EXHIBIT 10.1
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MANAGEMENT AGREEMENT
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THIS AGREEMENT is made and dated for reference effective as of the 1st
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day of August, 2002
BETWEEN:
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P--CE COMPUTERS, INC., a company duly incorporated under the laws of the
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State of Nevada, and having an address for notice and delivery located at
2300 - 1066 X. Xxxxxxxx St., Vancouver, British Columbia, Canada, V6E 3X2
(the "Company");
OF THE FIRST PART
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AND:
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XXXXX XXXXXXXX, an individual having an address for delivery located at
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905 - 000 Xxxxx Xx., Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx, X0X 0X0
(the "Consultant");
OF THE SECOND PART
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(the Company, or the Consultant, being hereinafter singularly also
referred to as a "Party" and collectively referred to as the "Parties" as
the context so requires).
WHEREAS:
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A. The Company is a non-reporting company duly incorporated in the State of
Nevada and is in the business of producing and marketing innovative computing
and entertainment environments;
B. The Company wishes to employ the Consultant to provide services as
President and CEO of the Company;
C. The Consultant has determined to accept the engagement by the Company;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
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mutual covenants and provisos herein contained, THE PARTIES HERETO AGREE AS
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FOLLOWS:
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Article I
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INTERPRETATION
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1.1 Definitions. For all purposes of this Agreement, except as otherwise
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expressly provided or unless the context otherwise requires, the following words
and phrases shall have the following meanings:
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(a) "Agreement" means this Agreement as from time to time supplemented
or amended;
(b) "Base Fee" means that compensation set forth in section "4.1"
below;
(c) "Board of Directors" or "Board" means the Board of Directors of
the Company, or any successors to the Company, as duly constituted
from time to time;
(d) "Effective Date" has the meaning ascribed to it in section "3.1"
hereinbelow;
(e) "Indemnified Party" has the meaning ascribed to it in section
"6.1" hereinbelow;
(f) "Non-Renewal Notice" has the meaning ascribed to it in section
"3.2" hereinbelow;
(g) "Term" has the meaning ascribed to it in section "3.1"
hereinbelow; and
(h) "Termination Fee" has the meaning ascribed to it in section "3.4
below.
1.2 Interpretation. For the purposes of this Agreement, except as otherwise
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expressly provided or unless the context otherwise requires,:
(a) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, section or other subdivision of this
Agreement;
(b) the headings are for convenience only and do not form a part of
this Agreement nor are they intended to interpret, define or limit
the scope or extent of this or any provision of this Agreement;
(c) any reference to an entity shall include and shall be deemed to be
a reference to any entity that is a successor to such entity; and
(d) words in the singular include the plural and words in the
masculine gender include the feminine and neuter genders, and vice
versa.
Article II
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SERVICES AND DUTIES OF THE CONSULTANT
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2.1 General Services. During the Term (as hereinafter defined) of this
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Agreement the Consultant will provide the Company with such general corporate,
administrative, technical and management services as is considered necessary or
advisable by the Consultant for the due and proper management of the Company to
achieve the goals and needs of the Company as determined by the policies and
proceedings of management and the Board of Directors and is considered advisable
and within the normal duties of a President and CEO (collectively, the
"Services").
2.2 Specific Services. Without limiting the generality of the Services to be
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provided as set forth in section "2.1" hereinabove, it is hereby acknowledged
and agreed that the Consultant will provide the following specific services:
(a) supervision of the hiring of competent personnel as are required
for the efficient operation of the Company's business;
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(b) the management and supervision of the performance of personnel and
of the operation of various business enterprises of the Company as
approved by the Board;
(c) the identification of business opportunities for the Company, the
conduct of due diligence, and assistance in the negotiation and
conclusion of contracts for such opportunities;
(d) assistance in the coordination and administration of all
development programs of the Company together with all capital
funding projects and resources which are necessarily incidental
thereto;
(e) assistance in the coordination of the preparation and
dissemination of business plans and reports for the Company;
(f) assistance in the liaison with and the setting up of corporate
alliances for the Company with major companies and customers, the
Company's auditors, the Company's solicitors and the Company's
affiliated companies and business partners; and
(g) such other activities as are necessary or incidental from time to
time.
2.3 Company Support. The Company shall reasonably make available all such
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resources as shall be required for the Consultant to perform the Services and
otherwise to fulfill the requirements of this Agreement. The Company warrants it
shall provide the Consultant with all such reasonable resources, financial and
otherwise, as the Consultant shall require to fulfill its reasonable goals as
determined by the Board and this Agreement.
Article III
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TERM, RENEWAL AND TERMINATION
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3.1 Term. The Term of this Agreement (the "Term") is for a period of five (5)
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years commencing on August 1, 2002 (the "Effective Date") and terminating July
31, 2007.
3.2 Renewal. This Agreement shall renew automatically for subsequent two-year
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periods if not specifically terminated in accordance with the following
provisions. Renewal shall be on the same terms and conditions contained herein,
unless modified and agreed to in writing by the Parties, and this Agreement
shall remain in full force and effect (with any collateral written amendments)
without the necessity to execute a new document. A Party hereto determining not
to renew agrees to notify the other Parties hereto in writing at least 90
calendar days prior to the end of the Term of its intent not to renew this
Agreement (the "Non-Renewal Notice") and such non-renewal shall be subject to
the Termination Fee provisions of sec. 3.4.
3.3 Termination. Notwithstanding any other provision of this Agreement, this
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Agreement may be terminated by a Party upon written notice if:
(a) the other Party fails to cure a material breach of any provision
of this Agreement within 30 calendar days from its receipt of
written notice from said Party (unless such breach cannot be
reasonably cured within said 30 calendar days and the other Party
is actively pursuing curing of said breach); or
(b) the other Party commits fraud or serious neglect or misconduct or
illegal act in the discharge of its respective duties hereunder or
under the law; or
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(c) the other Party becomes adjudged bankrupt or a petition for
reorganization or arrangement under any law relating to
bankruptcy, and where any such petition is not dismissed;
but that the Consultant shall have the right to receive the Termination Fee
(defined below) regardless of the reason for termination, without prejudice to
any rights of counter-claim in the event of damages for fraud or misconduct and
without prejudice to the right to recovery in the event of judgement.
3.4 Termination Fee. In the event that this Agreement is terminated (by act
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or constructively), or fails to renew due to failure of agreement after the
issuance of a Non-Renewal Notice, or otherwise at the termination of this
Agreement, the Consultant shall receive a termination fee (the "Termination
Fee") equal to the sum of:
(a) buy-out of any outstanding stock options for a price equal to the
fair market value of the Company's shares, determined for the 30 days
preceding termination and as determined in accordance with accounting
principles, multiplied by the number of shares under option and less the
exercise price thereof or, at the optionee's election and subject to any
required regulatory approval, extension of the option for a period of two
(2) years after termination or, at the optionee's election, the immediate
vesting and exercise of all granted options and the immediate right to
employ `net exercise' privileges in accordance with the practice of U.S.
companies or, if established in accordance with the Company's stock
option plan, in accordance with such plan; plus
(b) the greater of:
(i) the aggregate remaining Base Fee for the unexpired
remainder of the Term; or
(ii) an annual Base Fee (Base Fee multiplied by twelve) plus one
month of Base Fee for each year, or portion thereof, served
after the Effective Date;
but that such aggregate sum of this section 3.4(b) (therefore not
including section 3.4(a) amounts) shall not exceed the Base Fee
multiplied by 24.
At the Company's election the Termination Fee may be paid in 12 equal monthly
installments commencing with the first payment on the effective date of
termination. In the event of any dispute as to quantum of the Termination Fee
(or any claimed set-off or counter-claim), payment thereof shall not be delayed
or deferred but shall commence immediately monthly, in 12 equal parts, of the
aggregate sum of section 3.4(b) above which, if disputed, shall be determined by
an accountant selected by the Consultant which shall be irrevocably deemed
immediately due and payable monthly. The aggregate Termination Fee (and any
counter-claim) shall then be determined by the Parties thereafter and
adjustments, payments, or recoveries in accordance with judicial process or
settlement.
3.5 Disability. If the Consultant is unable to continue an employment,
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whether through disability or otherwise, and the Consultant consequently be
unable to provide the Services adequately, then the Company shall fund a
disability plan which shall continue for a period of two (2) years of seventy
five (75%) percent of the average Base Fee and Incentive Fee of the two years
preceding termination ("Disability Fund Sum"). If physically capable, the
Consultant shall be made available for consultation for up to ten (10) hours per
week, non-cumulative, at no cost to the Company. For additional hours per week,
the Consultant shall be paid at a per diem rate (any time spent in a day shall
be deemed to be a full day) equal to the per annum Disability Fund Sum divided
by 260.
3.6 Death. In the event that the Consultant is unable to provide the Services
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due to the death of the Consultant, the Company may terminate this Agreement as
a without fault termination and the Termination Fee shall be payable in
accordance with section 3.4.
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Article IV
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COMPENSATION OF THE CONSULTANT
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4.1 Base Fee. The Consultant shall be compensated on a monthly basis from the
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Effective Date of this Agreement by a basic monthly fee of twelve thousand five
hundred (US$12,500) dollars USD (the "Base Fee").
4.2 Base Fee Adjustment. The Base Fee may be renegotiated annually at the
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request of either Party. In the event that the Parties cannot agree then the
Base Fee shall be increased by the greater of 5% or the amount of the cost of
living index increase as published by the U.S. Federal government in its final
annual publication of such reports. The Base Fee may be temporarily adjusted in
the event that sales of the Company in any quarter are less than operating costs
of the Company and then at the end of the subsequent quarter should negative
cash flow be still occurring the Consultant's Base Fee shall, together with
other management personnel subject to the same formula, be reduced pro rata to
reduce costs to balance incoming revenue and outgoing expense but only up to a
50% reduction of the Base Fee. The reduction of Base Fee shall be ameliorated
upon the Company's revenue increasing sufficiently to pay some or all deferred
Base Fee (the Base Fee payment shall increase to its normal rate in direct
proportion to positive cash flow). Any reduction of Base Fee shall be treated as
a shareholder loan, without interest, and shall be paid from profit before
dividends.
4.3 Incentive Fee. In addition to the Base Fee, the Consultant shall also
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receive an incentive fee (the "Incentive Fee") which shall be no less than that
established by the Board for other management. For all management, incentive
Fees shall not exceed 20% of before tax profit of the Company and shall have an
aggregate maximum `cap' for all management of one million dollars ($1,000,000).
4.4 Discretionary Bonus. The Base Fee and Incentive Fee shall not exclude the
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granting of discretionary bonuses to the Consultant by the Company from
time-to-time.
4.5 Reimbursement of Expenses. The Consultant shall be funded for or
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reimbursed for all reasonable expenses incurred, or to be incurred, by the
Consultant for the benefit of the Company within 15 days of submission of
invoice and support therefor.
4.6 Vacation. The Consultant shall be entitled to up to four weeks paid
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vacation per year.
Article V
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ADDITIONAL OBLIGATIONS OF THE CONSULTANT
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5.1 No Conflict. During this Agreement the Consultant will not engage in any
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business which reasonably may detract from, compete with or conflict with the
Consultant's duties and obligations to the Company as set forth in this
Agreement, without disclosure to the Board of Directors of the Company, and will
not do so if the Board of Directors objects.
5.2 Confidentiality. The Consultant will not, except as authorized or
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required by the Consultant's duties hereunder, reveal or divulge to any person
or companies any information concerning the organization, business, finances,
transactions or other affairs of the Company, or of any of its subsidiaries,
which may come to the Consultant's knowledge during the continuance of this
Agreement, and the Consultant will keep in complete secrecy all confidential
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information entrusted to the Consultant and will not use or attempt to use any
such information in any manner which may injure or cause loss either directly or
indirectly to the Company's business. This restriction will continue to apply
after the termination of this Agreement without limit in point of time but will
cease to apply to information or knowledge which may come into the public
domain.
5.3 Compliance with Applicable Laws. The Consultant will comply with all
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Canadian, U.S. and foreign laws, whether federal, provincial or state,
applicable to the Consultant's duties hereunder and, in addition, hereby
represents and warrants that any information which the Consultant may provide to
any person or company hereunder will be accurate and complete in all material
respects and not misleading, and will not omit to state any fact or information
which would be material to such person or company.
5.4 Reporting. So often as may be required by the Board of Directors, the
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Consultant will provide to the Board of Directors of the Company such
information concerning the results of the Consultant's Services and activities
hereunder as the Board of Directors of the Company may reasonably require.
Article VI
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INDEMNIFICATION AND LEGAL PROCEEDINGS
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6.1 Indemnification. The Consultant (the "Indemnified Party") shall be
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indemnified and funded on a current basis for all losses, damages, legal
expenses, and any other expenses or costs of any nature which may be occasioned
by its service with the Company. Inter alia, this indemnity shall apply to all
manner of actions, proceedings, or prosecutions, whether civil, regulatory, or
criminal, to which the Indemnified Party may be subject due in whole or in part
to the Services provided herein or by virtue of any office held. This indemnity
shall apply both during and after its Term for all matters arising during the
Term, and any extension, until any limitation period has expired in respect to
any action which might be contemplated. The Company shall not refuse coverage
for any purpose or reason and a strict presumption of innocence shall be applied
and the Company may only seek refund of any coverage in the case of finding of
fraud or criminal culpability, after exhaustion of all appeals. The Company
shall diligently seek and support any such court approvals for the within
indemnity as the Indemnified Party may require. The Company shall pay all such
retainers and trust requirements as counsel for the Indemnified Party may
require and shall pay all accounts of counsel as they come due and such accounts
shall be rendered in the name of the Company and, further, should the Company
fail to pay any reasonable account, it shall attorn to all such actions, summary
judgments, and garnishing orders as such counsel may consider fit to enforce and
receive payment of its account. The Company shall not seek to settle or
compromise any action without the approval of the Indemnified Party. The Company
warrants it shall employ due diligence and good faith and seek the best
interests of the Indemnified Party as defendants in any action or prosecution.
The Indemnified Party shall permit the Company to consult with their counsel and
to be informed of any matters thereof, subject only to any requirements for
legal privilege purposes. The Company shall make the Consultant party to all
liability insurance policies, to the full extent permitted by such policies,
which may be acquired for the benefit of all or any of the Board or management.
6.2 Claim of Indemnification. The Parties hereto agree to waive any right
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they might have of first requiring the Indemnified Party to proceed against or
enforce any other right, power, remedy, security or claim payment from any other
person before claiming this indemnity.
6.3 Notice of Claim. In case any action is brought against an Indemnified
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Party in respect of which indemnity may be sought, the Indemnified Party will
give the Company prompt written notice of any such action of which the
Indemnified Party has knowledge. Failure by the Indemnified Party to so notify
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shall not relieve the Company of its obligation of indemnification hereunder
unless (and only to the extent that) such failure results in a forfeiture of
substantive rights or defenses.
Article VII
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FORCE MAJEURE
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7.1 Events. If either Party hereto is at any time either during this
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Agreement or thereafter prevented or delayed in complying with any provisions of
this Agreement by reason of strikes, walk-outs, labour shortages, power
shortages, fires, wars, acts of God, earthquakes, storms, floods, explosions,
accidents, protests or demonstrations by environmental lobbyists or native
rights groups, delays in transportation, breakdown of machinery, inability to
obtain necessary materials in the open market, unavailability of equipment,
governmental regulations restricting normal operations, shipping delays or any
other reason or reasons beyond the control of that Party, then the time limited
for the performance by that Party of its respective obligations hereunder shall
be extended by a period of time equal in length to the period of each such
prevention or delay.
7.2 Notice. A Party shall within seven calendar days give notice to the other
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Party of each event of force majeure under section "7.1" hereinabove, and upon
cessation of such event shall furnish the other Party with notice of that event
together with particulars of the number of days by which the obligations of that
Party hereunder have been extended by virtue of such event of force majeure and
all preceding events of force majeure.
Article VIII
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NOTICE
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8.1 Notice. Each notice, demand or other communication required or permitted
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to be given under this Agreement shall be in writing and shall be sent by
prepaid registered mail to the Party, or delivered to such Party, at the address
for such Party specified on the front page of this Agreement. The date of
receipt of such notice, demand or other communication shall be the date of
delivery thereof if delivered, or, if given by registered mail as aforesaid,
shall be deemed conclusively to be the third day after the same shall have been
so mailed, except in the case of interruption of postal services for any reason
whatsoever, in which case the date of receipt shall be the date on which the
notice, demand or other communication is actually received by the addressee.
8.2 Change of Address. Either Party may at any time and from time to time
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notify the other Party in writing of a change of address and the new address to
which notice shall be given to it thereafter until further change.
Article IX
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GENERAL PROVISIONS
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9.1 Entire Agreement. This Agreement constitutes the entire agreement to date
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between the Parties hereto and supersedes every previous agreement, expectation,
negotiation, representation or understanding, whether oral or written, express
or implied, statutory or otherwise, between the Parties with respect to the
subject matter of this Agreement.
9.2 No relationship of Employer-Employee. Nothing contained in this Agreement
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shall be construed as creating the relationship of employer and employee.
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9.3 No Assignment. This Agreement may not be assigned by either Party except
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with the prior written consent of the other Party.
9.4 Warranty of Good Faith. The Parties hereto warrant each to the other to
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conduct their duties and obligations hereof in good faith and with due diligence
and to employ all reasonable endevours to fully comply with and conduct the
terms and conditions of this Agreement.
9.5 Further Assurances. The Parties will from time to time after the
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execution of this Agreement make, do, execute or cause or permit to be made,
done or executed, all such further and other acts, deeds, things, devices and
assurances in law whatsoever as may be required to carry out the true intention
and to give full force and effect to this Agreement.
9.6 Representation and Costs. It is hereby acknowledged by each of the
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Parties hereto that, as between the Company and the Consultant herein, Xxxxxx
Xxxxxx, Barristers and Solicitors, acts solely for the Company, and that the
Consultant has been advised by Xxxxxx Xxxxxx to obtain independent legal advice
with respect to this Agreement
9.7 Applicable Law. The situs of this Agreement is Vancouver, British
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Columbia, and for all purposes this Agreement will be governed exclusively by
and construed and enforced in accordance with the laws prevailing in the
Province of British Columbia. This Agreement shall be exclusively litigated in
British Columbia unless the Parties voluntarily consent otherwise in writing.
9.8 Severability and Construction. Each Article, section, paragraph, term and
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provision of this Agreement, and any portion thereof, shall be considered
severable, and if, for any reason, any portion of this Agreement is determined
to be invalid, contrary to or in conflict with any applicable present or future
law, rule or regulation in a final unappealable ruling issued by any court,
agency or tribunal with valid jurisdiction in a proceeding to which any Party
hereto is a party, that ruling shall not impair the operation of, or have any
other effect upon, such other portions of this Agreement as may remain otherwise
intelligible (all of which shall remain binding on the Parties and continue to
be given full force and effect as of the date upon which the ruling becomes
final).
9.9 Consents and Waivers. No consent or waiver expressed or implied by either
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Party in respect of any breach or default by the other in the performance by
such other of its obligations hereunder shall:
(a) be valid unless it is in writing and stated to be a consent or
waiver pursuant to this section;
(b) be relied upon as a consent to or waiver of any other breach or
default of the same or any other obligation or constitute a
general waiver under this Agreement; or
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(c) eliminate or modify the need for a specific consent or waiver
pursuant to this section in any other or subsequent instance.
IN WITNESS WHEREOF the Parties hereto have hereunto set their respective
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hands and seals in the presence of their duly authorized signatories effective
as at the date first above written.
The CORPORATE SEAL of )
P--CE COMPUTERS, INC. )
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was hereunto affixed in the presence of: )
)
/s/ Xxx Xxxxxx ) (C/S)
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Authorized Signatory )
SIGNED, SEALED and DELIVERED by )
XXXXX XXXXXXXX )
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in the presence of: )
)
/s/ Xxx Xxxxxxxxx )
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Witness Signature )
) /s/ Xxxxx Xxxxxxxx
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) XXXXX XXXXXXXX
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