MEMORANDUM OF MANAGEMENT AGREEMENT ("AGREEMENT") MADE AND ENTERED INTO THE LOTH DAY OF JUNE, 2005, WITH EFFECT AS OF THE EFFECTIVE DATE (ASHEREINAFTER DEFINED).
Exhibit
4.19
10.1 If the Manager and/or Brink should violate any of the terms of this Agreement, the Corporation shall be entitled to all appropriate remedies, including, without limitation, an interim,
from time to time reasonably request in writing be done and/or executed in order to better evidence and/or perfect the respective matters and things herein provided for and/or the respective obligations created or intended to be created hereby.
MEMORANDUM
OF MANAGEMENT AGREEMENT ("AGREEMENT") MADE AND ENTERED INTO THE LOTH
DAY OF
JUNE, 2005, WITH EFFECT AS OF THE EFFECTIVE DATE
(ASHEREINAFTER
DEFINED).
|
BY
AND BETWEEN:
|
GENESIS
CONSULTING ANSTALT, a duly constituted corporation, having a place
of
business at Liechtenstein, herein represented by Xxxxxxx Xxxxx, its
Managing Director, duly authorized as he so declares,
|
|
(hereinafter
called the "Manager")
|
|
|
PARTY
OF THE FIRST PART
|
|
| AND: | XXXXXXX XXXXX, businessman, residing at Xxxxxx 679, Triesenberg FL9 497, Liechtenstein, |
| (hereinafter called the "Brink") | |
|
PARTY
OF THE SECOND PART
|
|
|
AND:
|
MAHJONG
SYSTEMS LIMITED, a
duly constituted corporation, having a place of business at Turks
and
Caicos, herein represented by Xxx Xxxxxxxxxxx, duly authorized as
he so
declares,
|
| (hereinafter called the "Corporation") | |
|
PARTY
OF THE THIRD PART
|
WHEREAS
the
Corporation is in the business of licensing gaming software (the
"Business");
WHEREAS
Brink
is
the key executive of the Manager;
WHEREAS
the
Manager and Brink have special expertise in the areas of licensing, sales,
marketing and business development, required by the Corporation in order to
successfully operate the Business;
WHEREAS
the
Manager, through its employee Brink, wishes to provide to the Corporation and
the Corporation wishes to acquire from the Manager certain services relating
to
the Business, subject to the terms and conditions hereinafter set
forth;
AND
WHEREAS
as
of the
effective date hereof, all of the shares of the Corporation and its sister
company 0000-0000 Xxxxxx Inc. ("Quebec
the.") shall have been acquired by Events International Holding Corporation
("EIH") and it is a condition of such acquisition that the Manager and Brink
execute a consulting agreement with the Corporation.
NOW,
THEREFORE,
THE PARTIES HAVE AGREED
AS
FOLLOWS:
1. PROVISION
OF SERVICES
1.1
The
Corporation hereby engages the Manager to provide sales, marketing, business
development and revenue generating services (the "Services")
to the
Corporation, and the Manager hereby agrees to provide such Services to the
Corporation.
1.2The
Manager and Brink each agree to devote such time, skill, energy and attention
to
the provision of the Services as may be required in order to perform the
Services in a proper and
judicious
manner.
2. TERM
2.1
The
parties agree that this Agreement commences on the Closing Date as defined
in
the Share Purchase Agreement whereby EM acquires the shares of the Corporation
and Quebec Inc. (the "Effective Date") and shall end on the five (5) year
anniversary of such Closing Date, unless otherwise
terminated in accordance with section 7 below.
3. CONSIDERATION
3.1As
consideration for the Services, the Corporation shall pay the Manager an annual
fee of One Hundred Twenty Thousand Canadian Dollars (CDN $120,000)
before
"Base 1 Fee")
of
Ten
Thousand
Canadian Dollars (CDN $10,000) per month, payable month,
or
in such other manner as may be mutually agreed to by the parties in
writing.
3.2
In
addition to the Base Fee, the Manager shall be entitled to a performance fee
equal to 20% of the first year license fees payable to the Corporation under
those license agreements executed by the Corporation and third parties in the
year, where the agreements were initiated and closed by the Manager or Brink.
Such performance fee shall be payable by the Corporation to the Manager fifteen
(15) days following receipt by the Corporation of the license fees in
question.
3.3
The
Manager shall be entitled to a further fee equal to 10% of the first year
license fees payable to the Corporation under those license agreements executed
by the Corporation and third parties in the year, other than those described
in
section 3.2 above. Such fees shall be payable by the Corporation to the Manger
fifteen (15) days following receipt by the Corporation of the license
fees
in
question.
3.4.
For
the
purposes of sections 3.2 and 3.3 hereof, "first year license fees"
means
fees payable to the Corporation in the first year of the license agreements
in
question including license fees and other upfront fees payable to the
Corporation (but not including any other amounts (whether revenue share or
other) payable under such agreements), to the extent that such first year
license fees are not reduced or offset by payments or other commitments of
the
Corporation toward licensees.
3.5
In
the event that the combined consolidated revenues (excluding intercorporate
transactions and charges) generated by the Corporation and its sister company
Quebec Inc. in each fu11 calendar year of the term hereof, beginning with
calendar year January 1" to December 31, 2006, reach $4 million, the Manager
shall be entitled to a bonus equal to 100% of the Base Fee for such year. In
the
event that such combined consolidated revenues are greater than $4 million
but
not more than $8 million, the Manager shall be entitled to an additional bonus
equal to 5% of the excess, and if such combined consolidated revenues are
greater than $8 million, the Manager shall be entitled to an additional bonus
of
2% of such excess. The Manager's entitlement to a bonus for the portion of
the
last year of the term following December 31, 2009 and ending in 2010 shall
be
calculated on a pro rata basis (based on the portion of the calendar year
worked). Such bonus shall be payable within fifteen (15) days of presentation
to
the shareholders of the financial statements for the year in
question.
3.6
The
Corporation will, subject to the rules that it may issue from time to time,
upon
receipt of acceptable receipts and vouchers, pay or promptly reimburse all
pre-approved expenses actually and reasonably incurred by the Manager in the
performance of its duties under this Agreement.
4. OPTIONS
4.1
Subject to the terms and conditions hereinafter provided, the Manager shall
be
granted options (the "Options") to acquire from the treasury of EIH up to one
million (1,000,000) common shares of EIH (the "Optioned Shares"), subject to
the
following.
4.2
One-third of the Options shall be granted on the Effective Date, one-third
shall
be granted on the one year anniversary date thereof and one-third shall be
granted on the two year anniversary date thereof, provided that, at such times,
this Agreement remains in full force and effect and the Manager is not in
default hereunder and provided further that Brink has been an employee of the
Manager continuously since the commencement of the term of this Agreement.
All
Options shall be subject to the terms and conditions of the EIH employee stock
option plan, including the plan's normal vesting period of 18 months, and any
applicable regulatory approval or conditions. The exercise price under the
Options shall be equal to the trading price of the EIH shares at the close
of
business on the day immediately preceding the grant of the Options in each
of
the three years.
5. PERFORMANCE
5.1
The
Manager shall devote the necessary time, attention and resources to the
provision of the Services, principally via its employee Brink who shall devote
the substantial majority of his time to the provision of Services hereunder
and
via such other employees as the Corporation may designate from time to
time.
-
5.2
The
Manager shall report to the board of directors of the Corporation and to Xxxxxx
Xxxxxxxx, President of EIH, with reporting lines to be reviewed and determined
by the board of directors of EIH from time to time during the term of this
Agreement.
5.3
Performance objectives and targets may be set from time to time by the board
of
directors of the Corporation or the person to whom the Manager reports. It
is
agreed and acknowledged that the objectives for the first year of the term
are
to generate revenues of $650,000 or more and in the second year to generate
revenues of $4 million or more. For these purposes, the combined consolidated
revenues (excluding intercorporate transactions and charges) of the Corporation
and its sister company Quebec Inc. shall be taken into
consideration.
5.4
The
Manager and the Corporation hereby acknowledge and agree that, as an independent
contractor, the Manager shall be responsible for the acts and expenses of all
its employees.
6. CONFIDENTIAL
INFORMATION AND NON-COMPETITION
6.1
The
Manager and Brink acknowledge that, in the course of this Agreement, the
Corporation will disclose to the Manager and its employees confidential
information having significant value to the Corporation concerning the Business,
the names and requirements of customers, suppliers and employees of the
Corporation, and that the disclosure of such information to competitors of
the
Corporation or to the general public would be highly detrimental to the
interests of the Corporation. Each of the Manager and Brink further acknowledges
and agrees that the right to maintain as confidential such information
constitutes a proprietary right which the Corporation is entitled to protect.
Accordingly, each of the Manager and Brink covenants and agrees that, during
the
course of this Agreement and thereafter, it will not disclose any such
confidential information to any person for any purpose other than those of
the
Corporation, nor will it use same for any purpose other than those of the
Corporation.
6.2
Each
of the Manager and Brink hereby covenants and agrees that it/he shall not at
any
time, during which it/he has any working relationship with the Corporation
whether as an employee, consultant or otherwise including the period of this
Agreement and for one (1) year thereafter, either individually or in partnership
or jointly or in conjunction with any person or persons, firm, association,
syndicate, company or corporation, as principal, agent, trustee, shareholder,
employee or consultant, or in any manner whatsoever, whether directly or
indirectly, carry on or be engaged in or concerned with or interested in, or
advise, lend money to guarantee the debts or obligations of, or permit his
name
or any part thereof to be used or employed by or associated with, any person
or
persons, firm, association, syndicate, company or corporation engaged in or
concerned with or interested in any business competing with the business carried
on by the Corporation or Quebec Inc., within any city, province, state, country
or other geographical area in which the Corporation or Quebec Inc. carries
on
any such business or part thereof or in which the Corporation or Quebec Inc.
has, at the date of termination of this Agreement, formulated plans to commence
carrying on such business or part thereof, as the case may be, within one (1)
year after the termination of this Agreement, provided that nothing herein
shall
restrict or prevent the Manager or Brink from owning as a passive investor
less
than five percent (5 %) of any class of securities of any competitor of the
Corporation that are listed for trading on a recognized stock exchange. Nothing in the foregoing shall prohibit the
Manager or Brink
from engaging in any business, after the termination of this Agreement
hereunder, that does not compete with the Corporation and Quebec Inc. For the
purposes of this section 6.2, "business" means the business carried on by the
Corporation and/or Quebec Inc., namely, developing software and providing
software support for the development and integration of the "Mahjong Mania"
software and producing materials incidental thereto, and licensing and
exploitation and commercialization of said "Mahjong Mania"
software.
-
6.3
Each
of the Manager and Brink hereby covenants and agrees that it/he shall not at
any
time during the period of this Agreement and for one (1) year following the
termination of this Agreement, directly or indirectly, approach or solicit
any
employee, client or supplier of the Corporation or Quebec Inc. or attempt to
direct any such employee, client or supplier away from the Corporation or Quebec
Inc.
6.4.
Notwithstanding
the foregoing, if the Corporation terminates this Agreement other than for
a
reason specified in any of paragraphs 7.2.1, 7.2.2, 7.2.3 or 7.2.4 below, the
non-competition covenants and obligations set forth in section 6.2 above shall
cease and be of no further effect upon such termination of this
Agreement.
7. TERMINATION
AND DEFAULT
7.1
The
Manager may terminate this Agreement upon thirty (30) days prior notice in
the
event of material breach of the terms hereof by the Corporation. In the event
that the Manager purports to terminate his employment hereunder, other than
due
to material breach by the Corporation (i) the Corporation shall thereafter
have
no further obligation to the Manager hereunder, whether in the nature of fee,
bonus, incentive or benefits, except to pay any amount due and unpaid hereunder,
as of the date of such termination, and (ii) the Corporation shall be entitled
to exercise all other rights and remedies it may have in respect of this
Agreement, and (iii) EIH shall be entitled to exercise all rights and remedies
it may have under the agreement for the purchase and sale of the shares of
the
Corporation.
7.2.
Termination
by Corporation
7.2.1 In
the event the Manager
or Brink is in breach of the non-competition provisions referred to in Article
6
hereof, and following written notice from the Corporation of such breach the
Manager or Brink, as the case may be, fails to remedy such breach, or fails
to
take active steps satisfactory to the Corporation (as determined in its
discretion) to cure such breach, within fifteen (15) business days of delivery
of such notice, the Corporation shall be entitled, in its sole discretion,
to
forthwith terminate this Agreement without further notice or payment in lieu
of
notice, and the Corporation shall thereafter have no further obligation to
the
Manager hereunder for any fee, bonus, incentive or benefit, except to pay any
amount due and unpaid hereunder as of the date of such termination.
-
7.2.2 If
the Manager or Brink
refuses or fails to execute any reasonable, lawful direction relating to the
business and affairs of the Corporation as requested or demanded by the Board
of
Directors of the Corporation, or the person to whom the Manager reports, or
otherwise wilfully and continuously fails to substantially perform his duties
according to the terms of his employment, and fails to remedy such refusal
or
failure, or fails to take active steps satisfactory to the Corporation (acting
reasonably) to execute such directions within fifteen (15) business days of
delivery of notice to remedy such refusal or failure, the Corporation shall
be
entitled, in its sole discretion, to forthwith terminate this Agreement without
further notice or payment in lieu of notice, and the Corporation shall
thereafter have no further obligation to Manager hereunder for any fee, bonus,
benefit or incentive, except to pay any amount due and unpaid hereunder as
of
the date of such termination.
7.2.3 If
the Corporation fails
to meet its approved revenue budget for any six (6) month period or if the
Corporation exceeds its approved expense budget by a material amount, the
Corporation shall be entitled, in its sole discretion, to terminate this
Agreement upon thirty (30) days written notice, and the Corporation shall
thereafter have no further obligation to the Manager hereunder for any fee,
bonus, incentive or benefit, except to pay any amount due and unpaid hereunder
as of the date of such termination.
7.2.4 The
Corporation shall be
entitled, in its sole discretion, to forthwith terminate this, without notice
or
payment in lieu of notice, if either of the Manager or Brink:
7.2.4.1 is
convicted of any
criminal offence which would have a material adverse impact on the ability
of
the Manager or Brink to perform its/his duties hereunder or on
the business of the Corporation;
7.2.4.2 is
grossly negligent or
acts in a manner constituting material misconduct (as determined by the Board
of
Directors, acting reasonably) or engages in
self-dealing conduct
in the performance of its duties hereunder, or engages in any criminal or
dishonest act resulting or intended to result directly or
indirectly in personal gain of
the
Manager
or Brink at the expense of the Corporation or its shareholders; or
7.2.4.3 wilfully
engages in any act that is materially injurious to the Corporation or is
shareholders, monetarily or otherwise;
and
in
any such case, the Corporation shall thereafter have no further obligation
to
the Manager hereunder for any fee, bonus, incentive or benefit, except to pay
any amount due and unpaid hereunder as of the date of such
termination.
7.2.5 The
Corporation may
terminate this Agreement at any time and for any reason upon giving ninety
(90)
days prior written notice of termination to the Manager, in which case
the
Manager shall be entitled to receive, in addition to its Base Fee up to the
date
of termination of employment, its share of any bonus or performance fee
calculated on a pro rata basis to the date of termination.
7.3 This
Agreement shall
terminate upon the death or permanent disability of Brink, in which case the
Manager shall be entitled to receive, in addition to its Base Fee up to the
date
of
termination of employment, its share of any bonus or performance fee calculated
on a pro rata basis to the date of termination.
8. TITLE
TO INTELLECTUAL PROPERTY
8.1 Each
of the Manager and
Brink covenants and agrees with the Corporation that it/he will fully and freely
(and without expense to the Corporation) communicate to the Corporation,
and each of the Manager and Brink hereby waives it/his moral rights in and
assigns to the Corporation, all discoveries, concepts, inventions or
improvements, whether patentable or not, made, discovered, conceived, invented
or improved by each of the Manager and Brink as well as any ideas, plans,
concepts, copyrightable materials, copyrights, trademarks, trade dress and
any
other intellectual property conceived or created by each of the Manager and
Brink (hereinafter collectively called the "IP Rights") during the period
commencing on the date hereof and ending on the termination of the term and
in
any way relating to any process, formula, plan, skill, method of advertising,
marketing, research, equipment, device, or method of doing business, developed
or being developed, made, used, sold or installed by or made known to each
of
the Manager and Brink during the period of its/his employment hereunder or
resulting from or suggested by any work which each of the Manager and Brink
may
do for the Corporation at the request of the Corporation and relating to any
business carried on or proposed to be carried on by the Corporation, and each
of
the Manager and Brink agrees that it/he will at the expense of the Corporation
at all times (both during the period of its/his employment hereunder and at
all
times thereafter) assist the Corporation or its assignees or their nominees
in
every way to protect the rights of the Corporation under this Section 8.1 and
to
vest in the Corporation or its assignees the entire right, title and interest,
including, without limitation, the copyright, in and to any and all of the
IP
Rights and that he will not disclose to any person, fum or company or use any
such IP Rights for his own purposes or for any purposes other than those of
the
Corporation.
9. RETURN
OF PROPERTY
9.1
Each
of the Manager and Brink agrees that upon termination of this Agreement, it/he
will immediately surrender and turn over to the Corporation, all books, forms,
records, client lists and all other papers and writings relating to the
Corporation, and all other property belonging to the Corporation, it being
understood and agreed that the same are the sole property of the
Corporation.
10. INJUNCTIONS
10.1 If the Manager and/or Brink should violate any of the terms of this Agreement, the Corporation shall be entitled to all appropriate remedies, including, without limitation, an interim,
interlocutory
or permanent injunction to be issued by any competent court enjoining and
restraining the Manager and/or Brink from such wrongful acts.
11. DISPUTE
11.1
If
any controversy, dispute, claim, question or difference (a "Dispute") arises
with respect to this Agreement or its performance, enforcement, breach,
termination or validity, the parties will use their best efforts to settle
the
Dispute as expeditiously as possible. To this end, they will consult and
negotiate with each other, in good faith and understanding their mutual
interests, to reach a just and equitable satisfactory all of the
parties.
11.2
If
the parties do not reach a resolution pursuant to section 11.1 within a period
of five business days following the first notice of the Dispute by any party
to
another, then they may, if both parties agree, submit the Dispute to
arbitration.
12. NOTICES
12.1
Any
notice or consent required or permitted to be given by one party hereunder
to
the other shall be validly given if personally delivered or mailed by prepaid
registered mail, addressed:
| 12.1.1 if to the Manager: | GENESIS CONSULTING ANSTALT | |
| Postfach 1025, Xxxxxx 679 Triesenberg FL9497 | ||
| Liechtenstein | ||
| Attention: Xxxxxxx Xxxxx | ||
| 12.1.2 if to the Corporation: | MAHJONG SYSTEMS LIMITED | |
| Britannic House, Providenciales, | ||
| Turks and Caicos Islands, British West Indies | ||
| Attention: CEO | ||
| with a copy to: | Events International Holding Corporation | |
| 000 Xxxxxx Xxxxxxxx, Xxxxx 000 | ||
| Xxxxxxxx, XX X0X 0X0 | ||
| Attention: President |
or
to
such other address as the party to whom such notice is to be given shall have
last notified the party giving the same in the manner provided in this Article
12. Any notice delivered to the parry to whom it is addressed as hereinabove
provided shall be deemed to have been given and received on the date it is
so
delivered to such address, provided that if such day is not a business day,
then
such notice shall be deemed to have been and received on the next business
day
following such day. Any notice mailed as hereinabove provided
-
shall
be
deemed to have been given and received on the fifth (5`s)
business day next following the date of its mailing. Any notice transmitted
by
facsimile as hereinabove provided shall be deemed to have been given and
received on that date it is so transmitted if transmitted during the normal
business hours of the recipient and, if not so transmitted, on the next business
day after its transmission.
13. CONCLUDING
PROVISIONS
13.1
If
any provision of this Agreement as applied to any party or to any circumstance
shall be adjudged by the court of competent jurisdiction to be invalid or
unenforceable, the same shall in no way affect any other provision of this
Agreement, the application of such provision in any other circumstances, or
the
validity or enforceability of this Agreement. The parties agree that the
provisions of this Agreement are reasonable and intend it to be enforced as
written. However, if any provision, or part thereof, is held to be unenforceable
because of the duration thereof, the area covered thereby, or the types of
activities restricted thereby, all parties agree that a Court of competent
jurisdiction making such determination shall have the power to reduce the
duration and/or area of such provision or types of activities restricted and/or
to delete specific words or phrases and in its reduced form such provision
shall
then be enforceable.
13.2
This
Agreement constitutes the entire agreement between the parties hereto relative
to the subject matter hereof and supersedes all prior agreements and
understandings whether written or oral relative to the subject matter hereof.
Except as otherwise specifically set forth in this Agreement, neither parry
makes any representation or warranty express or implied, statutory or otherwise
to the other party hereto. This Agreement may not be amended or modified except
by written instrument executed by each of the parties hereto.
13.3
No
provision of this Agreement shall be deemed to be waived as a result of the
failure of either of the parties to require the performance of any term or
condition of this Agreement or by other course of conduct. To be effective,
a
waiver must be in writing, signed by each of the parties hereto and state
specifically that it is intended to constitute a waiver of a term or breach
of
this Agreement. A waiver by either of the parties of any term or breach of
this
Agreement shall not prevent a subsequent enforcement of such term or any other
term and shall not be deemed to be a waiver of any subsequent
breach.
13.4
This
Agreement shall not be assigned by the Manager. This Agreement may be assigned
by the Corporation to a related corporation or to any person which purchases
or
acquires substantially all of the Corporation's assets and undertaking. This
Agreement shall enure to the benefit of and be binding upon the parties hereto
and their respective heirs, executors, administrators, successors and permitted
assigns. The provisions of sections 6 and 8 of this Agreement shall survive
the
termination of this Agreement.
13.5
All
references herein to dollar amounts refer to Canadian funds.
13.6
Each
of the parties hereto hereby covenants and agrees to promptly do all such acts
and execute all such further agreements, assurances and other documents as
the
other party hereto may
from time to time reasonably request in writing be done and/or executed in order to better evidence and/or perfect the respective matters and things herein provided for and/or the respective obligations created or intended to be created hereby.
13.7
Words importing the singular number include the plural and vice-versa and words
importing gender include all genders.
13.8
Headings preceding the text, sections, subsection or paragraphs hereof, have
been inserted for the convenience of reference and shall not be construed to
affect the meaning or effect of this Agreement.
IN
WITNESS WHEREOF, the
parties have signed.
| GENESIS CONSULTING ANSTALT | ||
| |
|
|
| Per: | /s/ Xxxxxxx Xxxxx | |
|
Xxxxxxx Xxxxx |
||
| MAHJONG SYSTEMS LIMITED | ||
| |
|
|
| Per: | /s/ Xxx Xxxxxxxxxxx | |
|
Xxx Xxxxxxxxxxx |
||
INTERVENTION
AND
ACKNOWLEDGEMENT BY:
| EVENTS INTERNATIONAL HOLDING CORPORATION | ||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxxxx | |
|
Xxxxxx Xxxxxxxx |
||
