EXHIBIT 10.2
CONSULTING SERVICES AGREEMENT
-----------------------------
THIS AGREEMENT made as of the 20th day October, 1998
BETWEEN:
XXXXXXXXX XXXXXX & ASSOCIATES LTD, a British Columbia
corporation having its office at 0000 Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0, Fax No.: (604)
608-0632 ("MHA")
AND:
XXXXXXXX.XXX INC, having its office at 0000 Xxxxxxx
Xxxx, Xxx Xxxxx, Xxxxxx 00000, XXX, Fax No.: (604)
713-0872 ("Client")
WITNESSES that the parties agree as follows:
1. INTERPRETATION
--------------
1.1 DEFINITIONS
The following terms shall, when used in this Agreement, have the
following meanings:
(a) "AFFILIATE" means, in relation to a party, any entity in which
that party owns both legally and beneficially not less than 80%
of the voting securities or rights and which is directly
controlled by that party;
(b) "COMPONENT SOFTWARE" includes software authoring tools and
server programmes and other like software components developed
and owned by MHA and used in the creation of the Site Software;
(c) "CONFIDENTIAL INFORMATION" means all commercial, financial,
legal, personal and/or technical information concerning the
Disclosing Party or any of its Affiliates disclosed by the
Disclosing Party or any of its Affiliates to the Receiving Party
or any of its Affiliates, the further disclosure of which could
reasonably be expected to have an adverse impact on the
Disclosing Party or any of its Affiliates to which it pertains,
and any information otherwise identified by the Disclosing Party
as "confidential", and all computer software owned or used by
the Disclosing Party in its business, but excludes information
that:
(i) is in the public domain, or becomes in the public domain
other than as a result of a breach of this agreement by
the Receiving Party; or
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(ii) is known to the Receiving Party before disclosure to it by
the Disclosing Party;
(iii) is disclosed to the Receiving Party by a third person who
is under no obligation of confidentiality with respect
thereto; or
(iv) forms part of any software source code that is intended to
be accessible to an end-user browser accessing a web site
including, without limitation, HTML and Java scripts and
other client-side software source code.
(d) "DISCLOSING PARTY" means MHA in respect of its disclosure of its
Confidential Information to Client, and Client in respect of its
disclosure of its Confidential Information to MHA;
(e) "DOMAIN" means that portion of a URL (Universal Resource
Locator) that lies immediately to the right of the protocol
identifier, such as "http://" and immediately to the left of
the very first single forward slash "/" (reading the URL from
left to right) -- for example, in the URL
"xxxx://xxx.xxx.xx/xxxxx/" the domain is "xxx.xxx.xx";
(f) "EXPENSES" means those expenses that are reimbursable to MHA by
Client pursuant to paragraph 4.2;
(g) "FEES" means the fees payable to MHA under paragraph 4.1;
(h) "NON-PRODUCTION SERVER SOFTWARE" means server software used on
non-production servers;
(i) "PRODUCTION SERVER SOFTWARE" means server software used on
production servers;
(j) "RECEIVING PARTY" means MHA as recipient of Confidential
Information of Client, and Client as recipient of Confidential
Information of MHA;
(k) "SERVICES" means consulting and related services to be performed
by MHA hereunder, as generally described in paragraph 2.1 and
Schedule A;
(l) "SHOP ENGINE" means an online public web site where the
principal perceived utility of the domain containing such web
site is to provide a search service for an open-ended inventory
database of third party consumer products (not including used
products) available for immediate online purchase and where the
entity operating the domain is acting strictly as a transaction
broker for such products, which are neither owned nor handled by
such entity;
(m) "SITE SOFTWARE" means software created by MHA specifically for
the Client under this Agreement, which software facilitates
operation and management of the Client's business of operating
an online retail transaction service for the sale of third party
products but specifically excludes Component Software;
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(n) "SOFTWARE" means Site Software and Component Software;
(o) "TERM" means the term of this Agreement, including any
extensions thereof, as determined under paragraph 8.1.
1.2 REFERENCES: Unless otherwise stated, a reference to "this
Agreement" or "herein", "hereof", "hereunder" and other similar terms
refers to this Agreement as a whole, together with any schedules hereto and
any amendments hereto, and not just to the particular clause or paragraph
in which those words appear and a reference herein to a numbered or
lettered section or paragraph refers to the section or paragraph bearing
that number or letter in this Agreement.
1.3 CAPTIONS: The captions in this Agreement have been inserted for
reference and as a matter of convenience only and in no way define, limit
or enlarge the scope or meaning of this Agreement or any of its provisions
1.4 NUMBER: In this Agreement, words importing the singular number
only shall include the plural and vice versa and words importing the
masculine gender shall include the feminine and neuter genders and vice
versa.
1.5 SCHEDULE: The attached Schedule A to this Agreement forms an
integral part of this Agreement.
2. SERVICES AND LICENSE
--------------------
2.1 SERVICES: MHA shall provide to Client the Services described in
paragraph 1 of Schedule A. MHA will deliver to Client a written report at
the end of each calendar month during the Term outlining the progress made
during that month.
2.2 ASSISTANCE: Client shall provide MHA with access to information,
materials, equipment and facilities as may be necessary for MHA to perform
the Services.
2.3 LICENSE: Subject to the payment of all Fees and Expenses, MHA
hereby grants to Client the exclusive license to use the Site Software and
the non-exclusive license to use the Component Software in conjunction with
its use of the Site Software. Client may permit Affiliates to use the
Software provided however that the number of domains using the Software
shall at no time exceed five, subject to paragraph 9.6, and provided that
Client shall ensure that Affiliate's use of the Software shall be in
compliance with terms and conditions of this Agreement, including without
limitation, the credit and proprietary rights notices set forth in
paragraph 2.4 of this Agreement. Client agrees that it will not transfer,
lease, rent, sublicense or franchise the Software to any other person or
entity except that it may sublicense the Software to its Affiliates as
provided herein, or transfer the Software in connection with the transfer
of its entire business or of a domain, in either case in compliance with
paragraph 9.6. Client acknowledges and agrees that MHA may at all times
use and license others to use the Component Software without restriction.
2.4 CREDIT: Client agrees to permit MHA to include a small permanent
graphical hyperlinked logo tag not smaller than 215 pixels by 45 pixels and
descriptive text not smaller than
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that generated by the HTML sizing code "" to the effect of:
"Web and Database Design, Programming and Development by Xxxxxxxxx Xxxxxx
& Associates Ltd." and "This site was developed using MHA's Visual Server
Side database connectivity tools." located on the top screen of the "about
page" which is to be directly accessible from the front page of the
xxx.xxxxxxxx.xxx and every other domain of Client or its Affiliate running
the Software. Furthermore, it is agreed that all legal notices necessary
to protect the proprietary rights of the parties will be included on, the
"about page". Client shall not delete or alter the graphical hyperlinked
logo tag and text notices under any circumstances. MHA hereby authorizes
Client to reproduce and display its logo for the foregoing purposes.
Client further agrees to permit MHA to identify Client as a customer of MHA
and for such purposes, hereby authorizes MHA to reproduce and display
Client's logo on MHA's web site and other promotional material, and to
create hyperlinks to Client's web site(s) from MHA's web site.
2.5 HARDWARE AND SOFTWARE ACQUISITIONS: As part of the Services, MHA
will acquire production server software licenses, including licenses for
Oracle 8 database server software and a secure transaction server software.
As part of the Services, MHA will acquire and transfer to Client a
production server to be used by Client to host its web site and database.
The production server software licenses and the production server provided
by MHA to Client must have a combined retail value not less than $50,000 at
the time of acquisition by MHA.
2.6 ADDITIONAL SERVICES: Client may from time to time request MHA
to perform additional services that are beyond the scope of this Agreement
including any modification of the Software. If MHA performs such
additional services, it will be entitled to compensation at its then
current professional rates for such additional services. If MHA has
declined to provide additional services requested by Client, Client may
engage a third party to provide the additional services provided however
that such third party must sign MHA's standard non-disclosure agreement
before Client provides such third party with access to the Software.
3. PROPRIETARY RIGHTS
------------------
3.1 SOFTWARE: Client acknowledges and agrees that except for the
license granted herein, MHA shall retain all rights, including copyright
and other intellectual property rights, in and to the Site Software and the
Component Software. Without limiting the generality of foregoing, MHA
shall at all times retain have the right to use and license others to use
the Component Software, in other databases, virtual store fronts, web
sites, intranets, extranets, on-line e-commerce systems and other network
computing systems.
3.2 SERVER SOFTWARE: MHA acknowledges and agrees that all production
server software licenses acquired will become the property of Client upon
completion of the Services. Client acknowledges and agrees that MHA shall
at all times remain the exclusive owner of all licenses to non-production
server software acquired in connection with the Services, including without
limitation, development server tools and development resources.
3.3 HARDWARE: MHA acknowledges and agrees that the production server
shall be transferred to Client upon completion of the Services. Client
acknowledges and agrees that all non-production servers and hardware
acquired in connection with the Services shall at all times remain the
exclusive property of MHA.
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4. FEES AND EXPENSES
-----------------
4.1 FEES: Client shall pay MHA for the Services the Fees set out in
paragraph 2 of Schedule A. Social service tax ("PST") and Goods and
services tax ("GST") are not included in the Fees. PST and GST, if any,
will be paid by Client to MHA on each payment in respect of the Fees.
4.2 EXPENSES: Client shall reimburse MHA at cost for the following
pre-authorized reasonable Expenses incurred in performing the Services:
travel and accommodation costs, long distance telecommunications costs,
courier, and reproduction costs, and other reasonable out-of-pocket costs.
MHA shall give Client, at its request, copies of receipts or other
customary expense documentation for Expenses incurred.
5. CONFIDENTIAL INFORMATION
------------------------
5.1 CONFIDENTIALITY: The Receiving Party will maintain the
confidentiality of the Confidential Information and prevent the
unauthorized disclosure to others of Confidential Information. The
Receiving Party shall disclose Confidential Information only to its
directors, officers and employees who require access to such Confidential
Information for the performance of its obligations under this Agreement or
the exercise of its rights under the licenses granted pursuant to this
Agreement, including but not limited to, the use of the Software. If
requested by the Disclosing Party, the Receiving Party shall require each
of its directors, officers or employees who have access to the Confidential
Information, and any third person to whom the Confidential Information is
disclosed with the consent of the Disclosing Party, to execute and deliver
to the Disclosing Party a written confidentiality agreement in favour of
the Disclosing Party on terms and conditions substantially as set out in
this section and as approved in writing by the Disclosing Party.
5.2 RETURN OF CONFIDENTIAL INFORMATION: Upon termination of this
Agreement, or otherwise upon demand of the Disclosing Party, the Receiving
Party shall deliver to the Disclosing Party all copies, whether written, in
the form of computer data or otherwise, of the Confidential Information and
all documents and materials prepared by or for the Receiving Party which
include or refer to Confidential Information and the Receiving Party shall
delete all Confidential Information from any computer system, retrieval
system or database of the Receiving Party, provided however that the
foregoing obligation shall not apply to Client's exercise of its rights
under the licenses of the Software granted pursuant to this Agreement,
including but not limited to the use of the Software, and if termination
occurs pursuant to paragraph 8.5, the modification of the Software. The
Receiving Party shall cause all third parties to whom it has provided any
Confidential Information to comply with this paragraph and, if requested by
the Disclosing Party, the Receiving Party shall provide to the Disclosing
Party a statutory declaration of a senior officer of the Receiving Party
confirming that the Receiving Party and all such third parties have
complied with the provisions of this paragraph.
5.3 DISCLOSURE REQUIRED BY LAW: The Receiving Party shall not be in
breach of this Agreement as a result of the disclosure of any Confidential
Information required by law or judicial or administrative process, provided
that the Receiving Party provides the Disclosing Party with as much notice
as is reasonably possible in the circumstances prior to making any such
disclosure of
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Confidential Information and cooperates with the Disclosing Party in any
application, proceedings or other action undertaken by the Disclosing Party
to obtain a protective order or other means of protecting the
confidentiality of the Confidential Information required to be disclosed.
5.4 PUBLICITY: Neither party nor any member of its staff will
without the other party's consent comment publicly or make any statements
to a member of any media group regarding the other party, its Affiliates,
and their principals, employees, customers, and business. Notwithstanding
anything in this Agreement, MHA may publicize for promotional purposes
general technical and statistical information regarding the performance and
efficiency of Client's or its Affiliate's Shop Engine web site servers,
including traffic and transaction volume statistics and database size
statistics, but specifically excluding client contact and customer specific
information. At MHA's request, Client will provide to MHA access to the
foregoing information.
5.5 AFFILIATES: The Receiving Party shall cause any of its
Affiliates to whom Confidential Information is disclosed to comply with the
terms of this section 5.
6. NON-COMPETITION; NON-SOLICITATION
---------------------------------
6.1 NON-COMPETITION: For a period of 90 days after the date that a
Client's or its Affiliate's Shop Engine web site is made accessible to
members of the public, MHA will not provide to any third party a Shop
Engine. For a period of 8 months from the date that a Client's or its
Affiliate's Shop Engine web site is made accessible to members of the
public, MHA will not provide to any third party a Shop Engine that offers
for sale a combination of products that includes books, music and computer
software. The foregoing non-competition covenant shall have no force or
effect in the event of any termination of this Agreement prior to the end
of the Term.
6.2 NON HIRING RESTRICTION: Neither MHA nor Client shall solicit
directly or indirectly, hire, nor retain in any fashion throughout Canada,
any employee, officer, contractor or agent of the other, unless mutually
agreed to between the parties, prior to and for a period of two years from
the date of completion of the Services.
7. LIMITED WARRANTY; LIABILITY LIMITED
-----------------------------------
7.1 LIMITED WARRANTY: MHA warrants that the Software, when correctly
used on correctly functioning hardware and internet access services and
when used with correctly maintained and functioning databases, will for a
period of 12 months from the date that the Software is delivered to the
Client:
(i) enable Client's clients to import product data using a
pre-determined ASCII delimited text format suitable for
database professionals;
(ii) enable manual editing of Client's client and contact
records through a password protected graphical user
interface;
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(iii) enable customers of the Client to search for and order
products listed in the inventory databases through an
online graphical user interface at Client's Shop Engine
web site(s);
(iv) enable payment processing through a reputable online
payment solution provider specified by Client and
reasonably acceptable to MHA as to practical and technical
viability; and
(v) enable tracking of banner graphic images to indicate which
image was shown, to which IP address the image was shown,
the number of click - throughs for each image and to
enable the control of the number of times the image
appears (assuming there is adequate site traffic).
THE FOREGOING ARE THE EXCLUSIVE WARRANTIES UNDER THIS AGREEMENT AND IN LIEU
OF ALL OTHER WARRANTIES AND CONDITIONS, WHETHER EXPRESSED OR IMPLIED,
INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTY OR CONDITION OF
MERCHANTABILITY, DURABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-
INFRINGEMENT OF A THIRD PARTY RIGHTS.
For any breach of the foregoing warranties, Client's exclusive remedy and
MHA's entire liability will be commercially reasonable efforts of MHA,
during the stated warranty period, to correct errors in the Software that
cause the breach of warranty.
7.2 LIABILITY LIMITED: IN NO EVENT WILL A PARTY BE LIABLE TO THE
OTHER PARTY OR ANY THIRD PARTY FOR ANY DIRECT, INDIRECT, INCIDENTAL,
SPECIAL OR CONSEQUENTIAL OR ACCIDENTAL DAMAGES, INCLUDING WITHOUT
LIMITATION, DAMAGES FOR BUSINESS INTERRUPTION, OR LOSS OF PROFITS, REVENUE,
DATA OR USE OF THE PROGRAM, OR BODILY INJURY OR DEATH OR PROPERTY DAMAGE OR
LOSS, WHETHER IN CONTRACT OR TORT, INCLUDING NEGLIGENCE, EVEN IF THAT PARTY
HAS BEEN ADVISED THE POSSIBILITY OF SUCH DAMAGE. THE PROVISIONS OF THIS
SECTION 7 ALLOCATE THE RISKS UNDER THIS AGREEMENT BETWEEN MHA AND THE
CLIENT AND THIS ALLOCATION OF RISK IS REFLECTED IN THE PRICING.
8. TERM
----
8.1 TERM: This Agreement shall be for the Term set out in paragraph
4 of Schedule A, subject to earlier termination pursuant to paragraphs 8.2,
and to extension by the mutual written agreement of the parties.
8.2 TERMINATION BY MHA FOR BREACH: MHA may terminate this Agreement
effective immediately upon written notice to Client if Client is in default
under, or breach of, this Agreement and has not remedied that default or
breach within five business days after receipt of written notice from MHA
specifying the default or breach.
8.3 TERMINATION BY CLIENT FOR CONVENIENCE: At any time up until the
date that MHA has delivered to Client the production server and a test
version of the Site Software, Client may terminate this Agreement for
convenience upon written notice to MHA, which termination will be effective
immediately upon receipt of written notice by MHA.
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8.4 IMMEDIATE TERMINATION OF LICENSE: The license granted under this
Agreement shall automatically terminate, without any further action by MHA,
if Client becomes insolvent or unable to pay its debts as they become due
or ceases to pay its debts as they become due in the ordinary course of
business or makes an assignment for the benefit of its creditors, or is
liquidated or dissolved or any proceedings are commenced against Client
under any debtor's relief law and such proceedings have not been vacated or
set aside within 30 days or a receiver is appointed for Client or any of
its assets.
8.5 OTHER TERMINATION BY CLIENT: Client shall have the right to
terminate this Agreement if MHA makes an assignment on behalf of its
creditors, or is liquidated or dissolved or any proceedings are commenced
against MHA under any debtor's relief law and such proceedings have not
been vacated or set aside within 30 days or a receiver is appointed for MHA
or any of its assets. Upon termination pursuant to this paragraph 8.5,
Client shall have the option to continue to have the right to use and
modify the Software subject to the same restrictions as are specified in
paragraph 2.3 of this Agreement, at no additional cost to Client, provided
however that Client has paid all amounts which would have been otherwise
owing hereunder to the date of termination.
8.6 OBLIGATIONS ON TERMINATION: Upon termination of this Agreement
prior to the end of the Term, MHA shall be entitled to receive the
following:
(a) payment in accordance with paragraphs 4.1 and 4.2 of Fees for
Services performed, and Expenses incurred, to the effective date
of termination, including without limitation, the per diem Fees
for the Services to the effective date of termination calculated
using the per diem rate of $1,467 (equals $44,000/30 days);
(b) the February 1, 1999 installment held in trust for the benefit
of MHA by Xxxxxx Downs as provided in paragraph 2 of Schedule A;
and
(c) an amount calculated as follows:
$88,000 x (The number of days from November 1,
1998 to the effective date of termination)
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Client acknowledges and agrees that the amounts payable for early
termination under (b) and (c) above, if any, are not penalties but a
genuine pre-estimate of the damages which will be suffered by MHA as a
result of early termination on the part of Client for convenience.
In the event of any termination prior to the end of the Term, Client shall
be entitled to received from MHA the following:
(a) all work product produced by MHA in its performance of the
Services under this Agreement to the effective date of
termination, regardless of the medium on which such work product
has been produced or stored, but excluding all Software and
licenses therefor;
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(b) if acquired by MHA pursuant to this Agreement prior to the
effective date of termination, the production server and all
production server software licences.
8.7 SURVIVAL: Notwithstanding any other provisions of this
Agreement, the provisions of Sections 3, 4, 5, 6 and 7 and paragraphs 2.3,
2.4, 2.6, 8.5, 8.6, 8.7 and 9.1 and all provisions of this Agreement
necessary for the interpretation or enforcement of any of the foregoing
sections and paragraphs shall survive the termination of all or any part of
this Agreement and shall continue in full force and effect, and references
in this Agreement to termination of this Agreement shall not apply to those
sections and paragraphs unless the parties agree in writing. Except as
specifically provided in this Agreement, the termination of this Agreement
does not release any party from any liability or obligation arising prior
to the date of termination.
9. GENERAL CONDITIONS
------------------
9.1 RELATIONSHIP: Client and MHA are independent contractors, and
each party and its employees and agents are not, and shall not represent
themselves to be, directors, officers, employees, agents, partners or joint
venturers of the other party or an Affiliate. Nothing herein shall be
deemed to require that MHA provide its services exclusively to Client, and
MHA hereby acknowledges that Client shall not be required, on behalf of MHA
or any of its employees, to make the remittances or payments required of
employees and that neither MHA nor any of its employees shall be entitled
to the benefits provided by Client to its employees.
9.2 AUTHORITY LIMITED: Neither party nor its employees and agents
are authorized to make any contract, or incur any legal obligation, binding
upon the other party or its Affiliates, without the consent of the other
party in each case.
9.3 LAW: This Agreement is governed by British Columbia law,
excluding rules of private international law that lead to the application
of any other law.
9.4 DISPUTE SETTLEMENT: All disputes arising out of or in connection
with this Agreement, or in respect of any defined legal relationship
associated with, or derived from, this Agreement, will be referred to and
finally resolved by arbitration under the rules of the British Columbia
International Commercial Arbitration Centre ("BCICAC"). There will be one
arbitrator. The appointing authority is the BCICAC. The case will be
administered by the BCICAC in accordance with its "Procedures for Cases
under the BCICAC Rules". The place of arbitration is Vancouver, Canada.
The language of the arbitration is English. If at the time a dispute
arises, the BCICAC does not exist, the dispute shall be resolved by
arbitration pursuant to the COMMERCIAL ARBITRATION ACT (BRITISH COLUMBIA).
9.5 NOTICES: All notices, including but not limited to approvals and
consents, must be in writing. Notice may be given personally or sent by
facsimile transmission to the addresses or fax numbers set out on page one.
A party may change its address or fax number for notices by subsequent
notice. Notices given by facsimile transmission are considered received on
the business day following the date of transmission.
9.6 ASSIGNMENT: This Agreement and the license granted herein may
not be transferred, leased, sublicensed, subcontracted or assigned by
either party to any other entity
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without the prior written consent of the other party, except however in the
event of a sale of all or substantially all of the assets and business of
a party, consent of the other party will not be required. Client or its
Affiliate may not transfer any domain that uses the Software apart from a
sale of all or substantially all of the assets and business of the Client
unless Client has paid to MHA a transfer fee in respect of the Software
being transferred to the third party transferee (which transfer fee shall
in no event exceed $300,000), and unless the third party transferee has
entered into a written license agreement with MHA. Upon the transfer by
Client or its Affiliate of a domain using the Software, the number of
domains at which Client or its Affiliate may use the Software under
paragraph 2.3 of this Agreement shall be reduced by the corresponding
number.
9.7 AMENDMENT: This Agreement may be amended only by a written
agreement signed by Client and MHA.
9.8 NON WAIVER: A waiver by any party of any breach of this
Agreement by another party does not operate as a waiver of any continuing
or subsequent breach. Waivers are not enforceable unless in writing.
9.9 SEVERABILITY: If any part of this Agreement is invalid, all
other parts of this Agreement remain enforceable.
9.10 ENTIRE AGREEMENT: This Agreement is the entire agreement between
the parties regarding its subject matter. All prior agreements and
communications, whether verbal or written, are of no legal effect.
9.11 ENUREMENT: This Agreement enures to the benefit of and is
binding upon the parties and their respective successors and permitted
assigns.
9.12 FURTHER ASSURANCES: Each party shall do all such things and
execute and deliver all such documents and instruments as may be required
to give full effect to the obligations set forth in this Agreement.
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9.13 CURRENCY: All monetary values in this Agreement are in Canadian
dollars.
IN WITNESS WHEREOF the parties have executed this Agreement as
of the day and year first above written.
XXXXXXXXX XXXXXX & ASSOCIATES LTD.
By: /s/ XXXXXX XXXXXXXXX
______________________________
Xxxxxx Xxxxxxxxx
XXXXXXXX.XXX INC.
By: /s/ XXXXXXX PAGE
______________________________
Xxxxxxx Page
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SCHEDULE A
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1. DESCRIPTION OF SERVICES
-----------------------
Creation of a commercial web site and associated database to facilitate
client's electronic commerce activities located at the domain name
xxxxxxxx.xxx.
2. FEES
----
Client shall pay the following amounts on account of Fees on the first day
of the month specified below:
October 1998 $60,000*
November 1998 $52,000*
December 1998 $44,000
January 1999 $92,000
February 1999 $44,000**
March 1999 $88,000***
*MHA acknowledges that Client has as of the date of signing of this
Agreement paid $50,000 of the October 1, 1998 instalment of $60,000. The
remaining $10,000 of the October 1, 1998 instalment together with the
November 1, 1998 instalment of $52,000, for a total of $62,000 will be paid
to MHA concurrent with the signing of this Agreement.
**Client agrees to pay the February 1, 1999 instalment of $44,000 to MHA's
lawyers, Xxxxxx Downs, to be held in trust for the benefit of MHA, which
sum may be released by Xxxxxx Xxxxx to MHA on the earlier of the following:
(a) five business days have elapsed after the Client has
failed to pay a scheduled instalment under the Agreement;
(b) any termination of the Agreement; or
(c) February 1, 1999.
***In lieu of cash payment, Client may deliver to MHA free trading common
shares in a capital of Xxxxxxxx.xxx Inc. in such quantity that the value of
the common shares delivered shall not be less than $88,000 together with
all fees, commissions and other charges ordinarily payable upon liquidation
of such shares, which value will be calculated by reference to the Current
Market Price. If free trading common shares in the necessary quantity are
not available on June 1, 1999, Client shall pay to MHA $88,000 in cash.
The "Current Market Price" at any date shall be the weighted averaged price
per share for common shares for 20 consecutive trading days before such
date on the NASD-OTC EBB in the common shares (or, if the common shares are
not listed on the NASD-OTC EBB, on such other stock exchange or market on
which the common shares are listed). The weighted averaged price shall be
determined by dividing the aggregate sale price of
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all such shares sold on the said exchange or a market during the said 20
consecutive trading days by the total number of such shares so sold.
3. TERM
----
This Agreement shall be effective from October 20, 1998 and terminate on
March 1, 1999 unless earlier terminated in accordance with the Agreement or
extended by the mutual agreement of the parties.
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November ___, 1998
DIRECTION TO PAY
TO: Xxxxxx Xxxxx
0000 Xxxxxxxxxx Xxxxxx
000 Xxxxxxx Xxxxxx
X.X. Xxx 00000
Xxxxxxxxx, X.X.
X0X 0X0
RE: The sum of $44,000 hereby paid by the undersigned to Xxxxxx
Downs in trust by certified cheque, representing the February 1,
1999 instalment of fees payable under the Consulting Services
Agreement between Xxxxxxxxx Xxxxxx & Associates Ltd. and
Xxxxxxxx.xxx Inc. dated as of October 20, 1998 (the "Agreement")
The undersigned hereby irrevocably authorizes Xxxxxx Downs to pay to
Xxxxxxxxx Xxxxxx & Associates Ltd. the sum of $44,000 held by Xxxxxx Downs
in trust for the benefit of Xxxxxxxxx Xxxxxx & Associates Ltd., on the
earlier of the following:
(a) five business days have elapsed after the undersigned has
failed to pay a scheduled instalment under the Agreement;
(b) any termination of the Agreement; or
(c) February 1, 1999.
XXXXXXXX.XXX INC.
By:__________________________
Xxxxxxx Page
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