EXHIBIT 10(22)
Management Services Agreement
Between
CANARGO ENERGY CORPORATION
And
VAZON ENERGY LIMITED
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT is made effective as of 30TH JUNE 2000
by and between CANARGO ENERGY CORPORATION, a corporation (Commission File Number
incorporated and existing under the laws of the State of Delaware,
United States of America (the "Company"), and VAZON ENERGY LIMITED, (company
number 5153) a company incorporated and existing under the laws of Guernsey,
Channel Islands ("Consultant").
PRELIMINARY STATEMENTS
A. The Company is engaged in the exploration, development, recovery,
production, marketing and sale of oil and gas (the "Business") throughout the
world.
B. Consultant has substantial experience in the Business, and is
available to render general and specific services of a management, technical,
administrative and/or advisory nature with respect to the Business, and is
prepared to provide such services as and when needed by the Company.
C. The Company desires to obtain the services of Consultant, and
Consultant desires to provide certain services to the Company in the Territory.
NOW, THEREFORE, in consideration of the agreements contained herein and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1 - DEFINITIONS
In this Agreement and the Exhibits hereto, except where the context
otherwise requires, the words and expressions set forth below shall have the
following meanings:
"Agreement" means this Management Services Agreement, including all Exhibits, as
the same may be amended, modified or extended from time to time.
"Bonus" has the meaning set forth in Exhibit 3.
"Board" means the board of directors of the Company from time to time.
"Business" has the meaning set forth in the 'Preliminary Statements'
"Code of Conduct" means that document appended hereto as Exhibit 2.
"Confidentiality" has the meaning set forth in Section 8.
"Engagement" means the engagement of the Consultant for the Term by the Company
pursuant to this Agreement.
"Event of Default" has the meaning set forth in Section 12.
"Exhibit" means an exhibit to this Agreement.
"Consultant's Domicile" has the meaning set forth in Section 5.
"Consultant Invention" means any idea, invention, technique, modification,
process, or improvement (whether patentable or not), any industrial design
(whether registrable or not) and any work of authorship (whether or not
copyright protection may be obtained for it) created, conceived, or developed by
Consultant, either solely or in conjunction with others, during the Term, or a
period that includes a portion of the Term, that relates in any way to, or is
useful in any manner in, the Business, and any such item created by the
Consultant, either solely or in conjunction with others, following termination
of Consultant's employment with the Company, that is based upon or uses
Confidential Information.
"Salary" has the meaning set forth in Section 6.
"Section" means a section of this Agreement.
"Tax" or "Taxes" has the meaning set forth in Section 7.
"Term" has the meaning set forth in Section 3.
"Territory" means that geographic area that the Company is has business
activities.
SECTION 2 - ENGAGEMENT
For and during the Term, and subject to the terms and conditions
hereinafter set forth, the Company hereby appoints the Consultant to perform the
duties set out herein and the Consultant agrees to procure that Dr Xxxxx Xxxxxx,
of Concordia, Xxxxxxxxx Xxxx, Xx. Xxxxx Xxxx, Xxxxxxxx, XX0 0XX, Channel
Islands, shall serve as the Chief Executive Officer and Managing Director for
the Company. For the purposes of this Agreement "CEO" shall be deemed to mean
Dr Xxxxx Xxxxxx, acting in the capacity of Chief Executive Officer and Managing
Director of the Company. The Company agrees that for the purposes of the
Company's length of service definitions, and for benefit schemes, including the
Company's stock option plans etc., Dr Xxxxx Xxxxxx will be deemed to be a
"consultant" of the Company, and that such "consultancy" began on 1st March
1997, when the Consultant began the provision of services to a subsidiary of the
Company.
SECTION 3 - TERM
This Agreement shall commence June 30, 2000 and shall terminate upon the
earliest to occur of (i) Three (3) years from the date hereof, with the
possibility of extension subject to mutual agreement, (ii) the mutual agreement
of the parties hereto to terminate this Agreement, (iii) the liquidation or
dissolution of the Company, or (iv) the occurrence of an Event of Default. The
period during which this Agreement is in effect shall be known as the "Term".
SECTION 4 - DUTIES
During the Term, Consultant will procure that the CEO will:
(A) perform to the best of his ability all the duties of Chief
Executive Officer and Managing Director including, without limitation, those
duties specified in Exhibit 1 and such other functions, being not inconsistent
with his position as Chief Executive Officer and Managing Director as the Board
may require;
(B) comply promptly with all lawful directions and instructions given
by or with the authority of the Board;
(C) whenever so required for the proper fulfilment of his duties, work
without further remuneration in excess of the normal hours of work of the
Company which are from 9 a.m. to 5 p.m. from Monday to Friday; and
(D) attend and act at any premises of the Company situated in Europe,
and travel and act in the Territory and such other locations as may be required
for the proper fulfilment of his duties, provided such locations are deemed, in
the reasonable opinion of the Consultant, to be free from risk of kidnap, civil
insurrection, war, or other bodily risk.
SECTION 5 - VACATION/ OVERTIME/SICKNESS/ INJURY/ RESIDENT BASE /POINT OF
ORIGIN/EXPENSES
VACATION.
In addition to Bank and other Public holidays the CEO shall be entitled to 25
working days holiday in every calendar year to be taken at such time or times as
may be approved by the Company. If the full vacation is not taken during
calendar year, the vacation will accumulate thereafter. The CEO will do
everything in his power to take the full vacation each year. In the event of
extended work during weekends or Bank and other Public holidays, the CEO shall
be able to take and equivalent time of additional leave in lieu, this to be
taken as soon as is possible after the event.
PAYMENT DURING SICKNESS/INJURY.
(A) If the CEO is unable to attend at work by reason of sickness or injury
or other unauthorised reason the CEO must notify (if possible) a Board
member or other representative at his place of work not later than 11.00
am on the first day of absence and, in the case of absence of uncertain
duration, the CEO must keep an appropriate person at his place of work
regularly informed of the reason for your continued absence and his
likely date of return.
(B) If the CEO's absence is due to sickness or injury which continues for
more than seven consecutive days (whether or not working days) he must
provide the Board with a doctor's statement from the eighth consecutive
day of sickness or injury.
(C) Immediately following the CEO's return to work after any period of
absence the CEO will be required to complete a self-certification
form available from his place of work.
(D) If the CEO's absence is due to sickness or injury, the Company will pay
any Statutory Sick Pay (S.S.P) in accordance with any relevant statutory
provisions in the Consultant's Domicile. For S.S.P purposes, qualifying
days are Monday to Friday inclusive.
(E) In addition, in the event of the CEO being absent from work due to
sickness or injury, the Company will pay sick pay as follows:-
a. The Fees, minus any S.S.P paid to the Consultant by the Company,
and minus any other State sickness benefit recoverable by the
CEO, will be paid in full for the first 10 weeks' absence in any
twelve month period;
b. Thereafter, one half of the Fees, minus any S.S.P paid to the
Consultant by the Company, and minus any other State sickness
benefit recoverable by the CEO, will be paid for a further 10
weeks' absence in the same twelve month period.
c. After a total period of 20 weeks absence in the same twelve month
period, then provisions of the sickness and disability insurance
cover to be arranged by the Company for the CEO (as in Section
6 of the Agreement) shall apply.
RESIDENCE AND POINT OF ORIGIN
For the purpose of this Section 5, the Consultant's Domicile shall refer to the
CEO's place of habitation and shall be located in Guernsey, Channel Islands
("Residence") and the point of origin shall be the same ("Point of Origin").
The Company shall provide, at its cost, a small office with all necessary
equipment and services for the CEO and Consultant to carry out their duties, and
provide for the employment of a suitable Personal Assistant (PA) at the Point of
Origin Suitable accommodation for Consultant will be provided at the Company's
expense for time spent away from Point of Origin. Any travel for the Consultant
or CEO on Company business will be provided by the Company or any costs
re-embursed to the Consultant in full, and shall be at an appropriate class of
travel and accommodation consistent with the CEO's position, and with the
requirements of the duties.
EXPENSES
The Company shall reimburse to the Consultant all out-of-pocket expenses
properly incurred by the Consultant and the CEO in the course of the Engagement.
No expenses shall be reimbursed, however, unless they are incurred in the
ordinary course of business and are supported, where possible by receipts or
other appropriate justification.
SECTION 6 - REMUNERATION
The Company shall pay the following to the Consultant for the Appointment:
(a) A Fee to be paid in the Channel Islands ("Channel Islands") for work
performed in the amount of Twelve Thousand Five Hundred POUNDS STERLING
(12,500) per calendar month to be paid in advance on the 1st of each
month for the duration of the Term. These Fees shall be paid to the
Consultant either by cheque, or by bank transfer, with the full value
of the Fees being received at the Consultant's bank. The Consultant
will advise of bank details from time to time.
(b) The Company will also pay at the same time as the Fees a monthly
contribution to the Consultant for the CEO's pension requirements, equal
to nine per cent (9%) of the Consultants Fees (not including Bonus).
Consultant would also be provided with a insurance policy that would
cover the CEO for a minimum of (a) life insurance with death cover of 4
times the annual Fees(not including Bonus), (b) sickness and disability
benefits (permanent health insurance) and (c) comprehensive BUPA Travel
Insurance.
(c) The Company will also award the Consultant a Bonus as described in
Exhibit 3. Adjustment of the remuneration package during the Term will
Be in an upwards direction only and be based on the Company's
Compensation Committee determination and on the same criteria as the
Company's executive team. The remuneration is denominated in Pounds
Sterling.
SECTION 7 - TAX COMPLIANCE
(a)Compliance with Tax Laws. The Company will use its best efforts to comply
with all laws, rules and regulations pertaining to the reporting of the
compensation and reimbursable expenses attributable to Consultant's Engagement
in the Territory.
(b)Consultant's taxes. The Consultant is responsible for his own taxes.
SECTION 8 - CONFIDENTIALITY
During the Term of this Agreement and at all times thereafter, Consultant shall
hold in strict confidence, and shall not disclose to any person or entity any
labelled Confidential Information of the Company. For the purposes of this
Section 8, the term "Confidential Information" shall include without limitation,
trade information relating to the Company research and development, engineering
data, seismic data, surveys, specifications, process formulations, production
operations or techniques, planning, purchasing, accounting, finance, selling,
marketing, market research, promotional plans, customers, suppliers, and other
information of a similar nature which may include design specifications and
know-how, in which the Company or its suppliers or distributors have proprietary
interests, and all other information pertaining to the business of the Company
that is not publicly available. Consultant shall not use such labelled
Confidential Information except for the sole benefit of the Company.
SECTION 9 - PROPERTY OF THE COMPANY
Promptly upon the termination of this Agreement, Consultant shall surrender to
the Company all written materials (and all copies), all information stored in
computer memories or on microfiche, magnetic tape or diskette , that are at the
time in his direct or indirect possession or control and that pertain to the
business or affairs of the Company.
SECTION 10. INVENTIONS
a) The Consultant will disclose and deliver to the Company for the
exclusive use and benefit of the Company any inventions as a direct
result of the work performed for the Company, promptly upon the making,
devising or discovering of the same, and will give all information and
data in his possession as to the exact mode of working, producing and
using the same and also all such explanations and instructions to the
Company as may in the view of the Board be necessary to enable the
full and effectual working, production or use of the same and will at
the expense of the Company furnish it with all necessary plans,
drawings, formulae and models.
b) The Consultant will at the expense of the Company execute and do all
acts, matters, documents and things necessary to enable the Company
or its nominee to apply for and obtain protection for the Inventions
in any or all countries and to vest title thereto in the Company or its
nominee absolutely.
c) During the Appointment and at all times thereafter the Consultant will
(whether by omission or commission) do nothing to affect or imperil the
validity of the protection for the inventions obtained or applied for by
the Company or its nominee pursuant to section 10 (b). The Consultant
will at the direction and expense of the Company render all assistance
within his power and capacity to obtain and maintain such protection
or application or any extension thereof.
d) Nothing in this Agreement shall oblige the Company to seek patent or
other protection for any invention nor to exploit any Invention. The
Company has to claim its wishes to seek the patent within 3 months of
The presentation of any possible patent application or invention
presented by the Consultant. If the Company refrains to claim its
interest, the Consultant is free to proceed to apply in his own
interest the use of the invention for whatever purposes he decides.
SECTION 11. COVENANTS AGAINST COMPETITION
a) During the Term, the Consultant has a duty of loyalty to the Company.
This duty of loyalty requires that during the Term all of Consultant's
Actions be taken with a view toward and for the purpose of advancing the
Interest of the Company. Consultant agrees to act in accordance with
Consultants duty of loyalty during the Term. In particular, Consultant
Will take no action during the Term to interfere with or adversely
Affect willingly and purposely the Company's relationship with then
existing or prospective customers, clients, suppliers, co-venture,
lenders, consultants, and professional advisers or otherwise to harm the
interest of the Company.
b) During the Term, and for a period of two years following the date of
termination of this Agreement, Consultant shall not directly or
indirectly induce any Consultant of the Company to terminate his or her
employment, hire by direct approach any Consultant of the Company, or in
any way interfere with the relationship of the Company and any
Consultant, agent or representative;
c) For a period of two years following the date of termination of this
Agreement, Consultant shall not directly or indirectly solicit or
Otherwise divert or attempt to divert from the Company any Business
or any related business:
(i) which is being conducted by the Company pursuant to any contract
in existence during the Term, or
(ii) which may be conducted by the Company pursuant to any extension
or renewal of a contract in existence during the Term, or
(iii) which was the subject of negotiations between the Company
and a potential customer or client during the Term in which
negotiations Consultant participated or was in any way involved.
d) at no time, whether during the Term or at any time thereafter shall
Consultant use the name "CanArgo" or any name likely to cause confusion
therewith in the minds of members of the public for the purposes of a
business similar to or competing with any business carried on by the
Company whether by using such name as part of a corporate name
otherwise.
SECTION 12 - TERMINATION FOR EVENT OF DEFAULT
Notwithstanding the provisions above, the Company may terminate the
Engagement by notice with immediate effect for any of the following reasons
(each an "Event of Default"):
(A) the Consultant is guilty of dishonesty or of misconduct,
including, without limitation, a material breach of the Code of
Conduct, or gross incompetence or wilful neglect of duty, or
Consultant commits any material breach of this Agreement,
including, without limitation, a breach of the Confidentiality
Agreement, other than a breach which is capable of remedy and is
remedied forthwith by the Consultant at the Company's request;
or
(B) the Consultant is convicted of a serious criminal offence; or
(C) the Consultant becomes bankrupt, declares himself insolvent,
applies for, or has made against him, a receiving order, makes
any composition with his creditors or commits an act of
bankruptcy (as defined under any law with jurisdiction over the
Consultant); or
(D) the Consultant is incapacitated for twenty-six (26) consecutive
weeks, or for an aggregate of thirty-nine (39) weeks during any
period of fifty two (52) consecutive weeks, from performing
the duties of the Engagement; or
(E) the Consultant becomes mentally unfit to perform his duties.
SECTION 13 - DISCIPLINARY RULES; GRIEVANCE PROCEDURES; HEALTH AND SAFETY
(A) Consultant acknowledges by the execution of this Agreement that
he has received a copy of Company's Disciplinary Rules and
Grievance Procedures as well as the Company's Policy on Health
And Safety at Work and is familiar with the terms of both
documents.
(B) Consultant shall at all times during the course of his
Engagement conduct himself in the conformity with the laws of
Guernsey and shall otherwise perform his duties hereunder in a
professional and responsible manner. Without limiting the
generality of the foregoing, as a condition to Consultant's
Engagement, Consultant shall execute the Code of Conduct
appended hereto as Exhibit 2 and shall be obligated to conduct
himself in accordance therewith.
SECTION 14 - POST-TERMINATION PROVISIONS
Any provision of this Agreement which contemplates or is capable
of operation after the termination of the Engagement shall apply notwithstanding
termination of the Engagement for whatever reason.
SECTION 15 - CONSULTANT'S REPRESENTATIONS AND WARRANTIES
Consultant represents and warrants to the Company (i) that this
Agreement constitutes a valid and binding obligation, enforceable against
Consultant in accordance with its terms; (ii) that neither the execution or
delivery of this Agreement nor the performance by Consultant of any covenants
hereunder will constitute a default under any contract, agreement or obligation
to which Consultant is a party or by which Consultant or any of Consultant's
properties is bound; (iii) that there are no lawsuits, arbitration actions
or other proceedings (equitable, legal, administrative or otherwise) pending or
( to the best of Consultant's knowledge ) threatened which could adversely
affect the validity or enforceability of this Agreement or Consultant's
obligation or ability to perform his obligations hereunder; and (iv) that
no consent, approval or authorization of, or notification to, any governmental
entity or any person or entity is required in connection with the execution,
delivery or performance of this Agreement by Consultant.
SECTION 16 - NOTICE
Any notices or other communications required or permitted to be given
hereunder or otherwise in connection herewith shall be in writing and shall be
sent to the parties at the following addresses or at such other addresses as
shall be specified by he parties by like notice:
To the Company: CanArgo Energy Corporation
Xxxxx 0000, 000 0xx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0 Xxxxxx
Telephone: x0 000 000 0000
Facsimile: + 1 403 777 1578
With a copy to: Company's legal counsel
address to be advised by the Company to the Consultant
To Consultant: Vazon Energy Limited
XX Xxx 000
Xx Xxxxx Xxxx
Xxxxxxxx XX0 0XX
Channel Islands
Telephone: x00 0000 000 000
Facsimile: x00 0000 000 000
With a copy to: Dr Xxxxx Xxxxxx
Concordia
Xxxxxxxxx Xxxx
Xx Xxxxx Xxxx
Xxxxxxxx XX0 0XX
Channel Islands
Telephone: x00 0000 000 000
Facsimile: x00 0000 000 000
Such notices or other communications shall be deemed to have been duly
given and received (i) on the day of sending if sent by personal delivery,
cable, telegram, , (ii) on the third calendar day after the day of sending if
sent by facsimile transmission or telex ,Federal Express or other express
delivery service or (iii) on the fifth calendar day after the day of sending if
sent by registered or certified mail (return receipt requested).
SECTION 17 - AMENDMENTS
Any amendment to the provisions of this Agreement shall be in writing
and signed by the parties hereto or their duly authorized representatives.
SECTION 18 - SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force
and effect to the extent not held invalid or unenforceable.
SECTION 19 - NO WAIVER
The failure to enforce at any time any of the provisions of this
Agreement or to require at any time performance by the other party of any
of the provisions hereof shall in no way be construed to be a waiver of such
provisions or to affect the validity of this Agreement, or any part thereof, or
the right of either party thereafter to enforce each and every such provision
in accordance with the terms of this Agreement.
SECTION 20 - ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties with
respect to the Engagement of Consultant by the Company and supersedes any and
all prior understandings, agreements or correspondence between the parties. The
Exhibits to this Agreement form an integral part of this Agreement.
SECTION 21 - GOVERNING LAW
This Agreement shall be governed by, and interpreted in accordance with,
the laws of England.
SECTION 22 - DISPUTE RESOLUTION
(A) The parties agree that if any dispute or claims arises in
relation to the Agreement, representatives of each party shall
negotiate promptly and in good faith in an attempt to resolve
the matter between themselves.
(B) If the parties are unable to resolve any dispute pursuant to
clause 22(A) above, the matter shall be referred to mediation
in accordance with procedures laid down from time to time by
the Centre for Dispute Resolution ("CEDR") within thirty (30)
days on one party giving notice to the other that, in its
reasonable opinion, no agreement will be reached by them.
(C) If having followed the process set out in clause 22 (A) and 22
(B) , the parties have failed to resolve their dispute or
settled their claim, then the parties shall submit to the
exclusive jurisdiction of the English courts.
SECTION 23- ASSIGNMENT
Neither this Agreement nor any right, remedy, obligation or liability
arising hereunder or by reason hereof may be assigned or delegated by either
the Consultant or the Company without the prior written consent of the other .
SECTION 24 - INTERPRETATION
All references to Sections and Exhibits are to sections and exhibits
in or to this Agreement unless otherwise specified. The words "hereof", "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any Particular provision of
this Agreement. Where the context permits, the singular includes the plural and
vice versa and one gender includes any gender.
SECTION 25 - MONETARY TERMS
All amounts expressed in pound sterling or "pounds sterling " in this
Agreement shall mean pound sterling in the United Kingdom.
SECTION 26 - COUNTERPARTS
This Agreement may be executed in several counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
instrument.
IN WITNESS WHEREOF, this Agreement is executed on 29 June 2000, and is
effective as of 30th June 2000.
CANARGO ENERGY CORPORATION
By: /s/ Nils Trulsvik
Name: Nils Trulsvik
Title: Director
VAZON ENERGY LIMITED
By: /s/ Xxxxx Xxxxxx
Name: Dr. Xxxxx Xxxxxx
Title: Managing Director
EXHIBIT 1
SPECIFIC DUTIES OF CONSULTANT
Vazon Energy Limited (the "CONSULTANT") shall, in accordance with Article 1 of
the Management Services Agreement entered into between the Consultant and
CanArgo Energy Corporation. (the "COMPANY"), provide the Company with various
services and expertise which shall, by way of example and not limitation,
include the following:
MANAGEMENT SERVICES: The Consultant will provide XXXXX XXXXXX as the Chief
Executive Officer and Managing Director of the Company that shall have general
supervision, direction and executive control of the business and be responsible
for all operational and financial aspects of the Company.
EXHIBIT 2
CODE OF CONDUCT
POLICY
This policy applies equally to all Consultants and management of the
Company. All Consultants are obliged to exercise honesty, integrity and
diligence in their duties on behalf of the Company. This includes a
responsibility to avoid activities or interests which might conflict with this
obligation, whether it involves the Consultant or members of the Consultant's
family.
Responsibility For Handling Company Funds. Consultants who have access
to Company funds in any form must know and follow Company procedures and
practices for handling and protecting these funds. If an Consultant's job
requires him or her to make adjustments to bills, spend Company funds or incur
personal expenses to be later reimbursed, it is that Consultant's
responsibility to ensure that the Company gets good value for every dollar
that is spent.
Secret or undisclosed compensation or commission to anyone, including
Other Consultants or Consultants, is strictly prohibited.
When money is owed to the Company, as in refunds for transportation, it
Is the Consultant's duty to notify the proper person. Company funds are to be
Used for business purposes only and never for the personal benefit of a
Consultant.
PREPARATION AND MAINTENANCE OF COMPANY
Records
Accurate, reliable records of many kinds are necessary to meet the
Company's legal and financial obligations, and to manage the affairs of the
business. Purchase Orders, Work reports, receipts, invoices, payroll records and
other similar records must be factual and complete.
No record entry, voluntary omission or other subterfuge, such as
Deferral of payment, may be made with the intent of obscuring or disguising
the true nature of a transaction on the Company's books.
Knowingly falsifying data entered on any record, memorandum, performance
measurement or any report is considered a serious breach of this Code.
PROTECTION OF COMPANY
Property
All Consultants are responsible for the protection of Company property
used in carrying out their duties, including taking reasonable measures to
prevent theft or damage. Equipment, tools and upplies are to be used only
in the Company's interest. Company property must not be taken, sold, loaned,
destroyed or given away without prior authority.
CONFLICTS OF INTEREST
Conflict of interest refers to a situation in which a Consultant's
private interests may affect or be detrimental to the best interests of the
Company. Consultants must avoid circumstances which would:
* knowingly involve them in any illegal or improper activity relating to
the Company's affairs;
* impair their judgement, initiative or efficiency in the job; or
* be harmful or detrimental to the Company's activities or reputation.
A Conflict of Interest includes those situations where an Consultant:
1. has an outside interest which prevents them from fully performing their
duties for the Company;
2. has a direct or indirect interest in, or relationship with, an outsider,
or with a person in a position to influence the actions of such
outsiders that might:
a. make possible personal gain or favour to the Consultant
involved, or any of their near relatives;
b. cause the Consultant to favour the interests of an outsider for
personal reasons or in some manner inhibit the Consultant's
impartiality;
c. place the Consultant in an embarrassing or ethically
questionable position in the eyes of the public or any external
organizations; or
d. reflect unfavourably on the integrity of the Consultant or
Company;
3. makes use of Company information to the personal benefit of the
Consultant or any of their relatives by making available such
information to outside interests; or uses the information to further
their interests or those of their family;
4. has a direct or indirect relationship which is actually or potentially
detrimental to the Company's best interests;
5. engages in a business transaction on behalf of the Company with a
relative or with a firm in which the relative is a principle, officer
or representative;
6. has other gainful employment such as sales, consultation, operation,
maintenance, repair, design, construction or installation that is in
competition with or offers the same services as the Company. The term
"gainful employment" includes personal effort, direction, training of
other persons, or consultation or advice for any form of remuneration.
The Company accepts that the Consultant may have other unrelated and
non-conflicting contracts, provided that these do not prevent the
Consultant from fully performing its duties for the Company;
7. provides to the Company for their personal gain, work, supplies or any
service, or engages in any other business transaction with the Company,
in addition to their normal employment with the Company;
8. has a relationship with a superior or subordinate which leads to
personal gain or favour to the Consultant involved, or his or her
relatives resulting from the superior's influence; or
9. accepts gifts or benefits of any kind from a supplier or any other
person or business which has or may have dealings with the Company.
DEFINITION AND RESOLUTION
It is difficult to define every circumstance that could result in a
conflict of interest. Consultants should always depend on sound judgement and
moral integrity in assessing such situations.
Questions of ethical conduct can usually be resolved in making the
situation known to your Supervisor and seeking approval to proceed.
I, Xxxxx Xxxxxx, do hereby acknowledge and agree to abide by and
(PRINT NAME)
comply with this Code of Conduct.
Dated June 29, 2000 at Xx. Xxxxx Xxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxx.
/s/Dr. Xxxxx Xxxxxx
Consultant Signature
EXHIBIT 3
BONUS
A cash bonus (the "Bonus") will be paid to the Consultant based on increase in
cash flow from calendar quarter to calendar quarter as reported by the Company
in its Quarterly Reports (10Q and 10K).
The first Bonus shall be payable within one month of the release by the Company
of its Quarterly Report (10Q) covering the period July to September 2000, with
subsequent Bonuses being paid within one month of the release by the Company of
each subsequent Quarterly Report (10Q), or Annual Report (10K) as appropriate,
and with the last bonus being paid within one month of the release by the
Company of its Quarterly Report (10Q) covering the period April to June 2003.
As such there will be twelve (12) Bonus periods covered by this Agreement.
"Cash Flow " (CF) shall be defined as Operating Income plus Depreciation,
Depletion and Amortisation, and plus Equity loss from investments in
unconsolidated subsidiaries (as defined in the appropriate 10Q or 10K's)
The following equation will be used to define the Bonus ("Bonus Equation"):
B=(CF FOR CURRENT QUARTER - CF FOR PREVIOUS QUARTER)*P
B: Bonus for that Quarter
CF: Cash Flow [if negative equals zero]
Current Quarter: Quarter just reported ( commencing Quarter July to September
2000)
Previous Quarter: Previous Quarter reported (commencing Quarter April to June
2000)
P: Percentage allocated to Bonus (two and one half per cent-
2.5%)
The maximum Bonus payable for any Quarter will not exceed the total Fees for
that Quarter (converted to US dollars using the average Pounds Sterling to US
dollar exchange rate for that Quarter), and will be calculated by the Company
and paid in US dollars into a bank account nominated by the Consultant within
one month of the release of the appropriate Quarterly Report.
In the event that an increase in Cash Flow for a given Quarter is due all or in
part to the acquisition by the Company during that Quarter of an entity or
interest which is itself providing Cash Flow (as defined above) during that
Quarter, in addition to the Cash Flow being provided by the Company's existing
business, and where such an acquisition is purchased by the Company through an
issue of common shares in the Company ("Share Purchase Acquisition"), then an
adjustment (the " SPA Adjustment") will be made to the Cash Flow used in the
Bonus Equation, for that Quarter only, whereby for the purposes of calculation
of the Bonus, the Bonus for that Quarter will be based on the increase in the
Cash Flow of the Company's pre-existing business, excluding the direct effect on
Cash Flow of the Share Purchase Acquisition. In the Quarter following and
subsequent Quarters, the calculation of the Bonus will revert to the normal
Bonus Equation, as shown above. The SPA Adjustment will be made in a fair and
equitable manner, and in the event that a Share Purchase Acquisition is made
which significantly enhances Cash Flow, but is purchased with a number of shares
which represent a significant discount to the value of the additional Cash Flow
provided by the Share Purchase Acquisition, then this will be taken into account
in a positive manner in the assessment of any SPA Adjustment to apply, and in
the level of the Bonus.
In the event that the Consultant disputes the calculation of the Bonus, then an
independent auditor will be appointed to verify or otherwise the calculation.
Example 1
CF (Jan - March) = $1,500,000
CF (April - June) = $2,000,000
B = $12,500
Example 2
CF (April - June) = $2,000,000
CF (July - September) = $5,000,000
B = $56,250 (capped at equal to the Quarterly fees of 37,500 - converted at an
example of the average quarter's :$ exchange rate of 1.5 - the uncapped Bonus
would have been $75,000)
Example 3
CF (April - June) = $500,000
CF (July - September) = $-500,00
B = $0
