EXHIBIT 10.6
MANAGEMENT SERVICES AGREEMENT
THIS AGREEMENT is made effective as of the 1st day of May 2006 (the "Effective
Date"),
BETWEEN:
Consorteum Inc
(hereinafter referred to as the "CORPORATION")
- and -
XXXXX XXXXXXXX (hereinafter referred to as the "Associates"), incorporated
in the Province of Ontario. The services of Associates shall be provided
to the Corporation by XXXXX XXXXXXXX, of the City of Richmond Hill in the
Province of Ontario (hereinafter referred to as the "Executive").
Executive and Associates shall be understood to be interchangeable for the
purposes of this Service Agreement.
ARTICLE 1
APPOINTMENT AND DUTIES
----------------------
1.1 The Executive agrees to act as Chief Executive Officer of the Corporation.
1.2 The Executive herby acknowledges he is subject always to the direction of
the Corporation through the Board.
1.3 The Executive shall serve the Corporation in the capacity as Chief
Executive Officer and provide such services as are commensurate with such
position and responsibility. When present all meetings of the Board, and,
inter alia, direct the financial and capital market strategies necessary
for efficient performance, and accept responsibility for the
implementation of financial controls necessary to assume appropriate
compliance.
ARTICLE 2
TERM OF SERVICE
---------------
2.1 Subject to earlier termination pursuant to the terms hereof, the initial
term of this service agreement shall be from and including the Effective
Date up to and including June 30th, 2010 (the "INITIAL TERM"), unless
otherwise decided by shareholders or the Board.
The service of the Executive shall, on the consent of both parties,
continue thereafter for an additional two year period, but otherwise on
the same terms and conditions contained herein, or on revised terms and
conditions as may be established by the Board and agreed to by the
Executive.
2.2 Notwithstanding the preceding Section 2.1, this Agreement shall be subject
to early termination during either the Initial Term, or any subsequent
periods, in accordance with the termination provisions of Article 4
hereof.
2
ARTICLE 3
REMUNERATION AND BENEFITS
-------------------------
3.1 While in the service of the Corporation, the Executive will be paid an
annual base fee in the amount of one hundred and fifty thousand dollars
($150,000), subject to applicable statutory deductions, and contributions
to employee benefit plans (the "Base Fee").
3.2 The Executive's Base Fee will be payable monthly, in accordance with the
Corporation's practices and procedures as they may exist from time to
time.
3.3 The Base Fee will be reviewed by the Board on an annual basis, and may, in
the sole discretion of the Board, be increased.
3.4 The Executive will be eligible to participate in a bonus plan to be
established by the Corporation (the "Bonus Plan"). The Bonus Plan will be
based upon the pre-tax cash flow of the Corporation.
3.5 The Executive will be eligible to participate in any stock option plan
which the Corporation may establish in the future for its employees to the
extent determined by the Board in its sole discretion.
3.6 The Executive will be eligible to participate in all existing and future
benefit plans of the Corporation which it makes available to its executive
employees, including without limitation, dental, vision and health care
benefits, long-term care, disability and life insurance.
3.7 The Executive will be provided (This is subject to change) with a home
office allowance of $700.00 per month, ("THE HOME OFFICE ALLOWANCE") to
cover all home office expenses including the purchase, leasing or
maintenance of any equipment, technology or supplies reasonably necessary
or incidental to the Executive's responsibilities to the Corporation.
3.8 The Executive shall be solely responsible for any and all income tax
liability including without limitation taxable benefits from the receipt
of the Auto Allowance, the acquisition of common shares of the Corporation
upon exercise of stock option grants, and any other taxable benefits
received by the Executive under his service with the Corporation. All
payments made by the Corporation to the Executive or for the benefit of
the Executive shall be less applicable withholdings and deductions.
3.9 The Corporation shall pay to the Executive an automobile allowance of
Cdn$1250.00 per month. All reasonable and related automobile expenses
shall be reimbursed to the Executive or Associates by the Corporation upon
the provision of itemized accounts and receipts.
ARTICLE 4
TERMINATION OF SERVICE
----------------------
4.1 In the event the Executive resigns, at any time, for any reason, he shall
provide a minimum of three (3) months advance written notice to the
Corporation. The Executive will not be entitled to receive any further
compensation or benefits whatsoever, other than those which have accrued
up to the Executive's last day of active service with the Corporation in
the event of termination by the Executive. The Corporation may, at its
discretion, waive in whole or in part such notice, however three (3)
months compensation will still be honoured, including,
3
4.2 Notwithstanding the term of this Agreement as set forth in Section 2.1
hereof, the Executive hereby agrees that this Agreement and his service
shall be immediately terminable by the Corporation, without payment of any
severance or other compensation to him in lieu of prior notice of such
termination, in the event of the existence of Just Cause for the
termination or in the event of the Disability of the Employee. For the
purposes hereof:
(a) "Just Cause" means any act or conduct which at common law
constitutes just cause and shall be deemed to include, conduct
materially inconsistent with the fulfilment of the expressed or
implied terms and conditions of the Executive's service; materially
negligent performance by the Executive of his service duties; or a
consistent failure to exercise the amount of care and skill required
to perform his duties herein in a competent manner, except where
such failure results from the occurrence of a Disability; and
(b) "Disability" shall mean the failure of the Executive to perform his
duties on a substantially uninterrupted basis for three (3)
consecutive months or for a period of five (5) months out of any
twelve (12) month period where such failure results from physical or
mental illness.
4.3 In the event this Agreement and the Executive's service is terminated for
Just Cause, the Corporation shall not be required to give the Executive
any notice of such termination or payment or other compensation in lieu
thereof. In such event, the Executive shall only be entitled to the
payment of his remuneration and any other benefits, which have accrued to
the date of termination. In such event, the Executive expressly confirms
and agrees that he shall not be entitled to compensation for loss of
contract, loss of benefits or other matters relating to his contract with
the Corporation.
4.4 Notwithstanding any other provision of this Agreement, the Corporation
shall remain liable to pay to the Executive his remuneration during the
period of time that the Executive is unable to perform his service duties
herein by reason of illness or mental or physical disability or
incapacity. In the event that such illness or mental or physical
disability or incapacity constitutes a Disability as defined in the
preceding subsection 4.2(b), then the Corporation may, in its sole
discretion, immediately terminate this Agreement and the Executive's
service without any notice of termination or payment of any compensation
for his loss of contract, loss of benefits, or other matters relating to
his contract with the Corporation.
4.5 The service of the Executive will be terminated automatically in the event
of the death of the Executive, and Associates will not be entitled to
receive any further compensation or benefits pursuant to the terms of the
service of the Executive, other than those which have accrued up to the
date of death.
4.6 In addition to the circumstances as set out in this Article 4, hereof, the
Corporation may terminate the Executive's service at any time, without
prior notice, by paying to the Executive a separation package in a lump
sum which will be equal to twenty four (24) months of the Base Fee (the
"Separation Package").
4.7 The Executive acknowledges that the Separation Package provided pursuant
to this Agreement supersedes and replaces any and all rights to reasonable
notice of termination that the Executive might otherwise be entitled to at
common law, and the Executive expressly waives any rights to such notice.
The Executive agrees that the Separation Package is deemed conclusively to
be reasonable notice of termination and specifically includes all amounts
owing for termination and/or severance pay under any contract, statute,
common law or otherwise.
4
4.8 Except as set out herein, the Executive will not be entitled to any other
Fee or benefits of service following his dismissal, including without
limitation, Auto Allowance, Discretionary Bonus, health benefits, or the
issuance or vesting of any stock options pursuant to the Stock Option
Plan.
4.9 In the event that the service of the Executive with the Corporation is
terminated in any manner, upon termination, the Executive agrees to
execute a comprehensive release to the effect that he acknowledges that
receipt of any monies pursuant to the terms of this Agreement is in full
satisfaction of any and all outstanding claims or entitlements which the
Executive may otherwise have against the Corporation and its Affiliates,
as well as the officers, directors, employees and agents of the
Corporation and its Affiliates.
4.10 The Executive understands and agrees that all benefits, including
long-term disability coverage will cease as of the date of termination of
the Executive's service, and the Corporation has no liability for any
damages caused by the cessation of such benefits coverage regardless of
the reason for termination or resignation. The Corporation has no
obligation to extend any benefit coverage past the termination date.
4.11 All items of any kind or nature created or used by the Executive in the
course of service, or otherwise furnished by the Corporation, and all
equipment, credit cards, computers, cellular phones, data, books, records,
reports, files, notes, manuals, literature, software, Confidential
Information (as hereinafter defined) or any other materials belonging to
the Corporation or its customers, suppliers, distributors, employees or
consultants and in the Executive's possession or control, shall be
surrendered to the Corporation, in good condition, promptly upon the
Executive's termination of service, irrespective of the time, manner or
cause of termination.
ARTICLE 5
CONFIDENTIAL INFORMATION
------------------------
5.1 The Executive recognizes and understands that in performing the service
duties and responsibilities as outlined in this agreement, the Corporation
will provide the Executive with access to and the Executive will become
knowledgeable with respect to a wide variety of nonpublic information
relating to the Corporation, its business and that of its affiliates, its
customers, suppliers, distributors, employees and consultants of an
extremely confidential nature (the "CONFIDENTIAL INFORMATION").
5.2 During Associates' service with the Corporation, or at any time
thereafter, it shall not divulge, communicate or use any Confidential
Information which it may have access to or otherwise receive or obtain in
relation to the affairs of the Corporation or any of its subsidiaries,
related companies or affiliated entities. Breach of confidentiality will
be considered cause for immediate dismissal. Associates' covenant of
confidentiality will survive termination.
5
ARTICLE 6
NOTICE
------
6.1 Any notice required to be given hereunder shall be in writing and
sufficiently made if sent by facsimile transmission, or delivered
personally or mailed by prepaid registered mail to the parties at their
respective addresses herein.
Associates:
Xxxxx Xxxxxxxx, CEO
000 Xxxxxxxxxxx Xxx
Xxxxxxxx Xxxx,
Xxxxxxx XX 0X0
(i) The Corporation:
Consorteum Inc,
000 Xxxxxxxxx Xx,
Xxxx 00 Xxxxxxx
Xxxxxxx,
Any such notice shall be deemed to have been given on the date it is delivered
if personally delivered or sent by facsimile transmission, or, if mailed, on the
fifth business day following the mailing thereof Either party may change its
address for service by giving written notice hereunder.
6
ARTICLE 7
GENERAL PROVISIONS
------------------
7.1 All dollar amounts set forth in this Agreement refer to Canadian currency.
7.2 This Agreement shall be governed and construed in accordance with the laws
of the Province of Ontario.
IN WITNESS WHEREOF the parties hereto have executed and delivered this
Agreement as of the date first written above.
Consorteum, Inc.
Per: /s/ signature
-----------------------------------
Position CEO
-------------------------------
SIGNED, SEALED AND DELIVERED )
In the presence of: )
)
)
--------------------------------- ) /s/ Xxxxx Xxxxxxxx
Witness ) -----------------------------------
) XXXXX XXXXXXXX, CEO