CHAIRMAN, PRESIDENT AND CEO COMPENSATION AGREEMENT
THIS
AGREEMENT made
as
of February 01, 2004
BETWEEN:
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Gamestate
Entertainment, Inc., a company incorporated under the laws of Nevada,
USA
having a registered office at ▇▇▇▇-▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇
▇▇▇ ▇▇▇
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(the
"Company")
OF
THE FIRST
PART
AND:
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▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ with an office at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇
▇▇▇
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(the
"Executive")
OF
THE SECOND
PART
AND:
|
BPYA
966 Holdings Ltd.,
a
company incorporated under the laws of British Columbia having
its
registered office at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇
▇▇▇
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(the
"BPYA")
OF
THE THIRD
PART
WHEREAS,
the Company has appointed Executive to the position of Chairman,
President
and CEO, and Executive has accepted such appointment;
WHEREAS,
the Executive desires to direct his compensation for services rendered to
the
company through his holding company BPYA;
WHEREAS,
in connection with such appointment, the Company, Executive
And
BPYA
desire to enter into this Agreement;
NOW,
THEREFORE, in consideration of the Executive's appointment as Chairman,
President and CEO, and for other good and valuable consideration the receipt
of
which is hereby acknowledged, the Executive, BPYA and Company agree as
follows:
| 1. |
Effective
Date. This
Agreements Effective Date Is the date first mentioned
herein.
|
| 2. |
Duties.
The Executive agrees that while he is engaged by the Company, he
will
devote a reasonable
working time,
energies and talents to serving as the Chairman, President and
CEO of the
Company and providing services for the Company at the direction
of the
Board of Directors of the Company. The Executive shall have such
duties
and responsibilities as may be assigned to him from time to time
by the
Board of Directors, shall perform all duties assigned to him faithfully
and efficiently, subject to the direction of the Board of Directors,
and
shall have such authorities and powers as are inherent to the undertakings
applicable to his position and necessary to carry out the responsibilities
and duties required of him hereunder; provided, however, that the
Executive shall not be required to perform any duties while he
is
disabled. Both parties understand and agree that the Executive
may serve
on boards of directors of other businesses, which are not in competition
with the Company and may engage in commercial, civic and charitable
activities provided that such service and activities do not materially
interfere with the performance of the Executive's
duties.
|
| 3. |
Compensation.
Subject to the terms and conditions of this Agreement, during the
Employment Period while the Executive is employed by the Company,
the
Company shall compensate BPYA for the Executives services as
follows:
|
| 3.1. |
The
Executive shall receive, for each twelve-consecutive month period
beginning on February 1st, 2004, and each anniversary thereof,
an annual
fee not less than $90,000 (the "Fee"), which Fee shall be payable
in
substantially equal monthly instalments on or before the last day
of each
month. The Executive's rate of Fee shall be reviewed annually beginning
in
February 2005 and may be increased at that time with the Compensation
Committees approval.
|
| 3.1.1. |
The
Fee is net of any applicable taxes, and where any taxation is required
to
be applied as determined under Generally Accepted Accounting Principles
(“GAAP”) the same will be remitted to BPYA with the monthly remittance.
|
| 3.2. |
BPYA
is entitled to 5,000,000 common shares of the company issued over
a set
release schedule as long as Executive remains in the capacity of
President
and CEO. The shares are restricted under Rule 144 of the 1933 Securities
Act.
|
| 3.2.1. |
The
Company will do everything within its power to release the said
shares
from any and all restrictions at the earliest date possible.
|
| 3.2.2. |
BPYA
will receive 2,500,000 (12.15%) of the common shares of the Company
within
5 business days of the execution of this
Agreement.
|
| 3.2.3. |
500,000
released every 6 months on the anniversary of the Effective Date.
Common
shares are to be released from Treasury upon written approval from
Board
of Directors. If the Board chooses to terminate the Executive at
the
anniversary of this agreement, any balance of common stock remaining
unrealized by BPYA will be returned to
Treasury.
|
| 3.3. |
BPYA
is entitled to participate in the company’s stock option plan at
conversion price and an amount authorized by the Board of
Directors.
|
| 3.4. |
The
Executive is entitled to a bonus payable semi-annually based on
a defined
set of benchmarks established by the Board of Directors. Benchmarks
to be
attributed to sales levels, profitability of the corporation and
stock
price performance.
|
| 3.5. |
The
Company will pay to the consultant a bonus of 5% of the value of
any
companies or business funded or purchased by the Company, which
were
funded or purchased under the direction of the Executive (acquisition
bonus). The acquisition bonus will be paid 50% in cash added to
the
monthly fee and 50% in common stock of the Company.
|
| 3.6. |
Except
as otherwise specifically provided to the contrary in this Agreement,
the
Executive shall be provided with health, welfare and other fringe
benefits
to the same extent and on the same terms as those benefits are
provided by
the Company from time to time to the Company's other senior management
executives.
|
| 3.7. |
The
Executive shall be reimbursed by the Company, on terms and conditions
that
are substantially similar to those that apply to other similarly
situated
senior management executives of the Company, for reasonable out-of-pocket
expenses for entertainment, travel, meals, lodging and similar
items which
are consistent with the Company's expense reimbursement policy
and
actually incurred by the Executive in the promotion of the Company's
business.
|
| 3.8. |
The
Company shall pay the Executive for the amount of the monthly lease
payment for the automobile that the Executive uses for business;
provided,
however, that the Company shall report as income to the Executive
any
amounts required by law or the policies of the Company relating
to the
Executive's personal use of such
automobile.
|
| 3.9. |
All
cash Fees discussed herein will be accumulated and accrued (the
“Accrual”)
from the Effective Date to the benefit of BPYA but not paid out
until the
Company is listed for active trading with the NASDAQ OTCBB and
the Company
has completed an aggregate financing of $250,000.00. or April
30th,
2004 which ever is sooner at which time the company will have 10
business
days to pay BPYA the Accrual.
|
| 4. |
Rights
and Payments Upon Termination.
The Executive's right to benefits and payments, if any, for periods
after
the date on which his employment with the Company terminates for
any
reason (his "Termination Date") shall be determined in accordance
with
this Section 4:
|
| 4.1. |
Termination
by the Company for Reasons Other Than Cause; Termination by the
Executive
for Good Reason. If the Executive's termination by the Company
occurs for
any reason other than Cause or is a result of the Executive's termination
of employment for Good Reason (and is not on account of the Executive's
death, disability, or voluntary resignation, the mutual agreement
of the
parties or any other reason), then the Executive shall receive
from the
Company for the period commencing on his termination Date and ending
on
the earliest of;
|
| 4.1.1. |
the
thirty-sixth month after the Executive's Termination
Date;
|
| 4.1.2. |
the
date on which the Executive violates the provisions of Sections
5, 6 or 7
of this Agreement; or
|
| 4.1.3. |
the
date of the Executive's death, the Salary, bonus and benefits in
effect as
of his Termination Date, payable in accordance with the provisions
of
Paragraph 3.
|
| 4.2. |
The
monthly Fee amounts will continue as described above. Benefits
that will
continue will include medical, dental, basic life insurance, financial
counselling services, any optional life insurance and any optional
accidental death and dismemberment insurance. Bonus shall mean
three
payments of the average annual amount of the award paid to the
Executive
pursuant to the annual incentive plan or successor plan with respect
to
the three years immediately preceding that in which the Termination
Date
occurs; excluding any years in which the bonus was zero. If all
three
immediately preceding bonus payments were equal to zero, then no
bonus
payment would be continued for the next three
years.
|
| 4.2.1. |
Fee
payments to the Executive during the aforementioned thirty-six
month
period shall not preclude the Executive's eligibility for payments
under
the Company’s severance plan if
any.
|
| 4.2.2. |
All
existing unvested options as of the Termination Date will become
vested
and the Executive shall be afforded a 36-month extension period
of time
(but not beyond the original Termination Date of the option) from
the
Termination Date to exercise any remaining unexercised options
that had
not expired before the Termination
Date.
|
| 4.2.3. |
It
is expected that the Executive would have an opportunity to exercise
said
options in a cashless exchange from the first window period (post
earnings
public release period) after the Executive's Termination Date and
thereafter. The Company expects that such a transaction could be
accomplished very promptly at the beginning of said window period
and
thereafter. The Executive may exercise a cashless exchange of options
before the date mentioned above if the Company is in agreement
on the
efficacy of such action and the Company would not unreasonably
withhold
such agreement.
|
| 4.2.4. |
The
Company will, to the maximum extent permitted by law, defend, indemnify
and hold harmless the Executive, BPYA and the Executive's heirs,
estate,
executors and administrators against any costs, losses, claims,
suits,
proceedings, damages or liabilities to which the Executive may
become
subject which arise out of, are based upon or relate to the Executive's
engagement by the Company (and any predecessor company to the Company),
or
the Executive's service as an officer or member of the Board of
Directors
of the Company (or any predecessor company to the Company), including
without limitation reimbursement for any legal or other expenses
reasonably incurred by the Executive in connection with investigation
and
defending against any such costs, losses, claims, suits, proceedings,
damages or liabilities. The Company shall maintain directors and
officers
liability insurance in commercially reasonable amounts (as reasonably
determined by the Board), and the Executive shall be covered under
such
insurance to the same extent as other senior management employees
of the
Company with respect to matters which occurred during such period
of
employment.
|
| 4.2.5. |
The
Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking outside employment or
otherwise
and such payments shall not be reduced by any other income earned
by
Executive.
|
| 4.3. |
Termination
By Company for Cause. If the Executive's termination is a result
of the
Company's termination of the Executive's employment on account
of Cause,
then, except as agreed in writing between the Executive and the
Company,
the Executive shall have no right to future payments or benefits
under
this Agreement (and the Company shall have no obligation to make
any such
future payments or provide any such future benefits) for periods
after the
Executive's Termination Date.
|
| 4.4. |
Termination
for Death or Disability. If the Executive's termination is caused
by the
Executive's death or permanent disability, then the Executive (or
in the
event of his death, his estate) shall be entitled to continuing
payments
of his Salary for the period commencing on his Termination Date
and ending
on the earlier of (i) the last day of the calendar month in which
his
Termination Date occurs or (ii) the date on which the Executive
violates
the provisions of Sections 4, 5 or 6 of this
Agreement.
|
| 4.5. |
Termination
for Voluntary Resignation, Mutual Agreement or Other Reasons. If
the
Executive's termination occurs on account of his voluntary resignation,
mutual agreement of the parties, or any reason other than those
specified
in Paragraphs (A), (B) or (C) above then, except as agreed in writing
between the Executive and the Company, the Executive shall have
no right
to future payments or benefits under this Agreement (and the Company
shall
have no obligation to make any such future payments or provide
any such
future benefits) for periods after the Executive's Termination
Date. The
Executive's termination of employment for Good Reason shall not
be treated
as a voluntary resignation for purposes of this
Agreement.
|
| 4.6. |
Definitions.
For purposes of this Agreement:
|
| 4.6.1. |
The
term "Cause" shall mean:
|
| 4.6.1.1. |
the
wilful engaging by the Executive in conduct which is demonstrably
and
materially injurious to the Company or its affiliates, monetarily
or
otherwise, as determined by the Board of Directors;
or
|
| 4.6.1.2. |
conduct
by the Executive that involves theft, fraud or dishonesty;
or
|
| 4.6.1.3. |
the
Executive's violation of the provisions of Sections 5, 6 or 7
hereof.
|
| 4.6.2. |
The
term "Good Reason" means (a) the assignment to the Executive duties
which
are materially inconsistent with his duties as Chairman, President
and CEO
of the Company, including, without limitation, a material diminution
or
reduction in his title, office or responsibilities or a reduction
in his
rate of Salary, failure to provide bonus opportunities or stock
awards in
accordance with the requirements in Section 2, or (b) the relocation
of
the Executive to a location that is not within the greater Vancouver
metropolitan area.
|
| 4.6.3. |
Notwithstanding
any other provision of this Agreement, the Executive shall automatically
cease to be an employee of the Company and its affiliates as of
his
Termination Date and, to the extent permitted by applicable law,
any and
all monies that the Executive owes to the Company shall be repaid
before
any post-termination payments are made pursuant to the Executive
pursuant
to this Agreement.
|
| 5. |
Confidential
Information.
The Executive agrees that:
|
| 5.1. |
Except
as may be required by the lawful order of a court or agency of
competent
jurisdiction, or except to the extent that the Executive has express
authorization from the Company, he shall keep secret and confidential
indefinitely all non-public information (including, without limitation,
information regarding litigation and pending litigation) concerning
the
Company and its affiliates which was acquired by or disclosed to
the
Executive during the course of his employment with the Company,
and not to
disclose the same, either directly or indirectly, to any other
person,
firm, or business entity, or to use it in any
way.
|
| 5.2. |
Upon
his Termination Date or at the Company's earlier request, he will
promptly
return to the Company any and all records, documents, physical
property,
information, computer disks or other materials relating to the
business of
the Company and its affiliates obtained by him during his course
of
employment with the Company.
|
| 5.3. |
The
Executive shall keep the Company informed of, and shall execute
such
assignments as may be necessary to transfer to the Company or its
affiliates the benefits of, any inventions, discoveries, improvements,
trade secrets, developments, processes, and procedures made by
the
Executive, in whole or in part, or conceived by the Executive either
alone
or with others, which result from any work which the Executive
may do for
or at the request of the Company, whether or not conceived by the
Executive while on holiday, on vacation, or off the premises of
the
Company, including such of the foregoing items conceived during
the course
of employment which are developed or perfected after the Executive's
termination of employment. The Executive shall assist the Company
or other
nominated by it, to obtain patents, trademarks and service marks
and the
Executive agrees to execute all documents and to take all other
actions
which are necessary or appropriate to secure to the Company and
its
affiliates the benefits thereof. Such patents, trademarks and service
marks shall become the property of the Company and its affiliates.
The
Executive shall deliver to the Company all sketches, drawings,
models,
figures, plans, outlines, descriptions or other information with
respect
thereto.
|
| 5.4. |
To
the extent that any court or agency seeks to have the Executive
disclose
confidential information, he shall promptly inform the Company,
and he
shall take such reasonable steps to prevent disclosure of Confidential
Information until the Company has been informed of such requested
disclosure. To the extent that the Executive obtains information
on behalf
of the Company or any of its affiliates that may be subject to
attorney-client privilege as to the Company's attorneys, the Executive
shall take reasonable steps to maintain the confidentiality of
such
information and to preserve such
privilege.
|
| 5.5. |
Nothing
in the foregoing provisions of this Section 5 shall be construed
so as to
prevent the Executive from using, in connection with his employment
for
himself or an employer other than the Company or any of its affiliates,
knowledge which was acquired by him during the course of his employment
with the Company and its affiliates, and which is generally known
to
persons of his experience in other companies in the same
industry.
|
| 6. |
Non-solicitation.
While the Executive is employed by the Company and its affiliates
and for
a period of three years after the date the Executive terminates
employment
with the Company and its affiliates for any reason, the Executive
covenants and agrees that he will not, whether for himself or for
any
other person, business, partnership, association, firm, company
or
corporation, directly or indirectly, call upon, solicit, divert
or take
away or attempt to solicit, divert or take away, any of the customers
or
employees of the Company or its affiliates in existence from time
to time
during his employment with the Company and its
affiliates.
|
| 7. |
Non-competition.
While the Executive is employed by the Company and its affiliates,
and for
a period of three years after the date the Executive terminates
employment
with the Company and its affiliates, the Executive covenants and
agrees
that he will not, directly or indirectly, engage in, assist, perform
services for, plan for, establish or open, or have any financial
interest
(other than (i) ownership of 1% or less of the outstanding stock
of any
corporation listed on the New York or American Stock Exchange or
included
in the National Association of Securities Dealers Automated Quotation
System or (ii)ownership of securities in any entity affiliated
with the
Company) in any person, firm, corporation, or business entity (whether
as
an employee, officer, director or consultant) that engages in an
activity
in any state in which the Company or its affiliates is conducting
or has
reasonable expectations of commencing business activities at the
date of
the Executive's termination of employment, which is the same as,
similar
to, or competitive with location based entertainment centres,
entertainment processing and distribution business of the Company
and its
affiliates.
|
| 8. |
Equitable
Remedies.
The Executive acknowledges that the Company would be irreparably
injured
by a violation of Sections 5, 6 and 7 and agrees that the Company,
in
addition to other remedies available to it for such breach or threatened
breach, shall be entitled to a preliminary injunction, temporary
restraining order, other equivalent relief, restraining the Executive
from
any actual or threatened breach of Sections 5, 6 and 7 without
any bond or
other security being required.
|
| 9. |
Defence
of Claims.
The Executive agrees that, during his employment with the Company
and
after his termination, he will cooperate with the Company and its
affiliates in the defence of any claims that may be made against
the
Company or its affiliates to the extent that such claims may relate
to
services performed by him for the Company. To the extent travel
is
required to comply with the requirements of this Section 8, the
Company,
shall to the extent possible, provide the Executive with notice
at least
10 days prior to the date on which such travel would be required
and the
Company agrees to reimburse the Executive for all of his reasonable
actual
expenses associated with such travel; provided, however, that if
the
Company reasonably expects the travel to be extensive or unduly
burdensome
to the Executive from a financial perspective, the Company may
provide to
the Executive pre-paid tickets for transportation in connection
with such
travel.
|
| 10. |
Notices.
Notices provided for in this Agreement shall be in writing and
shall be
deemed to have been duly received when delivered in person or sent
by
facsimile transmission, on the first business day after it is sent
by air
express courier service or on the second business day following
deposit in
the Canada Post registered or certified mail, return receipt requested,
postage prepaid and addressed,
|
| 10.1. |
in
the case of the Company to the following address: Gamestate Entertainment
Inc. #▇▇▇▇-▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇ Attention:
▇▇▇▇▇▇▇ ▇▇▇▇, CFO
|
| 10.2. |
or
to the Executive: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
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| 10.3. |
or
such other address as either party may have furnished to the other
in
writing in accordance herewith, except that a notice of change
of address
shall be effective only upon actual
receipt.
|
| 11. |
Successors.
This Agreement shall be binding on, and inure to the benefit of,
the
Company and its successors and assigns and any person acquiring,
whether
by merger, reorganization, consolidation, by purchase of assets
or
otherwise, all or substantially all of the assets of the
Company.
|
| 12. |
Non-alienation.
The interests of the Executive under this Agreement are not subject
to the
claims of his creditors, other than the Company, and may not otherwise
be
voluntarily or involuntarily assigned, alienated or
encumbered.
|
| 13. |
Waiver
of Breach.
The waiver by either the Company or the Executive of a breach of
any
provision of this Agreement shall not operate as or be deemed a
waiver of
any subsequent breach by either the Company or the Executive. Continuation
of payments hereunder by the Company following a breach by the
Executive
of any provision of this Agreement shall not preclude the Company
from
thereafter terminating said payments based upon the same
violation.
|
| 14. |
Severability.
It
is mutually agreed and understood by the parties that should any
of the
agreements and covenants contained herein be determined by any
court of
competent jurisdiction to be invalid by virtue of being vague or
unreasonable, including but not limited to the provisions of Sections
5, 6
and 7, then the parties hereto consent that this Agreement shall
be
amended retroactive to the date of its execution to include the
terms and
conditions said court deems to be reasonable and in conformity
with the
original intent of the parties and the parties hereto consent that
under
such circumstances, said court shall have the power and authority
to
determine what is reasonable and in conformity with the original
intent of
the parties to the extent that said covenants and/or agreements
are
enforceable.
|
| 15. |
Applicable
Law.
This Agreement shall be construed in accordance with the laws of
the
Province of British Columbia,
Canada.
|
| 16. |
Currency.
All
dollar amounts referred to in this Agreement are the currency of
the
United States of America and in US
Dollars.
|
| 17. |
Amendment.
This Agreement may be amended or cancelled by mutual Agreement
of the
parties in writing without the consent of any other
person.
|
| 18. |
Counterparts.
This Agreement may be executed in any number of counterparts, each
of
which when so executed and delivered shall be an original, but
all such
counterparts shall together constitute one and the same instrument.
Each
counterpart may consist of a copy hereof containing multiple signature
pages; each signed by one party hereto, but together signed by
both of the
parties hereto.
|
| 19. |
Arbitration
& Legal Fees.
The Executive and the Company in good faith negotiations for the
purpose
of reaching an amicable resolution shall discuss disputes arising
out of
or in connection with the interpretation and application of this
Agreement. Without prejudice to the Company's rights under Section
8 of
this Agreement, any such disputes which cannot be settled amicably
within
thirty (30) days after written notice by one party to the other
(or after
such longer period agreed to in writing by the parties), shall
thereafter
be settled by binding arbitration in Chicago, Illinois, to be conducted
pursuant to the rules and procedures then obtaining of the American
Arbitration Association and judgement on the award rendered in
such
arbitration may be entered in any court of competent
jurisdiction.
|
| 19.1. |
The
Executive is entitled to timely payments (not later than 30 calendar
days
after notice from the Executive) from the Company of reasonable
attorney
fees incurred by the Executive in the event of a dispute arising
out of or
in connection with the interpretation and application of this
Agreement.
|
| 20. |
Other
Agreements.
This Agreement constitutes the sole and complete Agreement between
the
Company and the Executive and supersedes all other agreements,
both oral
and written, between the Company and the Executive with respect
to the
matters contained herein, provided, however, that this Agreement
does not
supersede the Change in Control Agreement or Severance Plan. No
verbal or
other statements, inducements, or representations have been made
to or
relied upon by the Executive. The parties have read and understand
this
Agreement.
|
IN
WITNESS WHEREOF
the parties have executed this Agreement as of the day and year first above
written.
Gamestate
Entertainment, Inc. BPYA
966 Holdings Ltd.
Per:________________________ Per:_____________________________
Authorized
Signatory Authorized
Signatory