Exhibit 10.1
JOINT VENTURE DEVELOPMENT AND OPERATING AGREEMENT
THIS JOINT VENTURE DEVELOPMENT AND OPERATING AGREEMENT is made and dated
effective (the "Effective Date") as of March 25, 2009.
BETWEEN:
VERIFIED CAPITAL CORP. with its address for notices at c/o 0000-000 Xxxx
Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX X0X 0X0
(hereinafter referred to as "VCC")
OF THE FIRST PART
AND:
VERIFIED TRANSACTIONS CORP. with its address for notices at c/o
0000-000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX X0X 0X0
(hereinafter referred to as "VerifiedT")
OF THE SECOND PART
AND:
TREASURE EXPLORATIONS INC, of
(hereinafter referred to as "Treasure")
OF THE THIRD PART
(collectively or individually also referred to as a "Party" or the
"Parties")
WHEREAS:
A. VCC is the operator and a participant to earn 75% participating interest in a
joint venture (subject to a cash payment and 3% royalty) with Verified
Transactions Corp. ("VERIFIEDT") and which joint venture (called the
"VERIFIEDT/VCC JOINT VENTURE") is in the business of internet security software
and on-line (Gateway) business and the Parties have determined to form a joint
venture to conduct such business and any future businesses which derive
therefrom or may be developed in such joint venture as hereafter defined (such
present and future business referred to hereafter as the "BUSINESS");
B. VCC (which hereby is receiving the approval of VerifiedT to the effective
assignment of VCC Interest to Treasure) and Treasure have determined to enter
into this joint venture to permit Treasure to earn up to a 70% participating
interest in the VerifiedT/VCC Joint Venture;
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NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements herein contained and the sum of $10.00 now paid by the
parties, each to the other (the receipt and sufficiency of which is hereby
acknowledged), the parties agree as follows:
1. DEFINITIONS
1.01 In this Agreement, including the recitals and schedules hereto, unless
there is something in the subject matter or context inconsistent therewith, the
following words and expressions shall have the following meanings:
(a) "Affiliate" means any corporation of which a party hereto owns
directly or indirectly not less than 50.1% of the outstanding capital
stock;
(b) "Agreement" means this Joint Venture agreement, as amended from time
to time;
(c) "Confidential Information" shall mean all information contributed by
the Parties or acquired or developed by the Joint Venture which the
Management Committee considers confidential, proprietary, or useful in
the Business and not generally known in the public and includes all
technical information such as data, know-how, research, designs,
drawings, plans, specifications, models, quality controls, trade
secrets, software, processes, equipment, controllers, patents, and
Business information such as equipment, devices, methods relevant to
the Joint Venture's Business, organizational charts, business plans,
policies, corporate structure, financial information and resources,
transactions, contracts and Joint Venture customers such as their
names, requirements and necessities, and any collateral information
which may be in the nature of a latent interest or expectation or
corporate opportunity such as inventions, discoveries or improvements
conceived, developed or made by employees, in whole or in part, or
other persons associated with the Joint Venture and all and every
other information which would reasonably be considered confidential in
the industry or by employment of reasonable judgement and the burden
shall be on a Party to show that information alleged by the Management
Committee or a Party to be confidential is not;
(d) "Costs" mean all costs, expenses, obligations, liabilities and charges
of whatsoever kind or nature incurred or chargeable, directly or
indirectly, in connection with the Project and the Joint Venture,
which costs, expenses, obligations, liabilities and charges include,
without limiting the generality of the foregoing, the following:
(i) all monies, of whatsoever nature, expended directly or indirectly
in maintaining and operating the JV Assets and the Project;
(ii) professional costs associated with the JV Assets, the Project or
the financing thereof;
(iii)development plans, marketing plans, and all other studies or
reports;
(iv) filing costs whether for securities regulations or other matters;
(v) suppliers, contractors, trades, services, and all other inputs of
goods, services, or labour for the Project and JV Assets thereof;
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(vi) employees, contract labour, management, and all other personnel
costs;
(vii)services of third parties or provided by the Parties at fair
market value;
(viii) administration, travel, office supplies, and all other costs
reasonably incurred by or chargeable to the Project and its
administration;
(ix) marketing, advertising, promotion, and such related expenses,
(x) costs of sales including commissions, transaction fees, and other
such charges;
(xi) the costs of raising equity or debt financing to capitalize the
Project and the JV Assets;
(xii)interest costs and payment, amortization or otherwise, of debt
in accordance with policies of the Management Committee; and
(xiii) all other costs as may be determined by the Operator, as
approved by the Management Committee, from time to time, and
normally charged to a project such as the Project in accordance
with industry standards and generally accepted accounting
principals consistently applied;
(e) "Joint Venture" means the relationship of co-venture between VCC,
VerifiedT and Treasure for the development and operations of the
Project, the joint ownership and management of the JV Assets and as
may be determined, expanded, or diminished in accordance with the
policies, procedures, and resolutions of the Management Committee;
(f) "JV Assets" means the VCC Assets, VerifiedT Assets and Treasure Assets
contributed to the Joint Venture by this Agreement and owned and
operated jointly in accordance with the terms of this Agreement and
all assets which may be contributed hereafter by the Parties or
developed by the Joint Venture;
(g) "Management Committee" means that committee established pursuant to
this Agreement and composed of representatives of the Parties hereto;
(h) "Operator" means that party or those parties appointed by the
Management Committee as operator and/or manager of the JV Assets, the
Project and the business of the Joint Venture and the first and
continuing Operator shall be Treasure by sub-contracted operating
agreement to VCC subject to review at the request of a Party on each
anniversary of this Agreement;
(i) "Parties", "Party", "Participant" or "Participants" means the parties,
singly or collectively as appropriate, to this Agreement or their
proper successors, assigns, or other recipients of a party's rights,
in whole or in part, in or to this Agreement;
(j) "Project" means the plan of development of the JV Assets in the
Territory for the purpose of establishing commercial objectives and
Revenues employing the JV Assets, and the additional contributions or
services of the Parties, in accordance with the development plans
established by this Agreement and the Management Committee and
conducted by the Operator appointed by this Agreement and the
Management Committee.
(k) "Revenues" or "Revenue" means gross sales proceeds and income of
whatsoever nature realized by the conduct of the JV Assets and the
business thereof and the realization of the Project conducted pursuant
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to this Agreement, less Costs, and available for distribution to the
Parties hereof;
(l) "Territory" means all of the world;
(m) "Treasure Assets" means the assets and services contributed by
Treasure to the Joint Venture and Project as set forth in Schedule "A"
hereto; and
(n) "VCC Assets" means the assets and services contributed by VCC to the
Joint Venture and Project as set forth in Schedule "C" hereto;
(o) "VerifiedT Assets" means the assets and services contributed by
VerifiedT to the Joint Venture and Project as set forth in Schedule
"B" hereto.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS
2.01 Each Party represents and warrants to the other Party hereto that, to the
best of its knowledge:
(a) it has full power and authority to carry on its business and to enter
into this Agreement and any agreement or instrument referred to or
contemplated by this Agreement, except where regulatory or shareholder
approval may be required;
(b) neither the execution and delivery of this Agreement nor any of the
Agreements referred to herein or contemplated hereby, nor the
consummation of the transactions hereby contemplated conflict with,
result in the breach of or accelerate the performance required by, any
agreement to which it is a party excepting only variances required
under finance documents;
(c) the VCC Assets, the VerifiedT Assets and the Treasure Assets hereby
contributed to the Joint Venture shall be transferred and contributed
to the Joint Venture free and clear of encumbrances of any nature and
the same are transferred and contributed with full right, title, and
interest to the Joint Venture and free of claims by any party
whatsoever; and
(d) the execution and delivery of this Agreement and the Agreements
contemplated hereby will not violate or result in the breach of the
laws of any jurisdiction applicable or pertaining thereto or of its
constating documents.
2.02 Each Party covenants, warrants and agrees with the other:
(a) to perform or cause to be performed its obligations and commitments
under this Agreement;
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(b) not to engage either alone or in association with others in any
activity in respect of the JV Assets, Business or the Project in the
Territory except as provided or authorized by this Agreement;
(c) to be just and faithful in all its activities and dealings with the
other Party; and
(d) any information which the Parties may provide to each other or the
Joint Venture or any permissible person or company will be accurate
and complete in all material respects and not misleading, and will not
omit to state any fact or information which would be material to the
Parties or the Joint Venture or such permissible person or company.
2.03 The representations, warranties and covenants hereinbefore set out are
conditions on which the Parties have relied in entering into this Agreement and
each Party shall indemnify and save the other harmless from all loss, damage,
costs, actions and suits arising out of or in connection with any breach of any
representation, warranty, covenant, agreement or condition made by them and
contained in this Agreement.
3. PURPOSE AND CREATION OF THE JOINT VENTURE AND PROJECT
3.01 Effective the Effective Date of this Agreement VCC and VerifiedT permit the
entry of Treasure to the joint venture called the VerifiedT/VCC Joint Venture
and agree to contribute in accordance with this Agreement the VCC Assets, the
VerifiedT Assets and the Treasure Assets to the Joint Venture to be owned and
operated jointly as assets of the Joint Venture, develop the Business of the
Project as co-venturers in the Territory, divide the funding requirements of the
Project as provided by this Agreement, conduct the Project in accordance with
this Agreement, and share in the Revenues of the Joint Venture in accordance
with the terms of this Agreement.
3.02 The business and affairs of the Joint Venture shall be limited strictly to
the Project and shall not be extended by implication, or otherwise, unless
specifically authorized by the Management Committee. So long as the same does
not derogate from the performance of the obligations and responsibilities of the
Parties hereto, none of the Parties to this Agreement shall be prevented or
restricted from carrying on business or any activities of whatsoever nature.
Neither Party shall compete with the Project. The Joint Venture Business shall
not be altered or changed to unrelated endeavors from that of the present
Project without unanimous consent of the Management Committee, with such consent
not to be unreasonably withheld.
3.03 The Project shall initially be that set forth in Schedule "D" hereto and
thereafter shall be that Business endeavor employing the JV Assets as shall be
determined by the Management Committee. The Joint Venture may not be terminated
except by consent in writing of all Parties to this Agreement.
3.04 The Joint Venture Business and the JV Assets shall be held in a Joint
Venture company ("JV-Co") and all the affairs of the Joint Venture shall be
located in such JV-Co. The JV-Co shall be a holding company in a mutually agreed
jurisdiction with minimal tax, good laws and judicial facilities and low
political risk. The JV-Co shall operate its active business in subsidiaries
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("Subs") which shall be established to provide for efficiency of operation of
separate businesses and to ensure compliance with law.
3.05 The Parties have not created a partnership hereby and nothing contained in
this Agreement shall in any manner whatsoever constitute a Party the partner,
agent or legal representative of any other Party or create any fiduciary
relationship between them for any purpose whatsoever. No Party shall have any
authority to act for or to assume any obligations or responsibilities on behalf
of any other Party except as may be from time to time agreed upon in writing
between the Parties or as otherwise expressly provided herein.
3.06 The rights and obligations of each Party shall be in every case several and
not joint or joint and several.
3.07 The Parties or the Management Committee may at any time elect to conduct
the Business Project in such Joint Venture management corporations, or several
corporations, in addition to the structure provided by sec. 3.04 as may seem
appropriate for tax, JV Asset registration, liability and administrative
efficiency.
4. INTEREST OF THE PARTIES IN AND TO THE JOINT VENTURE
4.01 The relevant ownership and Revenue interests of the Parties under this
Joint Venture shall be (subject to the segregated interests and Royalty below in
Part 5) a 25% (twenty-five percent) interest to VerifiedT ("VerifiedT
Interest"), a 5% (five percent) interest to VCC ("VCC Interest") and a 70%
(seventy percent) interest to Treasure ("Treasure Interest")(such interests are
collectively called the "Interests" or singularly the "Interest"). JV-Co shall
have its capital established and issued to reflect these interests such that
there shall be one class of participating shares which shall be issued 25/5/70
(VerifiedT/VCC/Treasure respectively). Except as provided in section 5 below,
all interests in the Subs shall be owned by JV-Co. The voting interests shall be
governed in the same manner as the provisions of British Columbia corporate law
(subject to any required variations of the jurisdiction of incorporation of
JV-Co) as if the interests were common shares such that, inter alia, special
resolutions shall require a 2/3rd's vote (or such other special resolution
percentage as the law provides at that time).
4.02 Treasure shall have the right to buy all of the VCC Interest and all of the
VerifiedT Interest (except the royalty below) at market value at the earlier of
the Joint Venture generating $100 million in aggregate revenue per year with a
minimum net margin of 25% or 5 years. Market value shall be determined by an
agreed valuator or, failing agreement, Treasure may hire a top-five chartered
accountancy firm to prepare a market value report and, absent material error of
standard calculation, such report shall be final.
4.03 The Interests of the Parties hereto shall not be effected, altered, or
amended except pursuant to the provisions of this Agreement or as subsequently
agreed by the Parties hereto in writing.
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5. FINANCE, SHARE PROVISIONS AND VCC LICENSE
5.01 As consideration for VerifiedT contributing a license to the Joint Venture
and VCC admitting Treasure to the Joint Venture to earn a 70% interest, on the
terms below, Treasure shall provide the following:
(a) Treasure shall employ reasonable best efforts to provide an initial
$2,000,000US of capital to the Joint Venture by May 1, 2009 but this
Joint Venture shall be effective as to Treasure's participating 70%
interest from the Effective Date. In the event that Treasure does not
raise the said funds then either of VerifiedT or VCC may elect to
terminate this Agreement on sixty (60) days notice but should Treasure
raise the said funds during such notice period then the Joint Venture
shall continue to be effective. Treasure shall not have a right to
Revenue until it has raised the $2,000,000. Of that first $2,000,000,
US$250,000 shall be paid to VerifiedT as a license fee;
(b) Treasure shall employ reasonable best efforts to provide an additional
$3,000,000US as capital to the Joint Venture by July 1, 2009 of which
US$500,000 shall be paid to VerifiedT as a license fee. In the event
that Treasure does not provide the said funds (which may be provided
out of Treasure's portion of Joint Venture Revenue) then either of
VerifiedT or VCC may elect to invoke the provisions of sub-section
5.01(c); and
(c) Treasure shall be responsible to fund all on-going costs and cash
calls of the Joint Venture not covered by Revenue. In the event that
Treasure shall not be able to supply a Joint Venture capital
requirement, deficit or cash call at any time then either of VerifiedT
or VCC may pay such deficit or cash call and such shall be a demand
debt (at 10% per annum simple interest calculated monthly until paid)
of Treasure to the paying Parties or VerifiedT or VCC, if VCC pays,
may elect to convert any such Joint Venture deficit or debt of
Treasure to dilute Treasure Interest by applying a dilution factor of
one (1%) percent for Asset and Revenue Interest (one percent point of
JV-Co participating stock) for each $100,000 of deficiency (such
aggregate diluted interest called the "Dilution Interest") but that
Treasure may elect to repurchase such Dilution Interest at the
aforesaid cost plus interest within six (6) months of the relevant
Party making a particular election to acquire;
(d) Treasure will permit (as a `call' by VerifiedT or VCC) and Treasure
shall have the right to tender to shareholders and creditors of
VerifiedT (but not for the Class "B" convertible shares) and all
shareholders and creditors of VCC to convert their debts and shares
into Treasure shares on a one for one basis subject to the following
pre-conditions:
(i) Treasure having raised the funds of section 5.01(a) above and
(ii) The Joint Venture earning gross cash flow of not less than
$100,000US per week.
To accomplish this, subject to securities and tax advice for VerifiedT
and VCC, Treasure shall effect a take-over offer, merger or shall pay
to VerifiedT as a license fee and to VCC as a Joint Venture entry fee
sufficient common shares to permit VerifiedT and VCC to buy in all
such debt and shareholders as elect to surrender their VerifiedT and
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VCC equity. As to VerifiedT, the method shall be in such manner as
result in a surrender of capital of the VerifiedT shareholders and not
a transfer to Treasure or VCC.
5.02 VerifiedT shall provide an exclusive license ("License") of the VerifiedT
Assets to the Joint Venture with terms as follows:
(a) VerifiedT has granted or shall grant the exclusive License to all of
its present business and assets including the internet security
software and all other internet business of whatsoever nature and
including all future developments of such business;
(b) The License shall be a world-wide license with grant of all rights of
use and exploitation and including rights to sub-license;
(c) The term of the license will be 25 years with a right to renew for an
additional 25 years on the same terms for a payment of $5,000,000US;
(d) In consideration for the License Verified T will receive;
(i) the cash payments of sections 5.01(a);
(ii) ten (10%) percent of Revenues of the Joint Venture to a maximum
of US$1,250,000 (this is separate from the VerifiedT Interest);
and
(iii)a 3% gross revenue royalty on all gross cash flow of the Joint
Venture, JV-Co and the Subs, where such gross cash flow shall be
gross revenue less only direct transaction or sales taxes but
before Costs and income taxes;
(e) All on-line internet business (Gateway) will bear a 10% carried equity
interest (equivalent to a net profits interest) to Xxxxx and Zos
Xxxxxx; and
(f) The remainder shall be standard license terms as to audit rights,
intellectual property protection and other standard terms.
6. CALCULATION OF REVENUE
6.01 Treasure shall receive 70% of the Revenues, VCC shall receive 5% of the
Revenues and VerifiedT shall receive 25% of the Revenues of the Joint
Venture/JV-Co. The Revenue of the Joint Venture distributable to the
Participants shall be calculated from gross revenue of the Joint Venture
from all sources less Costs. Such Revenue shall be calculated before income
tax and other such costs which are attributable only to the Participants.
Revenues shall be distributed at such time and in such manner as may be
determined in accordance with the policies of the Management Committee but,
absent agreement to the same, shall be payable no less than quarterly and
within thirty (30) days of each quarter. The Management Committee shall
retain such reserves for approved budgets and working capital as the
Management Committee shall consider prudent. In the event of error of
Revenue calculation, or if, for any other reason, a Party has received an
attribution or payment greater than its entitlement then the Management
Committee may balance the Revenue accounts, by debits and credits to the
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Participant upon the next Revenue allocation or may demand repayment of
excess distributions and the relevant Participant shall refund such excess
within thirty (30) days of demand.
7. OPERATOR
7.01 The Parties hereto agree that Treasure, or an Affiliate, shall be the
operator until replaced by the Management Committee or until such time
as it resigns pursuant to the terms of this part. Treasure shall
contract VCC to act as sub-Operator through JV-Co and the board of
directors of JV-Co shall be established as the Management Committee.
The Management Committee shall be empanelled by election of the board
of directors of JV-Co in the manner contemplated by this Agreement and
hereafter all reference to the Management Committee shall be to the
board of directors of the JV-Co.
7.02 The Operator may at any time on ninety (90) days notice to the
Management Committee resign as Operator, in which event the Management
Committee shall select another Party, person or company to be Operator
upon the 90th day after receipt of the Operator's notice of
resignation or such sooner date as the Management Committee may
establish and give notice to the resigning Operator. The resigning
Operator shall thereupon be released and discharged from all its
duties and obligations as Operator on the earlier of those dates, save
only as to those duties and obligations that it theretofore should
have performed.
7.03 The new Operator shall assume all the rights, duties, liabilities and
status of the previous Operator as provided in this Agreement, other
than the previous Operator's Interest, if any, with such obligation to
retain or hire any of the employees of the former Operator, or to
indemnify the former Operator for any costs or expenses which the
previous Operator may incur as a result of the termination of the
employment of any of its employees resulting from this change of
Operator, as the Joint Venture has not assumed.
8. POWERS, DUTIES AND OBLIGATIONS OF OPERATOR
8.01 Subject to the control and direction of the Management Committee, the
Operator shall have full right, power and authority to do everything
necessary or desirable to manage, conduct, and carry out the Project
and to determine the manner of development of the Project and, without
limiting the generality of the foregoing, shall have the right, power
and authority to:
(a) conduct such of the Project, the JV Assets, the JV Business, and
administration on such premises as it shall determine, including
its own premises, and regulate access to the JV Assets and
Project subject only to the right of representatives of the
Parties to have access at all reasonable times for the purpose of
inspecting work being done thereon but at their own risk and
expense;
(b) employ and engage any such employees, agents and independent
contractors as it may consider necessary or advisable to carry
out its duties and obligations hereunder and in this connection
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to delegate any of its powers and rights to perform its duties and
obligations hereunder, but the Operator shall not enter into
contractual relationships with a party except on terms which are
commercially competitive; and
(c) execute all documents, deeds and instructions, do or cause to be
done all such acts and things and give all such assurances as may
be necessary to maintain good and valid title to the JV Assets
and each Party hereby irrevocably constitutes the Operator its
true and lawful attorney to give effect to the foregoing and
hereby agrees to indemnify and save the Operator harmless from
any and all costs, loss or damage sustained or incurred, without
gross negligence or bad faith by the Operator, directly or
indirectly, as a result of its exercise of its powers pursuant to
this sub-paragraph.
8.02 The Operator shall have the following duties and obligations during
the term hereof:
(a) to diligently manage, direct and control all development of the
Project and the JV Assets in accordance with the development
plans of the Project approved by the Management Committee and in
compliance with all applicable laws, rules, orders and
regulations;
(b) provide pro formas, projections, and budget analysis for the
Project for assessment by the Management Committee and the
Operator shall prepare and submit reports on a quarterly basis to
the Participants respecting operations of the Joint Venture;
(c) subject to provision of funds, subject to the requirement for
operating loans and other commercial facilities in the nature of
leases or otherwise and subject to either party retaining the
right to register its Interest for its own needs, to keep the JV
Assets in good standing and appropriately registered with service
providers and registries and clear of all liens, charges and
encumbrances of every character arising from operations (except
for those created pursuant to this Agreement and the Project
finance requirements)
(d) to maintain true and correct books, accounts and records of
operations hereunder;
(e) to permit one representative of the Parties on not less than one
(1) business day notice, and at their expense, to inspect, audit,
and copy the Operator's accounts and records relating to the JV
Assets, Project development or to the determination of Revenue;
(f) to open and maintain on behalf of the Joint Venture such bank
account or bank accounts as the Operator may determine or the
Management Committee may direct;
(g) to prosecute and defend, but not to initiate without the consent
of the Management Committee, all litigation or administrative
proceedings arising out of the JV Assets or the Project; and
(h) to transact, undertake and perform all transactions, contracts,
employments, purchases, operations, governmental presentations,
negotiations with third parties and any other matter or thing
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undertaken by or on behalf of the Joint Venture hereunder in the
Operator's name.
8.03 Subject to any specific provisions of this Agreement, the Operator, in
carrying out its duties and obligations hereunder, shall at all times
be subject to the direction and control of the Management Committee
and shall perform its duties hereunder in accordance with the
instructions and directions as from time to time communicated to it by
the Management Committee and shall make all reports to the Management
Committee except where otherwise specifically provided herein.. The
Operator shall act in good faith and in the best interest of the Joint
Venture at all times and conduct the affairs of the Joint Venture with
a view to maximizing gross revenue of the Joint Venture.
9. MANAGEMENT COMMITTEE
9.0l A Management Committee, consisting of at least one representative of
VCC and VerifiedT and two representatives of Treasure, shall be
established but votes of such committee shall be governed by the
percentages of voting Interests of the Participants. The Management
Committee shall be the governing body of the Joint Venture and shall
be responsible for general management and control of the Joint Venture
and for determining the choice of and the general policies and
direction to be adopted by an Operator.
9.02 The Management Committee shall meet at least once quarterly and
otherwise on ten (10) days notice given by the Operator or by a
Participant. Such notices shall be accompanied by an agenda of matters
to be discussed and/or decided at the meeting. Decisions of the
Management Committee shall be by majority vote. Each Party's
Management Committee representatives shall be entitled to one vote for
each one percent voting Interest held by such Party. A quorum shall be
one representative of each Party. If a quorum is not present then the
meeting shall be adjourned one week and the members present at such
subsequent meeting shall constitute a quorum. If there are any issues
or uncertainties in respect to procedure or authorities then the
Participants and their representatives shall adopt the laws, policies,
and precedents applicable to corporate law as if the Management was a
board of directors of a public company in British Columbia.
9.03 The Joint Venture shall keep proper accounting records (including
financial statements) in respect of all financial transactions, and
shall keep such other records as may be determined by the Management
Committee. The said records shall be kept at a place determined by the
Management Committee and may be inspected by any Party and any member
of the Management Committee at any time during normal business hours.
10. PARTITION AND OPTION
10.01 No Party shall, during the term of this Agreement, exercise any right
to apply for any partition of the JV Assets and the Parties hereby
waive any right to partition.
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11. TAX BENEFITS AND WRITE OFFS
11.01 Each Party on whose behalf any Costs have been incurred and in
proportion to their Interests shall be entitled to claim all tax
benefits, write-offs and deductions with respect thereto.
12. RESTRICTIONS ON ALIENATION
12.01 Save and except as provided elsewhere herein, during the first three
(3) years no Party shall transfer, convey, assign, mortgage or grant
an option in respect of or grant a right to purchase or in any way
transfer or alienate all or any portion of its Interest or rights
under this Agreement except by permission of the other Parties.
Thereafter the below right of first refusal shall first apply.
12.02 Nothing in this section shall prevent:
(a) a sale by any Party of any part of its Interest or an assignment
of any part of its rights under this Agreement to an Affiliate
provided that such Affiliate first complies with the provisions
of sub-paragraph 12.09 and agrees with the other Parties in
writing to re-transfer such Interest to the originally assigning
Party before ceasing to be an Affiliate of such Party; or
(b) a disposition pursuant to an amalgamation or corporate
reorganization which will have the effect in law of the
amalgamated or surviving company possessing all the property,
rights and interest and being subject to all debts, liabilities
and obligations of each amalgamating or predecessor company, and
the same not constituting a change of control.
12.03 Any of the Parties intending to dispose of all or any portion of its
Interest or rights under this Agreement (in this section called the
"Offeror") shall first give notice in writing to the other Party(s)
(in this section called the "Offerees") of such intention together
with the terms and conditions on which the Offeror intends to dispose
of its Interest or a portion thereof or rights under this Agreement.
12.04 Any communication of an intention to sell (the "Offer") for the
purposes of this section shall be in writing and shall:
(a) set out in reasonable detail all of the terms and conditions of
any intended sale;
(b) if it is made pursuant to a proposed sale by agent,
advertisement, or otherwise, include a photocopy of the Offer and
all other relevant documents; and
(c) if it is made pursuant to a third Party offer, clearly identify
the offering Party and include such information as is known by
the Offeror about such offering Party;
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and such communication will be deemed to constitute an Offer by the
Offeror to the Offerees to sell the Offeror's Interest or its rights
(or a portion thereof as the case may be) under this Agreement to the
Offerees on the terms and conditions set out in such Offer.
12.05 Any Offer made as contemplated in sub-paragraph 12.04 shall be open
for acceptance by one or more Offerees, and if more than one, then
pro-rata by the Offerees, for a period of sixty (60) days from the
date of receipt by the Offerees. The whole of the Offer must be
accepted and if there are more than one Offeree, and one or more
refuse their pro-rata portion, then the same may be accepted by the
other Offerees in whole, but pro rata if more than one.
12.06 If one or more of the Offerees accept the Offer, such acceptance shall
constitute a binding agreement of purchase and sale between the
Offeror and the Offerees, or of such one or more of them as accept the
Offer on the terms and conditions set out in such Offer.
12.07 If none of the Offerees accept the Offer, or do accept but fail to
close the transaction contemplated thereby, the Offeror may complete a
sale and purchase of its Interest, or a portion thereof or rights
under this Agreement, for up to six months thereafter on terms and
conditions not less favorable to the Offeror than those set out in the
Offer.
12.08 While any Offer is outstanding, no other Offer may be made until the
first Offer is disposed of and any sale resulting therefrom completed
or abandoned in accordance with the provisions of this part.
12.09 Before the completion of any sale by a Party of its Interest or
rights, or any portion thereof, under this Agreement, the purchasing
party shall enter into an agreement with the Parties not selling on
the same terms and conditions, mutatis mutandis, as set out in this
Agreement.
12.10 Each Party agrees that its failure to comply with the restrictions set
out in this section would constitute an injury and result in damage to
the other Parties impossible to measure monetarily and, in the event
of such failure, the other Parties shall, in addition and without
prejudice to any other rights and remedies at law or in equity, be
entitled to injunctive relief restraining or enjoining any sale of any
Interest or rights under this Agreement, save in accordance with the
provisions of this section, and any Party intending to make a sale or
making a sale contrary to the provisions of this section hereby waives
any defense it might have in law to such injunctive relief.
13. CONFIDENTIALITY AND COMPETITION
13.1 From the Effective Date and during this Agreement neither Party will
engage in any business which reasonably may detract from, compete with
or conflict with the Joint Venture.
13.2 A Party hereunder will not, except as authorized or required by the
Party's duties hereunder or as flow as a consequence of law or
contract (for example consequent upon reporting requirements of a
public company or consequent upon a merger or consequent upon a sale
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of Interests by a Party hereto), reveal or divulge to any person or
companies any Confidential Information concerning the Joint Venture or
its Business or of any of the Parties or of any Affiliates, which may
come to the Party's knowledge during this Agreement, and the Parties
will keep in complete secrecy all Confidential Information and will
not use or attempt to use any such Confidential Information in any
manner which may injure or cause loss either directly or indirectly to
the Joint Venture's Business. This restriction will continue to apply
after the termination of this Agreement without limit in point of time
but will cease to apply to information or knowledge which may come
into the public domain through no act or fault of the alleged
offending Party. During this Agreement and for a period of one year
following the termination the Party (the "LEAVING PARTY") which has
left the Joint Venture (whether by default, removal by loss of all
Interest or removal by exercise of Option), excepting only wind-up
with distribution to each Party of Joint Venture Assets (in which case
both Parties shall be free to conduct the Business in the Territory in
competition) shall not enter into any activity which would cause
restriction or competition to the Business thereby remaining with the
other Party (the "REMAINING PARTY") and, without restricting the
generality, shall not enter into the service of any competitor, shall
not provide to any party Confidential Information which would allow
such party to compete with the Remaining Party, shall not accept any
position or effect any investment with a party which competes with the
Remaining Party or which intends to compete with the Remaining Party,
nor take any steps which would negatively affect the Remaining Party
including such acts as inducing customers or members of the Remaining
Party to leave the Remaining Party. The Leaving Party will also
refrain from effecting negative acts in respect to the Remaining Party
both including refraining from such acts as spreading false or
malicious rumors, comment, or innuendo, initiating communications
which bring the reputation of the Remaining Party in disfavor or under
suspicion, or otherwise effecting negative acts or campaigns towards
the Remaining Party.
13.3 The Parties acknowledge that the Confidential Information is crucial
to the Business and to the Parties individually and that in the event
of unauthorized disclosure or use of the Confidential Information,
which the Parties acknowledge would be an act of bad faith as well as
a breach of this undertaking, the damage will be irreparable or the
affected Party will not be adequately compensated by monetary award.
Accordingly, the offending Party agrees that in the event of any such
breach, the affected Party shall be entitled as a matter of right,
without notice and prior to service of an originating action in
British Columbia and on an ex parte application, to apply to a Court
of competent jurisdiction in British Columbia, for determination in
accordance with British Columbia law, for relief by way of restraining
order, injunction, decree or otherwise as may be appropriate to ensure
compliance with the provisions hereof. The Parties also agree and
acknowledge that the offending Party will also be liable, as
liquidated damages, for an amount equal to the amount received and
earned by the offending Party as a result of and with respect to any
breach hereof, in addition to any other losses the affected Party may
suffer, including loss of economic opportunity.
13.4 Upon termination of this Agreement:
(a) The Parties hereby acknowledge and agree that all personally
possessed Joint Venture property, including without limitation,
all books, manuals, records, reports, notes, contracts, lists,
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and other documents, Confidential Information, copies of any of
the foregoing, and equipment furnished to or prepared by the
Joint Venture or a Party for such and in the course of or
incidental to the Business or this Agreement, all belong to the
Joint Venture and shall be promptly returned to the Joint Venture
upon termination but that all VCC license rights, and any Joint
Venture developments thereof shall belong exclusively to VCC; and
(b) The Parties acknowledge that all Confidential Information is
received or developed in confidence and for the exclusive benefit
of the Joint Venture, the VCC license (as applicable) and the
successors thereof. During this Agreement and thereafter in
accordance with this Agreement's restrictions, Parties will not,
directly or indirectly, except as required by the normal business
of the Joint Venture or expressly consented to in writing by the
Management Committee:
(i) disclose, publish or make available, other than to an
authorized person any Confidential Information;
(ii) acquire, possess for his own interest, sell, transfer or
otherwise use or exploit any Confidential Information;
(iii)permit the sale, transfer, or use or exploitation of any
Confidential Information by any third party; or
(iv) retain upon termination or expiration of this Agreement any
Confidential Information, any copies thereof or any other
tangible or retrievable materials containing or constituting
Confidential Information;
14. FORCE MAJEURE
14.01 No Party will be liable for its failure to perform any of its
obligations under this Agreement due to a cause beyond its reasonable
control (except those caused by its own lack of funds) including, but
not limited to, acts of God, fire, storm, flood, explosion, strikes,
lockouts, or other industrial disturbances, riots, laws, rules and
regulations or orders of any duly constituted governmental authority,
including environmental protection agencies, or non-availability of
materials or transportation (each an "Intervening Event").
14.02 All time limits imposed by this Agreement will be extended by a period
equivalent to the period of delay resulting from an Intervening Event.
14.03 A Party relying on the provisions of sub-paragraph 14.0l will take all
reasonable steps to eliminate any Intervening Event and, if possible,
will perform its obligations under this Agreement as far as practical,
but nothing herein will require such Party to settle or adjust any
labour disputes or to question or to test the validity of any law,
rule, regulation, or order of any duly constituted governmental
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authority or to complete its obligations under this Agreement if an
Intervening Event renders it uneconomical or impossible of completion.
15. NOTICE
15.01 Any notice, direction, cheque or other instrument or communication
required or permitted to be given under this Agreement shall be in
writing and may be given by the delivery of the same or by mailing the
same by prepaid registered or certified mail or by sending the same by
telegram, telex, telecommunication or other similar form of
communication, in each case addressed to the intended recipient at the
address of the respective Party set out on the first page hereof.
15.02 Any notice, direction, cheque or other instrument or communication
will, if delivered, be deemed to have been given and received on the
day it was delivered, and if mailed, be deemed to have been given and
received on the seventh business day following the day of mailing,
except in the event of a disruption of the postal service in which
event notice will be deemed to be received only when actually
delivered on the address and, if sent by telegram, telex,
telecommunications or other similar form of communication, be deemed
to have been given or received on the day it was so sent.
15.03 Any Party may at any time give to the other notice in writing of any
change of address of the Party giving such notice and from and after
the giving of such notice the address or addresses therein specified
will be deemed to be the address of such Party for the purposes of
giving notice hereunder.
16. WAIVER
16.01 If any provision of this Agreement shall fail to be strictly enforced,
or any Party shall consent to any action by any other Party, or shall
waive any provisions as set out herein, such action by such Party
shall not be construed as a general waiver thereof but only a waiver
for the specific time that such waiver or failure to enforce takes
place and shall at no time be construed as a consent, waiver, or
excuse for any failure to perform and act in accordance with this
Agreement at any past or future occasion.
17. FURTHER ASSURANCES
17.01 Each of the Parties hereto, shall from time to time and at all times,
do all such further acts and execute and deliver all further deeds and
documents as shall be reasonably required in order to fully perform
and carry out the terms of this Agreement. This section shall not be
construed as imposing any obligation on any Party to provide
guarantees.
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18. USE OF NAME
18.01 No Party shall, except with written permission or when required by
this Agreement, or by any law, by-law, ordinance, rule, order or
regulation, use, suffer or permit to be used, directly or indirectly,
the name of any other Party for any purpose related to this Agreement
or the Project.
19. ENTIRE AGREEMENT
19.01 This Agreement embodies the entire agreement and understanding among
the Parties hereto and supersedes all prior agreements and
undertakings, whether oral or written, relative to the subject matter
hereof.
20. AMENDMENT
20.0l This Agreement may not be changed orally but only by an agreement in
writing, executed by each of the Parties.
21. TERM
21.01 Unless earlier terminated by default or by agreement of all Parties or
as a result of one Party acquiring the whole of the other Party's
Interest, the Joint Venture and this Agreement shall remain in full
force and effect for so long as any part of the Joint Venture Assets
or Project is held or conducted in accordance with this Agreement, but
such period not to exceed 50 years.
22. DEFAULT
22.01 No Party hereto shall purport to terminate this Agreement for any
event of default except pursuant to the terms of this part.
22.02 Except for emergency proceedings in respect to a default by a Party
which materially jeopardizes the Project or finances or credit or the
JV Assets, no Party hereto shall take proceedings for default, or
otherwise, unless it has given the defaulting Party notice in writing
of the nature and scope of the default and the defaulting Party has
failed to correct such default within ten (10) business days of notice
of such default.
23. TERMINATION AND WIND-UP
23.01 Upon termination of this Agreement for whatever cause, the Management
Committee shall administer wind-up of the Joint Venture and shall
dispose of JV Assets in such manner as the Management Committee
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determines, consistent with this Agreement, the VCC license and
practices of corporate law and practice, and shall distribute the net
JV Assets, after discharge of all encumbrances, in accordance with
outstanding Interests. At the time of wind-up of the Joint Venture or
termination of the Project for any reason, the Management Committee
shall meet and approve a procedure for the retention, maintenance and
disposal of documents (the "Documents") and shall appoint such Party
as may consent thereto to ensure that all proper steps are taken to
implement and maintain that procedure. If the Management Committee
fails to approve a procedure as aforesaid, the Operator, if a Party,
otherwise a Party holding an Interest as at the date immediately
preceding the date the management Committee was called to meet, shall
retain, maintain and dispose of the Documents according to such
procedure, in compliance with all applicable laws, as it deems fit.
The Party entrusted with the retention, maintenance and disposal of
the Documents shall estimate the costs and expenses incidental thereto
and shall be entitled to receive payment of those costs and expenses
prior to any distribution being made of the Assets or the revenues
received on the disposal thereof.
24. ENUREMENT
24.01 This Agreement shall enure to the benefit of and be binding upon the
Parties hereto and their respective successors and permitted assigns.
25. GOVERNING LAW AND COMPLIANCE
25.01 This Agreement shall be governed by and interpreted in accordance with
the laws of the Province of British Columbia. The Parties will comply
with all Canadian, U.S. and foreign laws, whether federal, provincial
or state, applicable to the Parties hereunder.
26. SEVERABILITY
26.01 If any one or more of the provisions contained herein should be
invalid, illegal or unenforceable in any respect in any jurisdiction,
the validity, legality and enforceability of such provision shall not
in any way be affected or impaired thereby in any other jurisdiction,
and the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or
impaired thereby.
27. HEADINGS
27.01 The division of this Agreement into articles and sections and the
insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement.
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28. TIME OF THE ESSENCE
28.01 Time shall be of the essence in the performance of this Agreement.
IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of the
day, month and year first written above.
VERIFIED TRANSACTIONS CORP. )
hereunto executed by: )
)
)
/s/ signed )
------------------------------------
Authorized Signatory )
VERIFIED CAPITAL CORP. )
hereunto executed by: )
)
)
/s/ signed )
------------------------------------
Authorized Signatory )
TREASURE EXPLORATIONS INC )
hereunto executed by: )
)
)
/s/ signed )
------------------------------------
Authorized Signatory )
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SCHEDULE "A"
TREASURE ASSETS CONTRIBUTED
1. the use of facilities of Treasure or of its affiliates at reasonable
commercial rates (in this Agreement reasonable commercial rates shall mean
only a 5% xxxx-up unless the Parties otherwise agree);
2. conduct as Operator at reasonable commercial rates;
3. provision of capital of the Joint Venture
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SCHEDULE "B"
VERIFIEDT ASSETS CONTRIBUTED
1. License for the Business for the Territory
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SCHEDULE "C"
VCC ASSETS CONTRIBUTED
1. the use of facilities of VCC or of its affiliates at reasonable commercial
rates;
2. conduct as sub-contracted Operator at reasonable commercial rates;
3. provision of capital of the Joint Venture in the event of failure of
Treasure.
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SCHEDULE "D"
THE PROJECT
VerifiedT has or will, upon demand, license the entirety of its Business
world-wide to JV-Co of the VerifiedT/VCC Joint Venture as to all of VerifiedT's
business on the Effective Date hereof and all developments and developable
aspects of the same including all aspects of its on-line business and all
aspects of its security software for financial transactions.
