CONSULTANT AGREEMENT
THIS AGREEMENT is made effective as of the 5th day of September,
1996, by and between PACIFIC BAJA LIGHT METALS CORP., a Wyoming corporation, a
Holding Company of OPTIMA WHEEL, INC., BAJA PACIFIC LIGHT METALS INC., and BAJA
ORIENTE S.A. DE C.V., (hereinafter referred to as "Corporation"), TURBODYNE
TECHNOLOGIES, INC., a British Columbian corporation ("Turbodyne"), LYKAR
SPECIALTIES, INC., a California corporation (hereinafter referred to as
"Consultant"). The parties agree and contract as follows:
ARTICLE I. RECITALS
1.01 CORPORATION: Corporation is involved in the manufacture and
sale of cast aluminum products, primarily related to automotive uses, and
wishes to retain Consultant to assist its president in the management of
Corporation.
1.02 CONSULTANT: It is the desire of Consultant to perform the
management functions for the Corporation. In particular, Consultant will
provide the services of XXXXXXX XXXXXXX (hereinafter referred to as "Swede") to
support the Corporation's management staff and Turbodyne. It is the
Consultant's intention to assist the corporation in increasing sales of non-
wheel or wheel related products.
1.03 TURBODYNE: Turbodyne is the parent company of Corporation, and
it is in the best interests of Turbodyne that Corporation be properly managed.
Accordingly, Turbodyne has agreed
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to certain stock options in favor of Swede as hereinafter set forth.
ARTICLE II. SERVICES TO BE PERFORMED BY CONSULTANT
2.01 CONSULTATIONS: The Consultant and Swede shall make themselves
available to consult with Xxxxxxx Xxxxx and other members of the Corporation's
management staff and the Turbodyne management and Board of Directors at
reasonable times concerning matters pertaining to (i) day to day operations and
management of the Corporation; (ii) strategic business decisions; and (iii)
such other transactions as may have a material impact on the Corporation's
business operations.
2.02 MANAGEMENT OF CONSULTANT: Except as otherwise provided, Swede
shall, on a day-to-day basis, assist in the management of the corporation under
the direction of its president, Xxxxxxx Xxxxx. Swede shall report to the
President of Turbodyne.
Neither the Consultant nor Swede shall have authority to sign
contracts on behalf of the Corporation, to incur on behalf of the Corporation
any short term indebtedness other than in the ordinary course of business, nor
incur any long term indebtedness, without the prior written approval of the
Board of Directors. Furthermore, neither Consultant nor Swede shall purchase,
lease or sell, or obligate the Corporation to purchase, lease or sell, any
capital asset of the Corporation without the prior written approval of the
Board of Directors.
2.03 AMOUNT OF SERVICE: Swede shall work full time for the
Corporation during the term of this Agreement and shall devote
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a minimum of forty (40) hours per week to the affairs of the Corporation.
These services shall be rendered at the Corporation's premises or in the
offices of persons with whom the Corporation conducts business.
2.04 BOOKS AND RECORDS: Consultant and Swede shall possess access and
the right to review all of the past and present books and records of the
Corporation and consult with Corporation's employees, agents, suppliers and
customers during normal business hours in order to assist Consultant or Swede
in the performance of their duties. During the term of this Agreement,
Consultant and Swede shall assist the Corporation in maintaining its books and
records.
2.05 CONSULTANT'S OTHER ACTIVITIES: Corporation recognizes and
acknowledges that Consultant is an independent consultant which employs Swede
and that Consultant and Swede may, from time to time, serve other clients whose
businesses are not competitive to or in conflict with Corporation during the
term of this Agreement.
ARTICLE III. INDEMNIFICATION
3.01 LIMITED LIABILITY: With regard to the services to be performed
by Consultant and Swede pursuant to the terms of this Agreement, the Consultant
and Swede shall not be liable to the Corporation, or to any third party, for
any acts or omissions in the performance of the services on the part of the
Consultant and Swede, as long as said acts or omissions of the Consultant or
Swede are provided or undertaken in good faith
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or do not constitute willful misconduct. Consultant and Swede shall be
entitled to rely on the items set forth in Corporations Code Section 309(b).
The Corporation shall defend, indemnify (to the maximum extent permitted by
California law) and hold Swede, Consultant and its agents, successors,
shareholders, directors, officers or employees free and harmless from any and
all obligations, costs, claims, judgments, attorney's fees, attachments or any
other liability arising from or growing out of the services rendered to the
corporation pursuant to the terms of this Agreement or in any way connected
with the rendering of the services specified in this such services are provided
or undertaken in good faith or do not constitute willful misconduct.
ARTICLE IV. TERM OF AGREEMENT
4.01 EFFECTIVE DATE OF AGREEMENT: This Agreement is effective as of
acquisition of Corporation by Turbodyne.
4.02 INITIAL TERM OF AGREEMENT: Unless otherwise terminated as
provided herein, this Agreement shall continue in full force and effect from
the effective date for a period of three (3) years.
4.03 TERMINATION: This agreement shall be terminated upon the
happening of any of the following events:
(a) Whenever Corporation and Consultant shall mutually agree in
writing to terminate this agreement;
(b) Upon the death of Swede;
(c) At Corporation's option, if Swede shall suffer permanent
disability. For purposes of this agreement "permanent
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disability" shall be defined as Consultant's inability, by reason of physical
or mental illness or other cause, to perform the majority of his usual duties.
Corporation's option shall be exercised in writing and delivered to Consultant
and shall be effective upon delivery.
(d) For cause (i.e. substance abuse, repeated mismanagement,
repeated failure to heed the policy directions of the Board of Directors,
dishonesty, etc.), upon written notice which shall be effective upon delivery.
Upon any such termination, Consultant shall be entitled to receive
the compensation accrued but unpaid as of the date of his termination and shall
not be entitled to an additional compensation, except as expressly provided in
this agreement.
ARTICLE V. COMPENSATION
5.01 COMPENSATION: Pacific Baja agrees to pay Consultant during the
term of this agreement the following:
a. BASE COMPENSATION. A base compensation of $12,500 per
month.
B. CASH BONUS. Consultant will be entitled to an annual cash
bonus based on the consolidated net operating profit (before taxes) of Optima,
Baja Pacific and Oriente. Accordingly, the net operating profit before taxes
for optima, Baja Pacific and Oriente shall be consolidated in accordance with
generally accepted accounting principles applied in the same manner as used
prior to the acquisition of Pacific Baja by Turbodyne. No expenses shall be
considered in this calculation that are not direct expenses of
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Pacific Baja, Baja Pacific, Optima or Oriente, and no Turbodyne overhead will
be charged. Any contracts with Turbodyne or any Turbodyne affiliate will be at
arm's length rates for this calculation. Such consolidated net profit shall be
calculated on a calendar year basis during the term of this agreement except
that the bonus for 1999 shall be calculated on the period January 1, 1999,
through August 31, 1999, if Consultant is employed by Pacific Baja or any of
the subsidiaries on August 31, 1999. If Consultant is employed by Pacific Baja
or any of the subsidiaries as of the last day of the applicable calendar year
then he shall be entitled to a bonus equal to a percentage of his annual base
salary (i.e., $150,000.00). Consultant cash bonus shall be determined in
accordance with the following schedule:
Consolidated Percentage
NET PROFIT BASE SALARY
------------ -----------
$0 or less 0%
$1 - $500,000 25%
$500,001 - $1,000,000 50%
$1,000,001 - $2,500,000 80%
$2,500,001 - $5,500,000 100%
$5,500,001 + 150%
The cash bonus shall be calculated within thirty (30) days following each
calendar year and paid in full within sixty (60) days following each calendar
year.
5.02 DATE OF PAYMENT: The compensation specified in 5.01 above shall
be paid monthly on or before the 10th day of each month.
5.03 EXPENSES: Corporation shall pay for all reasonable expenses and
out of pocket costs incurred by Consultant in the
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performance of the services required under this Agreement for travel related
expenses, costs, meals and any similar items. The Corporation authorizes
Consultant to advance such costs and make such out of pocket expenditures as
may be reasonably necessary in connection with its services. Corporation shall
reimburse the consultant for any and all such costs and out of pocket
expenditures upon the presentation by the Consultant, from time to time, of an
itemized account of such expenditures and corresponding vouchers.
5.04 WITHHOLDING TAXES: Consultant is an independent contractor.
Therefore, Consultant will pay all taxes, including but not limited to state
and Federal income taxes, SDI and FICA, which may be attributable to
compensation paid to consultant under this Agreement. Consultant will also
withhold and pay over any and all withholding responsible to taxes for its
employees or agents, specifically including but not limited to Swede and the
support staff.
ARTICLE VI. STOCK OPTIONS
6.01 STOCK OPTIONS: Consultant shall be entitled to options to
acquire 150,000 shares of stock in Turbodyne Technologies, Inc., at the rate of
50,000 shares on the date of this agreement, and 50,000 shares on each of the
next two anniversary dates of this agreement. The option price shall be the
average price of Turbodyne stock on the Vancouver Stock Exchange in the ten-day
period preceding the option date. The options shall be in effect for the
three-year period subsequent to the execution of
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this Agreement. It is understood that Turbodyne is acquiring Pacific Baja and
this stock option is intended to give Consultant an incentive to manage Pacific
Baja and its subsidiaries to the benefit of Turbodyne. To the extent Turbodyne
registers any stock in the United States or Canada under any registration
statement filed ninety (90) days or more after the date of closing of the
acquisition of Pacific Baja by Turbodyne, Turbodyne agrees to register
sufficient shares to cover the options herein described. Turbodyne agrees to
implement an Incentive Stock option plan within twelve (12) months from the
date of execution of this Agreement to conform to Internal Revenue Code Section
422. The options are granted in consideration of the execution of this
contract and will survive Consultant termination.
ARTICLE VII. CONFIDENTIALITY AND COVENANT NOT TO COMPETE
7.01 CONFIDENTIALITY: During the term of this Agreement,
Corporation will make available to Consultant certain confidential information
such as the Corporation's customers, billing, trade secrets and similar
confidential information about the general operation of the Corporation's
business. Since such information is agreed by the parties to be a valuable,
special and unique asset of Corporation, Consultant hereby agrees that the
consultant and its employees, officers, directors and shareholders will-not
during or after the term of such engagement reveal such confidential
information or any part of it to any person, firm, corporation or association
except as may be required by law. In
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the event of a breach of this covenant, Corporation will be entitled to enjoin
Consultant and its employees, officers, directors and shareholders from the
disclosure of such information, in addition to any other remedies available at
law. This covenant not to disclose confidential information will remain in
effect during the term of this Agreement and in perpetuity from and after the
termination of this Agreement unless waived by Corporation or by virtue of the
terms of sale of the Corporation or its assets. Consultant shall return all
company lists, company manuals and other company documents and including any
photocopies thereof upon termination of this Agreement.
7.02 COVENANT NOT TO COMPETE: During the term of this agreement,
Consultant agrees not to compete against Turbodyne, Pacific Baja Acquisition
Corporation, Optima Wheels, Inc., Baja Pacific Light Metals, Inc. or Baja
Oriente S.A. de C.V., whether as an officer, shareholder, director, partner,
sole proprietor, employee, or otherwise within a one hundred (100) mile radius
of any current office or manufacturing plant of either Optima or Baja Pacific
Light Metals. If Consultant breaches this agreement; then Pacific Baja shall
have the right to enjoin Consultant from any further competitive action.
ARTICLE VIII. GENERAL PROVISIONS
8.01 NOTICES: Any and all notices or other communications required
or permitted by this Agreement or by law to be served on or given to any party
hereto by the other party shall be in writing and shall be deemed duly
delivered when personally
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delivered to the party to whom they are directed, or in lieu of such personal
service, when deposited in the United States mail, first class, registered or
certified with return receipt requested, postage prepaid, and addressed as
follows:
Corporation: ATTENTION: XXXX XXXXX
00000 Xxxxxx Xxxx
Xx Xxxxxx, XX 00000
Consultant: LYKAR SPECIALTIES, INC.
00000 Xxxxxx Xxxx
Xx Xxxxxx, XX 00000
Any notice which is mailed shall be deemed delivered two (2) days after the
date when deposited with the United States mail.
8.02 ATTORNEY'S FEES: In the event of arbitration concerning this
Agreement or in relation thereto, the prevailing party in such arbitration
shall be entitled, in addition to any other relief, attorney's fees which shall
be determined by the arbitrator.
8.03 MODIFICATION AND WAIVER: No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by all
of the parties. No waiver of any provisions of this Agreement shall be deemed,
or constitute, a waiver of any other provisions, whether of the shall or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall
be binding unless executed in writing by the party making the waiver.
8.04 ASSIGNMENT: Neither this Agreement nor any duties or
obligations under this Agreement may be assigned by either party without the
prior written consent of the other party.
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8.05 ENTIRE AGREEMENT: This Agreement supersedes the January 1,
1995, Consultant Agreement and constitutes the sole and only agreement or
contract between the parties regarding the services by Consultant for
Corporation and correctly sets forth the obligations of the parties to each
other as of the date of execution. There are no other prior agreements,
promises, representations or understandings not expressly set forth. Any
agreements or representations respecting this Agreement not expressly set forth
in this contract are null and void.
8.06 PARTIAL INVALIDITY: If any provision of this Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions will nevertheless continue in full force without being
impaired or invalidated in any way.
8.07 CONSTRUCTION: Both parties participated in the drafting of
this Agreement. Therefore, no greater or stricter construction shall be
applied to any party hereto.
8.08 Arbitration: The parties shall use all reasonable efforts to
resolve amicably any controversy or claim arising out of, relating to this
Agreement, or the breach thereof. However, in the event such controversy or
claim cannot be resolved by agreement of the parties, it shall be settled by
arbitration in Los Angeles County, California, in accordance with the then
existing rules of the American Arbitration Association, except that the parties
shall be entitled to all discovery to which they would normally be entitled in
civil litigation in the California Superior Court.
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California law shall govern. Any judgment upon the award of the arbitrator may
be rendered and enforced in any court having jurisdiction thereof.
EXECUTED at La Mirada, California, USA and Xxxxxxxxx, Xxxxxxx
Xxxxxxxx, XXXXXX.
CORPORATION:
PACIFIC BAJA ACQUISITION CORP.,
A Wyoming Corporation
By_______________________________
XXXX X. XXXXX, President
CONSULTANT:
LYKAR SPECIALTIES, INC.
By /S/ XXXXX XXXXXXXXX
XXXXX XXXXXXXXX, President
Turbodyne Technologies, Inc., hereby agrees to the foregoing and
specifically/agrees to the stock option provisions.
TURBODYNE TECHNOLOGIES, INC.,
By its authorized signatories
By
--------------------------------
Director
By
-------------------------------
Director
XXXXXXX XXXXXXX hereby agrees to the foregoing.
/S/ XXXXXXX XXXXXXX
LENNART "SWEDE" XXXXXXX
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