Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 13th day of May, 2005
BETWEEN:
COREL INC.
(the "Corporation")
- AND -
XXXXX XXXXXXXXX
(the "Executive")
RECITAL:
WHEREAS The Corporation and the Executive wish to enter into this
Agreement to set out the rights and obligations of each of them respecting the
Executive's continued employment with the Corporation.
AND WHEREAS this Agreement shall replace and supersede all previous
employment agreements including the Employment Agreement dated December 1, 2004.
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 Corporation and
the Executive agree as follows:
1. DEFINITIONS
In this Agreement,
1.1 "Accommodation and Travel Expenses" means the amounts referred to in
sections 4.2, 4.3 and 4.4;
1.2 "Agreement" means this agreement as it may be amended from time to
time;
1.3 "Affiliate" has the meaning attributed to such term in the Business
Corporations Act (Ontario) as the same may be amended from time to
time and any successor legislation thereto, and includes an Associate;
1.4 "Associate" has the meaning attributed to such term in the Business
Corporations Act (Ontario) as the same may be amended from time to
time and any successor legislation thereto;
1.5 "Benefits" has the meaning set out in section 6;
1.6 "Board" means the Board of Directors of Corel Corporation;
1.7 "Business" means the bus iness development, marketing or sale of
computer software for office productivity or graphics;
1.8 "Commencement Date" means May 13, 2005;
1.9 "Confidential Information" means all information, intellectual
property (including trade secrets) and facts relating to and used or
proposed to be used in the Business of the Corporation and its
Affiliates, acquired by the Executive during any period in which the
Executive was affiliated with the Corporation in the capacity of an
employee, director or shareholder which is confidential based upon its
nature or the circumstances surrounding its disclosure, and includes,
without limiting the generality of the foregoing, information:
(i) relating to the Corporation's or an Affiliate's products and
services or to the Corporation's or a Affiliate's research and
development projects or plans;
(ii) relating to the Corporation's or an Affiliate's trade secrets,
technology, patentable and unpatentable inventions, discoveries,
processes, test procedures and results, records, specifications,
data, formulations, know-how, samples, specimens, manufacturing
processes and regulatory information;
(iii) relating to the Corporation's or an Affiliate's business
policies, strategies, operations, finances, plans or
opportunities, including the identity of, or particulars about,
the Corporation's or an Affiliate's clients or suppliers;
1.10 "Date of Termination" has the meaning set out in section 7.1 of this
Agreement;
1.11 "Disability" means the mental or physical state of the Executive such
that:
(i) subject to applicable human rights legislation, due to illness,
disease, mental or physical disability or similar cause, the
Executive cannot substantially perform his duties as an employee,
officer or director of the Corporation or any of its
Subsidiaries, as applicable;
(ii) a court of competent jurisdiction has declared the Executive to
be mentally incompetent or incompetent to manage his affairs;
(iii) the Executive is eligible for, has applied for, and has been
accepted for long-term disability benefits under the
Corporation's long-term disability plan; or
(iv) an attorney pursuant to a continuing power of attorney for
personal care or similar instrument is appointed to manage the
affairs of the individual due to the Execctive's mental
incompetence;
1.12 "Just Cause" means:
(i) theft, fraud, dishonesty or willful misconduct by the Executive
involving the property, business or affairs of the Corporation,
or the carrying out of the Executive's duties;
(ii) the breach by the Executive in any material respect of the
Executive's employment agreement; or
(iii) any other conduct that would be determined by the courts of
Texas to constitute misconduct;
1.13 "Good Reason" means any of the following, unless consented to by the
Executive:
(i) a material reduction in the Executive's titles, reporting
relationships, powers, authority, duties or responsibilities; or
(ii) a material reduction in the Executive's annual base salary,
benefits and perquisites.
1.14 "Salary" has the meaning set out in section 3.1.
2. EMPLOYMENT OF THE EXECUTIVE
2.1 The Corporation shall continue to employ the Executive, and the
Executive shall continue to serve the Corporation, in the position of
Chief Operating Officer of the Corporation for the Term of this
Agreement subject to termination pursuant to section 7;
2.2 While employed by the Corporation:
(a) The Executive shall report to the Chief Executive Officer of
Corel Corporation and the Board and shall perform such duties,
have such responsibilities and exercise such powers and
authorities as are
assigned to him by the Chief Executive Officer and the Board from
time to time; and
(b) The Executive shall devote the whole of his business time,
attention and ability to the Business;
(c) The Executive shall work on a remote basis from Dallas, Texas,
however Executive acknowledges that he will be required to spend
up to 50% of his time traveling to the Minneapolis, UK, and
Ottawa offices to attend to meetings required to run the
business.
(d) For as long as the Executive remains ordinarily resident in Texas
and submits US tax returns accordingly, the Corporation agrees
that it will cover costs incurred to calculate any incremental
cross border employment tax obligations incurred by Executive by
virtue of his employment with the Corporation and that the
Corporation will make such payments as are required to compensate
the Executive for any such incrementalobligation such that the
Executive's after tax compensation is equalized to the level as
if Executive had worked 100% of the time in Texas.
2.3 This Agreement replaces all previous agreements between the Executive
and the Corporation (and its Affiliates, Associates and their
predecessors and assignors) and the Executive hereby expressly waives
all rights he would otherwise have under any such previous agreements,
including the right to any severance benefits, benefits on change of
control, and, for the period following March 1, 2005, any salary or
incentive compensation, under said previous agreements.
3. REMUNERATION
Commencing and effective as of the Commencement Date, the remuneration of
the Executive for services hereunder shall be as follows:
3.1 The Executive shall receive an annual gross salary (before deduction
for income taxes and other required deductions) of USD $260,000, which
shall be reviewed periodically and which may be increased at the
discretion of the Board (the "Salary"), payable in accordance with the
policy of the Corporation for payments of salary to senior management.
The Salary shall be effective March 1, 2005;
3.2 The Executive shall also be eligible for an incentive bonus component
of USD $130,000, (subject to statutory withholdings and deductions).
The incentive bonus shall prorated for the fiscal year 2005 and will
be based upon the successful realization of targets set on a periodic
basis by Corporation. The incentive bonus shall be effective from
March 1, 2005. The terms and conditions related to the calculation of
the incentive bonus component, including the calculation of any
payment of same prior to or
following termination, shall be governed in accordance the incentive
bonus plan.
All payments in respect of 3.1 and 3.2 will be made by bank credit
transfer.
3.3 The Executive acknowledges that the granting of options is made only
to full time employees, solely at Corporation's discretion and subject
to the terms and conditions of any grant and of Corporation's stock
option plan in effect, from time to time.
3.4 The Executive shall be entitled to participate in benefits as are
enjoyed from time to time generally by Employees in accordance with
the established practices and policies of the Corporation as the
Corporation may in its absolute discretion create from time to time.
In this regard, the Corporation acknowledges having received a
description of the benefits in force as of the date hereof.
4. EXPENSES.
4.1 The Corporation shall reimburse the Executive for all reasonable
out-of-pocket expenses incurred by the Executive while employed by the
Corporation in the performance of his duties under this Agreement
(including attendance at industry, financing and other conferences
relevant to the Executive's performance of his duties hereunder), in
accordance with the Corporation's policy for reimbursement of
expenses, upon presentation of receipts or such other supporting
documentation as the Corporation may reasonably require
4.2 The Corporation shall provide accommodation in Ottawa of the
Executive's choosing, for the sole use by the Executive and his
family, subject to the following. The Corporation shall offset the
first $3,000 CDN per month for costs incurred for Executive's
accommodation, utilities and furniture, Should a furnished
accommodation not be available, Corporation shall provide a one-time
reimbursement of $10,000 CDN to be used by the Executive to furnish
suitable accommodations and the offset described above shall reduce to
$2,500 CDN per month. Except as provided for in the foregoing, any
additional expense related to the accommodation and furniture shall be
borne by the Executive.
4.3 The Executive shall be reimbursed for travel expenses for family
members who join or accompany the Executive on business related trips
and to return there from, including travel to and from Ottawa, to a
maximum of USD $10,000 per calendar year.
4.4 The Executive shall be reimbursed for ground transportation costs
incurred while in Ottawa to a maximum of $500 CDN per month.
5. VACATION
The Executive shall be entitled while employed by the Corporation to 4
weeks vacation with pay per year, in accordance with its normal practices.
Vacation shall be taken by the Executive at such time as may be reasonably
acceptable to the Corporation having regard to its operations.
6. BENEFITS
While the Executive is employed by the Corporation, the Corporation shall
provide to the Executive the benefits made generally available to its senior
executives, save and except any long term incentive, profit sharing, option or
similar plan, other than as expressly set out in this Agreement (the
"Benefits"). The Benefits shall be provided in accordance with and subject to
the terms and conditions of the applicable fund, plan or arrangement relating
thereto in effect from time to time.
7. TERMINATION
7.1 The employment of the Executive shall terminate or be terminable:
(a) by retirement or resignation on not less than 1 months written
notice, of the Executive;
(b) by the Corporation at any time on written notice to the Executive
for Just Cause;
(c) by the Corporation or the Executive at any time on written notice
because of the occurrence of Disability;
(d) automatically upon the death of the Executive;
(e) by the Corporation at any time on written notice without Just
Cause;
(f) by the Executive on written notice for Good Reason; or
(g) by the Executive, within six (6) months of the hire date of a new
CEO, and on three (3) months written notice from the Executive.
8. PAYMENTS ON TERMINATION OF EMPLOYMENT
8.1 If the employment of the Executive is terminated for retirement or
resignation, pursuant to section 7.1 (a), the Executive will receive
payment
for Salary, incentive bonus, and accrued but unused vacation owing on
the Date of Termination
8.2 If the employment of the Executive is terminated for Just Cause,
pursuant to section 7.1 (b), the Executive will receive payment for
Salary and accrued but unused vacation owing on the Date of
Termination.
8.3 If the employment of the Executive is terminated at any time by the
Corporation for Disability pursuant to section 7.1(c), by the death of
the Executive pursuant to section 7.1 (d) without Just Cause pursuant
to section 7.1(e), or by resignation for Good Reason pursuant to
section 7.1(f), the following provisions shall apply conditional on
the Executive (or the Executive's legal representative in the case of
termination by reason of death) providing a full and final release to
the Corporation in the form attached hereto as Schedule A:
(a) The Corporation shall pay to the Executive, immediately following
the Date of Termination, if not already paid, the Executive's
Salary owing at the Date of Termination and any accrued but
unused vacation in accordance with the Corporation's policy,
(b) The Corporation shall pay to the Executive forthwith following
the Date of Termination, a lump sum payment in USD equivalent
(less deduction for income taxes and other required deductions)
to six (6) month's annual Salary.
(c) The Executive shall continue to receive health benefits to the
extent the Corporation is permitted by the terms of the relevant
benefit plan(s) to provide such health benefits for six (6)
months following the date of termination and, to the extent the
Corporation is not so permitted, the Corporation shall make a
payment equal to the cost to the Corporation of such benefits for
said period;
(d) The Corporation shall reimburse expenses incurred by the
Executive on or prior to the Date of Termination for which the
Executive would be entitled to reimbursement but for the
termination of his employment hereunder;
(e) The Executive shall continue to be reimbursed and/or receive, as
the case may be, the Accommodation and Travel Expenses, to the
extent that same are incurred, for six (6) months following the
date of termination; and
(f) The Executive is not obligated to mitigate his damages or to seek
alternative employment. The payments refereed to in section 8.3
shall not be reduced if the Executive obtains alternate
employment following termination.
8.4 If the employment of the Executive is terminated by at any time by the
Executive, pursuant to section 7.1(g), the following provisions shall
apply conditional on the Executive providing the requisite notice and
executing a full and final release to the Corporation in the form
attached hereto as Schedule A:
(a) The Corporation shall pay to the Executive, immediately following
the Date of Termination, if not already paid, the Executive's
Salary owing at the Date of Termination and any accrued but
unused vacation in accordance with the Corporation's policy,
(b) The Corporation shall pay to the Executive forthwith following
the Date of Termination, a lump sum payment in USD equivalent
(less deduction for income taxes and other required deductions)
to three (3) month's annual Salary.
(c) The Executive shall continue to receive health benefits to the
extent the Corporation is permitted by the terms of the relevant
benefit plan(s) to provide such health benefits for three (3)
months following the date of termination and, to the extent the
Corporation is not so permitted, the Corporation shall make a
payment equal to the cost to the Corporation of such benefits for
said period;
(d) The Corporation shall reimburse expenses incurred by the
Executive on or prior to the Date of Termination for which the
Executive would be entitled to reimbursement but for the
termination of his employment hereunder;
(e) The Executive shall continue to be reimbursed and/or receive, as
the case may be, the Accommodation and Travel Expenses, to the
extent that same are incurred, for three (3) months following the
date of termination; and
(f) The Executive is not obligated to mitigate his damages or to seek
alternative employment. The payments refereed to in section 8.4
shall not be reduced if the Executive obtains alternate
employment following termination.
8.5 The Executive acknowledges and agrees that the provisions of this
section 8 are in satisfaction of and substitution for any and all
statutory and common law rights, including without limitation, any
right to reasonable notice of termination.
9. RESIGNATION AS A DIRECTOR AND OFFICER
On the Executive ceasing to be an employee of the Corporation for any
reason, the Executive shall forthwith resign as a director and officer of the
Corporation and all of its Affiliates (unless such position is established
through a shareholder agreement or other contractual right).
10. NON-COMPETITION AND NON-SOLICITATION
10.1 The Executive shall not, during his employment and for the period
ending 12 months after the Date of Termination, directly or indirectly
in any manner whatsoever including either individually, or in
partnership, jointly or in conjunction with any other person, or as
principal, agent, owner, consultant, contractor, executive, officer,
director, advisor or shareholder:
(a) be engaged in any undertaking;
(b) have any financial or other interest (including an interest by
way of royalty or compensation arrangements) in or in respect of
the business of any person which carries on a business; or
(c) advise, render or provide services to, lend money to or guarantee
the debts or obligations of any person which carries on a
business;
in any province of Canada or any state of the United States, if, at
the relevant time, the Corporation is carrying on business in such
state or province, which is the same as or which competes in any
material respect with the Business or any material part thereof
carried on by the Corporation or any of its Affiliates on the Date of
Termination or within the preceding 6 months;
10.2 The Executive shall not, during his employment and for the period
ending 24 months after the Date of Termination, directly or indirectly
employ or retain as an independent contractor any employee of the
Corporation or any of its Affiliates or induce or solicit, or attempt
to induce, any such person to leave his or her employment;
10.3 Nothing in this Agreement shall prevent the Executive from owning not
more than 5% of any class of securities of an entity, the securities
of which are listed on a recognized stock exchange or traded in the
over the counter market in Canada, which carries on a business which
is the same as or which competes with the business of the Corporation
or any of its Affiliates.
11. CONFIDENTIALITY
11.1 The Executive agrees that all Confidential Information is the property
of the Corporation or its Affiliates and that he shall keep the
Confidential Information secret and confidential and shall not use
(other than in
connection with his employment with the Corporation or any of its
Affiliates) or disclose to any person, directly or indirectly, any
Confidential Information at any time hereafter, provided, however,
that nothing in this section shall preclude the Executive from
disclosing or using 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 or other governmental regulatory or
arbitral body which is determining the rights of the parties
under this Agreement;
11.2 The Executive acknowledges and agrees to return to the Corporation,
upon the termination of his employment under this Agreement all
records, books, samples, paper, notes or other documents or assets
belonging to the Corporation or any Affiliate or relating to their
business and to return any written Confidential Information;
11.3 The Executive further acknowledges and agrees that the obligations
under this section 11 and shall exist and continue in full force and
effect notwithstanding any breach or repudiation, or alleged breach or
repudiation, of or termination of this Agreement by the Corporation;
11.4 For greater certainty, the Corporation acknowledges that this section
11 is not intended to apply to the skill, expertise, know-how and
experience of the Executive gained in the performance of his
employment or with respect to any skill, expertise, know-how and
experience the Executive obtained prior to or outside his employment
or directorship duties with the Corporation.
12. INTELLECTUAL PROPERTY
The Executive hereby assigns the Corporation his entire right, title and
interest in any invention, work or formula, whether patentable or not or
copyrightable or not, which is conceived or made solely by the Executive or
jointly by the Executive and any other person or persons prior to termination of
the Executive's employment and which relates in any manner to the Business,
research or other activities of the Corporation or which is suggested by or
results from any task assigned to or performed by the Executive on behalf of the
Corporation. The Executive covenants and agrees that (i) he shall promptly
disclose to the Corporation any invention or work covered by this paragraph,
(ii) if requested by the Corporation, he shall promptly execute a specific
assignment of title to the Corporation for such invention or work, and (iii) he
shall take all reasonable actions necessary to assist the Corporation, at the
Corporation's expense, to
secure patent or copyright protection in the United States, Canada and in
foreign countries.
13. REMEDIES
The Executive acknowledges that a breach or threatened breach by the
Executive of any provision of any of sections 10, 11 or 12 of this Agreement
shall result in the Corporation and/or its Affiliates suffering irreparable harm
which cannot be calculated or fully or adequately compensated by the recovery of
damages alone. Accordingly, the Executive agrees that the Corporation and/or its
Affiliates shall be entitled to (and the Executive shall not argue or take a
position that the Corporation or any Affiliate shall not suffer irreparable
harm) interim, interlocutory and permanent injunctive relief, specific
performance and other equitable remedies, in addition to any other relief to
which the Corporation and/or its Affiliates may become entitled.
14. NOTICE
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be given by facsimile or other means of
electronic communication or by delivery by hand as hereinafter provided. Any
such notice or other communication, if mailed by registered mail, shall be
deemed to have been received on the day such mail is delivered by the post
office, 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 time 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. In the event of a general discontinuance
of postal service due to strike, lock-out or otherwise, notices or other
communications shall be delivered by hand or sent by facsimile or other means of
electronic communication and shall be deemed to have been received in accordance
with this section. Notices and other communications shall be addressed as
follows:
(a) if to the Executive:
Xxxxx Xxxxxxxxx
0000 Xxxxxxxxx
Xxxxxxx, XX
00000
(b) if to the Corporation:
Corel Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx KIZ 8R7
Attention: General Counsel
Telecopier No: (000) 000-0000
15. ASSIGNMENT
This Agreement shall be assignable by the Corporation, but shall not be
assignable by the Executive.
16. 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.
17. 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 the subject
matter of this Agreement 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 the Corporation or its directors, officers and agents
to the Executive, 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.
18. 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.
19. CURRENCY
All amounts in this Agreement shall be paid in currency expressly noted.
For payments to be received under this agreement in US Dollars, in the event
that the Executive's compensation or other remuneration or reimbursement of
these US Dollar amounts are required to transferred to a Canadian payroll system
or otherwise paid in any currency other than US Dollars, the Executive shall
receive an amount in such other currency taking into consideration the then
prevailing exchange rate applicable to US currency conversion from the other
currency.
20. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of Texas.
21. SEVERABILITY AND JUDICIAL MODIFICATION
IF any provision of this Agreement is held by a court or arbitration panel
of competent jurisdiction to be enforceable only if modified, such holding shall
not affect the validity of the remainder of this Agreement, the balance of which
shall continue to be binding upon the parties hereto with any such modification
to become a part hereof and treated as though originally set forth in this
Agreement. The parties further agree that any such court or arbitration panel is
expressly authorized to modify any such unenforceable provision of this
Agreement in lieu of severing such unenforceable provision from this Agreement
in its entirety, whether by rewriting the offending provision, deleting any or
all of the offending provision, adding additional language to this Agreement, or
by making such other modifications as it deems warranted to carry out the intent
and agreement of the parties as embodied herein to the maximum extent permitted
by law. The parties expressly agree that this Agreement as so modified by the
court or arbitration panel shall be binding upon and enforceable against each of
them. In any event, should one or more of the provisions of this Agreement be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions hereof, and
if such provision or provisions are not modified as provided above, this
Agreement shall be construed as if such invalid, illegal or unenforceable
provisions had never been set forth herein.
22. 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. Counterpart signature pages may be
delivered by facsimile.
23. ACKNOWLEDGEMENT
Each of the Corporation and the Executive acknowledges that:
(a) he or it has had sufficient time to review and consider this Agreement
thoroughly;
(b) he or it has read and understands the terms of this Agreement and his
or its obligations hereunder;
(c) he or it was afforded the opportunity to retain independent legal
advice concerning the interpretation and effect of this Agreement; and
(d) this Agreement is entered into voluntarily and without any pressure.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date
first written above.
(c) he or it was afforded the opportunity to retain independent legal
advice concerning the interpretation and effect of this Agreement; and
(d) this Agreement is entered into voluntarily and without any pressure.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date
first written above.
COREL INC.
BY: /s/ Xxxxx Xxxxx
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SIGNED, SEALED & DELIVERED )
IN THE PRESENCE OF )
)
)
/s/ Xxxx Xxxxx ) /s/ Xxxxx Xxxxxxxxx
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WITNESS ) EXECUTIVE
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XXXX XXXXX )
WITNESS NAME (PRINTED) )
