THIS AGREEMENT made this March 21st 1997
BETWEEN:
TENGTU INTERNATIONAL CORP.
a body corporate incorporated under the
laws of Delaware having its head
office at
(hereinafter referred to as "Tengtu")
AND:
X.X. XXXXX & ASSOCIATES INC.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
(hereinafter referred to as the "Consultant")
WHEREAS, Tengtu's business opportunities can be grouped into two categories,
identifiable as education and entertainment.
AND WHEREAS, Consultant has experience with and knowledge of Tengtu and can be
of assistance in furthering its business objectives;
AND WHEREAS, Tengtu and Consultant wish to enter into an agreement whereby
Consultant will provide such assistance to Tengtu;
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, Tengtu and Consultant agree as follows:
I.
AGREEMENT
Tengtu hereby engages Consultant to provide the service to Tengtu outlined in
Article 2 hereof and Consultant agrees to provide the same, upon the following
terms and conditions.
II.
CONSULTANT SERVICES
Consultant will nominate one of its officers to assume the position of President
which duties shall include the development and field implementation of
strategies for Tengtu produce lines as well as Marketing Strategies and
quantified Revenue and Profit objectives as required to satisfy operating plan
objectives, including but not limited to capital infusions, mergers and
acquisitions, revenues and profit objectives and share price.
III.
TENGTU OBLIGATIONS
Tengtu shall provide suitable office space, parking, secretarial assistance,
stationery, postage, telephone and other such standard support services to
Consultant at its premises as and where determined by Consultant.
IV.
CHARGES AND PAYMENT TERMS
4.1
For the services provided hereunder, Tengtu shall pay Consultant at the rate of
one hundred and ninety- two dollars ($192.00) per hour plus expenses, as
determined by Consultant.
4.2
The parties agree that the minimum billable hours to be provided under this
contract are 3,600 hours and that the total paid will not exceed six hundred and
twelve thousand dollars ($612,000) without the prior written consent of Tengtu.
4.3
Allowable business costs for which Consultant is to be reimbursed are the usual
business related travel and entertainment expenses of a professional consultant
inclusive of business related telephone calls on Consultant's car phones.
4.4
Payment shall be made the last working day of each month provided Consultant
submits an itemized invoice
for hours worked and expenses incurred at least three (3) working days in
advance.
4.5
Effective with the signing of the agreement Tengtu agrees to provide Consultant
with a retainer of $15,000, which will be returned in full at the satisfactory
completion of this contract.
V.
TERM
This Agreement shall be in effect from the date first mentioned in this
Agreement until March 31, 2000, provided only that either party may terminate
the Agreement, without cause, on sixty (60) days prior written notice. If Tengtu
so terminates the Agreement a termination payment of two hundred thousand
dollars ($200,000) is immediately due and payable, if neither Xxxxx Xxxxx nor
Pak Xxxxxx is Chief Executive Officer. If Pak Xxxxxx or Xxxxx Xxxxx is Chief
Executive Officer at the time, the termination payment will be reduced by one
hundred thousand dollars ($100,000).
VI.
INCENTIVE REMUNERATION
6.1
Effective with the signing of this Agreement Tengtu agrees to cause to be vested
to Consultant 500,000 shares of Tengtu at no cost to Consultant. These shares
will be subject to a voting trust for two years in favour of Pak Xxxxxx.
6.2
At each anniversary of this contract or at achievement of each objective,
Consultant will receive a performance bonus in cash or equity (equity to be
determined based on latest month and share price) or a combination as agreed to
by Consultant and Tengtu equal to percentages identified in Table A attached of
capital funds raised, revenue/profit achieved, alliances and acquisitions
attained and share price increases.
6.3
Effective with the acquisition of the Iconix project (to be identified as such
by Consultant) Consultant will receive a one-third interest in the share equity
of the Iconix equity at Consultant option, at no cost to Consultant.
6.4
Effective with completion of each corporate acquisition by Tengtu, Consultant
will receive a 10.1% interest in the share equity of each project at
Consultant's option at no cost to Consultant. Each acquisition will be subject
to Board approval and Consultant may charge percentage in conjunction with
executive compensation packages that Consultant is to design.
VII.
INDEPENDENCE
The relationship between Tengtu and Consultant is solely that of principal and
independent contractor and without limiting the generality of the foregoing,
Consultant shall not under any circumstances be considered to be an employee of
Tengtu.
VIII.
LOCATION OF SERVICE
The services to be provided by Consultant shall be at any location deemed
appropriate by the Consultant. It is understood and agreed, however, that
Consultant shall undertake such travel, at Tengtu expense as may be required
form time to time.
INDEMNIFICATION
Each party shall indemnify and hold the other harmless from any loss, costs,
damages or expenses which the other may sustain and arising out of anything done
or omitted to be done by the indemnifying party . This provision shall survive
the termination of this
Agreement.
10.
ASSIGNMENT
This Agreement or any of its benefits or liabilities may not be assigned by
either party without the prior written consent of the other party.
APPLICABLE LAW
This Agreement shall be construed and governed solely in accordance with the
laws of the Province of Ontario and the parties specifically submit to the
exclusive jurisdiction of the courts of the said Province.
FURTHER ASSURANCE
The parties shall execute or cause or permit to be made, done or executed all
such further and other lawful acts, deeds, things, devices, conveyances and
assurances in law, as may be required, to carry out the true intent and to give
full force and effect to this Agreement.
NOTICE
Any notice, direction of instrument shall be given in writing and be mailed
postage prepaid by registered mail or delivered by one party to the other at the
address of the party first written above and, if delivered, shall be deemed to
have been given or made on the day on which it was delivered, or if mailed,
shall be deemed to have been given or made on the third business day following
the date after which it was mailed and either of the parties hereto may, from
time to time give notice of any change of their addresses in the manner herein
provided and, in such event, the address of the party shall be deemed to be
changed accordingly.
14.
HEADINGS
The section headings hereof are for the convenience of the parties only and
shall not be given any legal effect or otherwise affect the interpretation of
this Agreement.
15.
TAXES
Tengtu shall reimburse Consultant for all Goods and Services or Provincial Sales
taxes arising out of his provision services under this Agreement. This does not
include any liability for income taxes for which Consultant shall be solely
responsible.
16.
SEVERABILITY
If any provision of this Agreement shall be or become illegal or unenforceable
in whole or in part, the remaining provisions shall nevertheless be valid,
binding and subsisting.
TABLE A
ATTACHED TO SECTION 7
CAPITAL FUNDS First $5,000,000 4.0%
Balance 2.0%
REVENUE ACHIEVEMENTS On an annual basis 2.0%
ALLOWANCES/ACQUISITIONS At each transaction 5.0%
SHARE PRICE INCREASES On annual measurement of
increase per share times
outstanding shares issued 7.5%
These percentages are subject to downward adjustment by Consultant in
conjunction with the executive remuneration package that Consultant is
designing. The overall executive remuneration is subject to Board approval and
Consultant acknowledges that the business percentages for the executives and
Consultant will be relative and that he will evaluate accordingly.
TENGTU INTERNATIONAL CORP.
PROPOSED CORPORATE BONUS SCHEDULEJ.
-----------------------------------
The following are proposed bonus scheme to executives and directors of the
company for their direct contributions to successful undertakings listed below.
In cases where more than one person is involved in the undertaking, the bonuses
have to be apportioned according to either (a) a mutually agreed to bonus
sharing formula among the persons having involvement, or, (b) the Corporate
Bonus Sharing Formula depicted in Note 1.
Undertaking accomplished
------------------------
Total Corp.
Form of
Allocation (%)
--------------
Payment
-------
Capital raised from external sources
3
Cash
(Amount of cash raised)
Mergers and Acquisition
3
(Transaction value)
Shares
Strategic Relationship
3
Shares
(Resulting increase in revenue
forecast for two years)
Gross Revenue
1
Shares
(Current year for first two years)
Profit
1/4
Shares
(Before tax profit, commencing
on the third year)
Note 1: Corporate Bonus Sharing Formula (Applicable to Capital raised,
Mergers and Acquisition, and Strategic Relationships.)
a. If only two persons are involved with one lead person, lead person
takes 2/3 and the other person takes 1/3
b. If three persons are involved with one lead person, lead person
takes 1/2 and the other persons share the remaining.
If three persons are involved with two lead persons, lead persons take
1/2 and 3/4 each and the other person takes the remaining. c. If more than three
persons are involved with two lead persons, lead persons take 1/3 each and other
persons take the remaining.
