Consulting Agreement - China Broadband Corp. and M. H. Financial Management Ltd.
THIS AGREEMENT made effective April 1, 2001 (the "Effective Date").
CHINA BROADBAND CORP., a body corporate, incorporated pursuant to the
laws of the State of Nevada, United States of America
(hereinafter referred to as the "Corporation")
OF THE FIRST PART
- and -
M. H. FINANCIAL MANAGEMENT LIMITED, a body corporate, incorporated
pursuant to the laws of the Province of Alberta
(hereinafter referred to as the "Consultant")
OF THE SECOND PART
WHEREAS the Corporation wishes to engage the services and expertise of
the Consultant on the terms and conditions hereinafter set forth, and the
Consultant wishes to accept such an engagement;
NOW THEREFORE in consideration of the covenants of each of the parties
given to the other and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
1.1 Effective as of the Effective Date, the Corporation engages the
Consultant and the Consultant accepts an engagement with the
Corporation to render the consulting services for the Corporation as
set out in Schedule A. During the term of this Agreement, the
Consultant shall provide the services of Matthew Heysel who shall
devote such of his time, attention and abilities to the business of the
Corporation as may be necessary for the proper exercise of the
Consultant's duties hereunder. Nothing in this Agreement shall be
interpreted or construed as creating or establishing a relationship of
employer and/or employee between the Corporation and Matthew Heysel.
2.1 The Consultant shall devote reasonable time and effort to the
performance of this Agreement. The Corporation acknowledges that the
Consultant and Matthew Heysel shall also be entitled to render services
to others during the term hereof.
2.2 The Consultant's duties shall be to provide the services more
particularly set forth on Schedule "A" hereto.
The Corporation agrees to pay the Consultant as set out in Schedule "B"
4.1 This Consultant acknowledges the Corporation will have reporting and
disclosure obligations under all applicable securities legislation. The
Consultant covenants and agrees that it shall not any time, during or
after the termination of the Consultant's engagement by the
Corporation, reveal, divulge, or make known to any person (other than
the Corporation or its affiliates) or use for its own account any
customer's lists, trade secrets, or secret or confidential information
used by the Corporation or its Affiliates during the Consultant's
engagement by any of them and made known (whether or not with the
knowledge and permission of the Corporation, whether or not developed,
devised or otherwise created in whole or in part by the efforts of the
Consultant, and whether or not a matter of public knowledge unless as a
result of authorized disclosure) to the Consultant by reason of its
engagement by the Corporation of any of its Affiliates. The Consultant
further covenants and agrees that all knowledge and information, which
is acquired or developed for the Corporation or any of its Affiliates
by the Consultant, is the property of the Corporation. The Consultant
further covenants and agrees that it shall retain all such knowledge
and information which it shall acquire and develop during such
engagement respecting such customer lists, trade secrets and secret or
confidential information in trust for the sole benefit of the
Corporation, its affiliates, and their successors and assigns.
4.2 The Consultant shall promptly communicate and disclose to the
Corporation all observations made and data obtained by it in the course
of its engagement by the Corporation. All written materials, records
and documents created by the Consultant or coming into its possession
concerning the business or affairs of the Corporation or any of its
Affiliates shall, upon the termination of this Agreement, promptly be
returned to the Corporation. Upon the request of the Corporation until
termination of its engagement by the Corporation, the Consultant shall
render to the Corporation or to any Affiliate designated by it such
reports of the activities undertaken by the Consultant or conducted
under the Consultant's direction for the Corporation and its Affiliates
as the Corporation may request.
4.3 The Consultant warrants and represents that it is duly qualified to
perform its duties hereunder, and further covenants that in performing
its duties hereunder, it will not engage in activity that is in
violation of applicable securities laws or subject the Corporation to
4.4 The Consultant agrees that for a period of one (1) year after the
termination of work with the Corporation, it will not do any business
whatsoever with clients of the Corporation for substantially similar
5.1 This Agreement shall be for a term commencing April 1, 2001 and
terminating September 30, 2001.
5.2 This Agreement may, by the mutual agreement of the parties, be renewed
for a further term of five (5) years, or for such other term as may be
5.3 In the event the Corporation terminates this Agreement, the Corporation
shall pay to the Consultant as a genuine pre-estimate of damages and
not as a penalty $60,000 (US) at the time of the termination. If at the
time of any such termination, the Consultant is in fundamental breach
of this Agreement, the Corporation shall not be required to pay any
6. CHANGE OF CONTROL AND SALE OF CORPORATION
6.1 The Corporation acknowledges the valuable services that the Consultant
has provided and will continue to provide to the Corporation in
providing the services of Matthew Heysel in his capacity as an officer
thereof and an authorized representative thereof.
6.2 The Corporation acknowledges that in the event of a change of control
of the Corporation or a sale of all or substantially all of the assets
of the Corporation, there is a possibility that the service of the
Consultant would no longer be required and that this contract might be
6.3 The directors of the Corporation have determined that it would be in
the best interests of the Corporation to induce the Consultant to
provide the services of Matthew Heysel to the Corporation by indicating
that, in the event of a change of control of the Corporation, the
Consultant would have certain automatic and guaranteed rights.
6.4 In the event of a takeover of the control of the Corporation or a sale
of all or substantially all of the assets of the Corporation during the
term of this Contract, the Corporation agrees that the Consultant shall
be paid five percent (5%) of the value of the sale of the assets or of
the value of the transaction which constitutes a takeover of the
Corporation, as the case may be, such amount to be paid within ten (10)
days of the sale of the assets or the takeover of the Corporation, as
the case may be.
6.5 "Takeover of the control of the Corporation" means:
(a) any change in the holding, either direct or indirect, of shares of
the Corporation, or any reconstruction, reorganization,
recapitalization, consolidation, amalgamation, merger, arrangement
or other transaction, that results in a person who was, or a group
of persons acting in concert who were, not previously in a
position to exercise effective control of the Corporation (or any
Associate or Affiliate of any such person or group of persons),
being in a position to exercise such effective control either in
respect of the Corporation or the successor to the Corporation
(and for the purposes of this Agreement, a person or group of
persons acting in concert, or any Associate or Affiliate of any
such person or group of persons, holding shares of the
Corporation, or shares of the successor to the Corporation, in
excess of the number that would entitle the holders thereof to
cast twenty (25%) percent or more of the votes attaching to all
shares of the Corporation, or to shares of the successor to the
Corporation, shall be deemed to be in a position to exercise
effective control of the Corporation, or the successor to the
Corporation, as the case may be); and
(b) the exercise of such effective control to cause or result in the
election or appointment of two or more directors of the
Corporation, or of the successor to the Corporation, who were not
previously directors of the Corporation.
Any notices delivered or received between either party shall be deemed
to have been received:
(a) if it was delivered in person, on the date it was delivered;
(b) if it was sent by electronic facsimile transmission, on the date
it was delivered;
(c) it was sent by mail, on the day it was received to the following
CHINA BROADBAND CORP.
2080, 440 - 2nd Avenue SW
Calgary AB T2P 5E9
Attention: Chairman and CEO
By Facsimile: (403) 265-8808
M. H. FINANCIAL MANAGEMENT LIMITED
624 Wilderness Drive S.E.
Calgary, AB T2J 1Z2
Attention: Matthew Heysel
By Facsimile: (403) 225.2198
8. MODIFICATION OF AGREEMENT
Any modification of this Agreement must be made in writing signed by
the Consultant and an officer of the Corporation or it shall have no
effect and shall be void.
9. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Alberta, Canada and the parties agree to
attorn to the jurisdiction of the courts of the Province of Alberta.
The headings utilized in this Agreement are for convenience only and
are not to be construed in any way as additions or limitations of the
covenants and agreements contained in this Agreement.
11. ENTIRE AGREEMENT
The covenants in this Agreement shall be construed as an agreement
independent of any other provision in this Agreement. The parties
acknowledge that it is their intention that the provisions of this
Agreement be binding only to the extent that they may be lawful under
the existing applicable laws and in the event that any provision of
this Agreement is determined by a court of law to be overly broad or
unenforceable, the remaining valid provisions shall remain in full
force and effect. This Agreement constitutes the sole agreement between
the parties hereto for services to be performed as herein described and
the mutual covenants contained herein constitute due and adequate
consideration for the full performance by each party of its obligations
under this Agreement and any and all previous agreements, written or
oral, expressed or implied, between the parties or on their releases
and forever discharges the other of and from all manner of action,
causes of action, claims or demands whatsoever under or in respect of
12. GENERAL MATTERS
12.1 The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any
subsequent breach of the same or of any other provisions of this
12.2 This Agreement shall be binding upon the parties hereto and shall enure
to the benefit of and be enforceable by each of the parties hereto and
their respective successors and assigns.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the 30th day of April, 2001.
CHINA BROADBAND CORP. M. H. FINANCIAL MANAGEMENT
per: /S/ THOMAS MILNE per: /S/ MATTHEW HEYSEL
o Provide the services of Chairman and Chief Executive Officer of
the Corporation and, in this regard, to have responsibility for
the supervision, direction, control and operation of the
Corporation with the obligation, duty, authority and power to do
all acts and things as are customarily done by persons holding the
position of Chairman and Chief Executive Officer in corporations
of similar size to the Corporation and to do all acts and things
as are reasonably necessary for the efficient and proper operation
and development of the Corporation.
o As full consideration for performance of the services by the
Consultant, the Corporation shall pay the Consultant at the rate
of $500.00 (U.S.) per day to a minimum of $10,000.00 (U.S.) for
each month for which services are provided. The said rate shall
not, in any event, be less than $750.00 (Cdn.) per day to a
minimum of $15,000.00 (Cdn) per month and shall be inclusive of
all claims by the Consultant for its services, but shall be
exclusive of GST and of travel expenses incurred by the Consultant
and properly claimable in accordance with the provisions hereof.
o The Corporation shall not be required to provide any benefits to
the Consultant including, without limitation, dental, medical,
disability or life insurance.
o The Consultant shall submit invoices to the Corporation for each
month or portion thereof for which services are provided during
the period covered by the invoice and also including any proper
claim for travel expenses. Each invoice shall indicate the period
covered, the month or portion of a month worked, the rate and the
total charge for consultancy services. GST, if applicable, shall
be shown separately and the Consultant's GST registration number
shall be shown on each invoice.
o The Corporation will reimburse the Consultant, at actual cost, for
out-of-pocket expenses incurred in accordance with the
Corporation's standard practice for the reimbursement of
reasonable travel expenses incurred by its contractors or its own
personnel. The Corporation will also reimburse the Consultant for
any reasonable long distance telephone, fax or photocopying
charges incurred by the Consultant. Expenses claimed must be
supported by the applicable receipts.
o The Consultant will be responsible for the payment of the income
taxes of all of its employees including, without limitation,
Matthew Heysel, as well as Canada Pension Plan premiums and any
and all other taxes and contributions imposed by law with respect
to such employees, with the sole exception of GST. In the event
the Consultant should fail to make any such payments, the
Consultant indemnifies the Corporation for any claims, causes or
action, or liabilities which may be made, advanced or incurred
against the Corporation as a result of such non-payment, and
agrees to be responsible for the Corporation's solicitor-client
costs in defending or protecting itself.
o The Corporation will pay all proper invoices received from the
Consultant promptly following receipt of the applicable invoice
and any necessary supported documentation.
o The Consultant will be entitled to participate (at the discretion
of the Corporation) in any bonus program of the Corporation
resulting from achieving milestones in the business of the
Corporation (such as commercial stage of development in 10 or more
cities, 1 million or more subscribers, revenue in excess of U.S.
$100 million per year, or strategic alliances and partnerships
with other companies to significantly enhance the products and
services of the Corporation).
o The Corporation will, if it determines it to be necessary in its
total discretion, ensure that appropriate liability insurance
coverage is provided to Matthew Heysel at no cost to the
Consultant or to Matthew Heysel, which coverage should be the same
in all material respects as insurance coverage provided to
Directors and Officers of the Corporation.
o In any dispute arising from the enforcement of this Agreement, the
Corporation shall pay all reasonable legal fees and expenses
incurred by the Consultant in contesting or disputing the position
of the Consultant or seeking to obtain enforcement of or retaining
any right of payment or benefit provided for in this Agreement.