CONSULTING SERVICES AGREEMENT
-----------------------------
THIS CONSULTING SERVICES AGREEMENT is made as of the 24th day of January 2003
BETWEEN:
HORSEPOWER BROADCASTING NETWORK (HBN) INTERNATIONAL LTD., a company duly
-----------------------------------------------------------
incorporated in the Province of Quebec under the Canada Business
Corporation Act, which is a wholly-owned subsidiary of Sungold
Entertainment Corp., a company duly incorporated under the laws of the
Province of British Columbia, and having its registered and records office
at Suite 000 - 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, X.X., X0X 0X0,
(hereinafter called the "Company")
OF THE FIRST PART
AND
328707 B.C. LTD., a company duly incorporated in the Province of British
----------------
Columbia, having an address at 0000 Xxx Xxxx, Xxxx Xxxxxxxxx, XX, X0X 0X0,
(hereinafter called the "Contractor"),
OF THE SECOND PART
AND
XXXXXX X. XXXXXX, Executive, of 0000 Xxx Xxxx, Xxxx Xxxxxxxxx, XX, X0X 0X0,
----------------
(hereinafter called the "Consultant"),
OF THE THIRD PART.
WHEREAS: The Company and its affiliates carry on the business of developing and
operating the Horsepower(TM) virtual horseracing game available on the Internet
and the Company is in the business of operating the game as a U.S. dollar
wagering site (the "Business"); the Consultant is an employee of the Contractor;
the Contractor and the Consultant have experience in the Business; the Company
desires to secure the hereinafter described Services of the Contractor; the
Contractor has agreed to provide its Services to the Company in accordance with
the terms and conditions herein set forth.
NOW THEREFORE, THIS AGREEMENT WITNESSETH that in consideration of the respective
covenants and agreements hereinafter contained and the sum of One Dollar now
paid by the Company to the Contractor (the receipt and sufficiency of which is
hereby acknowledged by the Contractor), the parties hereto agree as follows:
1. Contract for Services. The Company hereby engages the Contractor to
-----------------------
provide the consulting services specified in Schedule "A" hereto together with
such other consulting services as the Company reasonably requests from time to
time (the "Services") and the Contractor hereby accepts such engagement on the
following terms and conditions.
2. Responsibilities of Company. The Company will:
-----------------------------
(a) Make available to the Consultant, information or data that the Company
considers pertinent to the Services to be provided by the Consultant
in connection with the Company's Business;
(b) Consider all memoranda, reports and other documents prepared by the
Consultant relating to the Services, and whenever prompt action is
necessary, inform the Consultant of the Company's decisions in a
reasonable time;
(c) Pay in full when due, all amounts payable to the Consultant;
(d) Arrange and make provision for the Consultant's access to records and
other information, and to
KH / MR
physical premises, as may be reasonably necessary, in the opinion of
the Company, to enable the Consultant to perform the Services; and
(e) Make such management personnel of the Company available to the
Consultant as may reasonably necessary, in the opinion of the Company,
be required for the Consultant to perform its consulting Services.
3. Term. Subject to the provisions hereof the term of this Agreement shall
----
be two (2) years commencing January 24th, 2003 and terminating on January 23rd,
2005 unless terminated in accordance with paragraphs 13 or 14 hereof.
4. Provision of Consultant. The Contractor shall provide the services of
-------------------------
the Consultant to perform the Services and the Consultant hereby agrees to
perform the Services for the Company. The Contractor shall pay to the Consultant
all amounts required to be paid to the Consultant to cause the Consultant to
perform the Services and the Company shall have no obligation to pay or
otherwise compensate the Consultant.
5. Character and Extent of Services to be Provided. It is the mutual intent
-----------------------------------------------
of the parties that the Consultant shall act strictly in a professional
consulting capacity as an independent contractor for all purposes and in all
situations and shall not be considered an employee of the Company.
6. Source Deductions. The Company shall have no obligation to and shall not
-----------------
make any source deductions with respect to the Contractor or the Consultant.
The Contractor shall make all source deductions, if any, required to be made in
respect of the Contractor and Consultant in respect of income tax, Canada
Pension Plan, Unemployment Insurance, Workers Compensation and all other
required remittances and deductions, and remit same as and when required and
shall indemnify and hold harmless the Company and each of its officers,
directors and employees from any liability in respect thereof.
7. Reporting. The Contractor shall cause the Consultant to report to the
---------
Chief Executive Officer of the Company (the "Company's Representative").
8. Time and Place of Consulting Services. The Contractor will determine the
-------------------------------------
times and places at which the Services will be performed by Consultant provided
that where such services require access to the records of the Company, or
consultation with the management of the Company, the Contractor will cause the
Consultant to attend at the premises of the Company or such other place as the
Company may reasonably require.
9. Working Facilities. The Consultant shall supply facilities and materials
------------------
as necessary for the performance of its services; however, the Consultant shall,
as reasonably required by the Company, attend the facilities of the Company to
facilitate access to the files and databases of the Company. The Consultant
shall have reasonable access to the customers, advisors, employees, information
and facilities of the Company as required in the performance of the Services
described herein.
10. Compensation and Expenses. The Company shall pay and the Contractor
---------------------------
agrees to accept as compensation for the Services to be rendered hereunder for
the first twenty-four (24) months a fee of, without duplication: US$200,000.00,
payable US$100,000.00 upon execution of this Agreement and the balance in
twenty-four (24) equal monthly instalments together with GST thereon. After
twenty-four (24) months, the compensation shall be as agreed between the parties
but in any event not less than the first twenty-four (24) months averaged on a
monthly basis. The Contractor shall provide proof of registration for GST, and
shall include its GST Registration number on all invoices. The Contractor shall
pay from such fees all amounts required to be paid to the Consultant upon
receipt of a detailed invoice specifying area of work, work done and time spent
on each matter. The Consultant shall invoice the Company monthly in respect of
the preceding month breaking out such work each by time and cost and be
reimbursed for Company approved expenses.
11. Performance Criteria. The Services shall be provided: (i) where
---------------------
specific written performance criteria have been agreed to by the Company's
Representative in respect of the Services or any one or more aspects thereof,
the Services shall be provided in accordance with such written specific
performance criteria; (ii) in the absence of such written specific performance
criteria the Services shall be provided in such manner as may be determined by
KH / MR
2
written mutual agreement between the Company's Representative and the
Consultant; and (iii) in the absence of any such written specific performance
criteria and written mutual agreement then all such Services provided hereunder
shall be provided to the reasonable satisfaction of the Company's
Representative.
12. Consultant's Qualifications. The Contractor and the Consultant jointly
----------------------------
and severally represent and warrant that the Consultant is qualified to provide
the Services contemplated hereby and that the Consultant has the necessary
qualifications and expertise to perform and provide the Services required
hereunder in a professional manner, in compliance with the highest ethical
standards and all applicable laws and regulations. The Consultant covenants and
agrees to provide the Services in a diligent, careful, skilful and efficient
manner in keeping with the commercial standards of the Consultant's industry.
13. Termination. The Company may not terminate this Agreement unless under
-----------
the provisions of paragraph 14. The Contractor may terminate this Agreement
after the first twenty-four months at any time by giving ninety (90) days
written notice to the other provided that upon such termination becoming
effective the Company shall pay in full to the Contractor the amount of fees,
commission and bonuses then due and payable to the Contractor within ninety (90)
days of receipt of the Contractor's final invoice.
14. Termination for Cause. Notwithstanding anything herein contained the
-----------------------
Company may terminate this Agreement without prior notice for just cause which
shall include but not be limited to:
(a) failure by the Contractor or the Consultant to comply with any of the
provisions hereunder including, without limitation, failure, refusal
or neglect by the Contractor or Consultant to perform or provide any
aspect of the Services within the time permitted for its provision or
performance as determined pursuant to the terms of this Agreement and
upon the Contractor and Consultant being notified in writing by the
Company's Representative alleging such failure and failing to remedy
such failure within fifteen (15) days of receiving such notice;
(b) the Contractor, the Consultant or any of its or his employees
committing an act of fraud or dishonest or serious misconduct, or any
act detrimental to the reputation of the Company in circumstances that
would, in the reasonable opinion of the Company's Representative make
the Contractor or Consultant unsuitable to continue to act on behalf
of the Company; or
(c) the Contractor or Consultant committing an act of bankruptcy or making
a general assignment for the benefit of its creditors or otherwise
taking advantage of laws relating to insolvency or creditors' rights
including the appointment of a receiver over the assets of the
Contractor or Consultant.
15. Duty of Loyalty - No Conflict of Interest. Each of the Contractor and
-------------------------------------------
Consultant hereby agree to avoid and to cause their employees to avoid any
circumstances or actions which might arguably place the Contractor, the
Consultant or its or his/her employees or any of them in a position of divided
loyalty regarding their obligations to the Company. The Contractor and
Consultant will not, and will obtain from each of their employees an agreement
in writing that he/she will not, utilize for its or his/her own benefit or that
of a third party any information or potential business opportunities it or they
may learn of as a result of the provision of the Services to the Company,
without having first obtained the written consent of the Company.
16. Non-Exclusive Services. The parties acknowledge that this is not an
-----------------------
exclusive consulting agreement and the Consultant, outside of the hours required
by the Company's business and not in the Company's office, may provide services
to third parties without the prior consent of the Company if such services will
not create an actual or apparent conflict of interest with the activities of the
Company or conflict with the obligations of the Consultant pursuant to this
Agreement. The Contractor and the Consultant acknowledge and agree that the
position of Chief Operating Officer is an executive management position and both
parties will be fully dedicated and on a first priority basis fulfil the
obligations of this Agreement prior to undertaking any other consulting
business.
KH / MR
3
17. Confidentiality.
---------------
17.1 The Services to be provided by the Consultant hereunder are sensitive
in nature. The Contractor and the Consultant shall keep and shall cause their
employees to keep in the strictest confidence all information regarding this
Agreement and all information it may acquire in respect of the Company, as well
as the nature and results of the Services the Consultant is to perform. During
the course of this Agreement the Consultant may also be given access to
confidential or proprietary information of the Company or another party with
whom the Company may have signed a non-disclosure agreement. Without the prior
written consent of the Company the Consultant shall not disclose or use any such
information.
17.2 The scope of this obligation includes any Company proprietary
information which is labelled or otherwise identified to the Consultant or his
employees as confidential. It also includes any information regarding the
purpose or details of the Contractor and Consultant's arrangement with the
Company, the strategic or other business plans of the Company, proprietary
information which is furnished to the Company by another under a non-disclosure
agreement, and any evaluations, discussions or transactions involving another
party in which the Consultant may be involved under this Agreement and whether
pertaining to the Company or otherwise (the "Confidential Information").
17.3 The Consultant will exercise due diligence to maintain in confidence
any Confidential Information which is disclosed to him/her. As used here the
term "due diligence" means the same precaution and standard of care which the
Consultant would use to safeguard its own proprietary information, but in no
event less than reasonable care.
17.4 The Consultant may not reproduce, distribute or disclose any
Confidential Information to others or use it for any commercial purpose outside
this Agreement without first obtaining the written permission of the Company.
The Consultant will ensure that any employee who is given access to the
Confidential Information signs an appropriate agreement in the form and content
provided by the Company from time to time requiring him/her to hold that
information in confidence and to use it only in the course of the Company's
Business.
17.5 This section does not impose any obligation on the Consultant if the
information is:
(a) publicly known at the time of disclosure;
(b) furnished by the Company to others without restrictions on its use or
disclosure;
(c) legally required to be disclosed by a regulatory or legal authority;
or
(d) independently developed by the Consultant without the use of
Confidential Information.
18. Title to Documents and Work Product. All draft and final reports,
----------------------------------------
notes, memoranda, budgets, plans, projections, records, documents, data bases,
lists of contacts, leads or other information which the Consultant furnishes to
the Company under this Agreement will become the sole property of the Company
and the Consultant shall deliver all such items to the Company's Representative
at the end of the Term or earlier termination of this Agreement and before
receipt of final payment hereunder and all reports and database materials will
be provided both as hard copy and on disk. The Consultant may keep a copy of
such materials for record keeping purposes. The Company shall own all right and
title to all ideas, materials or programs excluding pre-existing specified
computer programs owned by the Consultant and modified for use by the Company
which the Consultant make or conceive of in connection with the provision of
Services to the Company under this Agreement.
19. Assignment and Sub-contracting. Neither the Contractor nor the
--------------------------------
Consultant may assign or sub-contract this Agreement or any portion of it to
another without the express written consent of the Company since the Company is
relying on the special expertise of the Contractor and the Consultant to
properly provide the Services.
20. Non-Competition Agreement. The Non-Competition Agreement attached
---------------------------
hereto as Schedule "B" forms an integral part of this Agreement, the entering
into of this Agreement is consideration for entering into the said
Non-Competition Agreement and the parties to this Agreement shall execute the
Non-Competition Agreement in Schedule "A" concurrent with the execution of this
Agreement.
KH / MR
4
21. Provisions which Operating Following Termination. Notwithstanding any
--------------------------------------------------
termination of this Agreement for any reason whatsoever and with or without
cause the provisions of sections 15, 17, 18 and 20 any other provisions of this
Agreement necessary to give effect thereto shall continue in full force and
effect following any such termination.
22. Independent Contractor. This Agreement creates only an independent
-----------------------
contractor relationship between the Company, the Contractor and the Consultant.
Neither the Contractor nor the Consultant shall hold itself or himself or any of
its or his employees or permitted sub-contractors out to be a partner, or agent
for the Company. Neither the Contractor nor the Consultant shall create any
obligations or responsibilities on behalf of the Company or in the name of the
Company or purport to do so, or represent itself or himself to be authorized to
do so, without the prior written consent of the Company's Representative.
Neither the Contractor nor the Consultant shall have authority to act or to bind
the Company in any way or to represent the Company as responsible for the
actions of the Contractor or Consultant in any way. Neither the Consultant nor
any other employee of the Contractor will be deemed to be an employee of the
Company or entitled to any of the benefits provided by the Company to its
employees. The Contractor and the Consultant only will be responsible for the
acts of the Consultant.
23. Agreement Voluntary and Equitable. The Company, the Contractor and the
-----------------------------------
Consultant acknowledge and declare that in executing this Agreement they are
each relying wholly on their own judgment and knowledge and have not been
influenced to any extent whatsoever by any representations or statements made by
or on behalf of the other party regarding any matters dealt with herein or
incidental hereto. The Company, the Contractor and the Consultant further
acknowledge and declare that they will each have carefully considered and
understand the terms contained in the Agreement including, but without limiting
the generality of the foregoing, the Contractor's and the Consultant's rights
upon termination and the restrictions on the Contractor and the Consultant after
termination, and acknowledge and agree that the said terms of this Agreement and
rights and restrictions upon termination are mutually fair and equitable, and
that they execute this Agreement voluntarily and of their own free will.
24. General. The Contractor and the Consultant have been asked to seek
-------
independent legal advice before signing this Agreement. This Agreement and the
obligations of the parties shall be binding upon the parties and their heirs,
executors, successors and permitted assigns. Save and except for the express
provisions of this Agreement, any and all previous agreements, written or oral,
between the parties hereto or on their behalf relating to the employment of the
Contractor or the Consultant by the Company are hereby terminated and canceled.
Neither the Contractor nor the Consultant may assign this Agreement without the
prior written agreement of the Company. This Agreement and the instruments and
schedules referred to herein constitute the entire agreement between the parties
with respect to the subject matter of the agreement and supercede all prior
agreements, undertakings negotiations and discussions, whether oral or written,
between the parties and there are no warranties, conditions, representations or
other agreements between the parties in connection with the subject matter of
this Agreement, except as specifically set forth herein. No modification of
this Agreement shall be valid unless made in writing and signed by the parties
hereto. British Columbia law governs this Agreement. Notices under this
Agreement must be sent by personal delivery, facsimile or registered mail to the
appropriate party at its address stated on the first page of this Agreement or
to a new address if the other has been properly notified of the change. Such
notice shall be deemed to be delivered, if by personal delivery when delivered;
if by facsimile when the transmitting machine produces a report confirming the
successful transmission; and if delivered by registered mail on the third day
following such mailing. The headings in this Agreement are inserted for
convenience only and shall not affect the interpretation hereof. If any
covenant or provision herein is determined to be void or unenforceable in whole
or in part, it shall not be deemed to affect or impair the validity of any other
covenant or provision and the foregoing clauses are declared to be separate and
distinct covenants. The parties shall deliver to each other further
documentation and shall perform such further acts as and when the same may be
required to carry out and give effect to the terms and intent of this Agreement.
No waiver or consent by a party of or to any breach or default by any other
party shall be effective unless evidenced in writing, executed and delivered by
the party so waiving or consenting and no waiver or consent effectively given as
aforesaid shall operate as a waiver of or consent to any further or other breach
or default in relation to the same or any other provision of this Agreement.
Time is of the essence of this Agreement and of its performance.
KH / MR
5
25. Counterparts. This Agreement may be executed in counterparts and by
------------
facsimile each of which shall represent a signed original copy of this Agreement
and all of which together shall constitute one and the same Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement as of the day
and year first above written.
HORSEPOWER BROADCASTING NETWORK (HBN) INTERNATIONAL LTD.
Per: /s/ Xxx X. Xxxx
-------------------------
Authorized Signatory
328707 B.C. LTD.
Per: /s/ Xxxxxx X. Xxxxxx
-------------------------
Authorized Signatory
SIGNED, SEALED AND DELIVERED )
in the presence of: )
)
/s/ Xxxx Xx )
------------------------------)
Name ) /s/ Xxxxxx X. Xxxxxx
) -----------------------
0000 Xx. Xxxxxxxx'x Xx. ) XXXXXX X. XXXXXX
------------------------------)
Address Vancouver, BC )
)
Marketing Assistant )
------------------------------)
Occupation )
6
SCHEDULE "A"
DESCRIPTION OF CONSULTING SERVICES
All duties, responsibilities and authority normally associated with the position
of Chief Operating Officer. All employees and consultants of the Company,
except the Chief Executive Officer and the Corporate Secretary, will report to
the Chief Operating Officer.
The Consultant may stand for election to the Board of Directors of the Company
and Sungold, and the Chief Executive Officer of each company agrees to support
such election.
KH / MR
7
SCHEDULE "B"
NON-COMPETITION AGREEMENT
KH / MR
8
