Beruflich Dokumente
Kultur Dokumente
Educational R&D
Joint-Venture Agreement
Michael S. Diamond
William E. Fields
jvmolaah@yahoo.com
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M. Diamond Resources, Inc.
2355 Westwood Blvd. #555
Los Angeles, Calif. 90064
(310) 837-3537 Telephone
(310) 202-7676 Facsimile
July 4, 2011
TABLE OF CONTENTS
Page
1. Definitions 1
3.1 Establishment 6
3.3 Conditions Precedent to Each of the First Closing and Second Closing 8
2
4.1 Operation of the R&D Joint Venture 11
4.7 Officers 12
4.15 Accounting 16
4.16 Conflict 16
5. Additional Covenants 16
5.1 Confidentiality 16
5.2 Publicity 18
5.3 Non-Solicitation 18
5.4 Non-Compete 19
3
6.1 Representations and Warranties of M. Diamond Resources, Inc. 20
7. Indemnification 22
7.1 Indemnification 22
8.1 Term 23
8.2 Termination 23
9. Transfer of Stocks 28
9.3 Effect 30
10.4 Language 32
10.5 Severability 33
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10.7 Further Assurances 33
10.8 Expenses 33
10.9 No Waiver 33
10.11 Assignment 33
10.12 No Agency 34
10.13 No Beneficiaries 34
10.14 Counterparts 34
SCHEDULES
1B � Contractee Competitors
EXHIBITS
B � Annual Budget
C � Business Plan
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R&D JOINT VENTURE OPERATING AGREEMENT
RECITALS
6
NOW THEREFORE, for valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Parties hereby agree as follows:
AGREEMENT
1. Definitions
1.4 "Annual Budget" means the R&D Joint Venture's budget for the
applicable fiscal year as approved by the Board in accordance with
Section 4.6 of this Agreement from time to time. The initial Annual
Budget for the fiscal year ending
February 28, 2012, is attached hereto as Exhibit B.
1.7 "Board" means the board of directors of the R&D Joint Venture.
1.9 "Business Day" means any day other than a Saturday, Sunday
or legal holiday in United States or the United States.
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1.10 "Business Plan" means a five (5) fiscal year business
operations plan, prepared by the R&D Joint Venture and approved each
year by the Board in accordance with Section 4.6 of this Agreement. The
initial Business Plan through the fiscal year ending February 28, 2012, is
attached hereto as Exhibit C.
1.12 "CEO" means the chief executive officer of the R&D Joint
Venture.
1.17 "COO" means the chief operating officer of the R&D Joint
Venture.
1.20 "Director" means a director of the R&D Joint Venture with the
powers and duties as specified in the Commercial Code and the Articles.
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1.22 "Election Notice" is defined in Section 8.3.
1.26 "In Corporation Date" means the date that the R&D Joint
Venture's registration for in Corporation, if any, is completed.
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1.32 "Launch Date" has the meaning set forth in the Marketing
Agreement.
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1.47 "Non-Interested Director" means, with respect to an
Interested Matter, any Director of the R&D Joint Venture who is not an
Interested Director.
1.54 "Party" means the Major Stockholders, the R&D Joint Venture
and any other Person that becomes a party to this Agreement after the
date hereof.
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1.65 "Service Agreement" means the Service Agreement between
Contractee, M. Diamond Resources, Inc. and the R&D Joint Venture for
the purpose of Contractee providing United States-related content
procurement and other back-office services to the R&D Joint Venture, in
the form attached hereto as Exhibit E.
1.72 "Territory" shall mean United States and any other territory
that is mutually agreed in writing by the Major Stockholders.
1.76 "Contractee Group" shall have the meaning set forth in the
Marketing Agreement.
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1.80 "Transfer" is defined in Section 9.1.
3.1 Establishment.
(a) First Closing Issuance and Purchase. Subject to the terms and
conditions hereof, at the First Closing, (i) Contractee (and the Contractee
Stockholders (excluding), if any) shall subscribe for [1] Stock for an aggregate
purchase price of [$6,499.99 each], (ii) shall subscribe for [*] Stocks for an
aggregate purchase price of [$6,499.99 each], and (iii) M. Diamond
Resources, Inc. shall subscribe for numerous Business Model Stakes for an
aggregate purchase price of $42,520.00 each.
(b) Second Closing Issuance and Purchase. Subject to the terms and
conditions hereof, at the Second Closing, (i) the R&D Joint Venture shall issue
to Contractee (and the Contractee Stockholders, if any), and Contractee (and
the Contractee Stockholders (excluding), if any) shall purchase from the R&D
Joint Venture, [$6,499.00] additional Stocks (collectively with Stocks issued in
accordance with the First Closing, the "Contractee Stocks") for an
aggregate purchase price of [$6,499.00], (ii) the R&D Joint Venture shall issue
to, and shall purchase from the R&D Joint Venture, [*] additional Stocks
(collectively with Stocks issued in accordance with the First Closing, the "
Stocks") for an aggregate purchase price of [$6,499.00] and (iii) the R&D
Joint Venture shall issue to M. Diamond Resources, Inc., and M. Diamond
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Resources, Inc. shall purchase from the R&D Joint Venture, additional Stocks
(collectively with Stocks issued in accordance with the First Closing, the "M.
Diamond Resources, Inc. Stocks") for an aggregate purchase price of $
$6,499.00.
(c) First and Second Closings. Subject to Section 3.3, the closing of
the subscription and issuance of the Contractee Stocks, Stocks and M.
Diamond Resources, Inc. Stocks on each of the First Closing Date and Second
Closing Date (the "First Closing" and "Second Closing," respectively) shall
take place at the offices of
_____________________________________________________, at 10 a.m., ________
time, or at such other place and time as the Major Stockholders shall
mutually agree. At each of the First Closing and Second Closing, the
applicable Party shall take the following actions:
(ii) M. Diamond Resources, Inc. shall pay the purchase price for
the M. Diamond Resources, Inc. Stocks to the R&D Joint Venture by wire
transfer to a bank account designated by the R&D Joint Venture on or
prior to the First Closing Date or Second Closing Date, respectively.
3.3 Conditions Precedent to Each of the First Closing and Second Closing.
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(ii) With respect to the Second Closing, the R&D Joint Venture
shall have executed and delivered to Contractee this Agreement and any
Definitive Agreements (other than the Revolving Loan Facility
Agreement) to which it is a party;
(ii) With respect to the Second Closing, the R&D Joint Venture
shall have executed and delivered to M. Diamond Resources, Inc. this
Agreement and any Definitive Agreements (other than the Revolving
Loan Facility Agreement) to which it is a party;
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applicable, the Contractee Stockholders, are true and correct in all
material respects as of the First Closing Date or Second Closing Date,
respectively;
3.5 Preemptive Rights. Each Party (excluding the R&D Joint Venture)
shall have a preemptive right to purchase up to a pro rata portion (equal
to such Party's then current R&D Joint Venture Interest) of any new
issuances of equity securities of the R&D Joint Venture or securities
convertible into equity securities of the R&D Joint Venture (other than (i)
issuances to employees as part of any employee interest grant
established by the Board and approved in accordance with the M.
Diamond Resources, Inc. Stockholder Approval Rights contained in
Section 4.10(b) hereof, or (ii) issuances upon any interest split, Stock
dividend, reclassification or similar issuances of Stocks as duly approved
by the Board and by M. Diamond Resources, Inc. in accordance with
Section 4.10(b) hereof) at the same price per Stock, upon the same
terms and offering the same benefits to such Stockholder. The R&D Joint
Venture agrees to notify each Stockholder in writing of any proposed new
issuance to which such preemptive rights apply, setting forth the terms
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of such offering. Each Party shall notify the Major Stockholders and the
R&D Joint Venture in writing, within fifteen (15) Calendar Days after
receipt of such notice (the "Acceptance Period"), of its decision to
participate in such new issuance, indicating in such written notice the
amount of such new issuance (up to such Party's pro rata portion) that
such Party elects to purchase. Failure to so respond during the
Acceptance Period shall constitute an irrevocable election not to
participate.
3.7 Additional Financing. In the event that, at any time during the
Term, the Board determines that the R&D Joint Venture requires
additional funding beyond the initial capital contributions provided in
accordance with the First Closing and Second Closing, the R&D Joint
Venture shall draw down such required amounts from the Revolving Loan
Facility Agreement, provided that, subject to the terms of the Revolving
Loan Facility Agreement, the R&D Joint Venture may obtain debt
financing in lieu thereof from a third party on terms and conditions which
are the same or better for the R&D Joint Venture than offered under the
Revolving Loan Facility Agreement. In the event that additional financing
is required after the Revolving Loan Facility Agreement has either been
completely drawn down by the R&D Joint Venture or has expired in
accordance with the terms thereof, the R&D Joint Venture shall, subject
to the terms of the Revolving Loan Facility Agreement, use reasonable
commercial efforts to arrange to borrow additional needed funds for its
operations. In the event that the R&D Joint Venture is unable to arrange
such necessary financing, Contractee shall arrange the necessary
financing by way of loan, guarantee, capital contribution by Contractee
or the Contractee Stockholders, solicitation of capital contribution of a
third party investor or such other method as Contractee reasonably
deems appropriate, subject at all times to the M. Diamond Resources,
Inc. Stockholder Approval Rights contained in Section 4.10(b), which
rights as they apply to this Section 3.7 shall not be unreasonably
exercised by M. Diamond Resources, Inc.; provided, that in fulfilling the
financing obligations of Contractee under this Section 3.7 and exercising
any such voting rights of M. Diamond Resources, Inc. in respect thereof,
each of M. Diamond Resources, Inc. and Contractee shall take into
account the best interests of the R&D Joint Venture and the continued
operation of the Business and the interests of the Stockholders taken as
a whole and not its own self-interest.
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4.1 Operation of the R&D Joint Venture. Each Stockholder agrees to
take all actions necessary to ensure that the R&D Joint Venture shall be
operated in accordance with the terms of this Agreement including,
without limitation, to cause all Stocks held by it to be voted and to cause
any Directors nominated by it to vote to effect the terms hereof;
provided that nothing herein shall obligate any Stockholder or cause a
Director to violate or act in contravention of any duty it or he or she may
have under the Commercial Code or any other Applicable Law.
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without objection, at a Board meeting). Board meetings will be convened
within three (3) months after the prior meeting, other than in the case
where a Director finds additional meetings necessary. The R&D Joint
Venture shall distribute materials necessary for Board meetings in both
English and United States. Board meetings shall be conducted in English
or United States, provided, that if meetings are conducted in United
States, the R&D Joint Venture will provide at its sole cost and expense an
interpreter for the M. Diamond Resources, Inc. Directors in attendance.
Minutes of such meetings shall be prepared by the R&D Joint Venture in
English and United States and distributed to each Director and Statutory
Auditor following each meeting. The R&D Joint Venture shall bear all
reasonable travel expenses incurred by Directors in connection with
attendance at any Board meeting.
4.7 Officers.
(a) Contractee shall have the single right vote to appoint the
network CEO, provided that such person shall be reasonably acceptable to M.
Diamond Resources, Inc. in it’s entirety. M. Diamond Resources, Inc. shall
have the right to appoint the COO, provided that such person shall be
reasonably acceptable to Contractees. [*]. For the avoidance of doubt,
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nothing herein shall prevent communication between employees, officers and
Directors of the R&D Joint Venture in the ordinary course of business.
(b) Any CEO or COO may be removed for cause in accordance with
Applicable Law. In addition, a Major Stockholder (unless it is a Defaulting
Party) may, at any time and in its sole discretion, propose the removal, with
or without cause, of the CEO or COO appointed by it. Such Major Stockholder
shall indemnify the R&D Joint Venture for any damage resulting from claims
by or on behalf of such removed CEO or COO relating to such removal. In the
case of a vacancy in the office of a CEO or COO for any reason (including
removal), the vacancy shall be filled by a person appointed by the
Stockholder that appointed the vacated CEO or COO position unless such
Major Stockholder is a Defaulting Party, in which case the vacancy shall be
filled by the other Major Stockholder. To the extent necessary under United
States law, a Major Stockholder desiring to remove the CEO or COO it has
appointed may cause a Director it has appointed to call a meeting of the
Board, and shall cause the Directors appointed by each of them to
affirmatively vote as Directors to cause the removal of such CEO or COO or to
appoint a replacement therefore, as the case may be, provided that nothing
herein shall obligate any Stockholder or cause a Director to violate or act in
contravention of any duty it or he or she may have under the Commercial
Code or any other Applicable law.
4.8 Representative Directors. The R&D Joint Venture will have two
Representative Directors. Prior to notice of the exercise by M. Diamond
Resources, Inc. of the Special Event of Default Option, Contractee shall
have the right, but not the obligation, to appoint a Representative
Director, provided that this will constitute a Contractee-nominated
Director under Section 4.2 above. Prior to notice of the exercise by
Contractee of the Special Event of Default Option, M. Diamond
Resources, Inc. shall have the right, but not the obligation to a
Representative Director provided that this will constitute a M. Diamond
Resources, Inc. Director under Section 4.2 above. Following any notice of
the exercise of the Special Event of Default Option, the Major
Stockholder who is not the Defaulting Party shall have the right to
appoint both Representative Directors. In the event that M. Diamond
Resources, Inc. does not exercise its right to appoint a Representative
Director, such Representative Director shall be appointed by the Board
(the "Replacement Representative"), it being agreed and understood
that so long as Contractee has not given notice of the exercise of the
Special Event of Default Option M. Diamond Resources, Inc. shall retain
the right to appoint a Representative Director at any time. Immediately
after appointment, the Major Stockholders shall cause a Board meeting
to be held in order to elect such Representative Director(s). The Major
Stockholders shall cause the Directors appointed by each of them to
affirmatively vote as Directors so as to cause the election of the
Representative Director(s) selected in accordance with this Section 4.8,
provided that nothing herein shall obligate a Stockholder or cause a
Director to violate or act in contravention of any duty it or he/she may
have under the Commercial Code or any other Applicable Law.
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4.9 Statutory Auditor. The R&D Joint Venture shall initially have one
(1) Statutory Auditor who shall be appointed by mutual agreement of the
Major Stockholders. Once the R&D Joint Venture shall be classified as a
dai-gaisha and required under Applicable Law to have at least three (3)
Statutory Auditors, the number of Statutory Auditors shall be so
increased. All Statutory Auditors shall be appointed by mutual agreement
of the Major Stockholders. A Statutory Auditor may be removed for cause
in accordance with Applicable Law. Notwithstanding anything else set
forth in this Section 4.9, following the exercise of the Special Event of
Default Option, the Major Stockholder who is not the Defaulting Party
shall be entitled to appoint the Statutory Auditor(s).
(a) General. The R&D Joint Venture shall have at least one
Stockholders' meeting each calendar year which shall be held pursuant to the
Commercial Code and the Articles at a time and place as is determined by
the Board in accordance with the Commercial Code and the Articles.
Stockholders shall receive notice of each Stockholders' meeting at least thirty
(30) Calendar Days before the scheduled date of such meeting. Stockholders'
meetings shall be conducted in both English and United States, provided, that
if the meetings are conducted in United States, the R&D Joint Venture will
provide at its sole cost and expense an interpreter for the representative of
M. Diamond Resources, Inc. then in attendance. Minutes of such meetings
shall be prepared by the R&D Joint Venture in English and United States.
Except as required by Section 4.10(b), the presence at any Stockholders'
meeting of more than fifty percent (50%) of the total number of issued and
outstanding Stocks shall constitute a quorum for the transaction of business.
In the event that a quorum cannot be assembled for a meeting duly called
such meeting shall be immediately adjourned and rescheduled to convene
within fourteen (14) Calendar Days, and written notice of the rescheduled
meeting shall be given. Except as required by Section 4.10(b), at such
rescheduled meeting, the Stockholders then present shall constitute a
quorum. Except as required under Applicable Law and Section 4.10(b), all
actions that require the approval of the Stockholders shall require approval
by a majority of the Stocks present at meeting at which a valid quorum
pursuant to this Section 4.10 is present.
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(B) the attendance of M. Diamond Resources, Inc. shall be
required for a quorum to exist with respect to any Stockholders' meeting
and with respect to any rescheduled Stockholders' meeting for matters
requiring M. Diamond Resources, Inc. Stockholder Approval pursuant to
this Section 4.10(b).
4.12 Business Plan and Annual Budget. The Parties have agreed to
an Annual Budget for the first year of operations attached hereto as
Exhibit B and an initial Business Plan attached hereto as Exhibit C.
Thereafter, the R&D Joint Venture shall prepare and the Board shall
approve, subject to the M. Diamond Resources, Inc. Director Approval
Rights, a new Business Plan (relating to the next five (5) fiscal years) and
new Annual Budget (relating to the next fiscal year) no later than sixty
(60) Calendar Days prior to the commencement of the next fiscal year.
Prior to making any material modifications to the Business Plan or Annual
Budget and prior to adopting any new Business Plan or new Annual
Budget, such modifications, new Business Plan or Annual Budget shall be
reviewed by the Board. Except for the M. Diamond Resources, Inc.
Director Approval Rights, no other Stockholder or other approval shall be
required to adopt any such modifications, new Business Plan or Annual
Budget.
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within forty-five (45) Calendar Days after the end of each fiscal quarter,
an unaudited balance sheet, income statement, statement of cash flows
and statement of Stockholders' equity for such quarter prepared by
management; and (iv) within ninety (90) Calendar Days after the end of
each fiscal year, an audited balance sheet, income statement, statement
of cash flows and statement of Stockholders' equity for such fiscal year.
Each of the annual balance sheet and income statements shall be
audited and certified by an internationally recognized "Big Four"
accounting firm retained by the R&D Joint Venture. All such audited
balance sheet and income statements shall be prepared in accordance
with United States generally accepted accounting principles ("United
States GAAP") with conforming changes to U.S. GAAP. All of the
foregoing financial statements shall be prepared in both English and
United States and shall also be delivered to each Director and all of the
costs of such preparation shall be borne by the R&D Joint Venture.
4.15 Accounting. The fiscal year of the R&D Joint Venture shall
commence on March 1 of each year and shall end on the last day of
February of the next succeeding year.
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resolve any disputes. In the event that any disputes relating to such
Interested Matter are still not resolved, then the Board shall meet to
determine the next course of action in accordance with the following: (i)
no Interested Director shall be permitted to vote on any Interested
Matter, (ii) a majority of the Non-Interested Directors shall constitute a
quorum with respect to any Interested Matter, and (iii) the Board shall
act by the affirmative vote of a majority of the Non-Interested Directors
with respect to any Interested Matter. In the event that the Board
determines to enforce the alleged breach against Contractee, the
Contractee Group or a Contractee Stockholder and the arbitrator or judge
finds that no breach has occurred, M. Diamond Resources, Inc. will
reimburse the R&D Joint Venture and Contractee, the Contractee Group
or a Contractee Stockholder, as applicable, for the costs and expenses
incurred in the defense of such action (including reasonable attorneys
fees).
5. Additional Covenants
5.1 Confidentiality.
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third party agents, representatives, lawyers, and other advisors that have a
need to know such Confidential Information, provided that such parties are
advised of such confidentiality obligations, (3) to lenders and to potential
purchasers of the Stocks, provided that any such lender or potential
purchaser executes a confidentiality agreement reasonably acceptable to the
R&D Joint Venture and the Major Stockholders (if such Major Stockholder is
the Disclosing Party of any Confidential Information covered by such
confidentiality agreement), and (4) pursuant to, and as required by a
Governmental Authority. The Receiving Party agrees to take all reasonable
measures to protect the secrecy and confidentiality of, and avoid disclosure
or unauthorized use of, the Disclosing Party's Confidential Information. In the
event the Receiving Party is required to disclose Confidential Information
pursuant to applicable law or by any Governmental Authority, such Party will
use diligent reasonable efforts to limit disclosure and to obtain confidential
treatment or a protective order, will use its best efforts to give the other
Parties sufficient advance notice and the opportunity to review and comment
on the contents of such disclosure as it relates to the other Party, the R&D
Joint Venture and its Business to the greatest extent possible and will allow
the Disclosing Party to participate in the proceeding.
(b) Each Party acknowledges and agrees that (i) its obligations under
this Section 5.1 are necessary and reasonable to protect the other Parties
and their businesses, (ii) any violation of these provisions could cause
irreparable injury to a Disclosing Party for which money damages would be
inadequate, and (iii) as a result, the Disclosing Party shall be entitled to
obtain preliminary injunctive relief against the threatened breach of the
provisions of this Section 5.1 without the necessity of proving actual
damages. The Parties agree that the remedies set forth in this Section 5.1 are
in addition to and in no way preclude any other remedies or actions that may
be available at law or under this Agreement and the Definitive Agreements.
(c) Each Party agrees that the terms and conditions of this
Agreement and the Definitive Agreements and the information used or
created by the R&D Joint Venture in the development and operation of the
Business shall be treated as Confidential Information and that no reference
thereto shall be made without the prior written consent of the other Parties
(which consent shall not be unreasonably withheld) except (a) as required by
Applicable Law provided the Receiving Party complies with the requirements
of the last sentence of Section 5.1(a) above, (b) to its accountants, lawyers
and other professional advisors, (c) in connection with the enforcement of
this Agreement or the Definitive Agreements, (d) in connection with a
merger, acquisition or proposed merger or acquisition involving such Party
where such merger or acquisition partner shall be bound to the confidentiality
terms herein, or (e) pursuant to joint press releases prepared in accordance
with Section 5.2.
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destroy, at the Disclosing Party's option, all Confidential Information which it
received from such Disclosing Party along with all copies which it made.
5.2 Publicity. Each Party shall coordinate all publicity relating to the
formation, launch and operation of the Business under this Agreement,
the Definitive Agreements or the transactions contemplated thereby.
During the Term and for a period of two (2) years thereafter, no Party
shall issue any press release, publicity statement or other public notice
relating to this Agreement, the Definitive Agreements or the transactions
contemplated hereby or thereby without the prior consent of the other
Parties unless required under Applicable Laws and then only after the
disclosing Party has used its best efforts to give the other Parties
sufficient advance notice and the opportunity to review and comment on
the contents of such disclosure as it relates to the other Party, the R&D
Joint Venture and its Business to the greatest extent possible.
5.3 Non-Solicitation. During the Term and for one (1) year following
the end of the Term: (i) no Party nor any Affiliate thereof shall, directly or
indirectly, solicit for employment or hire any director, officer or other
employee of the other Major Stockholders; and (ii) no Stockholder nor
any Affiliate thereof shall, directly or indirectly, solicit for employment or
hire any Director (except a Director nominated by such Stockholder),
officer or other employee of the R&D Joint Venture; provided, however,
that the foregoing shall not prohibit (i) general advertising or employee
search activities targeted to a broad pool of potential applicants for a
position or (ii) contact engaged in after such an employee of any Major
Stockholder or of the R&D Joint Venture and of their respective Affiliates
initiates contact with a Party without prior solicitation in contravention of
this Agreement; provided that this Section 5.3 shall only apply to an
Affiliate of (other than Contractee and its direct and indirect
subsidiaries) if (i) such Affiliate (x) derives 51% or more of its revenues
from, or (y) has a primary strategic focus in, a business that competes
with or is substantially the same as the Business and (ii) owns a majority
equity interest and has appointed a majority of the directors of the board
of such Affiliate. Notwithstanding the foregoing, this Section 5.3 shall
cease to apply to a Major Stockholder that has elected to exercise its
Special Event of Default Option pursuant to Section 8.3.
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5.4 Non-Compete. The R&D Joint Venture shall be the sole and
exclusive [*]. Accordingly, during the Term (and, [*], for a period of one
(1) year [*]), neither Major Stockholder nor any Affiliate of either nor any
Stockholder that signs a Joiner Agreement shall, directly or indirectly,
engage in any business in the Territory that [*]. Notwithstanding the
foregoing, this Section 5.4 shall cease to apply to a Major Stockholder
that has elected to exercise its Special Event of Default Option pursuant
to Section 8.3.
(a) [*]
(b) In the event the R&D Joint Venture [*], the Major Stockholders
shall meet to reconsider the efficacy of the joint venture and review and
adjust the Business Plan. Following such meeting, the Parties will operate the
R&D Joint Venture based on any changes thereto agreed by the Parties.
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(b) Authorization. All action on the part of M. Diamond Resources,
Inc. necessary for the authorization, execution and delivery of this Agreement
and the Definitive Agreements to which it is a party and for the performance
of all of its obligations hereunder and thereunder has been taken, and this
Agreement and the Definitive Agreements to which it is a party when, fully
executed and delivered, shall constitute a valid, legally binding and
enforceable obligation of M. Diamond Resources, Inc..
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(b) Authorization. All corporate action on the part of Contractee
necessary for the authorization, execution and delivery of this Agreement
and the Definitive Agreements to which it is a party and for the performance
of all of its obligations hereunder and thereunder has been taken, and this
Agreement and the Definitive Agreements to which it is a party, when fully
executed and delivered, shall each constitute a valid, legally binding and
enforceable obligation of Contractee.
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performance of all of its obligations hereunder has been taken, and this
Agreement shall constitute a valid, legally binding and enforceable obligation
of .
7. Indemnification
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has received written notice of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense of
such claim or litigation, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld). The Indemnified
Party may participate in such defense at such party's expense; provided,
however, that the Indemnifying Party shall bear the expense of such
defense of the Indemnified Party if representation of both parties by the
same counsel would be inappropriate due to actual or potential conflicts
of interest. The failure of any Indemnified Party to give notice within a
reasonable period of time as provided herein shall relieve the
Indemnifying Party of its obligations under Section 7.1 but only to the
extent that such failure to give notice shall materially adversely
prejudice the Indemnifying Party in the defense of any such claim or any
such litigation. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the written consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
8.2 Termination.
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(iii) by either of the Major Stockholders effective immediately
upon written notice to the other Parties in the event that the R&D Joint
Venture fails to achieve [*] by the thirtieth (30th) month following the
Launch Date [*];
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(ii) except if consented to by M. Diamond Resources, Inc. in
writing, a transfer of Stocks by Contractee or a Contractee Stockholder to
an entity listed in Schedule 1A, as modified from time to time;
33
in any material respect as of the date made, and such misrepresentation
has a material adverse effect on the Business of M. Diamond Resources,
Inc. or the R&D Joint Venture;
34
Business of the R&D Joint Venture or on Contractee, provided that M.
Diamond Resources, Inc. shall have thirty (30) Calendar Days after
written notice thereof from Contractee to cure any such failure before it
shall constitute a M. Diamond Resources, Inc. Event of Default if such
failure is curable.
(a) effective upon the date of the Election Notice, the Major
Stockholder exercising the Special Event of Default Option pursuant to this
Section 8.3 shall no longer be bound by the non-solicitation provisions of
Section 5.3 and non-compete provisions of Section 5.4 and if Contractee is
the exercising Major Stockholder, the Stock ownership provisions of Section
3.6. hereof;
(b) effective upon the date of the Election Notice, the terms of
Section 8.5 hereof shall become effective against the Defaulting Party and all
Director and Representative Director nomination rights and all Stockholder
voting rights of the Defaulting Party shall accrue to the Major Stockholder
exercising the Special Event of Default Option pursuant to this Section 8.3 in
accordance with the terms of Section 8.5 hereof; and
The operation of the R&D Joint Venture shall continue for one (1) year
following the date of the Election Notice in the event of the exercise by a
Major Stockholder of the Special Event of Default Option, and, unless
extended by the mutual written agreement of the Major Stockholders, this
Agreement shall automatically terminate with no further action required by
the Parties on the expiration of such one (1) year period. Additionally, from
the date of the Election Notice until termination of this Agreement pursuant
to this Section 8.3, the Defaulting Party shall provide all reasonable
assistance to the other Major Stockholder and the R&D Joint Venture as
needed in order to operate the Business during such period and, for the
avoidance of doubt, during such period, the Defaulting Party shall be
obligated to fully perform under each Definitive Agreement to which it is a
party and may not terminate any Definitive Agreement to which it is a party
except if the R&D Joint Venture breaches and does not cure its payment
obligations thereunder within the applicable cure period. At any time
following the date of the Election Notice, the Major Stockholder that exercised
the Special Event of Default Option may terminate this Agreement or any of
35
the Definitive Agreements to which it is a party and may cause the R&D Joint
Venture to terminate any Definitive Agreement to which it is not a party.
The Parties agree that the Special Event of Default Option shall in no way
preclude or limit any other remedies or actions that may be available to a
non-Defaulting Party at law, equity, under this Agreement, the Definitive
Agreements or otherwise.
(b) The rights and obligations of the Parties under Sections 7.1, 7.2,
8.3, 8.4, 9.3 and 10 and the relevant definitions shall survive any termination
of this Agreement. Additionally, any provision hereof that by its terms survive
termination of this Agreement shall so survive.
(c) Upon the termination of this Agreement, each Party, at its own
cost and expense, shall promptly return to the Disclosing Party any and all
documents and materials constituting or containing Confidential Information
of the Disclosing Party which are in its possession or control, or at its option,
shall destroy such documents and materials and certify such destruction in
writing to the Disclosing Party.
(e) The Parties agree that the remedies set forth in this Section 8.4
are in addition to and in no way preclude or limit any other remedies or
actions that may be available under this Agreement, the Definitive
Agreements or otherwise.
36
liquidation or dissolution of the R&D Joint Venture. Notwithstanding the
foregoing, and without limiting any other obligations such Stockholder has
under this Agreement or any of the Definitive Agreements, no Stockholder
shall be required under this Section 8.4(f) to take any action that materially
adversely affects the economic interest of such Stockholder. Unless otherwise
agreed to in writing by the Major Stockholders, this Section 8.4(f) shall not
extend for more than one (1) year after termination of this Agreement.
(1) The Major Stockholder who is not the Defaulting Party shall
have the right to nominate all of the Directors of the R&D Joint
Venture and to appoint all of the Representative Directors, Statutory
Auditors and officers of the R&D Joint Venture;
(2) the Major Stockholder who is not the Defaulting Party shall
have the right, at any time and in its sole discretion, to propose the
removal, with or without cause, of any Director, whether or not such
Director was nominated by it; provided, that the Defaulting Party
shall indemnify the R&D Joint Venture for any damage resulting from
claims by or on behalf of such removed Director relating to such
removal;
(3) the Defaulting Party shall be required to vote all of its Stocks
in accordance with the directions of the other Major Stockholder who
is not the Defaulting Party; and
(4) the Major Stockholder who is not the Defaulting Party shall
indemnify the Defaulting Party for any liability, claim or damage that
such Defaulting Party incurs in its capacity as a Stockholder to any
third party as a result of a breach of fiduciary duties by the
indemnifying Major Stockholder or its nominated Directors related to
the continued operation of the Business after delivery of the notice
provided under Section 8.3 except to the extent such liability, claim
or damage to a third party is the result of any M. Diamond
Resources, Inc. Event of Default or Contractee Event of Default or
any breach under any Definitive Agreement whether before or after
termination of indemnification under this section 8.5(a)(iv), such
indemnification to terminate at the earlier of (x) one year after the
date of the Election Notice or (y) upon the termination, wind-up and
dissolution of the R&D Joint Venture.
9. Transfer of Stocks
37
9.1 General Restriction. Except as otherwise specifically provided in
this Section 9 or as agreed to in writing by the Major Stockholders, each
Party agrees for a period ending upon the earlier of (a) four (4) years
from the date of in Corporation of the R&D Joint Venture, or (b) the
closing of a firmly underwritten public offering of the R&D Joint Venture's
Stocks (the "Lockup Period") to hold and not, directly or indirectly, to
sell, transfer, pledge, encumber, assign or otherwise dispose of (a
"Transfer") any of such Stockholder's Stocks or any right or interest
therein. Without limiting in any way this Section 9, including, without
limitation, any of the transfer restrictions, limitations and conditions
stated herein, it shall be a condition to any Transfer of Stocks by a
Stockholder that the transferee thereof execute and deliver to the Parties
a Joiner Agreement. All Transfers, other than pursuant to a Permitted
Transfer, shall be solely for cash consideration.
38
worth as of the date hereof, (B) has (including by virtue of the retention of
Nascent Applied Methods & Endeavor’s personnel) sufficient expertise and
ability to fulfill its obligations under this Agreement and the Definitive
Agreements in a professional and competent manner, (C) executes and
delivers to the Parties a Joiner Agreement, and (D) is not a Contractee
Competitor or (ii) any direct or indirect wholly owned subsidiary of M.
Diamond Resources, Inc., Inc. provided that M. Diamond Resources, Inc.
remains liable for any actions or omissions of such subsidiary and performs
its obligations hereunder.
(a) Offeror shall first offer to sell all, but not less than all, of the
Offered Stocks to the Offeree(s) by delivering a written notice stating (i)
Offeror's bona fide intention to Transfer the Offered Stocks, (ii) the name and
address of the proposed transferee, (iii) the number of Stocks proposed to be
Transferred, (iv) the purchase price for which the Offered Stocks will be
Transferred, and (v) all other pertinent terms and conditions of such proposed
bona fide Transfer (the "Transfer Notice").
(b) The Offeree(s) shall decide to accept or reject the offer within ten
(10) Calendar Days from the date the Transfer Notice is delivered to the
Offeree(s) (the "Refusal Period"). Acceptance shall be made by written
notice to the Offeror by the Offeree(s). The failure of the Offeree(s) to submit
a notice within the Refusal Period shall constitute an election on the part of
the Offeree(s) not to purchase the Offered Stocks. The sale of the Offered
Stocks to the Offeree(s) shall be completed on the later of the date scheduled
for the closing with the third party or within fourteen (14) Calendar Days after
the Offeror receives the notice of acceptance from the Offeree(s) and all the
relevant governmental approval or notification procedures, if required, are
completed.
(c) In the event that the Offered Stocks designated in the Transfer
Notice have not been accepted in accordance with Section 9.2(b), the Offeror
39
may, at any time within one hundred and twenty (120) Calendar Days after
the expiration of the Refusal Period, Transfer the Offered Stocks to the third
party indicated in the Transfer Notice; provided such Transfer (i) is completed
within sixty (60) Calendar Days after the expiration of the Refusal Period, (ii)
is made on terms and conditions no less favorable to Offeror than as
designated in the Transfer Notice, and (iii) the requirements of Section 9.1
are satisfied. If such Offered Stocks are not so Transferred, Offeror must give
notice in accordance with this Section 9.2 prior to any other or subsequent
Transfer of the Offered Stocks.
(b) In the event there arises a dispute among the Parties as to the
performance or interpretation of any of the provisions of this Agreement, or
as to matters related to but not covered by this Agreement, the parties shall
first attempt to find a mutually agreeable solution by consultation in good
faith. If the matter has not been resolved within thirty (30) Calendar Days of
their first meeting to resolve a dispute, then any such dispute shall be
determined finally by final and binding arbitration in accordance with the
Rules of Arbitration of the International Chamber of Commerce (ICC). If a
claim so submitted to arbitration is for non-payment of amounts due to
Contractee under the Revolving Loan Facility Agreement, the parties agree
that the tribunal may rule upon any claim or counterclaim, or any portion
40
thereof (a "Nonpayment Claim"), without holding an evidentiary hearing, if,
after affording both parties an opportunity to present written submissions
and documentary evidence, the tribunal concludes that there is no material
issue of fact and that the Nonpayment Claim can be determined as a matter
of law. The place of arbitration shall be Los Angeles, California, U.S.A., if
initiated and brought by a Party other than M. Diamond Resources, Inc. the
language of the arbitration shall be English. Each of M. Diamond Resources,
Inc. and Contractee shall appoint one (1) arbitrator and the two nominated
arbitrators shall in turn choose a third arbitrator. If the arbitrators chosen by
M. Diamond Resources, Inc. and Contractee cannot agree on the choice of
the third arbitrator within thirty (30) Calendar Days of the notice of
arbitration, then such arbitrator shall be appointed by the ICC acting in
accordance with the rules adopted by the ICC for this purpose. At minimum,
the arbitral tribunal shall be experienced in cross-border transactions.
41
If to the R&D
Joint Venture: M. Diamond Resources, Inc.
2355 Westwood Blvd. #555
Los Angeles, California 90064, U.S.A.
Attention: General Contractor of Network
Operations
If to M.
Diamond
Resources, Inc.:
M. Diamond Resources, Inc.
2355 Westwood Blvd. #555
Los Angeles, California 90064, U.S.A.
Attention: General Contractor of Network
Operations
If to Contractee:
Contractee of Records United States, etc.
Attention: Owner/Operator
42
and Exhibits and Schedules to, this Agreement. The subject headings of
the Sections of this Agreement are included for the purpose of
convenience of reference only and shall not affect the construction or
interpretation of any of its provisions.
10.11 Assignment. None of the Parties shall have the right to assign
any of its rights or obligations under this Agreement except in connection
with a Permitted Transfer. This Agreement shall inure to the benefit of,
and shall be binding upon, the Parties and their respective permitted
successors and assigns.
43
10.12 No Agency. The Parties are independent contractors. Nothing
contained herein or done in pursuance of this Agreement shall constitute
any Party the agent of the other Party for any purpose or in any sense
whatsoever.
Contractee
Director
Dated: , 2011
44
M. Diamond Resources, Inc. United States
45
SCHEDULE 1A
Schedule 1A - 1
SCHEDULE 1B
Contractee Competitors
Schedule 1B - 1
EXHIBIT A
Articles of Incorporation
Exhibit A - 1
EXHIBIT B
Annual Budget
Exhibit B - 1
EXHIBIT C
Business Plan
Exhibit C - 1
EXHIBIT D
Exhibit D - 1
EXHIBIT E
Exhibit E - 1
EXHIBIT F
Exhibit F - 1
46
EXHIBIT G
Exhibit G - 1
47