Section 4.01.
“Partnership
Warrants” means
warrants to purchase shares of Common Stock pursuant to a written warrant
agreement, in a form determined by the Company but including the following
terms: (i) an exercise price equal to the opening bid price of the Common Stock
on the date of issuance of the Warrants, (ii) vesting following the
determination after the first anniversary of the partnership agreement at issue,
in a time period and manner as is reasonably practicable, at a rate of (a)
100%,
if the amount of video views that GoFish actually derived on the Websites from
such partner during the first year of the term of the partnership agreement
equals or exceeds Expected VV (as defined in Exhibit
B)
for
such partnership, or (b) the percentage of video views that GoFish actually
derived on the Websites from such partner during the first year of the term
of
the partnership agreement as compared with Expected VV, if such actual video
views is less than Expected VV for such partnership (with any remaining unvested
right to acquire underlying shares being automatically cancelled upon such
termination) and (iii) expiration automatically (1) if this Agreement is
terminated prior to six (6) months following the effective date, the date of
termination of this Agreement, (2) if this Agreement is terminated after this
Agreement has been in effect for at least six (6) months but less than eighteen
(18) months, six (6) months following the date of termination and (3) if this
Agreement is in effect for at least eighteen months, the fifth anniversary
of
the Effective Date .
“Party”
means
either of the parties to this Agreement, and “Parties”
means
all of them.
“Person”
means an
individual, corporation, partnership, association, limited liability company,
trust or unincorporated association or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
“Prospect”
means
any Person worldwide to which GoFish deems it advisable to market and sell
the
Covered Products and Services.
“Revenue”
means
revenue derived by GoFish from Sales, net of costs and expenses incurred
(including without limitation Taxes and Commissions.
“Sale
Finder’s Fee”
means
the amount payable by the Company or GoFish to KSE as set forth in Section
4.04(a).
4
“Sale
of the Company”
means,
in a single transaction or a series of related transactions, the sale of all
or
substantially all of the outstanding capital stock or assets of the Company
or
GoFish to a Person who is not, immediately prior to such transaction (or the
first of such series of related transactions) an Affiliate of the Company or
GoFish, whether by stock purchase, asset purchase, merger, consolidation, share
exchange or otherwise.
“Sale
of the Company Consideration” means
the
total net proceeds to the Company or its stockholders or GoFish, as the case
may
be, for the Sale of the Company, after deduction of all taxes, transaction
costs
and expenses (excluding the Sale Finder’s Fee).
“Sales”
means
sales by KSE of Covered Goods and Services during the term of this Agreement,
where such sales result from the sourcing of Prospects by KSE and the completion
of such Sales by KSE with minimal assistance and effort by GoFish or the Company
and subject to reduction by Thirty percent (30%) of such sales where substantial
assistance and effort by GoFish and/or the Company is utilized to complete
such
sale, as determined in the good faith judgment of GoFish or the Company.
“Taxes”
means
any duty, levy, import, export, excise, sales and value added taxes, customs
duties, levy or similar charge, including interest and penalties thereon,
however designated.
“Technical
Data”
means
those currently existing KSE drawings, plans, parts lists, specifications and
process descriptions that relate to the design, manufacture and use of the
Covered Products and Services, whether in printed, drawn or electronic
form.
“Warrants”
means
the
Base Warrants, the Commission Warrants, the Distribution Warrants, the
Partnership Warrants and the Award Show Warrants.
“Websites”
has the
meaning set forth in the section of this Agreement captioned “Background
Statement,” above.
“Work
Made for Hire”
has the
meaning set forth in Section 3.04.
“Work
Product”
has the
meaning set forth in Section 3.04.
Section
1.02 Usage.
For the
purpose of construing this Agreement, unless the context indicates otherwise,
words in the singular number shall be deemed to include words in the plural
number, and vice versa, and words in one gender shall be deemed to include
words
in the other gender. The table of contents, titles to articles and section
headings are for convenience only, and neither limit nor amplify the provisions
of this Agreement.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES
Section
2.01 Representations
and Warranties of KSE.
KSE
hereby represents and warrants to GoFish as follows:
5
(a) Valid
Existence.
KSE is
duly organized, validly existing and in good standing as a corporation under
the
laws of the State of Delaware.
(b) Authorization,
Execution and Enforceability.
KSE has
the power and authority under its organizational documents and applicable law
to
execute, deliver and carry out the terms and provisions of this Agreement.
The
execution, delivery and performance by KSE of this Agreement have been duly
authorized by all necessary corporate action of KSE, and this Agreement has
been
duly executed on behalf of KSE. This Agreement is the valid and binding
obligation of KSE, enforceable against KSE in accordance with its
terms.
(c) Right
to Conduct Business.
KSE and
its Affiliates are engaged primarily in the business of providing a
comprehensive system of healthcare and related services, including education
and
research. Neither KSE nor any of its Affiliates is subject to any judgment,
order, decree, writ, injunction or criminal penalty imposed by any Governmental
Authority that would have a material adverse effect upon the ability of KSE
to
engage in such business or to perform its obligations under this
Agreement.
(d) Intellectual
Property.
KSE (i)
is the owner of the entire right, title, and interest in and to the Patents,
Know-how and Technical Data (other than the Intellectual Property pertaining
to
the Award Show, all of which is and shall be jointly owned by KSE and GoFish
as
contemplated by this Agreement); (ii) has the right and power to grant the
licenses granted herein; and (iii) is not a party to any other agreements with
any Person in conflict with the license grant contemplated herein. To the
knowledge of KSE, GoFish’s contemplated use of the Patents, Know-how and
Technical Data to design, manufacture, use, lease and sell Covered Products
and
Services does not infringe any valid rights of any third party.
(e) Qualification.
KSE is,
and shall for the duration of the term shall be, fully qualified and capable
of
performing its obligations hereunder in a proficient and timely
manner.
Section
2.02 Representations
and Warranties of GoFish.
GoFish
hereby represents and warrants to KSE as follows:
(a) Valid
Existence.
GoFish
is duly organized, validly existing and in good standing as a corporation under
the laws of the State of California.
(b) Authorization,
Execution and Enforceability.
GoFish
has the power and authority under its organizational documents and applicable
law to execute, deliver and carry out the terms and provisions of this
Agreement. The execution, delivery and performance by GoFish of this Agreement
have been duly authorized by all necessary action of GoFish, and this Agreement
has been duly executed on behalf of GoFish. This Agreement is the valid and
binding obligation of GoFish, enforceable against GoFish in accordance with
its
terms.
(c) Business.
GoFish
and its Affiliates are engaged in the business of providing and maintaining
the
Websites, among other things. Neither GoFish nor any of its Affiliates is
subject to any judgment, order, decree, writ, injunction or criminal penalty
imposed by any Governmental Authority that would have a material adverse effect
upon the ability of GoFish to engage in such business or to perform its
obligations under this Agreement.
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(d) Common
Stock.
Upon
issuance in accordance with the terms and conditions of the Warrants, the Common
Stock will be fully paid and nonassessable.
ARTICLE
III
PROVISION
OF SERVICES BY KSE; AWARD SHOW; RESTRICTIVE COVENANTS; PUBLIC
ANNOUNCEMENTS
Section
3.01 Basic
KSE Services.
KSE
shall provide the following specific services, at times and places to be
mutually agreed upon between the Parties:
KSE
shall
use its best efforts to identify Prospects and consummate transactions with
a
view towards generating Sales. To that end, KSE shall devote such resources
as
are reasonably expected to maximize potential Sales generation, including the
devotion of certain staff members of KSE towards providing services to GoFish,
including the following personnel and estimated time (on a weekly basis) at
a
minimum to be devoted to servicing GoFish during the term of this Agreement:
|
Name
of Staff Member
|
Time
to Be Devoted to Services
|
|
Xxxxx
Xxxxx
|
3
days per week
|
|
Xxxxx
Xxxxxx
|
3
days per week
|
|
Xxx
Xxxxx
|
1
day per week
|
|
Xxx
Xxxxxx
|
1.5
days per week
|
|
Xxxx
Xxxxxx
|
1
day per week
|
Further,
Xxx Xxxxx shall serve as a member of the advisory board of the Company and/or
GoFish, without additional compensation. Should any of the foregoing staff
members cease working for KSE (either permanently or temporarily), or if GoFish
advises KSE that it is dissatisfied with the performance of any staff member
in
connection with the provision of services, then KSE shall promptly reassign
members of its staff such that the appropriate level of service (as agreed
by
GoFish) is provided to GoFish to achieve the objectives of this Agreement.
It is
expressly understood that the participation of Xxx Xxxxx, Xxxxx Xxxxx and Xxxxx
Xxxxxx in the provision by KSE of the services contemplated by this Agreement
is
a material term of this Agreement and that KSE shall use its best efforts to
ensure that these individuals are principally responsible for servicing GoFish
for the duration of the term of this Agreement.
Section
3.02 Award
Show.
KSE
shall use its best efforts to complete the design of a televised Award Show
with
advertising sponsors secured not later than April 30, 2007 and to, in
conjunction with GoFish, enter into a written agreement with an “old media”
broadcast network partner satisfactory to GoFish with a view to televised
broadcasting of the Award Show by September 30, 2007, all on terms and
conditions reasonably satisfactory to GoFish. GoFish shall have the exclusive
option to enter into a joint venture with KSE for the development and production
of the Award Show, which GoFish may exercise at any time during the term of
this
Agreement unless, at any time following the completion of the design of the
Award Show, GoFish expressly notifies KSE in writing that it declines to
participate in the Award Show and waives the aforesaid option, after which
time
KSE may produce the Award show independently or with the involvement of one
or
more joint venture partners other than GoFish, provided,
that
in
the event GoFish elects not to exercise its option and the Award Show is
produced by KSE and/or another joint venture partner, then GoFish shall be
afforded the opportunity to participate as a sponsor or advertiser of the Award
Show on a “most favored nations” basis. If GoFish elects to participate as a
joint venturer with KSE with respect to the Award Show, then GoFish and KSE
will
enter into a separate written agreement specifying the terms and conditions
of
such joint venture, which terms shall include a 50%-50% ownership of the
Intellectual Property and all other rights pertaining to the Award Show, a
50%-50% responsibility for the costs and expenses pertaining to the Award Show,
and the focus of GoFish (or an Affiliate of or successor to GoFish) as the
sponsor and central “brand” of the Award Show.
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Section
3.03 Reports.
During
the term of this Agreement, KSE shall provide to GoFish and the Company written
reports on at least a weekly basis, detailing from the date of the immediately
prior report all Prospects identified by KSE, all agreements in the process
of
negotiation for the provision of Covered Products and Services and all contracts
for Covered Products and Services that were closed, the progress of the design
of the Award Show and the efforts to secure a broadcast partner with respect
to
the Award Show and any other information that GoFish or the Company reasonably
requests. KSE shall also make appropriate personnel available for teleconference
and/or in person meetings with representatives of GoFish from time to time
as
and when reasonably requested by GoFish.
Section
3.04 Restrictive
Covenants of KSE.
KSE
hereby agrees as follows:
(a) KSE
acknowledges that the information, observations and data obtained by KSE and
its
Affiliates concerning the business and affairs of GoFish and its Affiliates
(the
“GoFish Group”), in connection with KSE’s performance of services for GoFish
(whether prior to, on or after the Effective Date) are confidential and are
the
property of GoFish, including information concerning transaction opportunities
in or reasonably related to the business or industry of GoFish of which KSE
is
aware as of the Effective Date, or becomes aware during the term of this
Agreement. Therefore, KSE agrees that it will not, and will not allow any of
its
Affiliates to, at any time, whether during or after the term of this Agreement,
disclose to any unauthorized person or, directly or indirectly, use for KSE’s
own account, any of such information, observations, data or any Work Product
(as
defined below) or Copyrightable Work (as defined below) without GoFish’s
consent, unless and to the extent that the aforementioned matters become
generally known and available for use other than as a direct or indirect result
of KSE’s or KSE’s Affiliates’ acts or omissions to act, provided, that, KSE may
disclose any such information, observations, data or any Work Product (as
defined below) or Copyrightable Work (as defined below) that is legally required
or compelled, provided, further, in such event, to the extent permitted by
law,
he shall provide GoFish with prior notice of such disclosure. KSE agrees to
deliver to GoFish at the termination of this Agreement, or at any other time
GoFish may request in writing (whether during or after the term of this
Agreement), all memoranda, notes, plans, records, reports and other documents,
regardless of the format or media (and copies thereof), relating to the business
of the GoFish Group (including, without limitation, all transaction prospects,
lists and contact information) which KSE or any of its Affiliates may then
possess or have under KSE’s or such Affiliate’s control.
8
(b) KSE
acknowledges that all Intellectual Property created by KSE or its Affiliates
for
GoFish and the GoFish Group during the term of this Agreement (“Work Product”)
belongs exclusively to GoFish, and KSE hereby assigns, and agrees to assign,
all
of KSE’s rights, title and interest in and to the Work Product to GoFish. For
the avoidance of doubt, no Intellectual Property created by KSE either prior
to
or after the term of this Agreement shall constitute Work Product for purposes
of this Agreement and KSE shall retain all right, title and interest in and
to
such Intellectual Property. Any copyrightable work (“Copyrightable Work”)
prepared by KSE or any of its Affiliates for GoFish or any member of the GoFish
Group shall be deemed a “work made for hire” under the copyright laws, and
GoFish shall own all rights therein. To the extent that it is determined, by
any
authority having jurisdiction, that any such Copyrightable Work is not a “work
made for hire,” KSE hereby assigns and agrees to assign to GoFish all KSE’s
rights, title and interest, including, without limitation, copyright in and
to
such Copyrightable Work.
(c) For
a
period commencing on the Effective Date and ending on the date that is six
(6)
months following the termination of this Agreement by either Party and for
any
reason (the “Covenant Period”), KSE shall not, other than in connection with
services to be provided to and for the benefit of any member of the GoFish
Group, directly or indirectly, either individually or as a principal, partner,
member, manager, agent, employer, employee, consultant, independent contractor,
stockholder, joint venturer or investor, or as a director or officer of any
corporation, limited liability company, partnership or other entity, or in
any
other manner or capacity whatsoever, engage in, assist or have any active
interest in a business in any location worldwide which uses an Internet portal
to provide, sell, develop, market or conduct a business in the nature of
providing Internet video content, whether publicly or as a user-paid service,
or
any other business engaged in or contemplated to become engaged in by any member
of the GoFish Group prior to or during the term of this Agreement, including
without limitation the Award Show (collectively, the “Business”).
Notwithstanding the foregoing, if KSE identifies to the Company or GoFish an
opportunity for any product or service related to the Business and the Company
and/or GoFish declines to pursue such opportunity, then, with the prior written
consent of the Company and GoFish, which consent shall not be unreasonably
withheld, KSE may exploit such opportunity, either itself or on behalf of or
through a third party.
(d) During
the Covenant Period, KSE and its Affiliates shall not, other than in connection
with its providing services to and for the benefit of the GoFish Group, directly
or indirectly, either individually or as a principal, partner, member, manager,
agent, employer, employee, consultant, independent contractor, stockholder,
joint venturer or investor, or as a director or officer of any corporation,
limited liability company, partnership or other entity, or in any other manner
or capacity whatsoever,
(i) solicit
or divert or attempt to solicit or divert from any member of the GoFish Group
any business with any Client (as defined below);
(ii) solicit
or divert or attempt to solicit or divert from any member of the GoFish Group
any business with any person or entity who was being solicited as a potential
Client;
(iii) induce
or
cause, or attempt to induce or cause, any salesperson, supplier, vendor,
representative, independent contractor, broker, agent or other person
transacting business with any member of the GoFish Group to terminate or modify
such relationship or association or to represent, distribute or sell services
or
products in competition with services or products of any member of the GoFish
Group; or
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(iv) otherwise
provide any services or products to any Client that are or have been provided
by
any member of the GoFish Group.
For
purposes of this Agreement, a “Client” shall mean (A) an individual or entity to
whom any member of the GoFish Group has provided any advertising, marketing,
analysis or other media services or products prior to the commencement of the
Covenant Period, or (B) any individual or entity to whom any member of the
GoFish Group has provided any advertising, marketing, analysis or other media
services or products with respect to or in connection with the Business at
any
time during the Covenant Period, and (C) any individual or entity who is
solicited by any member of the GoFish Group, as a potential “Client” at any time
during the Covenant Period.
(e) During
the term of this Agreement, except on behalf and for the benefit of the Company
and during that portion of the Covenant Period which continues after the term
of
this Agreement, KSE and its Affiliates shall not, directly or indirectly, either
individually or as a principal, partner, member, manager, agent, employer,
employee, consultant, independent contractor, stockholder, joint venturer or
investor, or as a director or officer of any corporation, limited liability
company, partnership or other entity, or in any other manner or capacity
whatsoever, either directly or indirectly, induce or cause, or attempt to induce
or cause, any employee, representative, independent contractor, member, manager,
partner, shareholder, director or officer of any member of the GoFish Group
to
leave the employ or engagement of the GoFish Group.
(f) The
parties agree that rights of GoFish and the other members of the GoFish Group
under this Section 3.04 are special and unique, and that any violation thereof
by KSE would not be adequately compensated by money damages, and KSE hereby
grants to GoFish and each other member of the GoFish Group the right to
specifically enforce (including the granting of injunctive relief) the terms
of
this Section 7 in any state or federal court located in the city and county
of
San Francisco, State of California or in any other court having jurisdiction.
In
any proceeding, in equity or at law, KSE specifically waives any and all
defenses to the relief sought, including without limitation that there is an
adequate remedy at law for any violations of the terms of this Section 3.04.
In
addition, KSE also agrees not to raise as a defense in any such proceeding
any
allegation that any of the provisions of this Section 3.04 are either
unnecessary or unreasonable or that any of them illegally restrains trade or
any
of his personal rights. The parties acknowledge and agree that if any term,
provision, covenant or restriction of this Section 3.04 is held by a court
of
competent jurisdiction to be invalid, void or unenforceable, the remaining
terms
of this Section 3.04 shall remain in full force and effect and shall in no
way
be affected, impaired or invalidated, and any term, provision, covenant or
restriction that is found to be unenforceable will be modified to the maximum
extent permissible to most closely conform to the intent of the unenforceable
term, provision, covenant or restriction as expressed in this Section 3.04.
Nothing herein shall be construed as prohibiting GoFish or any other member
of
the GoFish Group from pursuing any other remedies available to it for such
breach or threatened breach, including, without limitation, recovery of damages
from KSE or any of its Affiliates.
10
Section
3.05 Public
Announcements; Material Non-Public Information.
The
Parties agree that neither Party shall make any press release, announcement
or
other public disclosure of the existence or nature of this Agreement or the
relationship of the Parties pursuant to this Agreement absent the prior approval
of, if the Party seeking to make such announcement is KSE, the Company, or,
if
the Party seeking to make such announcement is the Company or GoFish, KSE,
with
respect to the content and manner of such public announcement. The Parties
further agree that they shall endeavor to issue, as soon as practicable
following the execution and delivery of this Agreement, through Businesswire
or
other reputable organization, a press release announcing the entry into this
Agreement and selected terms hereof. Notwithstanding the foregoing, KSE
acknowledges and agrees that the Company is a publicly-held corporation and
accordingly is under a duty to publicly disclose certain developments relating
to its operations, capital and obligations, and therefore the Company may make
such disclosures to the extent that such disclosure is, in the reasonable view
of the Company and its legal counsel, required by applicable law, rules and
regulations to which it is subject. In addition, KSE agrees to assist the
Company to the extent reasonably requested in any application that the Company
may make for confidential treatment under the federal Freedom of Information
Act
or other applicable statute pertaining to select, sensitive information that
would otherwise be required to be publicly disclosed if and to the extent that
the Company believes in good faith warrants confidential treatment. Furthermore,
KSE acknowledges and agrees that from time to time during the course of its
relationship with the Company and GoFish and their respective affiliates, KSE
may learn material nonpublic information regarding the Company, and KSE agrees
that it shall maintain the confidentiality of any such material nonpublic
information and shall refrain from making any investment decisions with respect
the Common Stock, any Warrants or any other securities of the Company (including
without limitation the optioning of any securities of the Company on any
applicable trading market or exchange) for so long as such material nonpublic
information remains material and nonpublic.
ARTICLE
IV
COMPENSATION
Section
4.01 Cash
Compensation to KSE.
In
consideration for certain services to be rendered by KSE hereunder, GoFish
shall
pay cash fees to KSE as follows:
(a) A
cash
Participation Fee shall be payable to KSE by GoFish in an amount equal to
Eighteen Thousand Dollars (US$18,000) for each month during the term of this
Agreement (subject to pro ration in the event of partial months). In addition,
GoFish shall reimburse KSE for the reasonable out-of-pocket expenses incurred
by
KSE in furtherance of its responsibilities to GoFish hereunder, provided,
that
KSE shall obtain the prior written consent (including by way of email) of GoFish
for any individual expense in excess of $750.00 or for expenses in excess of
$3,000, in the aggregate, during any monthly period, and provided,
further, that
out-of-pocket expenses incurred by Xxx Xxxxx shall not be reimbursable by
GoFish.
11
(b) Sales
commissions shall be payable in cash to KSE by GoFish on the basis of Revenue,
in the amounts set forth in Exhibit
B
(“Commissions”), which shall become due and payable within forty five (45) days
of the end of the fiscal quarter of GoFish during which the underlying Revenue
was received by GoFish.
Section
4.02 Warrant
Compensation to KSE.
In
consideration for certain services to be rendered by KSE hereunder, the Company
shall issue Warrants to KSE or KSE’s designee(s) as follows
(a) The
Company shall issue the Base Warrants to KSE within fifteen (15) days of the
Effective Date.
(b) The
Company shall issue Commission Warrants to KSE or its designee(s) in the amounts
as set forth in Exhibit
B,
which
Commission Warrants shall be earned upon the receipt by GoFish of the underlying
Revenue and delivered to KSE or its designee(s) within forty five (45) days
of
the end of the fiscal quarter of GoFish during which the underlying Revenue
was
received by GoFish.
(c) The
Company shall issue Partnership Warrants to KSE or its designee(s) in the
amounts and at the times as set forth in Exhibit
B.
(d) The
Company shall issue Distribution Warrants to KSE or its designee(s) in the
amounts and at the times as set forth in Exhibit
B.
(e) The
Company shall issue Award Show Warrants to KSE or its designee(s) in the amounts
as set forth in Exhibit
C,
which
Award Show Warrants shall be deemed earned upon the completion of the Award
Show
and delivered to KSE or its designee(s) within fifteen (15) days of the
completion of the Award Show.
Section
4.03 Finder’s
Fees.
If,
during the term of this Agreement or within six (6) months following the
termination of this Agreement, GoFish and/or the Company shall enter into a
written agreement for:
(a) The
Sale
of the Company to a third party with whom the Company and/or GoFish had no
prior
relationship and who is introduced to the Company and/or GoFish with a view
towards pursuing a possible Sale of the Company, then, upon the consummation
of
the Sale of the Company pursuant to such agreement, the Company or GoFish,
as
the case may be, shall pay to KSE an amount (in cash, stock or other form of
consideration constituting the Sale of the Company Consideration) equal to
two
percent (2%) of the Sale of the Company Consideration (the “Sale Finder’s Fee”).
Notwithstanding the foregoing, unless KSE specifically notifies the Company
and/or GoFish in writing, prior to or contemporaneously with the making of
such
introduction that such third party is intended to be covered by this provision,
no Sale Finder’s Fee shall become due or payable.
(b) The
Acquisition by the Company from a third party with whom the Company and/or
GoFish had no prior relationship and who is introduced to the Company and/or
GoFish with a view towards pursuing a possible Acquisition by the Company,
then,
upon the consummation of the Acquisition by the Company pursuant to such
agreement, the Company or GoFish, as the case may be, shall pay to KSE an amount
(in cash, stock or other form of consideration constituting the Acquisition
by
the Company Consideration) equal to two percent (2%) of the Acquisition by
the
Company Consideration (the “Aqcuisition Finder’s Fee”). Notwithstanding the
foregoing, unless KSE specifically notifies the Company and/or GoFish in
writing, prior to or contemporaneously with the making of such introduction
that
such third party is intended to be covered by this provision, no Acquisition
Finder’s Fee shall become due or payable.
12
Section
4.04 Taxes.
KSE
shall pay any Tax imposed as a result of the operation or existence of this
Agreement and the payment of any compensation hereunder. As may be required
by
law, GoFish and/or the Company shall be permitted to withhold or deduct from
such compensation any Taxes owed by KSE hereunder.
Section
4.05 Records
and Adjustments.
GoFish
shall keep complete and accurate records with respect to all Covered Products
and Services and shall furnish any information that KSE may reasonably request
from time to time to enable it to confirm the compensation payable to KSE under
this Agreement. GoFish shall retain all such records for at least three (3)
years. KSE shall have the right to make an examination once per quarter, during
normal business hours, of all records and accounts bearing upon the amount
of
compensation payable to it under this Agreement. Unless contested in good faith
by the Company or GoFish, GoFish shall promptly pay any additional compensation
found by such audit to be due. If any such audit discloses an underpayment
of
Participation Fees of more than Fifteen percent (15%) for the period audited,
GoFish shall reimburse KSE for the actual reasonable costs of the audit. KSE’s
right to audit and examine all records and accounts of GoFish shall survive
termination of this Agreement for a period of one (1) year.
ARTICLE
V
INTENTIONALLY
OMITTED
ARTICLE
VI
ALLOCATION
OF LIABILITY
Section
6.01 KSE
Warranty. KSE
warrants and agrees that any services that it provides hereunder will be
provided in a competent manner consistent with customary industry standards.
OTHER
THAN AS SPECIFICALLY SET FORTH HEREIN, THE ABOVE WARRANTY IS EXCLUSIVE AND
IN
LIEU OF ALL OTHER WARRANTIES AND KSE EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES
WITH RESPECT TO ITS SERVICES, KNOW-HOW, PATENTS AND TECHNICAL DATA, WHETHER
EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE. KSE shall not be liable for any consequential
or incidental damages resulting from a breach of its warranty
hereunder.
Section
6.02 GoFish
Warranty.
GoFish
warrants and agrees that any services that it provides hereunder will be
provided in a competent manner consistent with customary industry standards.
THE
ABOVE
WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES. GOFISH EXPRESSLY
DISCLAIMS ALL OTHER WARRANTIES WITH RESPECT TO ITS SERVICES, WHETHER EXPRESS
OR
IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
A
PARTICULAR PURPOSE. GoFish shall not be liable for any consequential or
incidental damages resulting from a breach of its warranty
hereunder.
13
Section
6.03 Indemnification.
(a) GoFish
Indemnification.
GoFish
agrees to defend, indemnify, and hold KSE, and its officers, directors, agents,
and employees, harmless against all costs, expenses, and losses (including
reasonable attorney fees and costs) resulting from a claim asserted by any
third
party that arises out of or relates to the acts or omissions of GoFish
hereunder, including without limitation, the marketing, sourcing, sale,
provision and support of Covered Products and Services (unless caused by a
breach of any representation and warranty made by KSE herein).
(b) KSE
Indemnification.
Subject
to limitations contained herein, KSE agrees to defend, indemnify, and hold
GoFish, and its officers, directors, agents, employees harmless against all
costs, expenses, and losses (including reasonable attorney fees and costs)
incurred through claims of third parties against GoFish based on KSE’ breach of
any representation and warranty made herein.
(c) Notice
and Defense.
The
party claiming the indemnification shall promptly notify the other party upon
the assertion of any such claim, shall permit such other party to defend the
claim and shall provide reasonable assistance to such other party, at such other
party’s expense, in the defense of the claim.
ARTICLE
VII
TERM
AND TERMINATION
Section
7.01 Term. The
term
of this Agreement shall commence upon the Effective Date and shall continue
for
a period of eighteen (18) months unless earlier terminated with the mutual
consent of the Parties or by either Party pursuant to Section 7.02.
Section
7.02 Termination.
Following completion of the first four (4) months of the term of this Agreement,
either Party may terminate this Agreement by written notice to the other Party.
Furthermore, either Party may terminate this Agreement at any time by written
notice thereof to the other Party if the other Party breaches a material term
of
this Agreement and fails to cure such breach within ten (10) days after written
notice thereof from the nonbreaching Party.
Section
7.03 Survival.
Upon
the termination of this Agreement, the licenses granted to GoFish hereunder
shall terminate, but any sublicense granted by GoFish to an Approved Prospect
prior to such termination, in the manner permitted hereunder, shall survive
and
continue in full force and effect. In addition, Articles IV, VI, VII and VIII
shall survive termination and continue in full force and effect.
14
ARTICLE
VIII
MISCELANEOUS
Section
8.01 Waiver.
No
failure or delay by either party in enforcing any of its rights under this
Agreement shall be construed as a waiver of the right to subsequently enforce
any of its rights, whether relating to the same or a subsequent
matter.
Section
8.02 Expenses.
Whether
or not the transactions contemplated in this Agreement are consummated, each
Party shall pay all costs and expenses incurred by such Party in connection
with
this Agreement and the transactions contemplated hereby.
Section
8.03 Notices.
All
notices and other communications required or permitted under this Agreement
shall be in writing and shall be deemed given when delivered by hand or by
a
reputable national overnight courier service or by facsimile transmission or
three business days after mailing when mailed by registered or certified mail
(return receipt requested), postage prepaid, to the Parties in the manner
provided below (information is included below for telephone and email contact
purposes but no notice delivered telephonically or by email shall be deemed
effective unless and until delivered physically in hardcopy form):
If
to
GoFish:
000
Xxxxx
Xxxxxx, Xxxxx 000
Xxx
Xxxxxxxxx, XX 00000
ATTN:
Chief Executive Officer
With
a
copy to:
McGuireWoods
LLP
0000
Xxxxxx xx xxx Xxxxxxxx, 0xx
Xxxxx
Xxx
Xxxx,
XX 00000
ATTN:
Xxxxx Xxxxx, Esq.
|
Tel:
|
000-000-0000
|
|
Fax:
|
000-000-0000
|
Email:
xxxxxx@xxxxxxxxxxxx.xxx
If
to
KSE:
000
Xxxxx
Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
ATTN:
Chief Executive Officer
Any
Party
may change the address to which notice is to be given by notice given in the
manner set forth above.
15
Section
8.04 Assignment.
Other
than as otherwise expressly stated herein, neither this Agreement nor any of
the
rights, interests or obligations hereunder may be assigned by any Party hereto
without the prior written consent of the other Party. Any purported assignment
in violation of this section shall be void. Notwithstanding the foregoing,
the
acquisition of any Party, whether by the sale of stock or assets, merger or
consolidation or other business combination, shall not constitute an assignment
for purposes of this Agreement.
Section
8.05 No
Rights in Third Parties. This
Agreement does not grant any rights or remedies to any Person that is not a
Party to this Agreement. No Person is a third-party beneficiary of this
Agreement.
Section
8.06 Governing
Law.
The
execution, interpretation and performance of this Agreement shall be governed
by
the internal laws and judicial decisions of the State of New York.
Section
8.07 Jurisdiction
and Venue.
Any
litigation or other court proceeding with respect to any matter arising from
or
in connection with this Agreement shall be conducted in the state courts of
the
State of New York located in the City and County of New York or in the U. S.
District Court for the Southern District of New York, and the Parties hereby
submit to the jurisdiction of and consent to venue in such courts.
Section
8.08 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
Section
8.09 Severability. The
invalidity of any portion of this Agreement shall not invalidate any other
portion of this Agreement and, except for such invalid portion, this Agreement
shall remain in full force and effect.
Section
8.10 Entire
Agreement.
This
Agreement embodies the entire Agreement and understanding of the Parties with
respect of the subject matter of this Agreement. This Agreement supersedes
all
prior agreements and understandings between the Parties with respect to the
transactions contemplated hereby. This Agreement may be amended, modified or
supplemented only by written agreement of all of the Parties
hereto.
[SIGNATURES
ON THE FOLLOWING PAGE]
16
IN
WITNESS WHEREOF,
the
Parties have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year set forth below.
|
GOFISH
TECHNOLOGIES, INC.
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
|
Date:
|
December
22, 2006
|
|
|
KALEIDOSCOPE,
INC.
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
|
Date:
|
December
22, 2006
|
|
17
Exhibit
A
Description
of Covered Products and Services
|
·
|
Services
pertaining to the Award Show;
|
|
·
|
Distribution/Syndication
of user generated content on the Websites pertaining to the
Business;
|
|
·
|
Identification
of Sales prospects;
|
|
·
|
Promotion
of the Websites, both with respect to creating and increasing user
awareness of and interest in such portals, creating awareness of
such
portals to the advertising and media communities, arranging “partnerships”
for generation of meaningful traffic to such portals and the
like;
|
|
·
|
Promotion
of the Company and/or GoFish as a possible merger/acquisition partner
with
a view towards acquisitions by the Company of appropriate targets
or the
Sale of the Company, including identifying prospective merger/acquisition
partners, making appropriate introductions and assisting the Company
and/or GoFish with respect to negotiations of possible merger/acquisition
transactions or the Sale of the
Company;
|
|
·
|
Assisting
GoFish and the Company in the design and functionality the Websites;
and
|
|
·
|
Assisting
GoFish and the Company with respect to strategic concepts and
implementation pertaining to the development and exploitation of
the
Websites.
|
18
Exhibit
B
Schedule
of Payment Milestones
Commissions.
Commissions
shall be payable on a quarterly basis in amounts based on the achievement of
targeted Revenue from Sales, for all fiscal quarters through June 2008 (unless
the Agreement is terminated prior to its stated expiration date) at the
following rates:
|
Target
not met:
|
10%
of Revenue
|
|
Target
met:
|
15%
of Revenue
|
|
Target
exceeded:
|
15%
of Revenue up to Target,
plus
20% of Revenue in excess of Target
|
Commission
Warrants.
Commission
Warrants will be issued quarterly in arrears, representing that number of
underlying shares of Common Stock equal to the 1/10 the amount of dollars of
Revenue received in each quarter during the term of the Agreement (without
duplication of any Revenue received in a prior or subsequent quarter). For
example, if Revenue of $1,000,000 is received during the quarter, Commission
Warrants for 1/10 (1,000,000), or 100,000 shares, will be issuable.
Distribution
Warrants
Distribution
Warrants will be issued from time to time within fifteen (15) days of the
date(s) when GoFish enters into a distribution agreement between GoFish and
a
third party introduced by KSE and approved by GoFish for purposes of increasing
distributing GoFish video content on the Websites
Partnership
Warrants.
Partnership
Warrants will be issued from time to time within fifteen days of the date(s)
when GoFish enters into a partnership agreement between GoFish and a third
party
introduced by KSE and approved by GoFish for purposes of increasing user
generated video content available on the Websites, representing that number
of
underlying shares of Common Stock determined by the amount of video views on
Websites that GoFish in good faith estimates that such partnership agreement
is
reasonably likely to generate on an ongoing, sustainable basis (“Expected VV”),
as follows:
(A)
where
such partnership agreement provides video content to GoFish on an exclusive
basis, (i) if Expected VV is less than 100,000 individual video views per day,
that number of underlying shares equal to 25% of Expected VV; (ii) ) if Expected
VV is more than 100,000 but less than 500,000 individual video views per day,
that number of underlying shares equal to 30% of Expected VV and (iii) ) if
Expected VV is more than 500,000 or more individual video views per day, 100,000
underlying shares, and
19
(B)
where
such partnership agreement provides user generated video content to GoFish
on a
non-exclusive basis, , (i) if Expected VV is less than 100,000 individual video
views per day, that number of underlying shares equal to 12.5% of Expected
VV;
(ii) ) if Expected VV is more than 100,000 but less than 500,000 individual
video views per day, that number of underlying shares equal to 15% of Expected
VV and (iii) ) if Expected VV is more than 500,000 or more individual video
views per day, 50,000 underlying shares
For
purposes of the foregoing, “video views” constitute Website user views of moving
image video content in digital of other appropriate form made available for
viewing on the Websites by the copyright holder thereof in compliance with
GoFish’s applicable terms of service and applicable law.
Award
Show Warrants.
The
Award
Show Warrants will be issued to KSE or its designee(s) within fifteen (15)
days
of completion of certain milestones in connection with the Award Show, as
follows: (i) upon entering into a binding agreement with a broadcast network
sponsor, 150,000 underlying shares, provided,
that
if a
broadcast network partner is not secured by the end of April 2007 the number
of
underlying shares shall be reduced by 25% for each three months thereafter,
and
(ii) upon televised broadcast of the Award Show, 350,000 underlying shares,
provided,
that
if
the Award Show is not produced and televised prior to September 2007, the number
of underlying shares shall be reduced by 25% for each three months thereafter
and provided,
further,
that if
sponsorship milestones to be established by the mutual agreement of KSE and
GoFish are not realized, then the foregoing shall be reduced in proportion
to
the shortcoming of the sponsorship milestone versus sponsorship actually
achieved.
20
