Commitments, Significant Contracts and Contingencies [Text Block] |
17.
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Commitments, Significant Contracts and Contingencies
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Management Agreements
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The Company is party to the following contractual commitments with service providers.
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Party |
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Monthly Commitment |
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C.A.B Financial Services |
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$12,000
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Docherty Management Ltd. |
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CAD$15,000
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C.A.B. Financial Services
The Company has an agreement with C.A.B. Financial Services (“CAB”) for a consulting fee of $12,000
per month. The term of the agreement is two years but can be terminated by either party by providing two months notice. The Company may pay Mr. Bunka a bonus from time to time, at its sole discretion. Mr. Bunka will be entitled to receive common stock-based and stock option based bonuses upon achieving certain milestones during the time of his consultancy with the Company. These milestones are during the first
12
months after the date of the agreement with CAB,:
Revenue Incentive Milestones (Revenue Incentives “A”)
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Upon the Company achieving non-refundable revenues of $200,000
to any single customer in any consecutive
60
-day period, CAB would be entitled to an award of
100,000
restricted common shares of the Company and after the first
12
-month period, expiring after
24
months of the amended agreement, upon the Company achieving non-refundable revenues of $200,000
to any single customer in any consecutive
60
- day period, CAB would be entitled to an award of
50,000
restricted common shares of the Company. These awards are limited to one payment per customer during the
24
-month period but payable for each customer that meets the revenue thresholds.
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Upon the Company achieving non-refundable revenues of $500,000
in any fiscal quarter would result in an award to CAB of
200,000
common shares of the Company and after the first
12
months, expiring
24
months after the amended agreement, the Company achieving non-refundable revenues of $500,000
in any fiscal quarter would result in an award to CAB of
100,000
common shares of the Company. These awards are limited to one payment per fiscal quarter.
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Intellectual Property Milestones (IP Incentives “B”)
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During the term of the agreement, for each provisional patent application substantively devised by CAB and successfully created, written and filed with the US Patent Office for the Company’s Technology, CAB will be entitled to an award of
250,000
restricted common shares of the Company.
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Docherty Management Ltd.
The Company appointed Mr. John Docherty as President of Lexaria effective April 15, 2015. On March 1, 2017, the Company executed a twenty four month consulting contract with Docherty Management Limited, solely owned by Mr. John Docherty with monthly compensation of CAD$15,000, superseding the previous agreement of monthly compensation of CAD$12,500. The Company may pay Mr. Docherty a bonus from time to time, at its sole discretion. Pursuant to the previous agreement, Mr. Docherty received
800,000
stock options and
924,000
restricted common shares of the Company. Mr. Docherty will be entitled to receive additional common stock-based and stock option based bonuses upon achieving certain milestones during the time of his consultancy with the Company. These milestones are during the first
12
months after the date of the agreement with Docherty Management Ltd.:
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Revenue Incentives “A” as defined above. |
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IP Incentives “B” as defined above. |
Office Lease
The Company has lease commitments for its office space for CAD$826
per month. The lease requires a
90
-day termination notice.
Convertible Debenture
The Company has issued a convertible debenture for $45,000, maturing on August 31, 2020. The convertible debenture accrues interest at
10% per annum, payable in quarterly installments (Note 11).
Corporate Development
On January 10, 2017, the Company entered into a entered into a service agreement with an arm’s length service provider for corporate development. The agreement is for six months continuing month to month and may be terminated thereafter with one month’s notice for CAD$4,000
per month. The Company may pay the service provider a bonus from time to time, at its sole discretion. The service provider will be entitled to receive common stock-based and stock option based bonuses upon achieving certain milestones during the time of his consultancy with the Company. These milestones are:
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For new customers sourced by the Consultant during the first six (6) months after signing; for combined Lexaria Energy and ViPova products and including all combined sales efforts and/or technology licensing revenues, achieving non-refundable revenues of $200,000
to any single customer in any consecutive
60
-day period would result in a restricted common share award of
100,000
Company shares; and, after the first six months after signing and expiring twelve months after signing; for combined Lexaria Energy and ViPova products and including all sales efforts, achieving non-refundable revenues of $200,000
to any single customer in any consecutive
60
-day period would result in a restricted common share award of
50,000
Company shares; this clause is limited to one payment per customer during the
12
-month period, but payable on each customer that meets these sales/licensing thresholds;
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For new customers sourced by the Consultant during the first six months after signing; for combined Lexaria Energy and ViPova products and including all combined sales efforts and/or technology licensing revenues, achieving non-refundable revenues of $500,000
in any fiscal quarter would result in a restricted common share award of
200,000
Company shares; and, after the first six months after signing and expiring twelve months after signing; for combined Lexaria Energy and ViPova products and including all sales efforts, achieving non-refundable revenues of $500,000
in any fiscal quarter would result in a restricted common share award of
100,000
Company shares; this clause limited to one payment per fiscal quarter;
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