1
EXHIBIT 3(a)(1)
CONSULTING SERVICES AGREEMENT
DATED FEBRUARY 2, 1997 BY AND BETWEEN LASERMEDIA INC. AND ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
3(a)(1)-1
2
CONSULTING SERVICES AGREEMENT
THIS AGREEMENT is made as of the 2nd day of February, 1997 between
LASER MEDIA INC., a corporation incorporated under the laws of the Province of
Ontario (the "Corporation") and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, of San Diego, California,
U.S.A. (the "Consultant").
R E C I T A L S:
A. The Corporation requires the expertise and advice of the
Consultant to carry out certain development, marketing and sales work as more
fully described in this Agreement.
B. The Corporation and the Consultant wish to set out the terms
and conditions pursuant to which the Corporation shall engage the services of
the Consultant and the Consultant shall provide such services.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement and other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereto agree as follows:
1. DEFINITIONS. In this Agreement:
"ACTIVE ABS" means that certain interactive fitness CD-Rom developed
by the Corporation, and all photography, publications, videos,
software, electronic, cable and satellite media, Internet/World Wide
Web exposure, promotional/advertising materials and any and all other
items, materials and things relating thereto, whether now or
hereinafter in existence;
"ACTIVE TRAINER" means that certain interactive fitness CD-Rom
developed by the Corporation, and all photography, publications,
videos, software, electronic, cable and satellite media,
Internet/World Wide Web exposure, promotional/advertising materials
and any and all other items, materials and things relating thereto,
whether now or hereinafter in existence;
"BUSINESS DAY" means any day, other than Saturday, Sunday or any
statutory holiday in the Province of Ontario;
"CAUSE" means:
(a) breach of this Agreement by the Consultant; or
3(a)(1)-2
3
(b) a circumstance which, if the Consultant were an
employee of the Corporation, would entitle the Corporation to
terminate the employment of the Consultant for cause under the laws of
Ontario;
"CONFIDENTIAL INFORMATION" means all confidential or proprietary
information, intellectual property (including trade secrets), customer
and client lists, customer and client information, and confidential
facts relating to the business and affairs of the Corporation and its
Subsidiaries, Active Trainer, Active Abs, and the Web Site;
"CORPORATION" includes the Subsidiaries of the Corporation unless the
context otherwise requires;
"SUBSIDIARIES" means subsidiaries within the meaning of the Business
Corporations Act (Ontario) as the same may be amended from time to
time and any successor legislation thereto;
"TERM" means the period from the effective date of this Agreement,
being January 21, 1997, to January 21, 2002, subject to earlier
termination in accordance with sections 13 and 14, respectively; and
"WEB SITE" means that certain World Wide Web Active Trainer web site
developed by the Corporation relating to health and fitness matters.
2. ENGAGEMENT BY THE CORPORATION. The Corporation engages the
Consultant for the Term to render the following services:
(a) In connection with Active Trainer:
(i) To assist in the transition and transfer of
all knowledge, information and materials concerning Active
Trainer gained or held by the Consultant as a result of the
Consultant's work and interaction with the Corporation and/or
Active Trainer prior to the date of this Agreement, including
without limitation any and all knowledge and information
relating to the development, marketing and sales of Active
Trainer;
(ii) To assist the Corporation in the
Corporation's negotiations with individuals involved in Active
Trainer, as requested by the Corporation; and
(iii) To assist in promotional work and support as
requested by the Corporation;
(b) In connection with Active Abs:
3(a)(1)-3
4
(i) To assist in the transition and transfer of
all }knowledge, information and materials concerning Active
Abs gained or held by the Consultant as a result of the
Consultant's work and interaction with the Corporation and/or
Active Abs prior to the date of this Agreement, including
without limitation any and all knowledge and information
relating to the development, marketing and sales of Active
Abs;
(ii) To assist in the final stages of the
development of Active Abs as requested by the Corporation;
(iii) To assist in promotional work and support as
requested by the Corporation; and
(iv) To assist with development, marketing and
sales of upgraded versions of Active Abs;
(c) In connection with the Web Site, to develop further
the existing Web Site to include the sale of vitamins, supplements,
sports clothing and other sports, health and fitness related products,
in accordance with section 12 of this Agreement;
and to perform such other duties as the Consultant shall reasonably be directed
to perform by the Corporation and to report to the Corporation details of the
Consultant's activities on behalf of the Corporation as requested by the
Corporation.
3. ACCEPTANCE OF ENGAGEMENT BY THE CONSULTANT
The Consultant accepts the engagement and agrees to render the
services and perform the duties described in section 2. In the performance by
the Consultant of the services and duties under this Agreement, the Consultant
shall act honestly and in good faith with a view to the best interests of the
Corporation.
4. COMPENSATION
(a) All prior arrangements for compensation, royalties,
commissions and other forms of consideration to be paid by the
Corporation to the Consultant shall be deemed null and void from and
after the date of this Agreement; provided, however, that the
Corporation agrees to pay the Consultant the amount of Two Thousand
U.S. Dollars (US $2,000) or unpaid compensation due for the month of
December 1996;
(b) The Corporation agrees to pay to the Consultant on a
quarterly basis royalties with respect to Active Trainer in the amount
of one and one-half percent (1.5%) of the gross revenues actually
received by the Corporation on the sale of the first 100,000
3(a)(1)-4
5
units (i.e., copies) of the interactive CD-Rom entitled "Active
Trainer" (including any upgrade version sales and private label sales
of the "Active Trainer" CD-Rom) less returns;
(c) The Corporation agrees to pay to the Consultant on a
quarterly basis royalties with respect to Active Trainer in the amount
of two and one-half percent (2.5%) of the gross revenues actually
received by the Corporation on the sale of units (i.e., copies) of the
interactive CD-Rom entitled "Active Trainer" in excess of the first
100,000 units (including any upgrade version sales and private label
sales of the "Active Trainer" CD-Rom) less returns;
(d) The Corporation agrees to pay to the Consultant on a
quarterly basis royalties with respect to Active Abs in the amount of
one percent (1%) of the gross revenues actually received by the
Corporation on the sale of any units in excess of 30,001 and up to
50,000 units (i.e., copies) of the interactive CD-Rom entitled "Active
Abs" (including any upgrade version sales and private label sales of
the "Active Abs" CD-Rom) less returns. The parties hereto acknowledge
that no royalty shall be paid to the Consultant on the sale of less
than 30,001 units;
(e) The Corporation agrees to pay to the Consultant on a
quarterly basis royalties with respect to Active Abs in the amount of
two percent (2%) of the gross revenues actually received by the
Corporation on the sale of an aggregate 50,001 to 100,000 units (i.e.,
copies) of the interactive CD-Rom entitled "Active Abs" (including any
upgrade version sales and private label sales of the "Active Abs"
CD-Rom) less returns;
(f) The Corporation agrees to pay to the Consultant on a
quarterly basis royalties with respect to Active Abs in the amount of
three percent (3%) of the gross revenues actually received by the
Corporation on the sale of units (i.e., copies) of the interactive
CD-Rom entitled "Active Abs" in excess of 100,000 units (including any
upgrade version sales and private label sales of the "Active Abs"
CD-Rom) less returns;
(g) For the purposes of this section 4 and section 12(d)
hereof, gross revenues shall not include any amounts received by the
Corporation in respect of sales tax, excise or similar taxes, customs
duty or freight, transportation or insurance costs paid or allowed by
the Corporation;
(h) The foregoing royalty payments shall be paid to the
Consultant on a quarterly basis such that payments shall occur on
April 30, July 31, October 31 and January 31 of each year, for the
respective preceding quarter; such payments shall be accompanied by a
quarterly statement of royalties earned;
3(a)(1)-5
6
(i) Within ten (10) days of the date of this Agreement,
the Corporation shall pay the Consultant the amount of Six Thousand
Dollars ($6,000);
(j) The Corporation shall pay to the Consultant an agreed
upon fee for time spent by the Consultant in the provision of services
to be performed by the Consultant pursuant to section 2(a)(iii) of
this Agreement, such fee to be paid within thirty (30) days after
receipt by the Corporation of an account therefor from the Consultant;
(k) The Corporation shall pay to the Consultant an agreed
upon fee for time spent by the Consultant in the provision of services
to be performed by the Consultant pursuant to section 2(b)(iii) of
this Agreement, such fee to be paid within thirty (30) days after
receipt by the Corporation of an account therefor from the Consultant;
(l) The Corporation shall pay to the Consultant a fee in
an amount to be agreed to by the Corporation and the Consultant, for
time spent by the Consultant in the provision of services to be
performed by the Consultant pursuant to section 2(b)(iv) of this
Agreement, such fee to be paid within thirty (30) days after receipt
by the Corporation of an account therefor from the Consultant;
(m) Accounts rendered by the Consultant pursuant to the
foregoing sections 4(j), 4(k) and 4(1) shall indicate the number of
hours covered by the particular account and shall describe, with
reasonable particularity, the services performed by the Consultant
during the period covered by the account. The Consultant shall not
render accounts more frequently than once per calendar month;
(n) In the event that LaserMedia Inc. becomes a publicly
traded company (i.e., an offering corporation within the meaning of
the Business Corporations Act (Ontario)), the Corporation agrees to
issue the Consultant Seven Thousand (7,000) shares of the common
capital stock of LaserMedia Inc., the offering corporation, within
ninety (90) days after LaserMedia Inc. becoming an offering
corporation; and
(o) In the event that LaserMedia Inc. becomes an offering
corporation as described in section 4(n) hereof, the Consultant shall
have the option from time to time during the five (5) year period from
and after the date that LaserMedia Inc. becomes an offering
corporation, to purchase up to Five Thousand (5,000) shares of the
common capital stock of LaserMedia Inc., the offering corporation, per
year (the "Option"), at the same price and in accordance with the same
terms and conditions as then being offered to management personnel of
the Corporation. The Option may be exercised once a year by written
notice from the Consultant to the Corporation prior to the expiration
of said year. The Option shall expire on the earlier to occur of (i)
two (2) years after a termination of this Agreement for any reason
whatsoever, and (ii) the death of the Consultant.
3(a)(1)-6
7
5. EXPENSES
The Corporation shall pay or reimburse the Consultant for all
reasonable expenses pre-approved by the Corporation in writing, actually
incurred or paid by the Consultant during the Term in the performance of the
Consultant's services under this Agreement, upon presentation of expense
statements or receipts or such other supporting documentation as the
Corporation may reasonably require, provided however that no such payment shall
be made for any taxes for which the Consultant is entitled to a credit or
refund.
6. NO USE OF CONFIDENTIAL INFORMATION
During and at all times after the Term, the Consultant shall hold in
confidence and keep confidential all Confidential Information and shall not use
for the benefit of the Consultant or others (except in connection with the
business and affairs of the Corporation in the course of providing services
hereunder) any Confidential Information and shall not disclose any Confidential
Information to any person except in the course of providing services hereunder
to a person who is employed by the Corporation or with the Corporation's prior
consent. The foregoing prohibition shall not apply to any Confidential
Information if:
(a) the Confidential Information is available to the
public or in the public domain at the time of such disclosure or use,
without breach of this Agreement;
(b) disclosure is required to be made by any law,
regulation, governmental body or authority or by court order; or
(c) disclosure is made to a court which is determining
the rights of the parties under this Agreement.
The Consultant acknowledges and agrees that the obligations under this
section are to remain in effect in perpetuity. The Consultant further
acknowledges that the obligations contained in this section are not in
substitution for any obligations which the Consultant may now or hereafter owe
to the Corporation and which exist apart from this section and do not replace
any rights of the Corporation with respect to any such obligations.
7. REMEDIES
The Consultant acknowledges that a breach or threatened breach by the
Consultant of the provisions of section 6 will result in the Corporation and
its shareholders suffering irreparable harm which cannot be calculated or fully
or adequately compensated by recovery of damages alone. Accordingly, the
Consultant agrees that the Corporation shall be entitled to interim and
permanent injunctive relief, specific performance and other equitable remedies,
in addition to any other relief to which the Corporation may become entitled.
3(a)(1)-7
8
8. PROPERTY OF THE CORPORATION
(a) All memoranda, notes, lists, records and other
documents (and all copies thereof), including, without limitation, all
such items stored in computer memories, on microfiche, on discs or on
tapes or by any other means, made or compiled by or on behalf of the
Consultant or made available to the Consultant in the performance of
the services hereunder at any time during the Term (whether by the
Corporation or any other person) concerning the business or affairs of
the Corporation are and shall be the property of the Corporation, and
shall be delivered to the Corporation by the Consultant promptly upon
the termination of this Agreement, or at any other time on request of
the Corporation;
(b) The Consultant acknowledges that during the term of
this Agreement, the Consultant will create literary and/or artistic
works, products, trademarks and ideas (collectively, the "Proprietary
Work") in which copyright, trademark and patent rights may subsist.
The Consultant agrees to assign and does hereby assign to the
Corporation all of his right, title and interest in and to such
Proprietary Work, including, without limitation, the right to seek and
obtain copyright, trademark, patent and other protection thereof in
Canada, the United States and all other countries. Original works of
authorship fixed in any tangible form, prepared by the Consultant
individually or jointly with others, within the scope of the work
performed under this Agreement, shall be deemed a "work made for hire"
under the copyright laws and shall be owned by the Corporation; and
(c) The Consultant agrees promptly and fully to assist,
as requested by and at the sole expense of the Corporation, in the
preparation, filing, and prosecution of any copyright, trademark,
patent or other applications on the Proprietary Work in any and all
countries selected by the Corporation to enable any such application
to be prosecuted under the direction of the Corporation and to insure
that any copyrights, trademarks, patents, or other forms of protection
therein will issue to the Corporation. Such assistance includes
cooperating with solicitors and attorneys and other representatives of
the Corporation, executing all lawful papers, taking all lawful oaths,
and doing all lawful acts, including giving testimony, in connection
with such applications and any divisions, continuations, reissues,
reexaminations, or renewals thereof.
9. NO CONFLICTS OF INTEREST/NON-COMPETITION
(a) The Consultant shall not engage in any business or
other transaction or have any financial or other personal interest
which is both (i) incompatible with the performance by the Consultant
of the duties under this Agreement in the manner contemplated by this
Agreement, and (ii) detrimental to the business of the Corporation;
and
(b) The Consultant shall not for a period of six (6)
months following the termination of this Agreement, design, develop,
market, distribute, deliver, promote, sell,
3(a)(1)-8
9
license, lease, or provide consulting or customer maintenance services
in connection with any CD-Rom based product that is in competition
with the Corporation.
10. NATURE OF RELATIONSHIP
The parties acknowledge and agree as follows:
(a) the relationship of the Consultant to the Corporation
is that of independent contractor;
(b) the Consultant is not an employee or agent of the
Corporation;
(c) the Corporation and the Consultant are not partners
or joint venturers with each other;
(d) nothing herein shall be construed so as
(i) to make the Corporation and the Consultant partners
or joint venturers;
(ii) to make the Consultant an employee or agent of the
Corporation; or
(iii) to impose any liability as partner, joint
venturer, employer or employee or principal or agent on the
Corporation or the Consultant, as the case may be.
11. NO AUTHORITY TO BIND THE CORPORATION
Without limiting the provisions of section 10, the Consultant shall
have no authority to act, or to hold the Consultant out, as agent of the
Corporation or to bind the Corporation to perform any obligations to any third
party, without the prior written consent of the Corporation, and the Consultant
shall so inform all third parties with whom the Consultant deals in the
performance of the services hereunder. The Consultant shall not use the name of
the Corporation or any of its Subsidiaries in any advertisement or promotional
or marketing, material or, without the use of any such name, suggest or imply
in any such material that the Consultant has a relationship with the
Corporation or any of its Subsidiaries.
12. WEB SITE
In connection with the Web Site, the parties hereto agree as follows:
3(a)(1)-9
10
(a) The Consultant may operate within the Web Site, at no
cost to the Corporation, a question and answer format column,
addressing questions relating to health and fitness to which the
Consultant is qualified to answer. The Corporation may cancel the
Consultant's column without prior notice to the Consultant in the
event that the Corporation believes that the answers being provided by
the Consultant are inaccurate, unprofessional or inappropriate, or the
column is otherwise unacceptable to the Corporation;
(b) The Consultant shall expand the existing Web Site to
include the sale of vitamins, supplements, sports clothing and other
sports, health and fitness related products (collectively, the
"Products"). The Consultant agrees to diligently research and select
the Suppliers and Products to be sold through the Web Site, striving
to offer better quality Products at reasonable prices, which may be
distributed and delivered to the consumer cost effectively. In no
event may the sale of any of the Products jeopardize or otherwise
negatively impact any of the Corporation's clients or customers;
(c) All Products must be pre-approved in writing by the
Corporation prior to their inclusion in the Web Site. The Corporation
reserves the right to remove any or all of the Products from the Web
Site without prior notice to the Consultant. The Corporation reserves
the right to terminate the sale of Products on the Web Site without
prior notice to the Consultant;
(d) During the term of this Agreement and until the date
that is the earlier to occur of (i) three (3) years after an early
termination of this Agreement and (ii) January 21, 2002, the
Consultant shall receive fifty percent (50%) of the profits (i.e.,
gross revenues less all expenses incurred) specifically realized by
the Corporation from the sale of the Products (other than from the
sale of any and all CD-Rom based products, which CD-Rom based products
shall be excluded from the profit sharing calculation). In addition,
The Corporation shall remit a quarterly commission payment to the
Consultant;
(e) The ordering and payment of the Products shall be
processed through the Corporation's head office;
(f) In no event shall the Consultant release to third
parties any information concerning the customers of the Products; and
(g) In the event of an early termination of this
Agreement, the Consultant shall cease all of his work under sections
12(a) and 12(b), except to the extent that the Corporation, in its
sole discretion, requests that the Consultant continue with any or all
of his work under sections 12(a) and l9(b).
3(a)(1)-10
11
13. TERMINATION BY THE CORPORATION
This Agreement may be terminated by the Corporation:
(a) for Cause, without notice; or
(b) for any reason, on 30 days' notice to the Consultant.
The Consultant acknowledges that, on any termination of this Agreement
by the Corporation, the Consultant shall be entitled to receive further royalty
payments pursuant to section 4(b), 4(c), 4(d), 4(e) and 4(f), but shall not be
entitled to any payment for other consideration pursuant to section 4, loss of
office or other similar compensation. The parties hereto acknowledge that
section 4(n) of this Agreement shall survive any termination of this Agreement.
14. TERMINATION BY THE CONSULTANT
This Agreement may be terminated by the Consultant for any reason on
30 days' notice to the Corporation, in which event the Consultant shall be
entitled to receive further royalty payments pursuant to section 4(b), 4(c),
4(d), 4(e) and 4(f), but shall not be entitled to any payment for other
consideration pursuant to section 4, loss of office or other similar
compensation.
15. INDEMNIFICATION
LaserMedia Inc. shall indemnify the Consultant and the heirs and legal
representatives of the Consultant against all costs, charges and expenses,
including all amounts paid to settle an action or satisfy a judgment,
reasonably incurred by the Consultant in respect of any civil, criminal or
administrative action or proceeding to which the Consultant is a party by
reason of being or having been engaged by the Corporation under this Agreement,
other than an action (including, without limitation, an action in contract or
tort) by the Corporation as a result of a breach or alleged breach by the
Consultant of this Agreement or of any duty owed by the Consultant to the
Corporation, if:
(a) the Consultant acted honestly and in good faith with
a view to the best interests of the Corporation; and
(b) in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, the Consultant had
reasonable grounds for believing that the conduct of the Consultant
was lawful.
3(a)(1)-11
12
16. NOTICE
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be given by prepaid first-class mail,
by facsimile or other means of electronic communication or by delivery as
hereafter provided. Any such notice or other communication, if mailed by
prepaid first-class mail, shall be deemed to have been received on the fourth
Business Day after the post-marked date thereof, or if sent by facsimile or
other means of electronic communication, shall be deemed to have been received
on the Business Day following the sending, or if delivered by hand shall be
deemed to have been received at the tinge it is delivered to the applicable
address noted below either to the individual designated below or to an
individual at such address having apparent authority to accept deliveries on
behalf of the addressee. Notice of change of address shall also be governed by
this section. Notices and other communications shall be addressed as follows:
(a) if to the Consultant:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ U.S.A.
Telecopier number: ▇▇▇-▇▇▇-▇▇▇▇
(b) if to the Corporation:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier number: ▇▇▇-▇▇▇-▇▇▇▇
17. ASSIGNMENT
This Agreement shall not be assignable by the Corporation or by the
Consultant.
18. HEADINGS
The inclusion of headings in this Agreement is for convenience of
reference only and shall not affect the construction or interpretation hereof.
3(a)(1)-12
13
19. INVALIDITY OF PROVISIONS
Each of the provisions contained in this Agreement is distinct and
severable and a declaration of invalidity or unenforceability of any such
provision by a court of competent jurisdiction shall not affect the validity or
enforceability of any other provision hereof.
20. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter of this Agreement. There are no warranties,
representations or agreements between the parties in connection with such
subject matter except as specifically set forth or referred to in this
Agreement. No reliance is placed on any representation, opinion, advice or
assertion of fact made by any party hereto or its directors, officers and
agents to any other party hereto or its directors, officers and agents, except
to the extent that the same has been reduced to writing and included as a term
of this Agreement. Accordingly, there shall be no liability, either in tort or
in contract, assessed in relation to any such representation, opinion, advice
or assertion of fact, except to the extent aforesaid. Notwithstanding the
foregoing, that certain LaserMedia Inc. Author's Release executed by the
Consultant on October 12, 1994, is still in full force and effect, save and
except the Participant's Remuneration provisions set forth in Schedule "A"
attached thereto, which shall be deemed null and void.
21. WAIVER, AMENDMENT
Except as expressly provided in this Agreement, no amendment or waiver
of this Agreement shall be binding unless executed in writing by the party to
be bound thereby. No waiver of any provision of this Agreement shall constitute
a waiver of any other provision nor shall any waiver of any provision of this
Agreement constitute a continuing waiver unless otherwise expressly provided.
22. CURRENCY
Except as expressly provided in this Agreement, all amounts in this
Agreement are stated and shall be paid in Canadian currency.
23. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable therein.
3(a)(1)-13
14
24. COUNTERPARTS
This Agreement may be signed in counterparts and each of such
counterparts shall constitute an original document and such counterparts, taken
together, shall constitute one and the same instrument.
25. FUTURE MATTERS
The Corporation agrees that to the extent that the Corporation
introduces new lines of Active Trainer products during the term of this
Agreement, the Corporation will consider utilizing the Consultant's services
prior to engaging the services of other third parties.
IN WITNESS WHEREOF, the Corporation and the Consultant have executed
this Agreement.
LASERMEDIA INC.
By:
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇, President
WITNESS:
-------------------------------- --------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
3(a)(1)-14
