EXHIBIT 22
INSURANCE SERVICES AGREEMENT
THIS INSURANCE SERVICES AGREEMENT, made as of the 1st day of March,
2004, by and among Shield Financial Services (Canada) Inc., a corporation
incorporated under the laws of the Country of Canada ("Shield"), and Value
Guaranteed Vacations Inc. a company formed under the laws of the Province of
Ontario ("VGV").
RECITALS
A. VGV has acquired and organized a group of companies in order to
launch its innovative Value Guaranteed Vacations(TM) insurance product,
providing protection to time share purchasers against devaluation in the value
of their time share ("Resale Value") and depreciation ("Depreciated Value"). VGV
and such companies have developed the Value Guaranteed Vacations(TM) system,
which is an online system, including an interactive web site whose domain name
is xxx.xxxxxx.xxx, for the issung and processing of Value Guaranteed
Vacations(TM) insurance policies and managing and monitoring said insurance
policies.
B. Shield and VGV wishes to enter into this Agreement for the purposes
of VGV exclusively engaging the services of Shield in providing any and all
insurance required by VGV in support of the Value Guaranteed Vacations insurance
product.
C. Shield has agreed to place said insurance needs of VGV for the term
of this Agreement and has agreed to act as intermediary for the provision of
said insurance placement services.
D. Shield and VGV wish to enter into this Agreement to set forth the
terms and conditions on which Shield shall provide, on an exclusive basis, to
VGV services related to the Value Guaranteed Vacations(TM) timeshare guarantee
insurance policies in the United States, Canada and the World (collectively, the
"Policies").
E. In consideration of Shield agreeing not to provide any similar
services for any third party, without the prior written consent of VGV, it is
agreed and acknowledged by both Shield and VGV, that this Agreement will become
binding as per the terms contained herein.
In consideration of the mutual covenants and other good and valuable
consideration, the parties agree as follows:
INSURANCE SERVICES
1. Duties and Responsibilities of Shield. Shield shall provide to GV:
(a) all Policies under the Value Guaranteed Vacations(TM)
insurance policies (or any substitute, successor or similar policies) in the
United States, Canada and the world within the time frames specified in the
paragraphs below or as required by VGV from tie to time;
2. Duties and Responsibilities of VGV. Value Guaranteed Vacations shall
provide Shield with detailed insurance related requirements needs, and shall
exclusively place said insurance product through Shield during the term of this
Agreement.
EXCLUSIVITY AND TERM
4. Exclusivity. Each of the parties hereto agrees that
exclusivity is necessary and reasonable to accomplish the
business purposes contemplated by this Agreement. To that end,
each of the parties hereto agrees that this Agreement and the
subject matter hereof are and shall be exclusive.
5. Term. The term of this Agreement shall, unless earlier
terminated pursuant to Section 6 below, be for a period of ten
(10) years from the date of this Agreement (the "Term").
6. Early Termination of the Term.
(a) VGV may terminate the Term upon written notice given to
Shield at any time prior to the third anniversary of the
date of this Agreement, accompanied by payment, by bank
draft or cashier's cheque payable to Shield, of an amount
equal to the sumof (i) $4,000,000, and (ii) all amounts
due and owing to Shield under this Agreement at the date
of such payment.
(b) VGV may terminate the Term, effective upon payment to
Shield of the Termination Amount (as hereinafter
defined), by written notice given to Shield (the
"Termination Notice") at any time on or after the third
anniversary and prior to the tenth anniversary of the
date of this Agreement.
"Termination Amount" means the of (i) 50% of the present
value, discounted at a rate of 6%, of the projected
Policies placed for the period between the date of
delivery of the Termination Notice and the tenth
anniversary of the date of this Agreement (the "Term
Remainder"), computed in accordance with paragraphs (c)
and (d) below (the "PV Amount"), and (ii) all amounts due
and owing to Shield under this Agreement at the date of
delivery of the Termination Notice.
(c) The PV Amount shall be computed by independent public
accountants selected by Shield, by written notice given
to VGV within forty-five (45)
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days following the date of delivery of the Termination
Notice. Such computation shall be made in accordance with
paragraphs (b) and (d) of this Section 6, shall be
completed as soon as reasonably practicable and shall be
final and binding upon the parties hereto. Each of Shield
and VGV shall promptly provide such information and
assistance as the independent public account may from
time to time reasonably require in connectin with such
computation. Payment of the Termination Amount shall be
made, by bank draft or cashier's cheque payable to
Shield, within forty-five (45) days following delivery by
such accountants to VGV and Shield of the computation of
the PV Amount.
(d) The projected Policies for each Year or part thereof
during the Term Remainder shall be determined as follows
for purposes of this Section 6:
(i) if the Termination Notice is delivered prior to the
fifth anniversary of the date of this Agreement,
the Base Amount shall be equal to the highest
amount of Claims in any prior Year; and if the
Termination Notice is delivered on or after the
fifth anniversary of the date of this Agreement,
the Base Amount shall be equal to the average of
the ighest, the next highest and the next highest
amounts of Policies in all prior Years;
(ii) The projected Policies for the balance of the Year
in which the Termination Notice is delivered shall
be 110% of the Base Amount, multiplied by the
number of days remaining in that Year, divided by
365; and
(iii) the projected Policies for each whole Year of the
Term Remainder shall be the Base Amount, plus an
amount equal to interest thereon at the rate of 10%
per snnum, compounded annually, from the first day
of the earliest whole Year in the Term Remainder to
the last day of the Term Remainder.
"Year" means the 12-month period ending on the first or any
subsequent anniversary of the date of this Agreement.
7. Return of Confidential Information. Upon the expiration of the Term
pursuant to Section 5 hereof or the termination or cancellation of the Term
pursuant to Section 6 hereof and the Payment Amount is paid full within the
requisite time period, then Shield shall return to VGV copies of all papers,
compact disks and other similar media in its possession containing Confidential
Information.
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COMPENSATION AND RIGHT TO PURCHASE 100% OF VGV
8. Fees. As compensation for the services provided by Shield under this
Agreement, VGV shall compensate Shield compensation which is standard in the
industry for said placement of insurance for and on behalf of VGV.
Right to purchase: VGV further agrees that Shield shall have the
right to purchase 100% of all VGV, at the fair market value of VGV, at any time
during three year period following the execution of this Agreement. Fair market
value shall be determined by a qualified third party evaluator appointed jointly
by both Shield and VGV.
REPRESENTATIONS, WARRANTIES AND COVENANTS
9. Representations, Warranties and Covenants of VGV:
(a) VGV is a valid and subsisting corporation under the laws of the
jurisdiction where it was formed, has full and power and authority to enter into
this Agreement and to perform each of its obligations hereunder and this
Agreement is enforceable against each entity in accordance with its terms;
(b) VGV is, and shall be, in full compliance with all federal, state
and provincial laws and regulations in every jurisdiction applicable to its
business and operations and the performance of its obligations under this
Agreement;
(c) The operation and maintenance of the Value Guaranteed
Vacations(TM) System is, and shall be, in full compliance with all applicable
federal and state laws, regulations, rulings and judicial and administrative
decisions, including but not limited to privacy matters;
(d) VGV owns all proprietary rights, including all patent,
copyright, trade secret, trademark, trade name and all other proprietary rights
in and to the software comprising the Value Guaranteed Vacations(TM) System
necessary to fulfill its obligations under the terms of this Agreement, such
proprietary rights do not, and will not, infringe on the rights of others and
Shield's use of the proprietary rights under this Agreement does not, and will
not, infronge on the rights of others;
(e) VGV has taken, and will take, all actions and precautions,
including but not limited to the installation, maintenance and upgrading of
features such as encryption and firewalls, (i) to limit access to the Value
Guaranteed Vacations(TM) System to authorized users, (ii) to prevent authorized
access and/or theft or misappropriatio, of, or tampering with System data, and
(iii) to protect against viruses or other programs or codes which could cause a
computer or server to malfunction, the corruption of data or any other damage;
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(f) Subject to Section 23 hereof, other than the entities who are
parties to this Agreement, no other entity or person, whether or not affiliated
or associated with VGV has or will have the right, power or authority to perform
the services provided for under the terms of this Agreement by the party
permitted or required to perform such services hereunder.
(j) each entity has not entered, and shall not enter, into any
agreement, commitment or understanding, whether written or oral, which conflicts
or is inconsistent with the terms of this Agreement or which would adversely
affect its ability to perform the obligations required to be performed by it
under this Agreement;
(k) VGV and the holders of the Value Guaranteed Vacations(TM)
timeshare guarantee insurance policies have, and will have, the exclusive right,
power and authority to deal in and have access to the Value Guaranteed
Vacations(TM) System.
10. Representations, Warranties and Covenants of Shield Financial
Services (Canada) Inc., Shield, represents, warrants and covenants as follows:
(a) Shield is a valid and subsisting corporation under the laws of
the jurisdiction where it was formed, has full and power and authority to enter
into this Agreement and to perform its obligations hereunder and this Agreement
is enforceable against Shield in accordance with its terms;
(b) Shield is, and shall be, in full compliance with all federal
and state laws and regulations in every jurisdiction applicable to its business
and operations and the performance of its obligations under this Agreement,
including laws and regulations relating to provacy matters; and
(c) Shield has not and shall not enter into any agreement,
commitment or understanding, whether written or oral, which conflicts or is
inconsistent with the terms of this Agreement or which would adversely affect
its ability to perform the obligations required to be performed by it under this
Agreement.
USE OF VALUE GUARANTEED VACATIONS(TM) SYSTEM AND ASSOCIATED RIGHTS
11. License. VGV hereby grant a license to Shield to use and access the
Value Guaranteed Vacations(TM) System, use the registered trademark "Value
Guaranteed Vacations" and the goodwill associated thereto, and use any and all
information required to be given it hereunder for purposes of performing the
services required to be performed by it under this Agreement.
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12. Software and Passwords. Shield shall be provided on a timely basis
with all necessary software and passwords (including any upgrades, revisions,
modifications and substitutions of same) to use and access the aforesaid System
and communicate with VGV.
CONFIDENTIALITY
14. Confidential Information. "Confidential Information" shall mean (i)
information provided by each VGV to Shield under Section 1 of this Agreement,
(ii) the information provided by Shield to VGV under Section 2 of this
Agreement, and (iii) the software and passwords provided for under Section 12 of
this Agreement (icluding any upgrades, revisions, modifications and
substitutions of same) (the "Intellectual Property").
15. Confidentiality Obligation. Both Shield and VGV, and each of their
respective affiliates, shareholders, members, directors, officers, employees and
agents) agrees to hold the Confidential Information in the strictest confidence,
both during and after the termination of this Agreement. To this end, each of
the foregoing persons shall:
(a) only use the Confidential Information to carry out its duties
and responsibilities hereunder and not use, disclose or reveal the Confidential
Information, or any portion thereof, for any reason to any person, except, with
respect to Confidential Information (other than Intellectual Property), to
employees of the foregoing entities, agents and independent contractors who have
a "need to know" for purposes of this Agreement;
(b) not make, or permit or cause to be made copies of the
Confidential Information, except as necessary to carry out its duties and
responsibilities as described by this Agreement;
(c) take all reasonable precautions to prevent the inadvertent
disclosure of the Confidential Information to any unauthorized person (other
than as provided for in paragraph (a) above); and
(d) participate, directly or indirectly, in the development,
marketing, sale, licensing of other exploitation of software products or
services which embody or are derived from the Confidential Information.
INDEMNIFICATION
16. Indemnification by VGV. VGV, hereby indemnifies and holds harmless
Shield and each of its members, managers officers, employees and agents from and
against any and all losses, liabilities, claims, causes of action, suits,
expenses
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(including but not limited to attorney's fees and expenses), costs (including
costs of investigation), interest, fines ad penalties incurred by Shield as a
result or by virtue of any breach of any representation, warranty or covenant
made by each of VGV herein.
17. Indemnification by Shield: Shield hereby indemnifies and holds
harmless VGV and their respective affiliates, shareholders, directors, officers
and employees from and against any and all losses, liabilities, claims, causes
of action, suits, expenses (including but not limited to attorney's fees and
expenses), costs (including costs of investigation), interest, fines and
penalties incurred by each of them as a result or by virtue of any breach or
default of any representation, warranty or covenant made by Shield herein.
18. Opportunity to Cure. In order to be entitled to indemnification
hereunder, each party seeking indemnification (the "Indemnity") shall be
required to notify the party in writing from who it is seeking indemnification
(the "Indemnifying Party) notice of the occurrence of the breach or default of
any representation, warranty or covenant made herein and such breach or default
has been continuing for at least sixty (60) days, specifying the termor terms of
this Agreement under which such breach or default has occurred, the
circumstances giving rise to such breach or default, and the opportunity to cure
such breach or default within thirty (30) days of the delivery of such notice
(the "Cure Period"). During the Cure Period, the Indemnifying Party shall have
right to discuss the alleged breach or default with the Indemnity, provided that
any such discussion shall not relieve the Indemnifying Party of the duty to cure
the breach or default.
19. Consequences Failure to Cure. In addition to and notwithstanding
any right to indemnification hereunder, if VGV shall fail to cure the breach or
default prior to the expiration of the Cure Perod, VGV shall be liable to make
payment of the Payment Amount to Shield within thirty (30) days of receipt of
the co mputation of the Payment Amount provided for by Section 6 hereof.
Notwithstanding anything to the contrary contained in the foregoing sentence,
the aforesaid remedy shall be limited a breachor default under Sections 1(a),
(b) and (c), Sections 9(i) and (j), Section 11 and Section 12.
MEDIATION AND ARBITRATION
20. Mediation and Arbitration.
(a) Mediation. The parties agree that any and all disputes, claims
or controversies arising out of or in connection with this Agreement shall first
be mediated pursuant to the Mediation Rules of the ADR Institute of Ontario,
Inc. ("Institute") within sixty (60) days of the written request for mediation.
(b) Arbitration. All disputes remaining unsettled after mediation
shall be submitted to final and binding arbitration. There is no right of appeal
from any arbitration
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or any decision of the arbitrator. Any party may submit that dispute to
arbitration by filing a Notice of Submission to Arbitration with the Institute.
The arbitration, and all its rules and procedures, shall be governed by the
National Arbitration Rules of the Institute, subject to any specific provisions
contained in Section 20(c) below.
(c) Arbitration Procedures. The place of arbitration shall be
Toronto. In the event of a dispute, claim or controversy in relation to Section
6, whether or not other sections are subject to dispute, claim or controversy,
the arbitrator shall be appointed in his stead, in accordance with the National
Arbitration Rules, provided that any such arbitrator has at least 15 years
experience as a chartered accountant and business valuator.
(d) Enforcement. The provisions of this Section 20 may be enforced
by any Court of competent jurisdictio, and the party seeking enforcement shall
be entitled to an award of all costs, fees and expenses, including attorneys'
fees, to be paid by the party against whom enforcement is ordered.
GENERAL
21. General. Notices and other communications shall be addressed of
directed to the physical and electronic addresses set forth under the signature
lines of each of the parties hereto. Facsimile signatures shall have the same
force and effect as physical signatures. This Agreement, the Exhibits attached
hereto and the subject matter hereof and thereof reflect the entire agreement
between the parties hereto and supersede any and all pror understandings,
agreements and commitments, whether written or oral, between any or all of them.
The waiver of one breach or default or any delay in exercising rights shall not
constitute a waiver of any subsequent breach or default. This Agreement may be
executed in counterparts, each of which shall be deemed an original and all of
which when taken together shall constitute one and the same instrument. This
Agreement shall be binding on and enure to the benefit of each of the parties
hereto, their respective successors and permitted assigns (subject to Section 23
hereof) and their respective affiliates, shareholders, members, managers,
directors, officers and employees. This Agreement may only be amended in writing
by an instrument executed by all of the parties hereto. Headings are for
convenience only and shall not be construed in the interpretation or meaning of
any provision hereof. This Agreement may be executed in counterparts, all of
which when taken together shall constitute one and the same instrument.
22. Governing Law. This Agreement shall be governed by the laws of the
Province of Ontario, without giving effect to principals of conflicts of laws.
This Agreement will not be governed by the United Nations Convention of
Contracts for the International Sale of Goods, the application of which is
expressly excluded.
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23. Assignment. The parties hereto shall be entitled to assign any of
its rights and obligations hereunder, (i) in the case of Shield, only with the
prior written consent of VGV.
24. Confidentiality of this Agreement. This Agreement ans the subject
matter hereof shall be held in the strictest confidence by each of the parties
hereto. Disclosure of this Agreement or the subject matter hereof shall be made
upon the mutual written consent of all of the parties hereto; provided, however,
that (i) this Agreement and a summary description of its contents (in any case,
with dollar amounts and percentages omitted) may be disclosed in a press release
issued by, or public filing made by, Shield without the aforesaid consent
requirement and (ii) this Agreement and the subject matter hereof may be
cisclosed by Shield in the performance of its duties under Section 2.
Notwithstanding the foregoing, in the event that Shield, in consultation with
securities counsel, determines that this Agreement is required by applicable
laws and regulations to be filed as an exhibit to a public filing required to be
made by it, Shield shall apply of confidential treatment of all dollar amounts
and percentages and other information considered confidential in accordance with
Rule 406, of the Securities Act of 1933 and Rule 24b-2 of the Securities
Exchange Act of 1934 and other applicable rules and regulations. Shield shall
consult with VGV prior to filing any applications for confidential treatment
relating to this Agreement or the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
affirmed their consent hereto as of the day and year first above written.
SHIELD FINANCIAL SERVICES (CANADA) INC.
By: /s/ Xxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
Title: President
Physical Address: 000 Xxxxxxxxx Xx., Xxxxx 000, Xxxxxxx, Xxxxxxx X0X 0X0
VALUE GUARANTEED VACATIONS
By: /s/ Xxx Xxxxx-Boxe
-------------------
Name: Xxx Xxxxx-Boxe
Authorized Signatory
Physical Address: 000 Xxxxxxxx Xxxx., Xxxxx 000, Xxxxxxx, Xxxxxxx X0X 0X0
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