JOINT VENTURE AND LIMITED LIABILITY COMPANY AGREEMENT by and among Teknik Digital Arts, Inc. and Powergrid Fitness, Inc

Exhibit 10.8

JOINT VENTURE
AND
LIMITED LIABILITY COMPANY
AGREEMENT
by and among
Teknik Digital Arts, Inc.
and
Powergrid Fitness, Inc.

TABLE OF CONTENTS

 i

JOINT VENTURE AND LIMITED LIABILITY COMPANY AGREEMENT

     THIS AGREEMENT is entered into as of August 1, 2006, by and between Teknik Digital Arts, Inc., a Nevada corporation ("Teknik"), and Powergrid Fitness, Inc. a Delaware corporation ("Powergrid")

W I T N E S S E T H :

     WHEREAS, Teknik develops and publishes technologies and intellectual properties utilized on personal computers, wireless phones, video game consoles and other consumer electronic devices;

     WHEREAS, Powergrid is a leading developer of technologies and products that promote effortless wellness, such as the proprietary ISOCOR™ technology.

     WHEREAS, Teknik and Powergrid wish to enter into a joint venture (the "JV") for the purpose of developing, and marketing Powergrid products and video game league software pursuant to the licensing rights obtained by the Joint Venture(the "Business"); from Powergrid and

     WHEREAS, Teknik and Powergrid desire to form the JV as a limited liability company under the Arizona Limited Liability Company Act, A.R.S. §§ 29-601, et seq ., as amended from time to time (the "Arizona Act"), to conduct the Business.

     NOW, THEREFORE, in consideration of the covenants and agreements contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Teknik and Powergrid agree as follows:

ARTICLE 1 — DEFINITIONS

     For purposes of this Agreement:

     " Arizona Act " means "The Arizona Limited Liability Company Act," Arizona Revised Statutes, §§ 29-601, et seq. ;

     " Capital Account " has the meaning set forth in Section 4.5(a);

     " Capital Expenditure " means any amount properly incurred by a Member to purchase or maintain any item of equipment or other capital asset for the JV, which amount would be recorded as a capital expenditure for GAAP purposes;

     " Capital Expenditure Distribution Amount " means, with respect to any Capital Expenditure, ten percent of the amount of such Capital Expenditure in the fiscal quarter in which such Capital Expenditure is incurred and in each of the succeeding nine fiscal quarters;

1

      "Change of Control" means any event (except going public), transaction or occurrence as a result of which the current shareholders or interestholders of a Member cease to directly or indirectly own and control 50% or more of the economic and voting rights of each class of the outstanding capital stock or the interests of such Member on a fully diluted basis.

      "Code" means the Internal Revenue Code of 1986, as amended;

      "Common Stock" means the common stock of Teknik.

      "Deceased Spouse" has the meaning set forth in Section 9.1(c);

      "Development Activities" means the research, development, manufacture and sale of the Video Games, including the provision of the funding for the acquisition of the Future JV Licenses and the provision of accounting services.

      "Distribution Allocation" has the meaning set forth in Section 4.6;

      "Divorced Member" has the meaning set forth in Section 9.1(d);

      "Divorced Spouse" has the meaning set forth in Section 9.1(d);

      "Existing Powergrid Products" means, collectively, the rights of Powergrid or its affiliates; to exclusively develop, manufacture and distribute the consumer game controller concept, product, design, and invention currently known as Exer-station, which rights shall be assigned to the JV by Powergrid pursuant to Section 4.4(a)(i);

      "Fiscal Year" has the meaning set forth in Section 3.5;

      "GAAP" means generally accepted accounting practices in the United States, consistently applied;

      "Improvements" means any and all Technology developed by (or on behalf of) the JV or Teknik, alone or in conjunction with others, or with respect to which the JV or Teknik acquires intellectual property rights, during the term of this Agreement;

      "Initiating Member" has the meaning set forth in Section 9.6;

      "JV" means "Teknik-Powergrid JV, LLC" , or such other name hereafter selected by the Members, the limited liability company to be formed by the Members pursuant to Article 3;

      "JV Financings" means short or long term secured or unsecured JV debt, or private placements or public offerings of JV equity;

      "JV Licenses" means the Existing Powergrid License and the Future JV Licenses;

      "Know-How" means the general and specific knowledge, experience, and information, not in written or printed form, used by the JV or Teknik and applicable to the design, development, manufacture, assembly, servicing, or sale of Video Games related equipment;

      "Liens" means all charges, claims, encumbrances, leases, liens, mortgages, security interests, and other restrictions of any kind and nature against personal or real property;

2

      "Liquidating Member" has the meaning set forth in Section 8.3;

      "Management Committee" has the meaning set forth in Section 5.1(a);

      "Manager" has the meaning set forth in Section 5.4;

      "Maximum Drawdown Other Member" has the meaning set forth in Section 9.5;

      "Member Spouse" has the meaning set forth in Section 9.1(c);

      "Member Representatives" has the meaning set forth in Section 5.1(a);

      "Members" has the meaning set forth in Section 3.4;

      "Membership Interest Conversion Right" has the meaning set forth in Section 10.1;

      "Net Distributions" has the meaning set forth in Section 4.6;

      "Net Profits" or "Net Loss" means, as appropriate, the taxable income or loss of the JV for a designated period for Federal income tax purposes as determined by the JV’s independent public accountants, increased by the amount of any tax-exempt income of the JV during such period and decreased by the amount of any Code Section 705(a)(2)(B) expenditures of the JV within the meaning of Treasury Regulation Section 1.704-1(b)(2)(iv) of the JV;

      "Other Member" has the meaning set forth in Section 9.5;

      "Participating Interests" has the meaning set forth in Section 4.1;

      "Party" or "Parties" means an individual or entity that has executed this Agreement or is an assignee under it;

      "Powergrid" has the meaning set forth in Section 3.4;

      "Powergrid License Agreement" has the meaning set forth in Section 4.4(a)(i);

      "Profit/Loss Allocation" has the meaning set forth in Section 4.2;

      "Reimbursable Expenses" means: (i) a Party’s direct costs and expenses incurred after the date hereof relative to the development, fabrication, manufacture, or distribution of the Powergrid products and related Video Game League for the JV, (ii) a Party’s costs and expenses incurred after the date hereof relative to its corporate overhead, administration of the JV, promotion of the Powergrid Products and Video Game league software , and negotiation for the JV, which overhead, administrative and general costs that are reasonable and fairly attributable to the JV shall be determined by mutual agreement of both Parties, (iii) a Party’s out-of-pocket expenses incurred after the date hereof for the JV in developing the Improvements, and (iv) a Party’s out-of-pocket legal and other expenses incurred in the preparation of this Agreement and the organization of the JV;

      "Subject Interest" has the meaning set forth in Section 9.1(a);

3

      "Technical Data" means documents containing technical information, engineering or production data, blueprints, drawings, plans, specifications, descriptions of assembly and manufacturing procedures, quality and inspection standards, test records and data, and other written materials owned and used by the JV or Teknik, and applicable to the design, development, manufacture, assembly, servicing, or sale of Powergrid products Video Game league software;

      "Technology" means Technical Data in human or machine readable form, inventions (whether or not patentable), works of authorship, products, Know-How, manufacturing methods, processes, concepts, designs, computer hardware and software, models, prototypes, automations, designs, and related information and things applicable to the design, development, manufacture, assembly, servicing, or sale of the Powergrid products Video Game league software;

      "Teknik" has the meaning set forth in Section 3.4;

      "Terms of Sale" has the meaning set forth in Section 9.5;

      "Third Party Expenses" means any amounts owing by the JV or a Party on behalf of the JV to third parties unaffiliated with a Party;

      "Unauthorized Transfer" has the meaning set forth in Section 9.2; and

      "Video Game League Software" means the video games and/or subscription-based organized community for computer games developed by JV;

      "Withdrawing Member" has the meaning set forth in Section 9.1(a).

ARTICLE 2 — PRELIMINARY MATTERS

     2.1. THE EXISTING POWERGRID PRODUCTS . Concurrent with the execution of this Agreement as defined in Paragraph 4.4, Powergrid and/or its affiliates shall execute an exclusive license agreement its interest in the Existing Powergrid Products with the JV.

ARTICLE 3 — FORMATION OF THE JV

     3.1 Name and Address . The name of the JV shall be "Teknik Powergrid, LLC" , or such other name hereafter selected by the Members. The principal place of business of the JV shall be 7518 Elbow Bend Road, B-9, Carefree, Arizona .

     3.2 Registered Office and Registered Agent . John Ward is hereby designated as the registered agent of the JV for service of process in the State of Arizona. His office located at 3104 E. Camelback #509, Phoenix, Arizona 85016 is designated as the registered office of the JV in the State of Arizona. The JV may from time to time change its registered agent for service of process, the location of its registered office within the State of Arizona and the location of its principal place of business.

     3.3 Purpose and Powers of the JV . The purpose of the JV shall be to develop, manufacture, market, and sell Powergrid products and’ Video Game League for personal computer and console applications. The JV may also engage in other businesses that are either a direct or indirect outgrowth of or are reasonably related to the foregoing purpose. In order to carry out its purpose, the JV shall have and may exercise all powers now or hereafter conferred on limited liability companies by the Arizona Act and other laws of the State of Arizona and, without limitation, shall have the authority to execute, acknowledge, and deliver instruments, and to do any and all things necessary, appropriate, proper,

4

advisable, incidental to, or convenient, for the furtherance and accomplishment of its purpose and for the protection and benefit of the JV.

     3.4 Members . The names and the addresses of the initial Members are as follows:

     The initial Members may withdraw, be replaced, or be removed from the JV, and new Members may be added, withdraw, be replaced, or be removed from the JV, all as provided in this Agreement.

     3.5 Fiscal Year . A "Fiscal Year" of the JV shall be a calendar year.

     3.6 Liability of Members . The Members shall not have any liability for the debts, obligations, or liabilities of the JV, except to the extent expressly provided in the Arizona Act.

     3.7 Restrictions on Transfer . Except as provided in Article 9, no Member shall have the right to sell, assign, pledge, transfer, encumber, or otherwise dispose of or alienate, all or any part of its Participating Interest in the JV without the prior written consent of the other Member in its sole discretion. Any purported sale, assignment, transfer, or other disposition by a Party of all or any part of its Participating Interest in the JV without such prior written consent shall be null and void and of no force and effect.

     3.8 Admission of Additional or Substitute Members . No substitute or additional Member shall be admitted to the JV, except as specifically set forth in this Agreement.

ARTICLE 4 — CONTRIBUTIONS; CAPITAL ACCOUNTS; DISTRIBUTIONS

     4.1 Participating Interests . The "Participating Interests" of the Members in the ownership of the JV are as follows:

     4.2 Allocation of Net Profits and Net Losses . The Net Profits and Net Losses of the JV for each Fiscal Year (or other period) shall be allocated to the Capital Account of each Member in accordance with the following table (the "Profit/Loss Allocation"):

5

     4.3 Initial Capital Contributions . The initial capital contribution of each Member to the JV in cash or other property shall be as follows:

     4.4 Equalization Transactions .

     (a) Powergrid shall:

     (b) Teknik shall:

6

     4.5 Capital Account .

     4.6 Expenses; Distributions . Subject to Section 4.8, the gross cash receipts of the JV for a fiscal quarter from all sources, including, without limitation, cash from operations, JV Financings, or other sources, less reserves for returns and inventory obsolescence, shall be used: first, to pay Third Party Expenses incurred in such or prior fiscal quarters; second, to distribute the sum of the Capital Expenditure Distribution Amounts for such or prior fiscal quarters to the Member that incurred such Capital Expenditures; and, third, to pay to the Members the Reimbursable Expenses incurred by each in such or prior fiscal quarters; provided, that to the extent that the JV fails to pay the full amount of the sum of the Capital Expenditure Distribution Amounts, the unpaid balance of such amounts will be carried forward and become payable as an additional Capital Expenditure Distribution Amount in the next succeeding fiscal quarter; and provided further, that to the extent that the JV fails to pay the full amount of the Reimbursable Expenses incurred in such fiscal quarter: (i) the payments to a Party for Reimbursable Expenses will be made in proportion to the relative amounts of Reimbursable Expenses owed to each in such fiscal quarter, and (ii) any remaining amounts of Reimbursable Expenses will be carried forward and become payable as an additional Reimbursable Expense in the next succeeding fiscal quarter. Subject to Section 4.8, any amount remaining after the payments (and after reserves for returns and inventory obsolescence) provided for in the preceding sentence will be distributed to the Members (the "Net Distributions") in accordance with the distribution set forth in the following table (the "Distribution Allocation"):

     4.7 Liabilities . Liabilities shall be determined in accordance with GAAP; provided, that: (i) the Management Committee, in its sole discretion, may provide reserves for estimated accrued expenses, liabilities, or contingencies, whether or not in accordance with GAAP, and (ii) Reimbursable Expenses and Capital Expenditure Distribution Amounts shall constitute obligations of the JV.

     4.8 Limitation of Distributions . Distributions will be subject to the provision by the JV for: (i) all JV liabilities in accordance with the Arizona Act, and (ii) reserves for liabilities taken in accordance

7

with Section 4.7. The unused portion of any reserve shall be distributed after the Management Committee has determined that the need therefor has ceased.

     4.9 Allocation of Income and Loss for Tax Purposes . The JV’s ordinary income and losses, capital gains, other losses, and other items as determined for Federal income tax purposes (and each item of income, gain, loss, or deduction entering into the computation thereof) shall be allocated to the Members in accordance with the Profit/Loss Allocation set forth in Section 4.2. Notwithstanding the foregoing sentence, Federal income tax items relating to any Section 704(c) property shall be allocated among the Members in accordance with Section 704(c) of the Code and Treasury Regulation Section 1.704-1(b)(2)(iv)(g) to take into account the difference between the fair market value and the tax basis of such Section 704(c) property as of the date of its revaluation pursuant to Section 4.5(b) hereof. Items described in this Section 4.9 shall neither be credited nor charged to the Members’ Capital Accounts.

     4.10 Determination by the Management Committee of Certain Matters . All matters concerning valuations and the allocation of taxable income, deductions, credits, Net Profits, and Net Losses among the Members including taxes thereon and accounting procedures, not expressly provided for by the terms of this Agreement shall be equitably determined in good faith by the Management Committee, whose determination shall be final, conclusive, and binding as to all of the Members.

ARTICLE 5 — MANAGEMENT OF THE JV

     5.1 Management of the JV .

8