EXHIBIT 99.2
FINANCING AND MANAGEMENT AGREEMENT
THIS FINANCING AND MANAGEMENT AGREEMENT is made and dated for reference
effective (the "Effective Date") as of the 7th day of March, 2000.
BETWEEN:
CANALASKA VENTURES LTD.
000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
000-000-0000
xxxxxxxxx@xxxxxxxxx.xxx
(hereinafter referred to as "CANALASKA")
OF THE FIRST PART
AND:
XXXXXXXXX.XXX INC.
0000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
(hereinafter referred to as "NEWS")
OF THE SECOND PART
(Collectively, CANALASKA and NEWS are
referred to as the "parties" for the
purposes of this Agreement.)
WHEREAS:
A. CANALASKA is a publicly traded company listed on the Canadian Venture
Exchange trading under the symbol of "CVV" and trades on the US OTC Bulletin
Board under the symbol "CVVLF", and is in the business of financing information
technology and software development ventures.
B. NEWS will soon make its application to become a publicly traded company
listed on the XXX.XX market: it's business plan is to be a leading Internet
source of expert opinion and information in the areas of money, health, and
lifestyles. NEWS unique content will empower its users towards e-commerce. Over
the long term, expert content will interface with broadcast and broadband
programming between knowledge and commerce and as further described in detail in
Exhibit II of this Agreement.
C. CANALASKA has the exclusive right to earn up to a 26.6% (three million
shares) interest in NEWS with this Financial and Management Agreement in a total
of three phases as noted herein. CANALASKA will earn up to its 26.6% interest in
NEWS by purchasing an equity position (common shares) in NEWS subject to the
terms and conditions hereinafter.
D. CANALASKA, subject to completion of Phase II financing of NEWS, has the
exclusive right to own 51% and be the operator of an exact Clone of NEWS for
Europe (defined as EUROGURU) and South America and the Caribbean defined as
Mexico, Central and South America and the Caribbean (and defined at
SOUTHERNGRURUS).
DEFINITIONS
For the purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires, the following words and phrases shall
have the following meanings:
(a) "Shareholders" means founders of NEWS as follows:
Xxxxx Xxxxx
Xxxxxx Xxxxxx
(b) "Agreement" means this Agreement as entered into between NEWS and
CANALASKA herein, together with any Schedules as attached hereto.
(c) "Board" means the Board of Directors of NEWS.
(d) "Effective Date" means the date first herein set forth.
(e) "Approval Date" means the date of approval of this Agreement by
regulatory authorities.
(f) "Party" or "Parties" means CANALASKA and/or NEWS hereto and their
respective successors and permitted assigns as the context so requires.
(g) "Technology" means the matters set forth in the preamble hereto and all
of the knowledge, information, patents, copyright, trade-names,
designs, business plans of NEWS, title, or other ownership which NEWS
presently own or have interests and is further described in Exhibit II
of this Agreement in or hereafter develop, own, or have interests in to
the fullest extent, limited only as specifically provided in this
Agreement.
(h) "RFQ" means Request for Quote provided to CANALASKA and NEWS by an
independent recognized software developer outlining the costs and
timelines involved with developing NEWS Technology.
(i) "Initial Public Offering" means Initial Public Offering (IPO).
(j) "CDNX" means the Canadian Venture Exchange Inc. (CDNX).
(k) "Clone" means the JV as proposed in Exhibit IIIa and Exhbit IIIb.
(l) "Joint Venture" means CANALASKA has the option to enter into a
agreement with NEWS subject to CANALASKA's successful completion of
Phase I and II equity financing of NEWS. The joint venture Agreement is
further described in Exhibit III of the Agreement.
(m) "Definitive Agreement" at the option of CANALASKA a more Definitive
Agreement may be prepared for signature by NEWS and CANALASKA. This
Agreement will
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remain in effect and in full force until a more detailed Agreement
is prepared and executed.
(n) "Independent News Letter Writer"
(o) "CanAlaska Warrants"
(p) All dollars figures in this agreement are U.S. dollars.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT THE PARTIES HERETO AGREE AS
FOLLOWS:
ARTICLE I
DUE DILIGENCE AND DISBURSEMENTS
CANALASKA AND NEWS AGREE THAT THE TWO COMPANIES WILL AGREE TO MILESTONES THAT
MUST BE ACHIEVED DURING PHASE I, II, AND III FINANCING ABOVE AND AS FURTHER
DESCRIBED IN EXHIBIT IV OF THIS AGREEMENT.
1.1 Subject to CANALASKA's thirty (30) day due diligence period from the
Effective Date of this Agreement, CANALASKA have the right to purchase
common shares of NEWS equity as outlined below. The due diligence period
will begin on the Effective Date of this Agreement. CANALASKA's has the
option to earn 26.6%, subject to further dilution of NEWS by purchasing
equity in NEWS as follows:
1.1.1 PHASE I: CANALASKA will provide NEWS a $30,000 convertible loan on the
Effective Date of this Agreement and a further $70,000 on regulatory
approval (the "Approval Date").
a) These funds will be used to create a defined beta version web-site
estimated to cost not more than $100,000 Cdn and to be completed by
April 15, 2000, or alternatively by The Approval Date.
b) The Funds shall be provided, by bank draft or certified cheque, as
needed.
o Security for this convertible loan will include a General
Security Agreement, a General Agreement of Book Debts, and a
Corporate Guarantee. Once CANALASKA's due diligence has been
completed, and an acceptable RFQ by a recognized software
developer has been received, and the appropriate regulatory
bodies have reviewed and ratified this Agreement, the loan may
be converted into common shares at CANALASKA's sole option
discretion. If converted, the common shares will be converted
at $0.25 per share.
o Regardless of any other provision of this Agreement, the
$30,000 convertible loan or any portion thereof, plus interest
(at a rate of 7% per
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annum), is repayable to CANALASKA within twelve (12) months of
the Effective Date of this Agreement by NEWS unless CANALASKA
converts this amount into common stock of NEWS at $0.25 per
share.
o The subsequent convertible loan of $70,000 will be disbursed to
NEWS on the Approval date.
o The entire convertible loan must be converted to common shares
of NEWS at the price of $0.25 per share within 30 days of the
Approval Date.
c) Prior to issuing common shares of NEWS to CANALASKA, NEWS will, if
CANALASKA so elects, prepare a NEWS Shareholders Agreement.
1.1.2 PHASE II: Investment of $440,000 at $0.40 per common share of NEWS. After
each increment of financing provided by CANALASKA, CANALASKA earns a
warrant that allows CANALASKA the right to buy an equal number of
additional shares in NEWS at a price of $1.30 for a period of two years
from the date each increment is EXECUTED OR EXERCISED.
a) Subject to completion of Phase I as set forth herein and based on
completion on a mutually acceptable NEWS' Shareholders Agreement
referred to in Article II 2.1 and at CANALASKA'S option the
"Definitive Agreement" referred to in Article III, 3.1 the Funds
shall be provided, by bank draft or certified cheque, as follows
o $50,000 30 days after the Approval Date;
o $50,000 60 days after the Approval Date;
o $50,000 90 days after the Approval Date;
o $50,000 120 days after the Approval Date;
o $50,000 150 days after the Approval Date;
o $50,000 180 days after the Approval Date;
o $50,000 210 days after the Approval Date;
o $50,000 240 days after the Approval Date;
o $40,000 270 days after the Approval Date.
b) Phase I & II funds will be used to complete a beta version of the
NEWS WEBSITE; to complete a full commercial version of the beta
version NEWS WEBSITE and suite of products and services within 180
days of the Approval Date; and, to conduct the marketing, sales and
general operations of the company as per board-approved company
budgets. The Commercial Beta site is described as a beta site
capable of producing revenue streams and operational no later than
May 31, 2000. At all times NEWS will demonstrate its success by
signing up independent news letter writers and journalists to
provide content for the WEBSITE and to use its commercially viable
suite of products referred to in Exhibit II.
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d) NEWS will issue the appropriate amount of common shares to CANALASKA
immediately following the payment of each portion of its
investment(s).
1.1.3 PHASE III: CANALASKA has the right to invest up to an additional
$1,950,000 in the common shares of NEWS by executing its warrants to
purchase up to 1.5 million shares at $1.30 per share, on a pro rata basis
(the Phase III Investment), as earned by completing each tranche of the
Phase I and Phase II investments.
CANALASKA reserves the right to invest the Phase III Investment in one
lump sum or in several smaller portions at CANALASKA's discretion. NEWS
will issue the associated common shares to CANALASKA immediately
following the investment of the lump sum or of each portion of the Phase
III Investment.
a) CANALASKA has the option to use third party investors to provide all
or part of the Phase III Investment in NEWS and to convey all or
part of the earned-in equity to the third parties. In this event,
CANALASKA has the right to request NEWS to reimburse CANALASKA for
its reasonable expenses (Pre-approved by the NEWS board) associated
with finding this investment and in addition CANALASKA will earn
share purchase warrants equal to 10% of the third party financing
arranged by CANALASKA.
b) CANALASKA reserves the right to assign each full share purchase
warrant, as earned above in Article I 1.1.3, to an outside third
party. As an example: in the event that CANALASKA arranges a
financing for NEWS for 2,000,000 shares at $2.00 per share CANALASKA
will receive 400,000 warrants enabling it to purchase 400,000 shares
of NEWS at $2.00 per share for a period of two years from the date
of the Phase II investment. In this example NEWS would raise a
minimum of $4,000,000 and a maximum of $4,800,000 if CANALASKA
exercises all of its warrants.
c) If CANALASKA wishes to transfer any third party shares or warrants
as contemplated by (a) and (b), the following shall apply:
o CANALASKA must give reasonable advance notice;
o the proposed involvement must comply with all relevant
securities laws;
o NEWS shall have the right to approve the third party in
advance, with approval not to be unreasonably withheld;
o NEWS will not approve such third part involvement if said party
is a competitor to the NEWS business plan; and
o the third party must agree to be bound by the NEWS-CANALASKA
Shareholders Agreement (but all rights thereunder
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not strictly related to share ownership shall remain with
CANALASKA).
d) CANALASKA has the option to earn a total of 26.6% of NEWS and to
follow its position during all future financings.
e) CANALASKA has the right to have up to two people on NEWS Advisory
Board.
f) CANALASKA has the right to have its prorata share of directors on
NEWS Board of Directors.
g) CANALASKA has the option to provide advice and to be closely advised
on the following:
- Share structure of NEWS
- Future Financing
- New Management of NEWS
- Business Plan Changes
- Miscellaneous
h) NEWS agrees to allow CANALASKA to provide its shareholder with
ongoing information in the form of CANALASKA or joint CANALASKA -
NEWS news releases and will provide its comments within 48 hours of
delivery of a draft release by CANALASKA.
i) NEWS agrees to share the costs with CANALASKA in regard to the
promotion of NEWS business plan. All costs to be approved in advance
by NEWS management. The following list is an example of shared
promotion costs:
- trade shows;
- print advertising;
- internet advertising;
- media; and
- travel lodging, etc
j) This proposal is subject to CANALASKA's Advisory Board and Board of
Directors as well as regulatory approval.
k) In the event that CANALASKA does not complete the phase II
investment schedule in its entirety, then CANALASKA agrees to
forfeit its right to any representation on the NEWS board of
directors and to any representation on the NEWS Advisory Board.
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ARTICLE II
TERMS AND CONDITIONS
2.1 Upon NEWS acceptance and approval of these terms, CANALASKA reserves the
right to instruct its solicitors to complete a definitive agreement (the
"Definitive Agreement") incorporating the terms herein, on a best efforts
basis. THIS AGREEMENT, THE FINANCING AND MANAGEMENT AGREEMENT, DATED
MARCH 7, 2000, WILL REMAIN IN EFFECT AND IN FULL FORCE UNTIL THE
DEFINITIVE AGREEMENT IS EXECUTED.
a) CANALASKA shall have the right to appoint one director to NEWS Board
of Directors and one Financial and one Business Advisor to NEWS
Advisory Board on the Effective Date of this Agreement. At NEWS
directors' request the director representing CANALASKA shall execute
any then-current standard NEWS Confidentiality and/or director's
agreements.
b) CANALASKA's director will be added to then-current NEWS Board of
Directors, which currently is comprised of three individuals.
c) NEWS shall make its best efforts to ensure that the Board meets no
less frequently than eight (8) times a year, in person or via
telephone.
d) During the period that CANALASKA is directly funding NEWS during
Phases I and II and has elected to participate in additional funding
(Phase III), a majority of the Board (which majority must include
Xxxxx Xxxx or his representative) is required to approve the
following:
o incurring additional funded indebtedness other than bank
operating lines provided by Canadian Financial or International
Institutions;
o issuance of more than 200,000 treasury shares, warrants, or
options on treasury shares to any one person or legal entity;
o sale of any assets of the company;
o payment of dividends;
o appointment of all senior management and approval of their
compensation plans (including salary, options, benefits and
bonuses);
o approval of all company budgets;
o approval of all unbudgeted expenses over $5,000;
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e) NEWS will use its best efforts, on a timely basis (within two
working days of CANALASKA's request), to provide all necessary
corporate, market, and technical information to assist CANALASKA in
issuing news releases on the development of its investments in NEWS.
f) NEWS agrees to compensate CANALASKA's nominees for Director and
Advisor positions on a fair and equitable basis for expenses
incurred in the execution of NEWS business.
g) Employment contracts with the CEO and other key employees will be
put in place by March 31, 2000 and will be tied to the Phase II
investment.
h) CANALASKA has the right to take advantage of any existing or new CDN
or US tax advantages to provide incentives for CANALASKA or its
investors unless this would have any material adverse impact on the
business position, financial position, or tax status of NEWS.
i) Pre-emptive Rights - CANALASKA reserves the right to provide funding
as outlined in Phases I, II, and III (or any portion thereof) and
its prorata share of all future financings required by NEWS provided
it completes Phases I and II of this Agreement.
j) CANALASKA has the right to maintain its equity position in NEWS by
funding its prorata share of NEWS in the event a third party
participates in NEWS future financings.
k) Xxxxx Xxxx or his representative (Xxxxx Xxxxxxx or Xxxxxxx Xxxxxx)
to co-sign all cheques and disbursements made by NEWS that are over
$5000.00, only during CANALASKA's funding of Phase I and II.
l) CANALASKA and its management team have specialized expertise in
IPO's and managing public companies. CANALASKA has the right to
offer non-binding advice regarding the IPO of NEWS.
2.1 Subject to CANALASKA completing the financing of Phase II, CANALASKA will
have earned the right to own 51% of a Clone described as CCV GURU;
whereby CANALASKA has the sole and exclusive right to operate the Clone
in Europe as further described as EUROGURUS; and in South America and the
Caribbean (which consists of Mexico, Central and South America and the
Caribbean), described as SOUTHERNGURU. (The terms and conditions of the
Joint Venture are completely defined and described in EXHIBIT III of this
Agreement.) The Clone will incorporate with not less than eight million
shares outstanding, owned 51% by CANALASKA and 49% by NEWS, which shares
cannot be cancelled or rolled-back without unanimous approval by the
Clone Board of Directors. NEWS agrees to provide a copy of its web-site,
and all the content thereon to the Clone and for that will own 49% of the
Clone. NEWS will further provide, in return for revenue streams as
described in the Joint Venture Agreement, continuous content to CCV
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GURU for the life of the Joint Venture Agreement. CANALASKA will agree to
provide initial funding in the amount of $350,000 and for that and for
the above-noted completion of Phase II financing into NEWS, will own 51%
of the Clone. CANALASKA will have the majority of the Board and will be
in charge of the day to day operations of the Clone. CANALASKA and NEWS
agree that each party will dilute its interests proportionately in the
event a third party of public financing is obtained for the Clone. The
Clone will initially be operated by the Joint Venture until such time
that the Joint Venture agrees to delegate operations and management to a
European-based management team..
ARTICLE III
CONDITIONS PRECEDENT
Disbursement of the Phase II funds shall be made subject to prior satisfaction
and performance of the following Conditions Precedent which are the exclusive
benefit of CANALASKA and which may be waived in whole or in part in writing by
CANALASKA.
3.1 CANALASKA shall have received an acceptable and reasonable RFQ by a
recognized software developer for the final site construction. The final
site is expected to cost $500,000 - or substantially more - to develop.
It is distinctly more advanced than either the Beta site or the
Commercial Beta site and offers additional features and usability.
3.2 CANALASKA shall be entitled to make such investigations of the financial
position of NEWS and its business, property, assets, officers, key
management and such other matters in relation to the investment
contemplated herein as CANALASKA's management deem advisable so as to
satisfy themselves as to the financial position, future profitability,
business prospects, property, assets and other matters of NEWS, such
investigation to be to the satisfaction of CANALASKA, in their sole
discretion.
3.3 There shall have been no material adverse change in the market or
business or affairs of NEWS, in the sole opinion of CANALASKA.
ARTICLE IV
WARRANTIES, REPRESENTATIONS
AND COVENANTS BY NEWS AND SHAREHOLDERS
4.1 In order to induce CANALASKA to enter into and consummate this Agreement,
NEWS and the Shareholders hereby warrant to, represent to and covenant
with CANALASKA, with the intent that CANALASKA will rely thereon in
entering into this Agreement and in concluding the transactions
contemplated herein, that, to the best of the knowledge, information and
belief of NEWS, after having made due inquiry:
a) NEWS is the sole registered and beneficial owner of all of the
existing Technology without claim or interest by any other party;
b) NEWS holds all of the Technology free and clear of all liens,
charges and claims of others and will not transfer, directly or
indirectly, any part thereof without the
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CANALASKA's written permission; excluding transfers to JV partners
and subsidiaries.
c) NEWS's Technology and assets including patents, business plans,
market study, software prototypes, trademarks, URLs, and rights have
been duly and validly established or acquired pursuant to applicable
law, all interest therein of the Shareholders has been duly
transferred to NEWS, and there are no challenges or objections to
NEWS' right, title, ownership, or registration;
d) there is no adverse claim or challenge against or to the ownership
of or title to any of the Technology nor to the best of the
knowledge, information and belief of NEWS, after making due inquiry,
is there any basis for any potential claim or challenge, and there
are no outstanding or potential Agreements or options to acquire any
interest in the Technology;
e) NEWS is duly incorporated under the laws of Nevada and is validly
existing and in good standing with respect to all filings required
by the applicable corporate laws and regulatory authorities;
f) NEWS has the requisite power, authority and capacity to own and use
all of its business assets, to carry on the business as presently
conducted by it, and to conduct the business contemplated by this
Agreement;
g) NEWS holds all licenses and permits required for the conduct in the
ordinary course of the operations of its businesses and for the uses
to which its business assets have been put and are in good standing,
and such conduct and uses are in compliance with all laws, zoning
and other by-laws, building and other restrictions, rules,
regulations and ordinances applicable to NEWS and neither the
execution and delivery of this Agreement nor the completion of the
transactions contemplated hereby will give any person the right to
terminate or cancel any license or permit or affect such compliance;
h) there are approximately 40 existing shareholders of NEWS as set
forth in Exhibit I. NEWS is obligated to issue options to purchase
common shares in NEWS as set forth in Exhibit I. Any individual
share issuance over 200,000 common shares and/or warrants and/or
options during Phase I & II must be approved by unanimous vote of
the Board;
i) there are no claims of any nature whatsoever affecting the rights of
NEWS to the Technology or any impedance to the use thereof;
j) this Agreement constitutes a legal, valid and binding obligation of
NEWS enforceable against NEWS in accordance with its terms, except
as enforcement may be limited by laws of general application
affecting the rights of creditors;
k) neither the Shareholders nor NEWS are aware of any court order which
restricts or prevents the issuance of the Shareholders' Shares or
CANALASKA's Shares;
l) there are no material liabilities, contingent or otherwise, existing
on the date hereof in respect of which NEWS may be liable on or
after the completion of the transactions contemplated by this
Agreement except an obligation to pay RD Capital $70,000 in
consulting fees; to pay six monthly fees of $2,500 each month in
respect to a website marketing agreement with CPM of Pilidelphia;
and, to pay up
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to $10,000 in fees in respect for certain financing efforts: all
such payments are within the proposed NEWS operating budget.
m) there is no basis for and there are no actions, suits, judgments,
investigations or proceedings outstanding or pending or, to the best
of the knowledge, information and belief of NEWS, after making due
inquiry, threatened against or affecting NEWS at law or in equity or
before or by any federal, state, municipal or other governmental
department, commission, board, bureau or agency;
n) NEWS is not in breach of any laws, ordinances, statutes,
regulations, by-laws, orders or decrees to which it is subject or
which applies to it;
o) there are no pension, profit sharing, group insurance or similar
plans or other deferred compensation plans affecting NEWS;
p) the directors and officers of NEWS are as follows:
Name Position
---- -------
Xxxxx Xxxxx President and CEO, director
Xxxxxx Xxxxxx VP Information Technology, director
Dev Randhawa Director
q) Any claims against NEWS's rights to its technology or assets must be
defended by NEWS's founding shareholders at their sole cost.
r) NEWS AGREES TO ADVISE CANALASKA OF ANY MATERIAL CHANGE IN THE
AFFAIRS OF NEWS.
s) NEWS SHALL COMPLY WITH ALL LAWS, WHETHER FEDERAL, PROVINCIAL OR
STATE.
ARTICLE V
ARBITRATION
5.1 MATTERS FOR ARBITRATION. The Parties agree that all questions or matters
in dispute with respect to this Agreement shall be submitted to
arbitration pursuant to the terms hereof in the Province of British
Columbia.
5.2 NOTICE. It shall be a condition precedent to the right of any Party to
submit any matter to arbitration pursuant to the provisions hereof, that
any Party intending to refer any matter to arbitration shall have given
not less than ten (10) calendar days' prior written notice of its
intention to do so to the other Party together with particulars of the
matter in dispute. On the expiration of such ten days the Party who gave
such notice may proceed to refer the dispute to arbitration as provided
in section 9.3 herein below.
5.3 APPOINTMENTS. The Party desiring arbitration shall appoint one
arbitrator, and shall notify the other Party of such appointment, and the
other Party shall, within 15 calendar days after receiving such notice,
appoint an arbitrator, and the two arbitrators so named, before
proceeding to act, shall, within 30 calendar days of the appointment of
the last appointed arbitrator, unanimously agree on the appointment of a
third arbitrator, to act with them and be chairman of the arbitration
herein provided for. If the other Party shall fail to appoint an
arbitrator within 15 calendar days after receiving notice of the
appointment of the first arbitrator, and if the two arbitrators appointed
by the Parties shall be unable to agree on the appointment of the
chairman, the chairman shall be appointed under the provisions of the
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Commercial Arbitration Act of the Province of British Columbia (the
"Arbitration Act"). Except as specifically otherwise provided in this
section, the arbitration herein provided for shall be conducted in
accordance with such Arbitration Act. The chairman, or in the case where
only one arbitrator is appointed, the single arbitrator, shall fix a time
and place for the purpose of hearing the evidence and representations of
the Parties, and he shall preside over the arbitration and determine all
questions of procedure not provided for under such Arbitration Act or
this section. After hearing any evidence and representations that the
Parties may submit, the single arbitrator, or the arbitrators, as the
case may be, shall make an award and reduce the same to writing, and
deliver one copy thereof to each of the Parties. The expense of the
arbitration shall be paid as specified in the award.
5.4 AWARD. The Parties agree that the award of a majority of the arbitrators,
or in the case of a single arbitrator, of such arbitrator, shall be final
and binding upon each of them.
ARTICLE VI
DEFAULT AND TERMINATION
6.1 DEFAULT. The Parties hereto agree that if either of the Parties is in
default with respect to any of the provisions of this Agreement
(hereinafter referred to as the "Defaulting Party"), the non-defaulting
Party (hereinafter referred to as the "Non-Defaulting Party") shall give
notice to the Defaulting Party designating such default, and within
thirty (30) business days after its receipt of such notice, the
Defaulting Party shall either:
(a) cure such default, or diligently commence proceedings to cure such
default and prosecute the same to completion without undue delay,
with notice to the Non-Defaulting Party of the procedures it has
instigated to cure; or
(b) give the Non-Defaulting Party notice that it denies that such
default has occurred and that it is submitting the question to
arbitration as herein provided.
If default is not addressed appropriately in the form required by (a)
above, or cured within 30 days of an arbitration finding of default, then
the Non-Defaulting Party may terminate this Agreement at any time,
without prejudice to any claims it may have for an accounting or damages.
ARTICLE VII
LAPSING DATE
7.1 In the event that the Phase I transaction contemplated herein has not
been closed on or before May 15, 2000, or such other date as mutually
agreed to by CANALASKA and NEWS ("Lapsing Date"), then this Agreement
will be null and void.
ARTICLE VIII
CONDITIONAL OFFER
8.1 It is understood and agreed that this is a Conditional Offer to Finance
and cannot be binding upon CANALASKA without the prior approval of the
regulatory authorities of CANALASKA.
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ARTICLE IX
CONFIDENTIALITY, FORCE MAJEURE, EVENTS, AND NOTICE
9.1 CONFIDENTIAL INFORMATION. Each Party acknowledges that any and all
information which a Party may obtain from, or have disclosed to it, about
the other Party constitutes valuable trade secrets and proprietary
confidential information of the other Party (collectively, the
"Confidential Information"). No such Confidential Information shall be
published by any Party without the prior written consent of the other
Party hereto, however, such consent in respect of the reporting of
factual data shall not be unreasonably withheld, and shall not be
withheld in respect of information required to be publicly disclosed
pursuant to applicable securities or corporation laws. Furthermore, each
Party hereto undertakes not to disclose the Confidential Information to
any third party without the prior written approval of the other Party
hereto and to ensure that any third party to which the Confidential
Information is disclosed shall execute an Agreement and undertaking on
the same terms as contained herein.
9.2 IMPACT OF BREACH OF CONFIDENTIALITY. The Parties hereto acknowledge that
the Confidential Information is important to the respective businesses of
each of the Parties hereto and that, in the event of disclosure of the
Confidential Information, except as authorized hereunder, the damage to
each of the Parties hereto, or to either of them, may be irreparable. For
the purposes of the foregoing sections the Parties hereto recognize and
hereby agrees that a breach by any of the Parties of any of the covenants
therein contained would result in irreparable harm and significant damage
to each of the other Parties hereto that would not be adequately
compensated for by monetary award. Accordingly, the Parties hereto agree
that in the event of any such breach, in addition to being entitled as a
matter of right to apply to a court of competent equitable jurisdiction
for relief by way of restraining order, injunction, decree or otherwise
as may be appropriate to ensure compliance with the provisions hereof,
any such Party will also be liable to the other Party, as liquidated
damages, for an amount equal to the amount received and earned by such
Party as a result of and with respect to any such breach. The Parties
hereto also acknowledge and agree that if any of the aforesaid
restrictions, activities, obligations or periods are considered by a
court of competent jurisdiction as being unreasonable, the Parties agree
that said court shall have authority to limit such restrictions,
activities or periods as the court deems proper in the circumstances. In
addition, the Parties hereto further acknowledge and agree that all
restrictions or obligations in this Agreement are necessary and
fundamental to the protection of the respective businesses of each of the
Parties hereto and are reasonable and valid, and all defenses to the
strict enforcement thereof by either of the Parties hereto are hereby
waived by the other Parties.
9.3 EVENTS. If any Party hereto is at any time prevented or delayed in
complying with any provisions of this Agreement by reason of strikes,
walk-outs, labour shortages, power shortages, fires, wars, acts of God,
earthquakes, storms, floods, explosions, accidents, protests or
demonstrations by environmental lobbyists or native rights groups, delays
in transportation, breakdown of machinery, inability to obtain necessary
materials in the open market, unavailability of equipment, governmental
regulations restricting normal operations, shipping delays or any other
reason or reasons beyond the control of that Party, then the time limited
for the performance by that Party of its respective obligations hereunder
shall be extended by a period of time equal in length to the period of
each such prevention or delay.
9.4 NOTICE. A Party shall, within seven calendar days, give notice to the
other Party of each event of force majeure and upon cessation of such
event shall furnish the other Party with
13
notice of that event together with particulars of the number of days by
which the obligations of that Party hereunder have been extended by
virtue of such event of force majeure and all preceding events of force
majeure.
9.5 FUNDS. All funds referred to in this Agreement are quoted in U.S.
Dollars.
9.6 PRIOR APPROVAL. Where required, this Agreement is subject to the approval
of the CDNX Exchange and all securities administrators having
jurisdiction over the Parties hereto.
ACCEPTANCE
This Conditional Offer to finance is open for acceptance by CANALASKA and by
NEWS until 5:00 PM PST Wednesday, March 07, 2000.
If accepted, duly signed where indicated below and a fully executed copy
returned to CANALASKA before this date, it shall be a binding contract and shall
remain in effect, subject to the terms hereof until the Lapsing Date.
ACCEPTED this 7th day of March, 2000.
XXXXXXXXX.XXX, INC.
Per:
Xxxxx Xxxxx
/s/ Xxxxx Xxxxx
-------------------------
Title: President and CEO
CANALASKA VENTURES INC.
Per:
Xxxxx Xxxx
President and CEO
/s/ Xxxxx Xxxx
-------------------------
Title: President and CEO
14
EXHIBIT I
EXISTING AND CONTEMPLATED SHARE STRUCTURE FOLLOWING PHASE II AND PHASE III
CANALASKA INVESTMENTS AND INCLUDING NOW-ANTICIPATED ADDITIONAL MAJOR SHARE
ISSUANCES.
APPROX.
TOTAL SHARES
XXXXXXXXX.XXX, INC. EXISTING 8.3 MILLION
CANALASKA PHASE I AND II 1.5 MILLION 9.8 MILLION
CANALASKA PHASE III 1.5 MILLION 11.3 MILLION
ADDITIONAL FINANCING UP TO 2 MILLION UP TO 13.3 MILLION
UP TO 100 EDITORS UP TO 3.9 MILLION ADDITIONAL UP TO 17.2 MILLION
ACQUISITIONS UNKNOWN
NEW EDITORS SCHEDULE:
STAGE ONE - UP TO THE DAY XXXXXXXXX.XXX IS QUOTED FOR TRADING, OR UP TO A
MAXIMUM OF TWENTY EDITORS AND INCLUDING 12 EDITORS ALREADY SIGNED WITH
APPROXIMATELY 1.3 MILLION SHARES: -A MAXIMUM TOTAL OF 2,000,000 SHARES OVER THE
LIFE OF THEIR CONTRACTS, AS A GROUP.
STAGE TWO - AFTER XXXXXXXXX.XXX IS TRADING ON A PUBLIC MARKET, THE NEXT TWENTY
EDITORS, REGARDLESS OF THE TIME PERIOD IN WHICH THEY JOIN; OR, AFTER THE FIRST
2,000,000 SHARES HAVE BEEN ISSUED, WHICHEVER COMES FIRST: -A MAXIMUM OF
1,400,000 SHARES OVER THE LIFE OF THEIR CONTRACTS, AS A GROUP.
STAGE THREE - THE NEXT TWENTY EDITORS, REGARDLESS OF THE TIME PERIOD IN WHICH
THEY JOIN; OR, AFTER THE FIRST 3,400,000 SHARES HAVE BEEN ISSUED, WHICHEVER
COMES FIRST: -A MAXIMUM OF 800,000 SHARES OVER THE LIFE OF THEIR CONTRACTS, AS A
GROUP.
STAGE FOUR - THE NEXT FOURTY EDITORS, REGARDLESS OF THE TIME PERIOD IN WHICH
THEY JOIN. OR, AFTER THE FIRST 4,200,000 SHARES HAVE BEEN ISSUED, WHICHEVER
COMES FIRST: - A MAXIMUM OF 1,000,000 SHARES OVER THE LIFE OF THEIR CONTRACTS,
AS A GROUP.
15
EXHIBIT II
DESCRIPTION OF NEWS
NEWS is the first media company designed for the 21st century. It encourages
interactivity between users and the news. NEWS will use the Internet and,
eventually, wireless broadband to xxxxxx two-way news delivery and communication
- something no media company has ever done before. As in the example of United
Artists in the early days of motion picutres, NEWS will capitalize on the
overwhelming desire of artists and experts to control their own professional
destiny through their direct ownership of the company.
NEWS has an opportunity to be the first of its kind in this next evolution of
media within the information age. NEWS can be the leader in its market segment
and reach appropriate valuations. The opportunity to contributing writers is to
benefit through ownership, while retaining complete editorial independence.
Although NEWS is a start-up company complete with all inherent risks, it
benefits from start-up company experience in its founder. Existing management is
well aware of its tasks in broadening its team and capabilities. Through the
Editorial Advisory Board, NEWS will benefit from the collective business
experience of dozens of existing media Gurus.
Competing media sites will be hard-pressed to retain their best experts without
equity ownership incentives. Most of the smaller media sites will be incapable
or unwilling to make such an offer while the larger sites will require valuable
time to maneuver.
Complete journalistic independence and integrity is paramount. Coupled with the
ability to participate in the EAB, content providers have strong incentives to
become part of the NEWS team.
Executive management has built a three- part marketing strategy that grows in
scope as the company is capable of implementation. The first-stage marketing
strategy of enticing existing newsletter readers to join our Website delivers a
highly sought after demographic to NEWS with no cash outlays. Thus, the first
hurdle in corporate growth - often the most difficult - is prepared for.
The second-stage marketing strategy is innovative and cost-effective. By using
other advertisers to subsidize the cost of its own marketing, NEWS will
effectively reach more people than it otherwise could. Through the NEWS
magazine, the company will establish its brand outside the Internet. Exciting
marketing partnerships are being pursued now.
The marketplace has an almost insatiable appetite for information and NEWS
intends to provide what the market wants. The public has said that it expects
on-line content at virtually no cost. NEWS will meet the expectation while
offering additional content as a value-added product.
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The company enjoys three main revenue streams to help it diversity its revenue
model. Most of its revenue will come through marketing and advertising. Almost
as important are user fees and subscriptions. Growth in both these segments will
be strong, but not as strong as in Business-to-Business E-commerce. Over time it
is expected that each of these revenue sectors will converge in importance.
17
EXHIBIT IIIA - DESCRIPTION OF JOINT VENTURE
A Joint Venture company will be established that will "Clone" the existing
NewsGurus web-site and business plan for the express and exclusive region of
Europe, Mexico, Central and South America. XxxxXxxxx.xxx will not enter any
other agreement with any other company for the purpose of coverage of these
geographic areas. Canalaska will not attempt to reach users located in any
geographic area other than those described herein and is not permitted to
transfer, re-sell, or otherwise distribute the described content and/or
technology to any other entity without express written permission of
XxxxXxxxx.xxx Inc. Computer servers for such clones may not be located in Canada
or in the USA.
A) PRODUCTION OF WEB SITE AND TECHNOLOGY TRANSFERS.
XxxxXxxxx.xxx, Inc. will earn 3,920,000 shares in the Joint Venture by providing
the following: XxxxXxxxx.xxx, Inc. will deliver to the Joint Venture a complete
and exact working turn-key copy of the website located at xxx.xxxxxxxxx.xxx.
Such technology to be provided at the one-time cost of $1.00 U.S. to the Joint
Venture. Delivery of the site, regardless of stage of completion, will occur
upon completion of Phase II financing as noted in the Financing and Management
Agreement. Company will also deliver to the Joint Venture, on at least a
quarterly basis, any and all upgrades and refinements of said website for as
long as this Joint Venture shall exist, or until otherwise directed by the
Board.
Joint Venture may use all or any part of the technology and website delivered to
it for the express and exclusive purpose of reaching persons located in the
geographic regions previously described in the Joint Venture Agreement. Joint
Venture may also elect to develop its own technology and refinements to the
website. Joint Venture agrees to deliver such technology and refinements to
XxxxXxxxx.xxx, Inc. on a quarterly basis for as long as this Joint Venture shall
exist, or until otherwise directed by the Board. In the event that the Joint
Venture elects to produce, design, contract, or otherwise acquire such
technology, it will do so at its own costs and specifically without seeking
remuneration for costs from either CVV or from the XxxxXxxxx.xxx, Inc.
All technology transfers between the Joint Venture and the XxxxXxxxx.xxx, Inc.
will be full, complete, and at no cost to the receiving party.
XxxxXxxxx.xxx, Inc. will nominate one member to the JV Board of Directors and
one member to the JV Advisory Board.
Canalaska will earn 4,080,000 shares in the Joint Venture by contributing
financing in the amount of $350,000 U.S.; and by providing expertise in future
financing requirements; management; marketing methods to build the Joint Venture
URL brand; generate customer lists; develop and market customer databases; and,
acquire local content from each of the exclusive geographical areas it serves.
Canalaska shall be entitled to a repayment of such $350,000 from future JV
revenues.
18
Canalaska will nominate two members to the JV Board of Directors, and two
members to the Advisory Board.
B) CONTENT AVAILABLE AT WEB SITES.
XxxxXxxxx.xxx, Inc. will deliver to the Joint Venture its entire existing
database of content as it appears at the website located at xxx.xxxxxxxxx.xxx.
Such content to be provided at a one-time cost of $1.00 U.S. to the Joint
Venture. Delivery of the content, regardless of its extent, will occur upon
completion of Phase II financing as noted in the Financing and Management
Agreement.
XxxxXxxxx.xxx, Inc. will also make available to the Joint Venture, on a
real-time electronic basis, any and all additional content appearing at
xxx.xxxxxxxxx.xxx for as long as this Joint Venture shall exist, or until
otherwise directed by the Board. XxxxXxxxx.xxx, Inc. will receive 20% of all
revenue derived from this content located at the Joint Venture web-site
The Joint Venture also agrees to make available to the XxxxXxxxx.xxx web-site or
to XxxxXxxxx.xxx, Inc, on a real-time electronic basis, any and all additionally
acquired or created content appearing at the Joint Venture web-site for as long
as this Joint Venture shall exist, or until otherwise directed by the Board.
XxxxXxxxx.xxx, Inc. will receive 30% of all revenue derived from this additional
Joint Venture content located at the xxx.xxxxxxxxx.xxx.
19
EXHIBIT IIIB
THE JOINT VENTURE AGREEMENT
THIS AGREEMENT, THE JOINT VENTURE AGREEMENT, DATED MARCH 7, 2000, WILL REMAIN IN
EFFECT AND IN FULL FORCE UNTIL THE DEFINITIVE AGREEMENT IS EXECUTED.
THIS JOINT VENTURE AGREEMENT, entered into this 7th day of March, 2000 is by and
between the following corporations, collectively referred to herein as "the
partners"; Gurus International Corp. (Referred to as COMPANY,) a Nevada
corporation, (and a wholly-owned subsidiary of XxxxXxxxx.xxx, Inc, a Nevada
corporation) with offices at 0000 Xxxxxxxx Xxxxx, Xxxxxxx XX X0X 0X0; and,
CanAlaska Ventures Ltd. (hereinafter referred to as "CVV"), a British Columbia
Corporation with offices at 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx X0X 0X0.
WHEREAS CVV is a publicly traded company listed on the Canadian Venture Exchange
trading under the symbol of "CVV" and trades on the US OTC Bulletin Board under
the symbol "CVVLF", and is in the business of financing information technology
and software development ventures.
WHEREAS COMPANY is in the process of applying to become a publicly traded
company on the US OTC Bulletin Board and has technology, products and/or
services at the URL xxxx://xxx.xxxxxxxxx.xxx which it wishes to market and sell.
WHEREAS the parties desire to enter into an agreement to form a Joint Venture
with the purpose of ultimately taking this Joint Venture public; and which Joint
Venture has the exclusive right to the NewsGurus technology, products and
services in Europe, Mexico, South America and the Caribbean. To earn its place
in the Joint Venture the COMPANY will contribute the technology and content
required to create a copy of the fully functioning website found services at the
URL xxxx://xxx.xxxxxxxxx.xxx. Future content to be provided to the Joint Venture
at a cost as described in section 1.7 and 1.14. To earn its place in the Joint
Venture, CVV will contribute financing in the amount of $350,000 U.S.; expertise
in future financing requirements; management; marketing methods to build the
Joint Venture URL brand; generate customer lists; develop and market customer
databases; and, acquire local content from each of the exclusive geographical
areas it serves.
NOW THEREFORE, in consideration of the foregoing and the following articles, the
parties, intending to be legally bound, agree as follows:
ARTICLE I
FORMATION
1.1 Formation and Ownership. The partners hereby form a Joint Venture to
implement the business as set forth herein. The Joint Venture shall be a Nevada
or Colorado or Offshore Corporation and
20
its domicile will be decided by CVV. There will be one class of shares, which
shall be issued equally to the partners so that CVV owns fifty-one percent (51%)
of shares of the Joint Venture and COMPANY owns fourty-nine (49%) of the Joint
Venture. The Joint Venture shall initially issue a total of exactly eight
million shares - 4,080,000 to CVV; and 3,920,000 to the COMPANY. Such shares
cannot be cancelled or rolled back without unanimous approval of the Board of
Directors of the JV. No action by the existing shareholders shall be effective
unless approved by the board of directors of the Joint Venture.
1.2 Name of Joint Venture. The name of the Joint Venture shall be CVV-Gurus,
Inc.
1.3 Term. The Joint Venture shall commence upon completion of Phase II financing
as noted in the Financing and Management Agreement and remain in full force and
effect until terminated by the parties in accordance with the terms of this
agreement.
1.4 Operation. The Joint Venture shall be operated primarily by CVV, with
assistance provided as required by the COMPANY. In due course, as the JV
receives adequate funding, the Board of Directors will locate and engage
independent management to run the JV's daily operations. At such time as such
management is engaged, then all primary management and accounting
responsibilities as described below will be assumed by management.
1.5 Inspection. The books and records of the Joint Venture shall be maintained
by CVV on behalf of the Joint Venture. They will be available for inspection by
the Joint Venture partners during normal business hours at the offices of CVV
upon reasonable notice to CVV. Such books and records also to be available for
inspection at any time by officers and directors of the Joint Venture and the
Joint Venture partners via secure electronic query over the Internet. Such
electronic accounting system to be e-commerce compatible with the Joint Venture
website.
1.6 Checking Account. CVV shall be responsible for maintaining the Joint Venture
checking account, in the name of the Joint Venture. All checks or transfers of
any kind under $1,000.00 each require only one signature from either the
Controller, President or from a key staff member of CVV. All checks or transfers
of any kind over $1,000.00 will require two signatures to be valid: one
signature from a key staff member of CVV and one signature from either the
President or the Controller of the Joint Venture.
1.7 Revenue and Accounting. COMPANY shall directly receive all payments for
their products and/or services sold by the Joint Venture.
o COMPANY will forward 50% of all such revenue to CVV's checking account on a
monthly basis by direct deposit directly to CVV at CVV's offices in
Vancouver or such other location as decided by CVV until such time as CVV
has received $350,000 in total (the Payout).
o COMPANY will forward 30% of all such revenue to the Joint Venture checking
account on a monthly basis by direct deposit directly to the Joint Venture
at CVV's offices in Vancouver or such other location as decided by CVV until
such time as the Payout is complete.
o COMPANY will retain 20% of all such revenue as compensation for providing
unrestricted and continual access by the Joint Venture to its ever-expanding
pool of content initially located at the xxx.xxxxxxxxx.xxx website and
transferred to the Joint Venture website, until such time as the Payout is
complete.
21
o AFTER THE PAYOUT is Complete, COMPANY will forward 70% of all such revenue
to the Joint Venture checking account on a monthly basis by direct deposit
directly to the Joint Venture at CVV's offices in Vancouver or such other
location as decided by CVV; and COMPANY will retain 30% of all such revenue
as compensation for providing unrestricted and continual access by the Joint
Venture to its ever-expanding pool of content initially located at the
xxx.xxxxxxxxx.xxx website and transferred to the Joint Venture website.
Other revenue, including but not limited to that derived from Customer List
Rentals, will be collected directly by the Joint Venture. At the end of each
calendar month, CVV and COMPANY will present the proportionate expenses, as
agreed upon by the Board, that are attributable to the Joint Venture for
reimbursement from the Joint Venture to the CVV and COMPANY, respectively. All
other normal expenses as described in section 1.14 and incurred by the Joint
Venture will be deducted before determining monthly profit/loss.
o The profits of the Joint Venture account will be split 80% to CVV until
such time as the Payout is complete and 20% to the COMPANY until such time
as the Payout is complete.
o The profits of the Joint Venture account will be split 51% to CVV after
such time as the Payout is complete and 49% to the COMPANY after such time
as the Payout is complete.
Monthly balance reports will be submitted to the Joint Venture Partners. With
the unanimous approval of the Board, this Revenue splitting agreement may be
terminated in whole or part at such time as the JV goes public.
1.8 Accounts and Financial Statements. The Joint Venture shall use the services
of independent Certified Accountants, to prepare all necessary tax returns and
financial statements. To comply with regulations both the COMPANY and CVV may
require that their respective Auditors also audit all records of the Joint
Venture.
1.9 Board of Directors. The Joint Venture shall initially have a Board of
Directors consisting of three members with CVV nominating Xxxxx Xxxx and Xx.
Xxxxxx Xxxxxxx as directors, and COMPANY nominating Xxxxx Xxxxx as director. A
simple majority of the Board shall agree on the budget for marketing activities,
the selection of officers and all other discretionary matters. Board members
will not be financially compensated, other than for reasonable expenses. Board
meetings can be held by telephone conference call and need not be in person.. A
majority of the Board (which majority must include both Xxxxx Xxxx and Xxxxx
Xxxxx) is required to approve the following:
o incurring additional funded indebtedness other than bank operating lines
provided by Canadian Financial or International Institutions;
o issuance of more than 200,000 treasury shares, warrants, or options on
treasury shares to any one person or legal entity;
o sale or pledge of common or preferred shares of the Joint Venturer any
change in ownership of the Joint venture other than addressed in the
Shareholder's Agreement;
o payment of dividends;
22
o appointment of all senior management and approval of their compensation
plans (including salary, options, benefits and bonuses);
o approval of all company budgets;
o approval of all unbudgeted expenses over $5,000.
1.10 Executives. Executive appointments shall be made by the Board in due
course.
1.11 Offices. The Joint Venture shall maintain offices at the following
locations: 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0. Telephone: 000-000-0000 and Facsimile: 000-000-0000. In due course the
Joint Venture will establish an office in Europe.
1.12 Restriction on Sale. Each of the Joint Venture partners covenants and
agrees that it shall not mortgage, pledge, sell, assign, hypothecate, or
otherwise encumber, transfer, or permit to be transferred in any manner or by
any means whatsoever, whether voluntarily or by operation of law all or any part
of its Joint Venture interest without the express written permission from the
other partner or partners. Any of the above, done without the written permission
of the other party shall be grounds to terminate this agreement. Each Joint
Venture partner will offer a right of first refusal to the other Joint Venture
partner in the event that any such mortgage, pledge, sale, assignment,
hypothecation, encumbrance, or transfer is contemplated.
1.13 Dilution of Ownership. Each of the partners agrees that all future
financing activities undertaken by the Joint Venture shall dilute the ownership
by the existing partners on an equal basis. This applies regardless of whether
such dilution occurs as a result of financing activities undertaken from the
company treasury or through limited, board and regulator-approved sales of the
partners existing equity.
1.14 Allocation of Profits/Losses. After CVV recovers its $350,000 capital as
previously described in section 1.7 of this agreement, all profits and losses of
the Joint Venture shall be distributed equally to the Joint Venture partners
after all of the expenses of the Joint Venture are paid. Expenses include but
are not limited to the cost of products/services, customer support, salaries of
executives, and infrastructure and multimedia expenditures as mutually agreed
upon. The profits shall be distributed on a quarterly basis except such amounts
as may be mutually agreed upon by the Board of Directors to be retained in the
Joint Venture for purposes of corporate operations. This allocation may be
changed by unanimous consent from the Board.
1.15 Non-Encumbrance. Each of the partners covenants and agrees that it shall
not obligate the other to any third party without written notice to the other.
ARTICLE II
PARTNERS' OBLIGATIONS AND RESPONSIBILITIES
23
2.1 COMPANY's responsibilities shall include but not be limited to: providing
retail pricing and negotiated wholesale costs, (currently set at 20% of sales)
to the Joint Venture for the products and or services being offered for sale
through the Joint Venture, and fulfillment of products and services. This
includes both the present and the future products and services to be sold by
COMPANY through the Joint Venture.
2.1.1 Specifically and exclusively excluded from the revenue sharing agreement
noted in section 1.7, 1.14, and 2.1, is all direct subscription based revenue
derived by independent analysts and content providers from their copy-written
subscription-based newsletter or book content at the Joint Venture site. Such
revenue will flow 85% to the individual content provider and 15% to the COMPANY.
2.2 CVV's responsibilities and obligations shall include but not be limited to:
development and management of the marketing strategies, and further use of its
existing customer lists, the implementation and budgeting for which are subject
to the approval of the Joint Venture Board of Directors. Some of the marketing
programs will be implemented at no cost to the Joint Venture or to the COMPANY.
CVV will contribute its expertise in future financing requirements; management;
marketing methods to build the Joint Venture URL brand; generate customer lists;
develop and market customer databases; and, acquire local content from each of
the exclusive geographical areas it serves.
2.2.1 CVV will contribute or arrange third-party financing in the amount of
$350,000 U.S. If provided by a third party, then said third party shall dilute
each of the Joint Venture partner's existing ownership equally, and third party
ownership shall not exceed 10% of the Joint Venture.
2.3 CVV and the COMPANY will have all their direct costs in the operating of the
Joint Venture reimbursed by the Joint Venture. The Joint Venture is also
responsible for paying the salaries of its managers. All such expenses to be
approved by the Board.
2.4 Both the Joint Venture and CVV are specifically prohibited from
redistributing, forwarding, selling or transferring by any means any of the
technology or content provided by the COMPANY or by XxxxXxxxx.xxx, Inc, in any
manner and at any time, to any third party. The Joint Venture is acquiring such
technology and content for use only in the geographic areas listed at the
beginning of this Joint Venture Agreement.
ARTICLE III
INTELLECTUAL PROPERTY
3.1 Copyrights, Patents, and Trademarks.
a. All pre-existing patents, intellectual property, trademarks and
copyrights of the partners shall remain their respective property. The
COMPANY is wholly owned by XxxxXxxxx.xxx, Inc., which is executing a
similar business plan in other geographic areas in which the Joint
Venture does not have rights. The COMPANY and XxxxXxxxx.xxx, Inc. own
and will own the copyright to all exclusive written and multimedia
content so produced, except that copyright that is previously owned by
individual writers and content
24
providers. The Joint Venture specifically does not own any copyright or
exclusive license to the content so furnished to the Joint Venture. The
COMPANY specifically retains full ownership of the URL's
xxx.xxxxxxxxx.xxx and xxx.xxxxxxxx.xxx, and also retains rights or
ownership of other assets not specifically listed here.
b. Any and all patents, trademarks and/or copyrights which the Joint
Venture may develop and register under State, Provincial, or Federal law
shall be registered in the name of the Joint Venture. If, for any
reason, the Joint Venture fails or terminates, all patents, trademarks,
and/or copyrights developed by the Joint Venture shall revert to the
concept originator as evidenced by a "concept origination" memo to be
kept on file by the patent, trademark, or copyright firm that files all
applications on behalf of the Joint Venture.
3.2 Customer Lists. All customer lists developed by the Joint Venture will be
the property of the Joint Venture. CVV will use its expertise and be responsible
for the marketing of the lists on behalf of the Joint Venture. Both Partners
must agree to any and all actions to sell or disclose to a third party the
customer list resulting from the Joint Venture. Customer lists are valuable
assets and include, among other things, any database of existing or past users
of Joint Venture's services or products, or persons who have responded to Joint
Venture marketing efforts. One copy of such database would be delivered in its
entirety to both the partners if the Joint Venture for any reason terminates,
for future use as each former partner so decides. The Customer lists must be
automated and available for review by the Joint Venture partners via a secure
Internet connection.
3.3 Warranty/Indemnification. The parties to this Agreement do hereby warrant
and covenant for themselves that their undertaking hereunder does not infringe
or interfere with any intellectual property or other contract rights of third
parties, and each shall indemnify, save, and hold the other party harmless,
including cost of defense, from any suit, demand, judgement, claim, liability,
or proceeding founded on such third party's claim or settlement.
ARTICLE IV
TERMINATION
4.1 In the case of any unresolved breach of this Agreement by either party, and
after conformance with the cure provisions as defined in Article V, sub-section
5.5 Subparagraph f, hereafter, either party may declare this Agreement
terminated as to any further business to which the Joint Venture is not already
obligated. Termination for reasons other than cause shall require the unanimous
written agreement of each of the members of the Board of Directors. Upon
termination, the assets of the Joint Venture, if any, including retained
earnings, after payment of all Joint Venture obligations, shall be divided
equally between the partners.
4.2 Either party may terminate this Agreement upon thirty (30) days written
notice to the other party in the event that the Joint Venture becomes insolvent
or bankrupt. Insolvent meaning that its assets are less than its liabilities and
it is unable to pay debts as the become due over the following three month
period.
25
4.3 At any time during or subsequent to the termination of this Joint venture as
provided herein or otherwise, COMPANY will not utilize any of CVV's multimedia
marketing channels and materials or any parts thereof without the express
written permission of CVV. COMPANY is, however, free to utilize any variety of
marketing mediums in its promotion of similar business plans, so long as such
actions do not utilize CVV's existing relationships within those mediums.
4.4 In the event of termination, neither CVV nor COMPANY shall use the
copyrights, intellectual property, patents, or trademarks of the other without
the express written permission of the party that owns the copyright,
intellectual property, patent, or trademark. This paragraph shall not apply to
any media that is currently being run at the time of termination until such
contracted time of running (with the third party media) expires.
4.5 In the event of termination, CVV specifically relinquishes any and all right
to all content already produced or yet to be produced by the COMPANY and its
associates, and further relinquishes any and all right to distribute or make
available such content in any location via any method to any audience.
4.5 Cause shall be defined as any action that constitutes fraud.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.1 Execution of Other Documents. The parties will forthwith execute and deliver
all documents and instructions, which are reasonably necessary to carry out the
terms of this agreement.
5.2.1 CVV Indemnification. In the event that COMPANY or any of its partners,
shareholders, officers, directors, or employees, in pursuit of their obligations
created under this or any other agreement, subject CVV or any of its partners,
shareholders, officers, directors, or employees, to possible regulatory action
or sanction by a governmental agency of any type, or any litigation concerning
copyright, trademark, servicemark, or tradename infringement, or product or
professional liability actions, or any other actions.
a. CVV shall provide immediate notice in writing to COMPANY at the
address provided in the Preamble of this Agreement of any such claim,
litigation, regulatory, or other action. Such notice shall include a
copy of all documents, correspondence, pleadings, filings or other
writings that are involved with such claim, litigation, regulatory, or
other action.
b. CVV further agrees that COMPANY shall have the right to
take part in and approve any and all settlement negotiations and
settlements made or entered into by CVV or any of its partners,
shareholders, officers, directors, employees or nominees or any
combination of the above, for any claim, litigation, regulatory or other
action which is subject to the indemnification in this Article.
5.2.2 COMPANY's Indemnification. As well, in the event that CVV or any of its
partners, shareholders, officers, directors, or employees, in pursuit of their
obligations created under this or
26
any other agreement, subject COMPANY or any of its partners, shareholders,
officers, directors, or employees, to possible regulatory action or sanction by
a governmental agency of any type, or any litigation concerning copyright,
trademark, servicemark, or tradename infringement, or product or professional
liability actions, or any other action, CVV shall defend and indemnify in full
COMPANY and any of its partners, shareholders, officers, directors, or
employees, for all costs, fees, penalties, fines, settlements, and/or judgements
incurred by COMPANY or any of its partners, shareholders, officers, directors
employees, or nominees or any combination of the above, including reasonable
attorney's fees, arising as a direct or indirect result of such actions.
c. COMPANY shall provide immediate notice in writing to CVV at the
address provided in the Preamble of this Agreement of any such claim,
litigation, regulatory or other such action. Such notice shall include a
copy of all documents correspondence, pleadings, filings, or other
writings that are involved with such claim, litigation, regulatory, or
other action.
d. COMPANY further agrees that CVV shall have the right to take part
in and approve any and all settlement negotiations and settlements
made or entered into by COMPANY or any of its partners, shareholders,
officers, directors employees, or nominees or any combination of the
above, for any claim, litigation, regulatory or other action which is
subject to the indemnification in this Article.
5.3 Force Majeure. Each party hereto shall be excused from performing any
obligations under this agreement, in whole or in part, as a result of delays or
interference caused by the party or by an act of God, war, labor disputes,
strikes, flood, lightening, sever weather, shortage of materials, failure or
fluctuations in electrical power, disruption of service, or other cause beyond a
party's reasonable control. Such nonperformance shall not be deemed a default
under this agreement unless is constitutes for a period of ninety (90) days.
5.4 Miscellaneous.
a. This agreement represents the entire agreement between the
parties and shall not be changed orally. There are no other
contemporaneous oral agreements. Any changes to this agreement shall be
in the form of a written addendum to this agreement signed by both
parties. b. This Agreement shall inure to the benefit of the parties
together with their successors and assigns.
c. If any portion of this Agreement is struck down or declared
unenforceable by a court of competent jurisdiction, it shall not affect
the other provisions of this Agreement.
d. The waiver by either party of any right hereunder shall not
constitute a waiver of any other rights, nor shall the waiver of any
right in instance constitute the waiver of such right on going.
e. Any and all disputes arising under or related to this Agreement
shall be submitted to binding arbitration before the Canadian
Arbitration Association, in accordance with the rules and regulations
then in effect. Any award may be entered by either party as a judgement
or decree in any court of competent jurisdiction and enforced
accordingly. The parties shall share equally any American Arbitration
Association fees incurred by either party in connection with any
dispute. Any such arbitration shall take place in Vancouver, British
Columbia, and shall be governed by British Columbia law.
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f. Neither party shall enforce an alleged breach of any provisions
of this agreement without first giving the other party written notice
via Canada Post, Registered Mail, clearly specifying the nature of the
alleged breach within thirty (30) days of receipt of such notice. Notice
by fax machine shall not be sufficient.
g. All signatories to this agreement hereby represent and warrant
that they have the requisite authority to enter into this transaction,
and that the entity which they represent has complied with all necessary
formalities under all applicable bylaws or agreements, as well as all
applicable state laws and regulations.
h. Each partner agrees that the other shall at all times be
free to engage in any other business activities not in conflict or
competition with this joint venture unless agreed in writing.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed
by their duly authorized representative as the day and year first written above.
This agreement may be executed in multiple counterparts, each of which shall be
deemed an original and all of which shall constitute one and the same
instrument.
------------------------------------------------------------------------
Date: Xxxxx Xxxxx for: XxxxXxxxx.xxx, Inc.
------------------------------------------------------------------------
Date: Xxxxx Xxxx for: CanAlaska Ventures Ltd.
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ADDENDUM A
Technology Creation and Maintenance, and Products and/or Services Information.
A) PRODUCTION OF WEB SITE
COMPANY will deliver to the Joint Venture a complete and exact working turn-key
copy of the website located at xxx.xxxxxxxxx.xxx. Such technology to be provided
at the one-time cost of $1.00 U.S. to the Joint Venture. Delivery of the site,
regardless of stage of completion, will occur not later than the completion of
Phase II financing as noted in the Financing and Management Agreement. Company
will also deliver to the Joint Venture, on at least a quarterly basis, any and
all upgrades and refinements of said website for as long as this Joint Venture
shall exist, or until otherwise directed by the Board.
Joint Venture may use all or any part of the technology and website delivered to
it for the express and exclusive purpose of reaching persons located in the
geographic regions previously described in the Joint Venture Agreement. Joint
Venture may also elect to develop its own technology and refinements to the
website. Joint Venture agrees to deliver such technology and refinements to the
COMPANY or to XxxxXxxxx.xxx, Inc. on a quarterly basis for as long as this Joint
Venture shall exist, or until otherwise directed by the Board. In the event that
the Joint Venture elects to produce, design, contract, or otherwise acquire such
technology, it will do so at its own costs and specifically without seeking
remuneration for costs from either CVV or from the COMPANY.
All technology transfers between the Joint Venture and the COMPANY will be full,
complete, and at no cost to the receiving party.
B) CONTENT AVAILABLE AT WEB SITE.
COMPANY will deliver to the Joint Venture its entire existing database of
content as it appears at the website located at xxx.xxxxxxxxx.xxx. Such content
to be provided at a one-time cost of $1.00 U.S. to the Joint Venture. Delivery
of the content, regardless of its extent, will occur not later than the
completion of Phase II financing as noted in the Financing and Management
Agreement.
Company will also make available to the Joint Venture, on a real-time electronic
basis, any and all additional content appearing at xxx.xxxxxxxxx.xxx for as long
as this Joint Venture shall exist, or until otherwise directed by the Board.
Payment for this ongoing content will be as described in the Joint Venture
Agreement.
The Joint Venture also agrees to make available to the COMPANY or to
XxxxXxxxx.xxx, Inc, on a real-time electronic basis, any and all additionally
acquired or created content appearing at the Joint Venture website for as long
as this Joint Venture shall exist, or until otherwise directed by the Board.
Payment for this ongoing content will be as described in the Joint Venture
Agreement.
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COMPANY will forward 30% of all revenue derived from this additional Joint
Venture content located at the xxx.xxxxxxxxx.xxx web site to the Joint Venture
checking account on a monthly basis by direct deposit directly to the Joint
Venture at CVV's offices in Vancouver or such other location as decided by CVV.
