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EXHIBIT 99.1
CONSULTING AGREEMENT
CONSULTING AGREEMENT (this "Agreement") dated as of the First day
of May, 1999 between Reward Enterprises, Inc. (the "Company"), a Nevada
corporation, and Xxxxxx X. Xxxxxxxx (Consultant), a British Columbia
resident.
WHEREAS, the Company desires to retain Consultant to render
consulting and advisory services for the Company on the terms and
conditions set forth in this Agreement, and Consultant desires to be
retained by the Company on such terms and conditions.
NOW, THEREFORE, in consideration of the premises, the mutual
agreements herein set forth and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties
agree as follows:
1. Engagement of Consultant; Services to be Performed.
1.1. The Company hereby retains Consultant to render such
consulting and advisory services as the Company may request.
Consultant hereby accepts such engagement and agrees to perform such
services for the Company upon the terms and conditions set forth in
this Agreement.
1.2. During the Term (as defined in Section 2), Consultant shall
devote such time, attention, skill and energy to the business of the
Company as may be reasonably required to perform the services required
by this Agreement up to a maximum time commitment of 140 hours in any
calendar month, and shall assume and perform to the best of his ability
such reasonable responsibilities and duties as the Company shall assign
to Consultant from time to time.
1.3. Consultant shall perform the services hereunder primarily at
the Company's principal office but he shall, at the Company's expense,
also be required to render the services at such other locations as the
Company may specify from time to time.
1.4. In rendering services hereunder, Consultant shall be acting
as an independent contractor and not as a employee or agent of the
Company. As an independent contractor, Consultant shall have no
authority, express or implied, to commit or obligate the Company in any
manner whatsoever, except as specifically authorized from time to time
in writing by an authorized representative of the Company, which
authorization may be general or specific. Nothing contained in this
Agreement shall be construed or applied to create a partnership.
Consultant shall be responsible for the payment of all federal, state,
provincial or local taxes payable with respect to all amounts paid to
Consultant under this Agreement; provided, however, that if the Company
is determined to be liable for collection and/or remittance of any such
taxes, Consultant shall immediately reimburse the Company for all such
payments made by the Company.
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2. Term. Unless terminated at an earlier date in accordance with
Section 4, this Agreement shall commence as of the date first written
above and shall continue for a continuous period of sixty (60) months
(the "Term").
3. Compensation.
3.1 Compensation As compensation in full for Consultant's
services hereunder, the Company shall pay to Consultant a consulting
fee at the rate of $5,000 per month. Should Consultant incur greater
than 160 hours per month providing consulting services to the Company
under this Agreement, the Company shall pay Consultant at the rate of
$100 per hour plus applicable taxes in excess of 160 hours upon receipt
of a satisfactory invoice therefor. The consulting fee shall be
payable to Consultant in arrears at the end of each calendar month
during the Term and a prorated portion of such fee shall be payable
upon termination of this Agreement if such termination occurs other
than at the end of a month.
3.2 Stock Options. The Company also agrees to offer to the
Consultant the option to purchase, upon the terms and conditions set
forth in this Section 3, one (1,000,000) common shares (the "Options").
3.3. Exercise Price. The exercise price of the Options shall be
as follows:
Number of Options Exercise Price
500,000 $0.10
500,000 $0.25
3.4. Vesting. The Options shall be fully vested and exercisable
as of the date of this Agreement.
3.5. Options not Transferable. Unless otherwise specified in this
Agreement or by the Board of Directors of the Company (the "Board"),
this Option and the rights and privileges conferred by this Agreement
may not be transferred, assigned, pledged or hypothecated in any manner
(whether by operation of law or otherwise) other than by will or by
applicable laws of descent and distribution and shall not be subject to
execution, attachment or similar process. Upon any attempt to
transfer, pledge, hypothecate or otherwise dispose of any Option or of
any right or privilege conferred by this Agreement contrary to the
provisions hereof, or upon the sale, levy or attachment or similar
process upon the rights and privileges conferred by this Agreement,
such Option shall thereupon terminate and become null and void.
3.6. Expiration and Termination: Options shall expire on the
earlier of:
(a) May 15, 2005.
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(b) Termination of Service as Consultant: The expiration of
thirty (30) days from the date of the Consultant's removal (with or
without cause) pursuant to Section 4 of this Agreement, resignation or
other termination as consultant.
(c) Termination Due to Death or Disability: The expiration
of one (1) year from the date of the death or Disability (as defined
below) of the Consultant, assuming that Consultant was serving as
consultant at the time of such death or Disability.
Notwithstanding the occurrence of one of the above events, the
exercise period may be extended in the sole discretion of the Board
until a date not later than the expiration date of the Options. If
Consultant's term as advisory member is terminated by death, any
Options held by the Consultant shall be exercisable only by the person
or persons to whom such Consultant's rights under such Options shall
pass by the Consultant's will or by the laws of descent and
distribution of the state or county of the Consultant's domicile at the
time of death.
3.7. Distributions, Reorganization or Liquidation. In the case of
any share distribution, share split, liquidation or like change in the
nature of common shares covered by this Agreement, the number of common
shares and exercise price shall be proportionately adjusted as set
forth below.
(a) If (i) the Company shall at any time be involved in a
transaction described in Section 424(a) of the Code (or any successor
provision) or any "corporate transaction" described in the regulations
thereunder; (ii) the Company shall declare a distribution payable in,
or shall subdivide or combine, its common shares or (iii) any other
event with substantially the same effect shall occur, the Board shall,
with respect to each outstanding Option, proportionately adjust the
number of shares of common shares and/or the exercise price per common
shares so as to preserve the rights of the Consultant substantially
proportionate to the rights of the Consultant prior to such event, and
to the extent such action shall include an increase or decrease in the
number of common shares subject to outstanding options, the number of
Common Shares available under this Agreement shall automatically be
increased or decreased, as the case may be, proportionately, without
further action on the part of the Board, the Company or the Company's
shareholders.
(b) If the Company is liquidated or dissolved, the Options
may be exercised prior to the effective date of such liquidation or
dissolution. If the Consultant does not exercise his Options prior to
such effective date, each outstanding option shall terminate as of the
effective date of the liquidation or dissolution.
3.8. Exercise of Options. The Options shall be exercisable, in
whole or in part, until termination; provided, however, if the
Consultant is subject to the reporting and liability provisions of
Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act")
with respect to the common shares, he shall be precluded from selling
or transferring any common shares or other security underlying an
Option during the six (6) months immediately following the grant of
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that Option. If less than all of the Common Shares included in the
Options are purchased, the remainder may be purchased at any subsequent
time prior to the expiration of the Option term. Only whole Common
Shares may be issued pursuant to the Options, and to the extent that
the Options cover less than one (1) Common Share, they are
unexercisable.
Each exercise of the Option shall be by means of delivery of a
notice of election to exercise (which may be in the form attached
hereto as Exhibit A) to the Company at its principal executive office,
specifying the number of common shares to be purchased and accompanied
by payment in cash by certified check or cashier's check in the amount
of the full exercise price for the Common Shares to be purchased.
During the lifetime of the Consultant, the Options are exercisable only
by the Consultant.
3.9. Professional Advice. The acceptance of the Options and the
sale of Common Shares issued pursuant to the exercise of Options may
have consequences under federal and state tax and securities laws,
which may vary depending upon the individual circumstances of the
Consultant. Accordingly, the Consultant acknowledges that he has been
advised to consult his personal legal and tax advisor in connection
with this Agreement and his dealings with respect to the Options for
the Common Shares. Without limiting other matters to be considered,
the Consultant should consider whether upon the exercise of Options,
the Consultant will file an election with the Internal Revenue Service
pursuant to Section 83(b) of the Code.
4. Termination By the Company.
4.1 For Cause. Company will have the right to immediately
terminate Consultant's services and this Agreement for cause. "Cause"
means: any material breach of this Agreement by Consultant, including,
without limitation, breach of Consultant's covenants in Sections 6 and
7; any failure to perform assigned job responsibilities that continues
unremedied for a period of ten (10) days after written notice to
Consultant by Company; conviction of a felony or failure to contest
prosecution for a felony; violation of any statute, rule or regulation,
any of which in the judgment of Company is harmful to the business of
the Company or to Company's reputation; unethical practices;
dishonesty; disloyalty; or any reason that would constitute cause under
the laws of Nevada. Upon termination of Consultant's engagement
hereunder for cause or upon the death or disability of Consultant,
Consultant will have no rights to any unvested benefits or any other
compensation or payments after the termination date or the last day of
the month in which Consultant's death or disability occurred.
For purposes of this Agreement, "disability" means the incapacity
or inability of Consultant, whether due to accident, sickness or
otherwise, as determined by a medical doctor acceptable to the
Board of Directors of Company and confirmed in writing by such
doctor, to perform the essential functions of Consultant's
position under this Agreement, with or without reasonable
accommodation (provided that no accommodation that imposes undue
hardship on Company will be required) for an aggregate of ninety
(90) days during any period of one hundred eighty (180)
consecutive days.
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4.2 Without Cause. Company may terminate Consultant's engagement
under this Agreement without cause and without advance notice;
provided, however, that Company will continue to pay, as severance pay,
Consultant's Base Salary at the rate in effect on the termination date
for a period of six (6) months; provided, further, that Company will be
entitled to offset any severance pay otherwise payable to Consultant by
the amount of any compensation or consulting fees being paid to
Consultant by another party while severance pay would otherwise be
payable. Such payments will be at usual and customary pay intervals of
Company and will be subject to all appropriate deductions and
withholdings. Upon termination, Consultant will have no rights to any
unvested benefits or any other compensation or payments except as
stated in this paragraph.
4.3 Termination By Consultant. Consultant may terminate
Consultant's engagement under this Agreement for any reason provided
that Consultant gives Company at least thirty (30) days' notice in
writing. Company may, at its option, accelerate such termination date
to any date at least two weeks after Consultant's notice of
termination. Company may, at its option, relieve Consultant of all
duties and authority after notice of termination has been provided.
All compensation, payments and unvested benefits will cease on the
termination date.
5. Expenses. In addition to the payment of consulting fees set forth
above, the Company shall reimburse Consultant all actual out-of-pocket
costs for long-distance telephone services, facsimile transmissions,
photocopying, courier services and postage, and all reasonable travel,
lodging and per diem expenses, that he shall incur in connection with
the rendering of Consultant's services; provided that the Company shall
have no obligation to reimburse any of such expenses except upon
provision by Consultant of adequate documentation thereof in such form
as the Company shall reasonably request; and provided further, that the
Company shall have no such obligation in respect of any travel, lodging
or per diem expenses unless the travel to which such expenses relate
shall have been authorized in advance by the Company.
6. Ownership of Intellectual Property.
6.1 Background Technology. Exhibit B hereto lists any and all
technology that (i) Consultant intends to use in performing the
services hereunder, (ii) is either owned solely by Consultant or
licensed to Consultant with a right to sublicense and (iii) is in
existence in the form of a writing or working prototype prior to the
date of this Agreement ("Background Technology").
6.2 Notification and Disclosure. Consultant shall promptly
notify the Company in writing of the existence and nature of, and shall
promptly and fully disclose to the Company, any and all ideas, designs,
practices, processes, apparatus, improvements and inventions (all of
which are hereinafter referred to as "Inventions") that Consultant has
conceived or first actually reduced to practice and/or may conceive or
first actually reduce to practice during the Term or which Consultant
may conceive or reduce to practice within six months after the Term, if
such inventions relate to a product or process upon which Consultant
worked during the Term or during the period of his/her engagement.
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6.3 Ownership of Inventions. All such inventions shall be the
sole and exclusive property of the Company or its nominee during the
Term and thereafter, and, except for Consultant's rights in any
Background Technology, Consultant hereby assigns to the Company all its
right, title and interest in and to any and all such inventions.
Whenever the Company so requests, Consultant shall execute and
assign any and all applications, assignments and other instruments that
the Company shall deem necessary or convenient in order to apply for
and obtain Letters Patent of the United States and/or of any foreign
countries for such inventions and in order to assign and convey to the
Company or its nominee the sole and exclusive right, title and interest
in and to all such inventions.
Consultant shall aid and assist the Company in any interference or
litigation pertaining to such inventions, and the Company shall bear
all expenses reasonably incurred by Consultant at the request of the
Company. In this connection, if any such aid or assistance requires
any expenditure of Consultant's time after the Term, Consultant shall
be entitled to compensation for the time requested by the Company at a
rate equal to the pro rata rate at which Consultant was being paid for
a normal pay period immediately prior to the end of the Term.
6.4 Limitation. Sections 6.2 and 6.3shall not apply to any
invention meeting the following conditions:
(i) such invention was developed entirely on Consultant's
own time;
(ii) such invention was made without the use of any of the
equipment, supplies, facility or trade secret information of the
Company;
(iii) such invention does not relate (i) directly to the
business of the Company or (ii) to the Company's actual or demonstrably
anticipated research or development; and
(iv) such invention does not result from any service
performed by Consultant for the Company.
6.5 Copyrightable Material. All right, title, and interest in
all copyrightable material which Consultant shall conceive or
originate, either individually or jointly with others, and which arise
out of the performance of this Agreement, will be the property of the
Company and are hereby assigned to the Company along with ownership of
any and all copyrights in the copyrightable material. Consultant
agrees to execute all papers and perform all other acts necessary to
assist the Company to obtain and register copyrights on such materials
in any and all countries. Where applicable, works of authorship
created by Consultant for the Company in performing the services
hereunder shall be considered "works made for hire" as defined in the
U.S. Copyright Act.
6.6 Survival. This Section 6 shall survive the Term.
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7. Protection of Trade Secrets, Know-How and/or Other Confidential
Information of the Company.
7.1 Confidential Information. Except as permitted or directed by
the Company, during the Term or at any time thereafter Consultant shall
not divulge, furnish or make accessible to anyone or use in any way
(other than in the ordinary course of the business of the Company) any
confidential or secret knowledge or information of the Company that
Consultant has acquired or become acquainted with or will acquire or
become acquainted with during the Term or during engagement by the
Company prior to the Term, whether developed by Consultant or by
others, concerning any trade secrets, confidential or secret designs,
processes, formulae, products or future products, plans, devices or
material (whether or not patented or patentable) directly or indirectly
useful in any aspect of the business of the Company, any customer or
supplier lists of the Company, any confidential or secret development
or research work of the Company, or any other confidential information
or secret aspects of the business of the Company. Consultant
acknowledges that the above-described knowledge or information
constitutes a unique and valuable asset of the Company acquired at
great time and expense by the Company and its predecessors, and that
any disclosure or other use of such knowledge or information other than
for the sole benefit of the Company would be wrongful and would cause
irreparable harm to the Company. Both during and after the Term,
Consultant will refrain from any acts or omissions that would reduce
the value of such knowledge or information to the Company. The
foregoing obligations of confidentiality, however, shall not apply to
any knowledge or information which is now published or which
subsequently becomes generally publicly known in the form in which it
was obtained from the Company, other than as a direct or indirect
result of the breach of this Agreement by Consultant.
7.2 Know-How and Trade Secrets. All know-how and trade secret
information conceived or originated by Consultant which arises out of
the performance of the services hereunder or any related material or
information shall be the property of the Company, and all rights
therein are hereby assigned to the Company.
7.3 Return of Records. Upon termination of this Agreement,
Consultant shall deliver to the Company all property that is in his
possession and that is the Company's property or relates to the
Company's business, including, but not limited to records, notes, data,
memoranda, software, electronic information, models, equipment, and any
copies of the same.
8. Miscellaneous.
8.1. Entire Agreement. This Agreement (including any exhibits,
schedules and other documents referred to herein) contains the entire
understanding between the parties hereto with respect to the subject
matter hereof and supersedes any prior understandings, agreements or
representations, written or oral, relating to the subject matter
hereof.
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8.2. Counterparts. This Agreement may be executed in separate
counterparts, each of which will be an original and all of which taken
together shall constitute one and the same agreement, and any party
hereto may execute this Agreement by signing any such counterpart.
8.3. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law but if any provision of this Agreement is
held to be invalid, illegal or unenforceable under any applicable law
or rule, the validity, legality and enforceability of the other
provision of this Agreement will not be affected or impaired thereby.
8.4. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
heirs, personal representatives and, to the extent permitted by
subsection (e), successors and assigns.
8.5. Assignment. This Agreement and the rights and obligations of
the parties hereunder shall not be assignable, in whole or in part, by
either party without the prior written consent of the other party.
8.6. Modification, Amendment, Waiver or Termination. No provision
of this Agreement may be modified, amended, waived or terminated except
by an instrument in writing signed by the parties to this Agreement.
No course of dealing between the parties will modify, amend, waive or
terminate any provision of this Agreement or any rights or obligations
of any party under or by reason of this Agreement.
8.7. Notices. All notices, consents, requests, instructions,
approvals or other communications provided for herein shall be in
writing and delivered by personal delivery, overnight courier, mail,
electronic facsimile or e-mail addressed to the receiving party at the
address set forth herein. All such communications shall be effective
when received.
Xxxxxx X. Xxxxxxxx
0000 - 000X Xxxxxx,
Xxxxxx, X.X. X0X 0X0
Any party may change the address set forth above by notice to each
other party given as provided herein.
8.8. Headings. The headings and any table of contents contained
in this Agreement are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement.
8.9. Governing Law. ALL MATTERS RELATING TO THE INTERPRETATION,
CONSTRUCTION, VALIDITY AND ENFORCEMENT OF THIS AGREEMENT SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEVADA, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW PROVISIONS THEREOF.
8.10. Third-Party Benefit. Nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights,
remedies, obligations or liabilities of any nature whatsoever.
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8.11. No Waiver. No delay on the part of the Company in
exercising any right hereunder shall operate as a waiver of such right.
No waiver, express or implied, by the Company of any right or any
breach by Consultant shall constitute a waiver of any other right or
breach by Consultant.
8.12. Jurisdiction and Venue. THIS AGREEMENT MAY BE ENFORCED IN
ANY FEDERAL COURT OR STATE COURT SITTING IN NEVADA, AND EACH PARTY
CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY
ARGUMENT THAT VENUE IN SUCH FORUM IS NOT CONVENIENT. IF ANY PARTY
COMMENCES ANY ACTION UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY
OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT IN
ANOTHER JURISDICTION OR VENUE, ANY OTHER PARTY TO THIS AGREEMENT SHALL
HAVE THE OPTION OF TRANSFERRING THE CASE TO THE ABOVE-DESCRIBED VENUE
OR JURISDICTION OR, IF SUCH TRANSFER CANNOT BE ACCOMPLISHED, TO HAVE
SUCH CASE DISMISSED WITHOUT PREJUDICE.
8.13. Remedies. The parties agree that money damages may not be
an adequate remedy for any breach of the provisions of this Agreement
and that any party may, in its discretion, apply to any court of law or
equity of competent jurisdiction for specific performance and
injunctive relief in order to enforce or prevent any violations this
Agreement, and any party against whom such proceeding is brought hereby
waives the claim or defense that such party has an adequate remedy at
law and agrees not to raise the defense that the other party has an
adequate remedy at law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date set forth in the first paragraph.
Reward Enterprises, Inc.
By:____________________________________
Its:________________________________
CONSULTANT
By:____________________________________
Xxxxxx X. Xxxxxxxx
Its
CONSULTANT
By
Xxxxxx X. Xxxxxxxx
