Kids Seed Capital Financing Agreement

Draft for Discussion - In Development

RE: INVESTMENT IN _______________________________ (www.kidse-marketplace.com kid's e-marketplace business operator "KEMBO" - the name of the business operator)

The following are the principal terms and conditions under which the investor is contemplating to make an investment:

1. FINANCING OF THE PROJECT

Use of Funds                           $                                                           Source of Funds              $

      ____________             ______                                                          ______________     _____

      ____________             ______                                                          ______________     _____

     ____________             ______                                                          ______________      _____

      ___________             _______                                                        ______________       _____

     ___________             _______                                                          ______________       _____

Note:  Use of funds is a list of the things you will be using the money for.

 Source of funds is who the money comes from i.e.. parents, grand-parents, savings etc.

2.  THE PROJECT

The proceeds of the investment should be used to _____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________.
(to set-up a business in www.kidse-marketplace.com)

3.  DESCRIPTION OF THE INVESTMENT

ISSUER _______________________ (kid's business operator)

AMOUNT_______________________ ($ amount of the investment)

FINANCIAL 
INSTRUMENT  (mark an "x" at one of the choices)

• IOU (I OWE YOU - You will pay it back sometime)                             __________
       Date ____________________ and the amount of $_____________

• GRANT (it's yours to keep and don't worry about giving it back)     ___________

• ROYALTY (give a % of the revenues you make to the investor)    ___________
             ______%  (determine the %) of _________________(ie. revenues)

• PARTNERSHIP (split the proceeds from the business)                    __________

                          _________% goes to the investor

                          _________% goes to the kid's business owner

                            100%     Total

• Barter (specify what services will be provided)

                  ____________________________________________                  ___________

• OTHER _______________________________________                  ____________

4.   PRECONDITION TO THE INVESTMENT

The investment of  _____________________ dollars ($__________) by the INVESTOR shall be made upon closing of the transaction, subject to fulfillment of the following conditions:

i    Due diligence review of the investment (review a executive summary and/or business plan of the KEMBO, a review of www.kidse-marketplace.com , kids-as-angel-investor program and the Kids' Red Herring) to the satisfaction of the INVESTOR;

ii   Signing of a "commitment contract" by (_______________________) KEMBO, stating that the KEMBO will be committed to the business for a period of time (# of months________) and (# __________ of hours per month. (This commitment is in lieu of an employment agreement .  The "commitment contract" can be the completion of this condition with initials by the INVESTOR  and the KEMBO or you can draft a more detailed document)

iii   Appointment of ADVISORY BOARD (people to advise you on your business decisions)

5.    CONFIDENTIALITY

The INVESTOR will not share the information related to this business with other people unless agreed to by the KEMBO.

6.    EXPENSES OF REVIEW AND COMMITMENT FEE.

_____________________(if there are cost s, then establish an amount - suggest none)

7.    TRANSACTION CLOSING COSTS

The KEMBO shall assume all costs and expenses (including photo copying charges, research cost, _____________________________) incurred by the INVESTOR, whether or not the closing (financing is completed) takes place.  All costs incurred by the investor, if any, shall be payable at the closing of the transaction.

8.    RESILIATION

This offer shall be resiliated upon mutual written agreement of the INVESTOR  and the KEMBO , or any time in which the results of the due diligence review are not satisfactory to the INVESTOR or by written notice from either party if the closing of the transaction does not take place before ______________________(date), or on any other subsequent date agreed upon in writing by the INVESTOR  and the KEMBO.

If this offer becomes null an void, the parties shall have no obligation towards one another and shall be released from all obligations hereunder, except for the obligations set forth in sections 5,6,7.

9.   PENAL PROVISION

If the KEMBO refuses to proceed with the closing of the investment (if the KEMBO finds a better offer or gets the money another way) when the INVESTOR wishes to complete the transaction, the KEMBO shall, pay to the INVESTOR a penalty of _______________
_______ (amount) $_____________, the "Penalty".

10.   INFORMATION

The KEMBO shall provide necessary assistance and information to the INVESTOR in order to allow he/she to complete the due diligence review to their satisfaction for the purpose of proceeding with the investment.

11.    LEGAL DOCUMENTS

The KEMBO agrees that the legal documents, if required, to close the transaction shall be prepared by the INVESTOR'S legal advisors.

12.   GENERAL CONDITIONS

The INVESTOR reserves the right, with the consent of the KEMBO, to present information regarding the KEMBO'S operations and performance (except of intellectual property secretes) to any individual or firm having expressed on interest in acquiring the KEMB or making an investment there in.

13.  CURRENCY

All amounts set forth in this document shall be in ____________________currency (name of countries currency i.e. US $ or CDN. $), unless otherwise stated.

14.   APPLICABLE LAW

This offer shall be governed by the laws of __________________(state or province)  and the laws of ______________________(country - i.e. U.S.A. or Canada)

If the foregoing terms and conditions are acceptable to you, please sign and date this letter in the space provided there for and return one signed copy to the undersigned before ______________________(Date), on which date this offer shall become null and void if it is not accepted and returned.

Should you have any questions, please do not hesitate to contact the undersigned.

Yours truly,

Per:________________________________

        _____________________________   (printed name of INVESTOR)

The undersigned understands and accept the principal terms and conditions of this Conditional Offer of Investment by ________________________(name of INVESTOR)

___________________________________ (Name of KEMBO)

Per:   _______________________________

            __________________________________(printed name of KEMBO - founder)

Shareholders Agreement

1. ADVISORY BOARD

     1.1  The Advisory Board shall be comprised of (#     ) (suggest 5 members): one (1) advisor designated by the KEMBO, the KEMBO, one (1) advisor designated by the INVESTOR and two (2) independent outside advisors subject to the approval of the INVESTOR and the KEMBO.  (If you wish to change the number of advisors - make the change in ink and both the INVESTOR and the KEMBO should initial the changes).  Advisory Board and Board of directors can be interchanged if the KEMB is registered as a legal entity.

     1.2  The Advisory Board shall meet at least (#    ) - (recommend #4 times) times a year, the quorum shall be (3) advisors, including the advisor designated by the INVESTOR, and a simple majority shall be required.

     2.    FINANCIAL INFORMATION

The INVESTOR shall receive all information necessary for a proper analysis of the KEMB's business operations.  The INVESTOR shall receive the following, inter alia:

      2.1  Reports showing revenues and expenses of the KEMB, within 60 days after the   year end;           

      2.2    Reports, within 30 days after the end of each quarter;

      2.3    Annual business plan with the operating budget, within 30 days before the end of the fiscal year; 

      2.4     All additional relevant information allowing for a proper analysis of the KEMB operations.

     3.   IMPORTANT DECISIONS

The following important decisions shall require the prior written consent of the INVESTOR:

           3.1  The declaration and payment of dividends or the distribution of the KEMB surplus;

           3.2   The winding-up or reorganization of the KEMB.

            3.3   Mergers and acquisitions by or of KEMB.

            3.4    Approval of the annual budget;

            3.5    Any change in the nature of the KEMB's business operations;

            3.6    Any transaction or contract which does not fall within the KEMB's ordinary course of business;

             3.7   Any change in the number of KEMB advisors.

             3.8   The appointment and replacement of the auditors;

             3.9   Any material change to the accounting policies established and used by the KEMB to prepare its financial statement;

             3.10   The hiring and laying off of key employees;

             3.11    Wages or bonuses paid to key employees, advisors,   executives and
 shareholders;

               3.12    The sale, assignment or transfer by the KEMB of copyright, trademark or other intellectual properly belonging to the KEMB;

               3.13    A change in the fiscal year end;

                3.14   The approval of public offerings;

                3.15   The institutions or settlement of legal proceedings

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