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EXHIBIT 3(A)(2)
CONSULTING SERVICES AGREEMENT
DATED FEBRUARY 2, 1997 BY AND BETWEEN LASERMEDIA AND ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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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
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(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:
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(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
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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;
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(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 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, the offering corporation, within ninety (90) days
after Lasermedia becoming an offering corporation; and
(o) In the event that Lasermedia 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 becomes an offering corporation, to
purchase up to Five Thousand (5,000) shares of the common capital stock
of Lasermedia, 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.
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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.
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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,
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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:
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(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).
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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 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.
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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:
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(b) if to the Corporation:
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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.
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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 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.
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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
By:
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▇▇▇▇ ▇▇▇▇▇▇▇▇, President
WITNESS:
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