Joint Venture Development and Operating Agreement among Verified Capital Corp., Verified Transactions Corp., and Treasure Explorations Inc.

Summary

This agreement, effective March 25, 2009, is between Verified Capital Corp., Verified Transactions Corp., and Treasure Explorations Inc. It establishes a joint venture for developing and operating an internet security software and online gateway business. Treasure Explorations Inc. can earn up to a 70% interest in the joint venture, with VCC and VerifiedT as the other participants. The agreement outlines each party’s contributions, management structure, and how costs and revenues will be shared. It also sets out confidentiality obligations and the process for managing the joint venture’s assets and operations.

EX-10.1 4 ex10-1.txt JOINT VENTURE AGREEMENT 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 2550-555 West Hastings Street, Vancouver, BC V6B 4N5 (hereinafter referred to as "VCC") OF THE FIRST PART AND: VERIFIED TRANSACTIONS CORP. with its address for notices at c/o 2550-555 West Hastings Street, Vancouver, BC V6B 4N5 (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; -2- 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; -3- (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 -4- 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; -5- (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 -6- ("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. -7- 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 -8- 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 Ralph and Zos Santos; 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 -9- 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 -10- 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 -11- 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. -12- 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; -13- 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 -14- 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, -15- 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 -16- 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. -17- 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 -18- 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. -19- 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 ) -20- 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% mark-up unless the Parties otherwise agree); 2. conduct as Operator at reasonable commercial rates; 3. provision of capital of the Joint Venture -21- SCHEDULE "B" VERIFIEDT ASSETS CONTRIBUTED 1. License for the Business for the Territory -22- 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. -23- 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.