EXHIBIT 10.21
STRATEGIC ALLIANCE AGREEMENT
THIS AGREEMENT is made as of the 19th day of May, 2004.
BETWEEN: NS8 CORPORATION, a Delaware corporation, having its main office
at Two Union Square, Suite 4200, Seattle, Xxxxxxxxxx 00000, XXX
(hereinafter called "NS8")
OF THE FIRST PART
AND: BU-SOLUTIONS, LLC, a Nevada limited liability company, doing
business as BROADBAND UTILITY SOLUTIONS, having an office at 0000
000xx Xxxxxx X.X., Xxxxx X-000, Xxxxxxxx, Xxxxxxxxxx 00000, XXX
(hereinafter called "BUS")
OF THE SECOND PART
WHEREAS:
A. NS8 is in the business of designing, programming, developing and managing
ecommerce related internet websites that provide online communication, product
distribution, business to business and business to consumer market interaction,
proprietary software development, licensing, broadcasting, data storage and
sales, and Internet based digital on-demand services (hereinafter, the
"BUSINESS"). NS8's Business includes but is not limited to the development of
proprietary technology that allows for high-speed delivery of encrypted data
over standard telephone lines allowing for secure and rapid distribution of
digital content (such as digitized video or voice) and actively seeks to obtain
the rights to distribute content directly ("DIGITAL ON DEMAND BUSINESS") or
seeks to license its proprietary technology to other companies for the purpose
of content distribution ("LICENSE BUSINESS").
B. BUS is engaged in various enterprises, businesses and other commercial
activities related to the Business.
C. NS8 wishes to establish a strategic alliance with BUS, for the purpose of
assisting and furthering the business interests of NS8 and BUS on an ongoing
basis, and BUS wish to establish a strategic alliance with NS8 for the purpose
of assisting and furthering the business interests of BUS and NS8 on an ongoing
basis.
D. NS8 and BUS have mutually agreed to enter into this agreement (the
"AGREEMENT") for the purposes stated herein upon the terms and conditions set
forth below.
NOW THEREFORE in consideration of the mutual covenants, premises and conditions
herein contained the parties hereto have agreed each with the other as follows:
1. Establishment of Strategic Alliance
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NS8 and BUS hereby mutually agree to establish and maintain a strategic alliance
(hereinafter, the "ALLIANCE") between NS8, on the one part, and BUS, on the
other part, for the purpose of assisting and furthering the business interests
of the other party on an ongoing basis.
2. Contribution
BUS agrees to utilize their respective credibility and influence in the
technology, telecommunications, cable broadcast, and entertainment industries
and the general business community to introduce business contacts and to
encourage persons and entities to deal with NS8, and its affiliates,
subsidiaries and other divisions as contemplated by this Agreement and as would
be appropriate in the circumstances. Without limiting the generality of the
foregoing, this would include promoting the Business, products, services and
initiatives of NS8, its affiliates, subsidiaries and divisions (all of the
foregoing are referred to herein as "CONTRIBUTIONS") including but not limited
to the following:
(a) Procuring License Agreements for NS8 Technology
BUS will exercise commercially reasonable efforts to procure License Agreements
with companies that own or control content and are in need of a technology to
allow for rapid and efficient distribution of its content to the public. When
BUS's efforts to secure License Agreements result in the execution of a License
Agreement between NS8 and the prospective Licensee then BUS shall be compensated
in accordance with Section I Paragraph 2 (a), of Schedule A to this Agreement
depending on BUS's the level of involvement in the procurement of the License
Agreement with the prospective customer.
(b) Sourcing Content for NS8 Digital On-Demand Business
BUS will exercise commercially reasonable efforts to either source or source and
secure for sale or license to NS8, program content that is suitable and
acceptable to NS8 (hereinafter, "CONTENT") for NS8's Digital On-Demand Business.
If BUS directly owns or holds the licensing rights to Content that permits the
Content to be licensed or sub-licensed to NS8 for NS8's Digital On-Demand
Business, then NS8 may in its sole discretion license the Content directly from
BUS or purchase it from BUS (if it is available for purchase), as the case may
be, on terms and conditions negotiated in good faith by the parties. When BUS's
efforts to secure Content can most accurately be described either as
"Introductions" or "Deal Involvement" as defined in Paragraph 5 (a), then BUS
will be compensated in accordance with Section II Paragraph 2 (b) of Schedule
"A" to this Agreement.
(c) Securing Subscribers for NS8 Digital On-Demand Business
BUS will exercise commercially reasonable efforts to secure subscriber customers
or entities with subscriber customers for NS8's Digital On-Demand Business. For
each subscriber or entity contractually secured by BUS as a customer for NS8's
Digital On-Demand Business (herein, the "SUBSCRIBER(S)"), BUS will receive,
during the Term, the percentage of NS8's cost of acquiring the Content ordered
by each Subscriber that BUS has secured as a customer for NS8's Digital
On-Demand Business ("NS8 CONTENT COST") as set forth in Section III Paragraph 2
(c) of Schedule "A" to this Agreement.
(d) Exiting Event Transaction
If the efforts of BUS directly lead to a merger, acquisition, bulk asset sale,
block stock sale (defined herein as five percent (5%) or more of the issued and
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outstanding shares of NS8), divestiture or other similar transactions (the
"EXITING EVENT TRANSACTION") then upon the completion and consummation of the
Exiting Event Transaction NS8 will pay BUS a consulting fee equal to the
percentage of the value ("VALUE") of any such Exiting Event Transaction as set
forth in Section IV Paragraph 2 (d) of Schedule "A". The Value will be mutually
determined by the parties or, failing agreement, by the Certified Public
Accountants (hereinafter, "CPA(s)") of the parties applying Generally Accepted
Accounting Principles (hereinafter, "GAAP"). In the event of an Existing Event
Transaction the Agreement and Alliance will, at the option of NS8, be
automatically terminated and all compensation payable to BUS through the Period
of Compensation will be paid by NS8. BUS specifically acknowledges that the
foregoing provisions regarding the activities of BUS and compensation with
respect to any Exiting Event Transaction are subject to the provisions of
Regulations 13D, 13E, and 14F (the "REGULATIONS") promulgated under the
Securities Exchange Act of 1934 (the "ACT"), as amended.
3. Excluded Activities
Neither BUS nor any director, officer or employee of BUS is intended to be, nor
shall anyone of them be deemed to be, under any circumstances, an employee,
director, senior officer or consultant of NS8 or any of its affiliates or
subsidiaries unless otherwise specifically agreed to in writing by BUS and NS8.
Neither NS8 nor any director, officer or employee of NS8 is intended to be, nor
shall anyone of them be deemed to be, under any circumstances, an employee,
director, senior officer or consultant of BUS or any of its affiliates or
subsidiaries unless otherwise specifically agreed to in writing by BUS and NS8.
4. Nature of Relationship
The relationship between NS8 and BUS pursuant to this Agreement is not and shall
not be deemed to be one of partnership, employer and employee, principal and
agent, representatives, or the like. The relationship is strictly that of
parties involved in an Alliance for their mutual benefit.
5. Compensation, Registering Referrals & Accounting
(a) Referral Compensation - If during the Term of the Agreement, BUS
initiates and introduces a business opportunity (hereinafter, "BUSINESS
OPPORTUNITY") to NS8 that directly generates a commercial transaction or
establishes a business relationship resulting in revenue for the Business of NS8
(hereinafter, "REFERRAL BUSINESS"), then during the five year period
(hereinafter the "PERIOD OF COMPENSATION") following BUS's first receipt of
revenue from that Referral Business, BUS will receive a percentage share of the
gross revenue (hereinafter the "GROSS REVENUE") derived from that Referral
Business and actually received by NS8 (hereinafter the "REFERRAL COMPENSATION")
as set forth in Schedule "A" to this Agreement. It is acknowledged and agreed
that the extent and nature of BUS's involvement in the generation and
consummation of the Business Opportunity and the Referral Business will vary
from:
(i) a mere introduction on the part of BUS to NS8 of key contact persons of
the qualified prospects of the Business Opportunity (herein, "INTRODUCTION(S))";
(ii) the expenditure of considerable effort, time and resources by BUS to
develop the Business Opportunity for the benefit of NS8 (herein, "DEAL
INVOLVEMENT");
(iii) the expenditure of considerable effort, time and resources by BUS to
develop the Business Opportunity to include contributing to bringing the
transaction to closing (herein, "QUALIFIED RESOURCE INVOLVEMENT").
The amount of Referral Compensation payable to BUS will vary accordingly, as set
forth in Section I of Schedule "A". For the purposes of this Agreement, the
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terms Business Opportunity and Referral Business do not include an Exiting Event
Transaction as defined in Paragraph 2 (d) of this Agreement.
(b) In order for BUS to become entitled to receive any Referral Compensation
with respect to a Business Opportunity, it must provide NS8 advance written
notice of the particulars of the party being referred to NS8 including
background and contact information. The initial list of BUS's contacts and
business opportunities is set forth on Schedule "B" attached hereto and
incorporated herein by this reference. As BUS provides new potential business,
it will augment Schedule "B" accordingly, and submit same to NS8 for its review
and maintenance. In addition, during the Term, BUS must provide NS8 at least
once a month with written progress reports regarding the status of the Business
Opportunities, Referral Business and Contributions with respect to which it is
or will be claiming Referral Compensation or any other kind of compensation
including, without limitation, the name of the party or parties who have been
contacted by BUS, all relevant contact information (addresses, telephone, fax,
email numbers, etc.) and such other information necessary to fully inform NS8 of
the status and progress of the matter.
(c) BUS acknowledges that some of the parties (contacts and business
opportunities that it will refer to NS8 and list in Schedule "B" might be large
corporations or organizations that have a great number of affiliates, divisions
or personnel with diverse management and business activities (the "LARGE
ENTITIES") that NS8 might have access to through its own efforts or through
other contacts or resources of NS8 (collectively "NS8 RESOURCES"). Therefore,
BUS agrees that BUS will not have any right to receive Referral Compensation
with respect to any contact or business opportunity of NS8 that is derived from
or attributable to NS8 Resources that NS8 might access with respect to any Large
Entity that is listed in Schedule "B" but that is not related to any BUS
Business Opportunities listed in Schedule "B",, from time to time, other than
with respect to specific Business Opportunities and Referral Business directly
or indirectly attributable to the efforts of BUS. If NS8 is negotiating a
transaction with a division of a Large Entity listed in Schedule "B" that is not
directly or indirectly attributable to the efforts of BUS, then NS8 will notify
BUS of the identity of the unrelated division and the general nature of the
business purpose and objectives of such negotiations. BUS agrees not to
interfere with NS8's negotiations or transactions with any such unrelated
division Large Entity.
(d) During the Term and the Compensation Period, NS8 will maintain a record
and accounting of all Business Opportunities brought to NS8 by BUS, all Referral
Business attributed thereto, and a calculation of all Referral Compensation
owing by NS8 in respect thereof. NS8 will provide the Referring Party will a
summary of the particulars of such record and accounting within 30 days after
the end of each month of the Term of the Agreement and during the Compensation
Period; Provided that if there is no Referral Business, Gross Revenue or
Compensation owing during a particular month then no written accounting need be
provided to BUS in respect thereof.
6. NS8 Not Obliged to Accept Transaction
Notwithstanding anything herein to the contrary, NS8 will not be obligated
hereunder to consummate any proposed transaction or contract (hereinafter, a
"Transaction"), and NS8 may determine in its sole discretion which Transactions,
if any, are in its best interests. If NS8 fails to accept the terms of any
proposed Transaction directly or indirectly introduced or arranged by BUS then
NS8 will not be obligated to pay BUS any compensation or reimbursement of
expenses whatsoever in respect of any such Transaction. However, in the event
that NS8, at a later date, completes a Transaction, then BUS will earn and NS8
shall be obligated to pay BUS its appropriate compensation in accordance with
the terms of this Agreement.
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7. Expenses
Each party to this Agreement will be responsible for paying its own expenses in
respect of the Alliance and the matters and transactions that are the subject of
this Agreement unless NS8 expressly agrees in writing to pay any particular
expense of BUS.
8. Commissions, Fees and Expenses Owing by BUS to Third Parties
In respect of the Alliance and the matters and transactions that are the subject
of or contemplated by this Agreement, NS8 will not be responsible for or have
any obligation to pay any commissions, fees or expenses owing or attributed to
any third party unless NS8 expressly agrees in writing to pay any particular
commission, fee or expense of a third party.
9. Agreement Not Exclusive To Either Party
BUS and NS8 mutually acknowledge and agree that the rights, obligations,
matters, and Transactions contemplated by this Agreement and the Alliance are
not exclusive to BUS or NS8 either in any territory or for any period of time
(whether within the Term or any extensions thereof), and BUS agrees that NS8 is
free at any time, without any notice or compensation to BUS whatsoever, to enter
into any agreements or arrangements with any third party or parties that it
might choose for the purpose of directly or indirectly pursuing business or
financial opportunities of any nature or kind whatsoever, including (without
limitation) any Referral Business, Transactions or Business Opportunities or
regarding any other matters, whether or not contemplated herein and similarly,
..NS8 agrees that BUS is free at any time, without any notice or compensation to
NS8 whatsoever, to enter into any agreements or arrangements with any third
party or parties that it might choose for the purpose of directly or indirectly
pursuing business or financial opportunities of any nature or kind whatsoever.
10. Term of Engagement
The initial term (the "TERM") of this Alliance and the Agreement will continue
for a period of sixty (60) months commencing on the date of this Agreement and
unless terminated earlier by either of the parties hereto giving ninety (90)
days advance written notice of its intention to terminate to the other party.
Upon the expiration of the initial sixty (60) month Term, this Agreement (the
"RENEWAL AGREEMENT") and this Alliance will be renewed for a further Term of
sixty (60) months commencing on the last day of the initial Term (the "RENEWAL
TERM"), provided, however, that the terms and conditions of the Renewal Term of
this Agreement and this Alliance will be renegotiated in good faith and mutually
agreed to by the parties hereto prior to the end of the initial Term. Upon the
termination of the initial Term and the Renewal Term, the terms of this
Agreement set out in the provisions in this Agreement regarding confidential
information and documents (Paragraph 15 (c)), non-competition, and payment of
Compensation during the Compensation Period regarding Referral Business that
existed before the date of termination, shall survive the termination of this
Agreement and the Alliance.
11. Demo Access Site
NS8 will provide BUS with access to a secure, Web-based demo site to enable BUS
to present demonstrations of NS8 Video On-Demand (VOD) capabilities to
prospective licensees, content providers, On-Demand Business Subscribers of NS8,
or to other prospective Business Opportunities (the "DEMO"). Access to the
NS8-provided Demo site will be at the discretion of BUS. Accordingly, BUS
agrees that any party to whom BUS intends to present a Demo of the NS8 Demo
site must execute the NS8 "Mutual Confidentiality and Non-Circumvention
Agreement" (the "NDA") and that BUS will deliver the executed NDA to NS8 before
allowing any such third parties any access to the Demo site.
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12. Further Acts and Agreements
Each of the parties hereto agrees to perform such further acts and execute such
other agreements and documents as might be reasonably necessary to fully
implement the intent and purpose of this Agreement.
13. Severability
If any provision or part of this Agreement is declared to be void or otherwise
invalid by a court of competent jurisdiction, the remaining provisions or parts
of this Agreement will remain in full force and effect. The parties with
endeavor to redraft any provisions or parts of this Agreement declared to be
void or invalid to the extent possible and necessary to effectively incorporate
the intent and purpose of the void or invalid provisions or parts of this
Agreement.
14. Entire Agreement
This Agreement constitutes the entire agreement between the parties hereto with
respect to the Alliance, the performance by BUS of their Contributions, and
their respective Compensation for performing the duties and obligations as
contemplated by the parties hereto. Any other previous agreements, written or
oral, express or implied, between the parties or on their behalf, relating to
these matters are terminated and cancelled unless the parties hereto have
expressly confirmed in writing that any such agreements will survive this
Agreement or as contemplated herein. Each party releases and forever discharges
the other of and from all manner of actions, causes of action, claims and
demands whatsoever, under or in respect of any prior agreement.
15. Confidentiality and Non-circumvention
(a) BUS and NS8 mutually understand and agree that any information or
documentation provided by or on behalf of one party to the other party or its
agents, representatives or partners that is designated or identified as
confidential and not in the public domain (hereinafter, the "CONFIDENTIAL
INFORMATION" or the "CONFIDENTIAL DOCUMENTS", as the case may be) is
confidential and privileged and the confidentiality thereof must be maintained.
Any information or documentation provided by one party to the other must not be
duplicated in any manner or medium or presented or submitted to any party other
than the intended direct recipients of documents and information as are
expressly permitted by delivering party for the purpose of the other party
performing its agreed function under this Agreement. BUS understands and agrees
that if it intends to submit or provide Confidential Documents or other
Confidential Information including any offering circular, memorandum,
prospectus, business plan, proprietary information or other intellectual
property of NS8 (including that of its affiliates or subsidiaries) to any
prospective investor, customer, business contact or other person, then a
confidentiality and non-circumvention agreement in the form used by NS8, from
time to time (the "CONFIDENTIALITY AND NON-CIRCUMVENTION AGREEMENT"), must first
be executed by the intended recipient of the Confidential Documents or
Confidential Information and registered with NS8. Once BUS notifies NS8 of its
desire to circulate Confidential Documents or exchange Confidential Information
in such circumstances, NS8 will directly arrange for the preparation and signing
of a Confidentiality and Non-circumvention Agreement by the prospective
investor, customer, business contact or other party and will notify BUS, as the
case may be, when the Confidentiality and Non-circumvention Agreement has been
duly executed by the parties thereto. In a like manner, at the request of XXX,
XX0 will arrange for authorized recipients of the Confidential Documents or
Confidential Information of BUS to execute BUS's form of Xxx-Xxxxxxxxxx
X-000
Agreement ("NDA") and register the NDA's. with BUS. BUS will provide NS8 with
BUS's form of NDA. Any prospective investor, customer, business contact or other
person not participating in the financing of NS8's business or concluding any
other agreement with NS8 or BUS must return all Confidential Documents to NS8 or
to BUS as the case may be.
(b) In addition, BUS agrees to maintain all trade secrets of NS8 and agrees
to not directly or indirectly circumvent or attempt to circumvent NS8, its
affiliates and subsidiaries. Accordingly, the parties hereto agree that they
will enter into a form of mutual confidentiality and non-circumvention agreement
that will govern the exchange and use of their respective confidential documents
and confidential information by the other party and also contain
non-circumvention covenants.
(c) If a prospective investor, customer, business contact or other person
that BUS wishes to introduce to NS8 wishes to protect the confidentiality of its
confidential documents or confidential information in its dealings with NS8,
then NS8 will enter into a mutual confidentiality and non-circumvention
agreement with such other party in the form used by NS8, from time to time.
16. Construing Agreement
This Agreement shall not be construed more stringently against the drafting
party since all parties and their respective counsel contributed to the
negotiation and drafting of this Agreement and each party has had the advice of
separate and independent legal counsel in the review and drafting of this
Agreement. If any litigation arises from this Agreement, the prevailing party
may recover reasonable attorney's fees and costs.
17. Resolution of Disputes
(a) Except for the right of the parties to seek injunctive relief in court,
any controversy, claim or dispute of any type arising out of or relating to
Alliance or the provisions of this Agreement shall be resolved in accordance
with this Paragraph regarding resolution of disputes, which will be the sole and
exclusive procedure for the resolution of any disputes. This Agreement shall be
enforced in accordance with the Federal Arbitration Act, the enforcement
provisions of which are incorporated by this reference. Matters subject to
these provisions include, without limitation, claims or disputes based on
statute, contract, common law and tort and will include, for example, matters
pertaining to termination, compensation and protection of confidential and
intellectual property.
(b) The parties to this Agreement will make a good faith attempt to resolve
any and all claims and disputes by submitting them to mediation in Seattle,
Washington, before resorting to binding arbitration or any other dispute
resolution procedure. The mediation of any claim or dispute must be conducted in
accordance with the then-current JAMS procedures for the resolution of disputes
by mediation, by a mediator who has had both training and experience as a
mediator of general commercial matters. If the parties to this Agreement cannot
agree on a mediator, then the mediator will be selected by JAMS in accordance
with JAMS' strike list method. Within thirty (30) days after the selection of
the mediator, NS8 and BUS and their respective attorneys will meet with the
mediator for one mediation session of at least four hours. If the claim or
dispute cannot be settled during such mediation session or mutually agreed
continuation of the session, either NS8 or BUS may give the mediator and the
other party to the claim or dispute written notice declaring the end of the
mediation process. All discussions connected with this mediation provision will
be confidential and treated as compromise and settlement discussions. Nothing
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disclosed in such discussions, which is not independently discoverable, may be
used for any purpose in any later proceeding. The mediator's fees will be paid
in equal portions by NS8 and BUS.
(c) If any claim or dispute has not been resolved in accordance with
sub-paragraph (b) of this Paragraph, then the claim or dispute will be
determined by binding arbitration in accordance with the then-current JAMS
arbitration rules and procedures, except as modified herein. The binding
arbitration will be conducted by a sole neutral arbitrator who has had both
training and experience as an arbitrator of general commercial matters and who
is and for at least ten (10) years has been, a partner, a shareholder, or a
member in a law firm. If NS8 and BUS cannot agree on an arbitrator, then the
arbitrator will be selected by JAMS in accordance with Rule 12 of the JAMS
arbitration rules and procedures. No person who has served as a mediator under
the mediation provision, however, may be selected as the arbitrator for the same
claim or dispute. Reasonable discovery will be permitted and the arbitrator may
decide any issue as to discovery. The arbitrator may decide any issue as to
whether or as to the extent to which any dispute is subject to the dispute
resolution provisions in this Paragraph and the arbitrator may award any relief
permitted by law. The arbitrator must base the binding arbitration award on the
provisions of this Paragraph and applicable law and must render the award in
writing, including an explanation of the reasons for the award. Judgment upon
the award may be entered by any court having jurisdiction of the matter, and the
decision of the arbitrator will be final and binding. The statute of limitations
applicable to the commencement of a lawsuit will apply to the commencement of
binding arbitration under this sub-paragraph (c). The arbitrator's fees will be
paid in equal portions by NS8 and BUS.
18. Modification of Agreement
Any modification to this Agreement must be in writing and signed by the parties
hereto or it will have no effect and will be void.
19. Headings
The headings used in this Agreement are for convenience only and are not to be
construed in any way as additions to or limitations of the covenants and
agreements contained herein.
20. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the State of Delaware applicable to contracts executed and to be wholly
performed therein without giving effect to its conflicts of laws principles or
rules.
21. This Agreement may be executed in counterpart copies and the fact of
execution transmitted to the other party via telecopy (facsimile).
22. Use of Grammar
In this Agreement words importing the masculine gender include the feminine or
neuter gender and words importing the singular include the plural and vice
versa.
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IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of
the date first written above.
THE REMAINDER OF THIS PAGE IS LEFT BLANK
THE NEXT PAGE IS THE EXECUTION PAGE OF THIS AGREEMENT
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DULY EXECUTED BY NS8 CORPORATION,)
in the presence of its duly Authorized )
Signatories in that behalf: )
)
)
Per: /s/ Xxxxxx X. Xxxxx ) SEAL
---------------------- )
)
)
DULY EXECUTED BY BU - SOLUTIONS, LLC )
D/B/A/ BROADBAND UTILITY SOLUTIONS)
in the presence of its duly Authorized )
Signatories in that behalf: )
)
)
Per: /s/ Xxxx Xxxxx ) SEAL
---------------- )
Authorized Signatory )
)
Per: _____________________________ )
Authorized Signatory )
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