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SHAREHOLDERS' AGREEMENT
THIS AGREEMENT made the 22nd day of November, 1999
AMONG:
XXXX X. XXXX, Businessman, with a residential address at
#0000-0000 Xxxxxxxxx Xxxxxx X.X., Xxxxxxx, Xxxxxxx, X0X 0XX
(herein "Lore") Fax: (000) 000-0000
OF THE FIRST PART
AND:
XXXXX XXXXX, Chartered Accountant, of 000 Xxxxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxx X0X OW4,
(herein "Booth") Fax, (000) 000-0000
OF THE SECOND PART
AND:
XX-XXXXXX.XXX INC., an Alberta corporation with an address
c/o Suite 2000 - 0000 00xx Xxxxxx X.X., Xxxxxxx, Xxxxxxx
Xxxxxx X0X IE7
(herein "the Company") Fax (000) 000-0000
OF THE THIRD PART
AND:
VERIDA INTERNET CORP., 00 Xxxxxxxxxx Xxxxxx, Xxxxx 0000,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, XXX
(herein "Verida") Fax: (000) 000-0000
OF THE FOURTH PART
WHEREAS the parties have agreed to capitalize the Company on the
terms hereinafter set forth and to bind themselves with respect to
the ongoing development of the Company;
NOW THEREFORE TM AGREEMENT WITNESSETH:
1. Company Capitalization.
The parties have agreed that the initial capitalization of the
Company shall be as a consequence of investments made as follows:
Shareholder Name Consideration Percentage of Shares
Verida US$800,000 cash 66 2/3%
Lore US$200,000 * 16 2/3%
Booth US$200,000 * 16 2/3%
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* deemed value of the Licence. know-how, business model, industry
goodwill and management team assembly
2. Timing of Capitalization
The parties agree the capitalization of the Company will be as
follows:
(a) Verida shall fund its capitalization requirements hereunder
by payment of US$35,000 on execution hereof, US$25,000 on November
29, 1999 US$25,000 on December 10, 1999 and US$50,000 on the 10th day
of each month commencing January 10, 2000;
(b) Lore and Booth represent that the Company holds a valid
agreement with AgraLink pursuant to which AgraLink has agreed to
grant them a licence (the "AgraLink Licence") for operating an
internet grain exchange website on the terms attached as Schedule "A"
hereto. The parties will use their respective best efforts to
negotiate a definitive AgraLink License within 60 days of the date
hereof;
(c) The parties will use their best efforts to articulate the
Company's first year objectives for which Lore and Booth shall assume
responsibility as well as the marketing and technology services to be
provided by Verida within 30 days of execution hereof;
(d) If Verida elects to cease funding in accordance with the
requirements of Subsection 2(a) after the AgraLink Licence has been
entered into it shall retain the pro-rata number of shares it has
funded but lose the right to further fund its commitment. Verida will
not cease funding on less than 90 days prior notice to the Company.
If the definitive AgraLink Licence is not entered into within 60 days
of execution hereof then Verida shall be relieved of its requirement
to further fund in accordance with Subsection 2(a) until the
definitive AgraLink Licence is entered into but shall nevertheless
retain its right to exclusively fund the Company.
3. Management, Voting.
Immediately on execution,
(a) a Board of Director shall be appointed for the Company which
shall comprise of the following persons:
Lore, Booth, Xxxxxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxx
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(b) the officers of the Company shall be:
Lore President and Chief Executive Officer;
Booth Secretary and Chief Financial Officer;
Xxxxxxx Chairman of the Board.
(c) the articles of the Company shall provide that the Chairman
shall have a casting vote. The parties agree to vote their shares in
the Company to elect and keep elected the foregoing persons in the
offices aforesaid. In the event any of the designated parties is
unwilling or unable to be appointed in the designated position, the
party which was entitled to such appointment shall be entitled to
nominate a replacement person who is eligible to be a director of the
Company and the parties shall elect such person accordingly. Mr.
Zinkhofer and Xx. Xxxxxxx will be designees of Verida and each of
Lore and Booth shall have the right to one nominee director;
(d) the Company shall operate under the trade name "Agriplace"
and shall change its name accordingly on completion of Verida
funding; and
(e) Lore and Booth shall be generally responsible for day-to-day
management including the hiring of additional employees and
management as required.
4. Pre-emptive Rights.
It is agreed that for a period of two years from execution
hereof, each of the shareholders shall be entitled to participate in
any future allotments of shares of the Company pro-rata to such
shareholders then prevailing shareholdings of the Company. Each
shareholder shall have a period of seven (7) days from receiving
notice of a proposed allotment of shares to indicate whether such
shareholder desires to participate in the allotment and shall have a
period of an additional fourteen (14) days in order to fund such
allotment. In the event that the Company's board determines to allot
shares for property or services, each shareholder shall have the
right to pro-rata participate in such allotments for cash only unless
all of the other shareholders otherwise agree. The parties
acknowledge that the Company will need to raise a further $250,000 in
seed capital in the first year and Lore and Booth may designate the
purchasers of 1/3 of these shares which will be issued at not less
than the cost of shares to Verida plus 10%.
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5. Employment Arrangements.
(a) Lore and Booth shall enter into employment/confidentiality
non-competition agreements with the Company for an initial term of
twenty-four (24) months from execution hereof. The non-competition
provisions of such agreements will be subject to Verida completing
its funding commitment hereunder. The Agreements shall generally
provide for monthly salary to Lore of Nine Thousand Dollars
(CDN$9,000) per month in consideration of his full-time efforts.
Booth shall be entitled to a salary of Six Thousand Dollars
(CDN$6,000) per month for approximately three-quarter full-time
efforts. These salaries will be reviewed annually by the board which
shall award a bonus if the objectives of Subsection 3(c) are fully
met; and
(b) Approximately 10% Of the Company's outstanding Shares shall
be made available for options at the direction of the Board with
Booth and Lore having the right to designate the recipients of 1/3 of
these options. All options will have vesting-over-time provisions and
be exercisable at a price equal to the per-share price paid by Verida
hereunder.
6. Company Warranties
The Company, Lore and Booth hereby jointly represent that the
Company is a newly incorporated Alberta corporation which does not
have any assets, liabilities, obligations or material contracts as of
the date hereof and that it has all necessary corporate power and
authority to enter into this Agreement. From the date of
incorporation to the date hereof Lore has been the registered and
beneficial owner of 100% of the outstanding shares of the Company.
The Company's capital consists of one authorized common shares of
which one common share is issued and outstanding as of the date
hereof in the name of Lore.
7. Verida Retainer
Verida and the Company shall enter into an agreement pursuant to
which Verida shall supply services to the Company as determined under
Subsection 2(c) to a maximum of US$400,000 over 18 months from the
date hereof. The services shall be at commercially standard and
reasonable rates as to cost and quality. After January 10. 2000 such
service shall be provided and invoiced at a rate not exceeding
$20,000 per month for the first six months after execution hereof.
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Lore and Booth shall commence operating the Company as day-to-day
management with a view to achieving the goals more particularly
described determined in Subsection 2(c). A dispute as to the cost or
quality of Verida services will be referred to arbitration.
8. Verida's Option
The parties acknowledge that Verida will, upon completion of its
cash funding requirements in Subsection 1, have assumed the greatest
degree of financial risk amongst the parties and, accordingly, has a
one time option to purchase one-half of each of Lore and Booth's
shares in the Company in consideration of the total payment of
US$50,000 for an 8.125% interest in the shares of the Company payable
within 5 days of the first anniversary hereof. This option is only
exercisable if the Company has failed to achieve Booth and Lore's
Subsection 2(c) milestones in most material respects which
circumstances will be determined by Verida, acting reasonably, in the
two weeks before the first anniversary of the date of execution
hereof. A dispute respecting such determination will be referred to
arbitration.
9. General Provisions
(a) The parties acknowledge that this is intended to be an
interim (but binding) agreement between the parties to be superseded
by a more comprehensive agreement concurrently with the entering into
of the definitive AgraLink Licence. The parties agree to negotiate
the final shareholders' agreement in good faith and to refer any
disputes in arriving at same to binding arbitration by a single
arbitrator appointed pursuant to the Commercial Arbitration Act of
the Province of British Columbia with the location of the arbitration
being Vancouver;
(b) Lore and Booth agree that their rights under this Agreement
are personal and may not be assigned to any other person without the
consent of Verida which shall be in its sole discretion, Lore and
Booth may transfer a portion of their shares hereunder to a person(s)
who will be a principal(s) of the Company providing any transferee
agrees in writing to be bound by the terms hereof applicable to such
shares. This Agreement is deemed to have been made and shall be
enforceable under the laws of the Province of British Columbia;
(c) This Agreement may be executed in counterpart and by
facsimile;
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(d) Notices shall be deemed to be effectively given when sent by
facsimile to the facsimile numbers set forth on page 1 hereof;
(e) The term of this agreement is for a two year period from the
date hereof.
IN WITNESS WHEREOF the parties have caused this Agreement to be
executed as of the date written on page one
/s/ Xxxx Xxxx
XXXX XXXX
/s/ Xxxxx Xxxxx
XXXXX XXXXX
XX-XXXXXX.XXX, INC.
Per; /s/ Xxxx X. Xxxx
Authorized Signatory
VERIDA INTERNET CO
Per: /s/ Xxxxxxxx Xxxxxxxxx
Authorized Signatory
