EMPLOYMENT AGREEMENT
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THIS made as of the 1st day of September, 1999.
BETWEEN:
E-FINANCIAL XXXXX.XXX, INC. with offices at 150 - 0000
Xxxxxxx Xxxx Xxxx, Xxxxxxx Xxxx, Xxxxxxxxxx, 00000
(hereinafter referred to as the "Company")
OF THE FIRST PART
AND:
XXXX X. XXXXXX, c/o 1005 - 000 Xxxx Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0
(hereinafter referred to as "Contractor")
OF THE SECOND PART
A. it has been understood and agreed between the Contractor and the Company
that an employment agreement would be drawn up and submitted to the
Contractor and the Company for approval; and
B. the Contractor and the Company now wish to formally record the terms and
conditions upon which the Contractor will continue to be employed by the
Company and that they have agreed to the terms and conditions set forth in
this Agreement, as evidenced by their execution hereof.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements herein contained and for other good and other valuable
consideration, the parties agree as follows:
1. Employment.
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The Contractor shall be employed by the Company in the position of, and shall
perform the functions of, President and Chief Executive Officer of the Company.
2. Term.
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The term of employment under this Agreement shall commence and shall continue
thereafter until terminated as hereinafter provided.
3. Inducement to Hiring
In consideration of the Contractor agreeing to enter into this Contract the
Company shall:
(a) issue to the Contractor 1,000,000 shares in the capital stock of the
Company, said shares being subject to restrictions under Rule 144; and
(b) grant to the Contractor an option to acquire 1,000,000 common shares
of the Company at a price of $1.25 per share, said option exercisable
for a term of 5 years and subject to "topping up" upon any partial
exercise in accordance with the terms of the option with any
subsequent options granted to have an exercise price equal to the
market price of the Company's shares at the time of such grants.
4. Salary.
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The Contractor shall receive a base salary of $150,000.00 U.S. Dollars, subject
to such annual increases as the board of directors of the Company shall
determine, together with such annual bonus based upon performance as shall, at
the sole discretion of the Company's compensation committee, be awarded.
5. Termination.
This Agreement may be terminated only as follows:
(a) by the death of the Contractor;
(b) by the Company upon six months' written notice if the Contractor
becomes unable to render or perform duties and responsibilities which
the Contractor is to discharge hereunder by reason of total or
permanent physical or mental disability;
(c) by the Contractor upon 30 days' written notice or such shorter period
as may be agreed to by the Company and the Contractor;
(d) by the Company in the circumstances in which there is no "cause" upon
the Company complying with the provisions of paragraphs 6, 7 and 8
hereof;
(e) by the Contractor in the circumstances and upon the terms described in
paragraph 10 hereof, whether or not there has been a "Change of
Control", as defined in paragraph 9 hereof.
For clarity, if the Company terminates the employment of the Contractor as a
result of the Contractor's refusal to physically relocate, the termination shall
not be for cause and the provisions of subparagraph 5(e) will apply. The
Company shall not dismiss the Contractor pursuant to subparagraphs 5(b), 5(c) or
5(e) unless such dismissal is specifically approved by the directors of the
Company.
6. Severance.
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If the employment of the Contractor is terminated:
(a) under subparagraph 5(e), other than as contemplated under (b), herein
the Company shall pay to the Contractor the following lump sum
severance payment:
(i) in circumstances where the Contractor has been employed by the
Company for more than two years but less than 3 1/2 years, an
amount equal to 9 months of base salary and monetary benefits
together with an amount equal to 3/4 of the most recent annual
bonus paid to the Contractor;
(ii) in circumstances where the Contractor has been employed by the
Company for more than 3 1/2 years but less than 4 years, an
amount equal to 12 months of base salary and monetary benefits
together with an amount equal to the most recent annual bonus
paid to the Contractor;
(iii)in circumstances where the Contractor has been employed by the
Company for more than 4 years but less than 5 years, an amount
equal to 15 months of base salary and monetary benefits together
with an amount equal to 1 1/4 times the most recent annual bonus
paid to the Contractor;
(iv) in circumstances where the Contractor has been employed by the
Company for more than 5 years, an amount equal to 18 months of
base salary and monetary benefits together with an amount equal
to 1 1/2 times the most recent annual bonus paid to the
Contractor;
(b) under subparagraph 5(e), as contemplated under paragraph 9, or under
subparagraph 5(e) in circumstances where a Change of Control (as
hereinafter defined) occurs within 120 days following the Contractor's
termination, the Company shall promptly pay to the Contractor a lump
sum severance payment in an amount equal to 18 months of base salary
and monetary benefits together with an amount equal to 1 1/2 times the
most recent annual bonus paid to the Contractor
7. Benefits.
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During the term of this Agreement the Contractor shall receive such executive
benefit plans and other compensation programs as the Company generally provides
its other salaried executives. If the employment of the Contractor is
terminated under subparagraphs 5(d) or 5(e) the Company shall continue to pay
contributions to the Contractor's medical, dental and health plans, pension or
group or individual RRSP plans and insurance, shall maintain executive loans and
continue to pay all privileges including automobile allowances and other
benefits generally available to other Contractor executives of the Company for a
period equal to the period of severance payments determined in accordance with
paragraph 6 hereof provided that, if the Contractor no longer qualifies for
inclusion in any medical, dental, health or other benefit plans of the Company,
the Company shall pay to the Contractor such amounts as are necessary for the
Contractor to arrange to obtain such benefits privately for the remainder of
such period.
8. Stock Options.
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If the employment of the Contractor is terminated under subparagraphs 5(d) or
5(e) then the term during which any option to purchase common shares of the
Company and the term during which any option to purchase common shares any other
corporation, if such option was granted to the Contractor in relation to the
Contractor's employment with the Company, shall be extended in every case to the
later of the expiry date of such options (collectively the "Options") and the
end of the period of severance payments determined in accordance with paragraph
6 hereof. In addition, any provisions which restricts the exercise of the
Options before a particular date shall be waived. Subject to required
regulatory approvals, if the exercise price of any option granted at the same
time as any option granted to the Contractor is reduced, the exercise price of
the option granted to the Contractor shall be reduced to the lowest price at
which common shares of the corporation granting the option may be purchased
pursuant to any repriced option. The terms of any option agreement shall be
deemed to be amended to reflect the provisions of this paragraph 8.
9. Change of Control.
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If a "Change of Control" (as hereinafter defined) occurs the Contractor may,
within 180 days of the effective date of the Change in Control, give notice (the
"Termination Election") to the Company that he has elected to treat the Change
of Control as a termination of this Agreement. The Company at that time shall
for all purposes be deemed to have terminated this Agreement without cause in
accordance with subparagraph 5(d) hereof and the Contractor shall be entitled to
the benefit of the provisions of paragraphs 6(b), 7 and 8 hereof. If no
Termination Election is received by the Company within 180 days of the effective
date of a Change of Control, the Contractor shall be deemed to have elected to
continue his employment with the Company under the terms of this Agreement
subject to the provisions of paragraph 10. For the purposes of this
subparagraph and subparagraph 5(e) of this Agreement, a "Change of Control" of
the Company shall have occurred when:
(a) any Person (as defined in the Securities Act (British Columbia), as
amended from time to time) or combination of Persons acquires or
becomes the beneficial owner of, directly or indirectly, whether
through the acquisition of previously issued and outstanding voting
securities or of voting securities which have not been previously
issued, or any combination thereof or any other transaction having a
similar effect, a sufficient number of securities of the Company to
affect materially the control of the Company or 20% or more of the
voting securities of the Company;
(b) any resolution is passed or any action or proceeding is taken with
respect to the liquidation, dissolution or winding-up of the Company;
(c) 20% or more of the issued and outstanding voting securities of the
Company become subject to a voting trust;
(d) the Company consolidates or merges with or into, amalgamates or enters
into a statutory arrangement with any other Person;
(e) the Company sells, leases or otherwise disposes of property or assets
aggregating more than 50% of the consolidated assets of the Company
measured by book or fair market value, whether pursuant to one or more
transactions;
(f) any Person not part of existing management of the Company or any
Person not controlled by the Company or any affiliate of the Company,
enters into any arrangement to provide all or substantially all the
management services to the Company;
(g) there shall be a change in a majority of the board of directors of the
Company whether as a result of a shareholders meeting or as a result
of appointments made in filling vacancies caused by resignations of
members of the board of directors; or
(h) the Company enters into any transaction or arrangement which would
have the same or similar effect as the transactions referred to in
(b),(d),(e) or (f) above.
10. Material Changes
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Subsequent to a Change of Control, the Contractor may by written notice to the
Company elect to terminate the Contractor's employment and the Contractor shall
be entitled to the benefit of the provisions of paragraphs 6(b),7 and 8 hereof
if there occurs within one year of a Change of Control one or more of the
following events:
(a) an adverse material change in the Contractor's duties and
responsibilities such that the Contractor is required to assume duties
that are not consistent with or relinquish responsibilities that are
consistent with, those performed by the Contractor prior to the Change
of Control;
(b) an adverse material change in the salary or benefits of the Contractor
from those received by the Contractor prior to the Change of Control;
(c) a diminution of the title of the Contractor as it exists immediately
prior to the Change in Control; or
(d) a change in the person or body to whom the Contractor reports
immediately prior to the Change of Control, except if such person is
of equivalent rank or stature or such change is as a result of the
resignation or removal of such persons, provided that this shall not
include a change resulting from a promotion in the normal course of
business.
11. Relocation Expenses.
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If the Contractor moved to California to accept employment with the Company and
if the Contractor has been resident in California for less than 12 months at the
time that the Contractor becomes entitled to a payment pursuant to paragraphs 6,
7 or 8 hereof as a result of the termination or deemed termination of employment
under subparagraph 5(d) or 5(e) or paragraph 10, the Company shall reimburse the
Contractor for all reasonable expenses incurred in relocating himself and his
immediate family and their household effects back to the location from which the
Contractor moved.
12. Business Expenses.
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The Contractor will be reimbursed by the Company for all reasonable business
expenses incurred by the Contractor in connection with his duties within
previously approved budgets upon submission of a monthly statement of expenses.
13. Vacation.
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The Contractor shall be entitled to periods of vacation during the term of this
Agreement upon terms and conditions as established by the Company (or any
assignee Company pursuant to Paragraph 12 hereof) and consistently applied for
its other salaried Contractors.
14. Disclosure of Information.
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The Contractor shall not, at any time during the employment of the Contractor by
the Company and/or at any time thereafter, directly or indirectly, disclose,
communicate, divulge, furnish or make accessible or available, in whole or in
part, to any person, firm, company, corporation or other entity, or use in any
fashion, other than in the discharge and performance of the duties and
responsibilities of the Contractor to the Company, any confidential information,
material or matter relating to the business of, or any other trade secrets of,
the Company or any firm, company, corporation or other entity related to the
Company (Company's Affiliates") obtained or acquired while in the employ of the
Company. The Contractor and the Company hereby specifically acknowledge and
agree that any information concerning (a) the business, operation or methods of
the Company and the Company's Affiliates, (b) the customers or clients of the
Company and the Company's Affiliates, (c) the past present or future research
done by the Company and the Company's affiliates, and (d) any method and/or
procedure relating to or pertaining to projects developed by the Company and the
Company's Affiliates or contemplated by the Company and the Company's
Affiliates, are of material importance and significance to the business of the
Company. Accordingly, the Contractor and the Company agree that all of the
above not readily available from an unrelated third part are to the maximum
extent permitted by law to be regarded as information or material which is of a
confidential nature; that trade secrets of the Company or the Company's
Affiliates shall be deemed to include any and all processes, equipment,
machinery, devices, techniques, methods, designs, inventions, materials, formula
and the like (whether patentable or not) used by the Company or the Company's
Affiliates in the conduct of its or their business, and all data, know-how,
drawings, plans, written instructions or other writings, relating or pertaining
thereto or to any other aspect of the business of the Company or the Company's
Affiliates, which are not in the "public domain" or not generally know
throughout the industry of which the Company of the Company's Affiliates are a
part; that any and all such confidential information, material or matter, or
trade secrets, from time to time disclosed, divulged, communicated, furnished or
made available to the Contractor is solely for the purpose of enabling the
Contractor to perform and discharge the duties and responsibilities of the
Contractor to the Company; that no such disclosure, divulgence, communication or
the like shall in any manner whatsoever be deemed or construed to derogate from
or affect any of the provision set forth herinabove; and that it is the specific
intent of the Company and the Contractor that each and all of the provision set
forth herein shall be valid and enforceable as specifically set forth herein.
If it shall be judicially determined that any of the provisions set forth herein
shall not be valid or enforceable as specifically set forth herein, such
provision shall not be declared invalid but rather shall be modified in such
manner so as to result in the same being valid and enforceable to the maximum
extent permitted by law. In the event of a breach or threatened breach by the
Contractor of the provisions of this Paragraph, the Company may, in addition to
any other remedies it may have, obtain injunctive relief in any court of
appropriate jurisdiction to enforce this Paragraph. The provisions of this
Paragraph shall survive the expiration or termination, for any reasons, of this
Agreement and shall be separately enforceable.
15. General
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(a) Assignment.
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The rights and obligations of the Contractor hereunder are not assignable. If
the Contractor has not elected to terminate the Contractor's employment in
accordance with the terms of this Agreement, this Agreement shall be assigned by
the Company to any successor corporation of the Company and shall be binding
upon such successor corporation. The Company shall ensure that the successor
corporation shall continue the provisions of this Agreement as if it were the
original party in place of the Company; provided however that the Company shall
not thereby be relieved of any obligation to the Contractor pursuant to this
Agreement. If there occurs a Change in Control, the Company shall be obligated
to ensure that the successor corporation honours this Agreement as if the
Contractor had exercised his maximum rights hereunder as of the effective date
of such transaction.
(b) Entire Agreement.
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This Agreement shall supercede and replace any prior contract of employment that
exists between the Company or any subsidiary of the Company and the Contractor.
(c) Independent Advice.
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This Agreement was prepared by the Company. The Contractor has been asked to
obtain independent legal advice before signing this Agreement and the Contractor
represents by signing this Agreement that he has either obtained such advice or
waived such advice.
(d) Controlling Law.
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The validity and construction of this Agreement or any of its provisions shall
be determined under the laws of the Province of British Columbia. The
invalidity or unenforceability of part or all of any provisions of this
Agreement shall not affect or limit the validity and enforceability of the
remainder of such provision and other provisions of this Agreement.
(e) Counterparts and by Facsimile.
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This Agreement may be executed in one or more counterparts, any counterpart
delivered via facsimile shall be deemed an original, and all such counterparts,
taken together, shall constitute one and the same instrument.
(f) Miscellaneous.
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This Agreement may not be changed orally, but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
(g) Headings.
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The headings herein are inserted only as a matter of convenience and reference,
and in no way define, limit or describe the scope of this Agreement or the
intent of the provisions thereof.
(h) Currency.
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All references to monetary amounts in this Agreement are to lawful money in
Canada.
(i) Damages.
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All payments provided for herein shall be in lieu of other notice or damage
claims as regards the dismissal or termination of employment with the Company or
any subsidiary of the Company of the Contractor after a Change in Control and
the arrangements provided for herein shall be considered in any judicial
determination of appropriate damages at common law for dismissal without cause,
other than as provided for in this Agreement.
(j) Beneficiaries.
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In the event that the Contractor dies prior to the satisfaction of all the
obligations of the Company under this Agreement, any remaining amounts payable
to the Contractor by the Company and any rights of the Contractor including,
without limitation, pursuant to the Options, shall be paid to or exerciseable by
the person or persons previously designated by the Contractor to the Company for
such purposes. Any such designation of beneficiaries shall be made in writing,
signed by the Contractor and dated and filed with the Secretary of the Company.
In the event that no designation is made, all such amounts shall be paid by the
Company to the estate of the Contractor.
(k) Further Assurances.
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Each of the Company and the Contractor agrees to make, do and execute or cause
to be made, done and executed all such further and other things, acts, deeds,
documents, assignments and assurances as may be necessary or reasonably required
to carry out the intent and purpose of this Agreement fully and effectually.
Without limiting the generality of the foregoing, the Company shall take all
reasonable steps in order to structure the payment or payments provided for in
this Agreement in the manner most advantageous to the Contractor with respect to
the provisions of the Income Tax Act (Canada) or similar legislation in place in
the jurisdiction of residence of the Contractor.
(l) Notices.
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Any election or designation to be made by the Contractor pursuant to the terms
of this Agreement shall be by notice in writing pursuant to the terms of this
Agreement shall be by notice in writing addressed to the attention of the
President of the Company and shall be delivered to the Company at its address
above, or such other address as the Company may notify the Contractor in
writing.
(m) Severability.
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Any provision of this Agreement which contravenes any applicable law or which is
found to be unenforceable shall, to the extent of such contravention or
unenforceability, be deemed severable and shall not cause this Agreement to be
held invalid or unenforceable or affect any other provision or provisions of
this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first written above.
Xxxx Xxxxxx E-FINANCIAL XXXXX.XXX, INC.
/s/ Xxxx Xxxxxx By /s/ Xxxx Xxxxxx
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(signature) President & CEO
X.X. Xxxxxx
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Name (Please print)
