EXHIBIT 10.39
June 28, 2001
AGREEMENT REGARDING
CHANGE IN CONTROL
THIS AGREEMENT ("Agreement"), made and entered into this 28th day of
June, 2001 (the "Effective Date"), by and between Mackenzie Management Inc.,
(the "Company") and Xxxxxxx X. Xxxxxxx (the "Executive");
WITNESSETH THAT:
WHEREAS, a change in control of the Company is deemed to have occurred
on April 20, 2001 (the "Change in Control"); and
WHEREAS, the Company wishes to assure itself of the continuity of the
Executive's service after the Change in Control; and
WHEREAS, the Company and the Executive accordingly desire to enter into
this Agreement on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, IT IS HEREBY AGREED by and between the parties as follows:
1. Agreement Term. The "Agreement Term" shall begin on the
Effective Date and shall continue through April 20, 2003. Except for the
provisions of this Agreement, the Company confirms the continuation of the
Executive's employment on the same terms and conditions as currently exist.
During the Agreement Term, the Executive agrees to continue to perform the
duties and responsibilities of his position. Nothing in this Agreement shall
restrict the Executive's employment with the Company from being terminated at
any time, subject to the terms and conditions set out herein and compliance with
any applicable employment laws.
2. Termination. For purposes of this Agreement, the term
"Termination" shall mean termination of the employment of the Executive during
the Agreement Term (I) by the Company, for any reason other than death,
Permanent Disability, or Cause, or (II) by Constructive Discharge of the
Executive (as these terms are described below). For purposes of this Agreement:
(a) The Executive shall be considered "Permanently Disabled" during any
period in which (i) he has a physical or mental disability which
renders him incapable, after reasonable accommodation, of performing
his duties under this Agreement; and (ii) such disability is
-1-
reasonably expected to continue for at least ninety (90) days. In the
event of a dispute as to whether the Executive is Permanently Disabled,
the Company may refer the same to a licensed practicing physician of
the Company's choice and reasonably acceptable to the Executive, and
the Executive agrees to submit to such tests and examination as such
physician shall deem appropriate.
(b) The term "Cause" shall mean:
(i) A willful act by the Executive of dishonesty, theft, breach of
trust, or misappropriation of the property of the Company.
(ii) The willful and continued failure by the Executive to
substantially perform his duties according to the terms of his
employment (other than any such failure resulting from the
Executive's being Disabled) after a written demand for
substantial performance is delivered to the Executive by the
Chief Executive Officer of the Company or the Board of
Directors of the Company (the "Board"), which specifically
identifies the manner in which the Chief Executive Officer or
Board believes that the Executive has not substantially
performed his duties, or the willful engaging by the Executive
in illegal conduct which is materially and demonstrably
injurious to the Company.
For purposes of this Agreement, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to
be done, by the Executive in bad faith and without reasonable belief
that the Executive's action or omission was in the best interest of the
Company. For the avoidance of doubt, it is recited here that action by
the Executive or the Executive's failure to act shall not be considered
to be "willful" by reason of such action or failure to act reflecting
bad judgment by the Executive, and action by the Executive or the
Executive's failure to act shall not be considered to be "willful" by
reason of such action or failure to act resulting in the failure to
achieve performance objectives. Without limiting the foregoing, any act
or failure to act based on authority given pursuant to a resolution
duly adopted by the Board or based upon the advice of counsel for the
Company shall be conclusively presumed to be done or omitted by the
Executive in good faith and in the best interest of the Company. It is
also expressly understood that the Executive's attention to matters not
directly related to the business of the Company shall not provide a
basis for termination for Cause so long as the Board or the Chief
Executive Officer had approved such activities prior to or subsequent
to the Change in Control or such activities are not inconsistent with
activities carried on by the Executive prior to the Change in Control.
(c) The Executive will be considered to have been terminated by reason of
Constructive Discharge if the Executive resigns from the Company after
the occurrence of any one of
-2-
the following events, provided that the Executive has provided written
notice of the Company of the occurrence of such event and the Company
has not remedied or cured such event within fifteen (15) days after the
receipt of such notice:
(i) Any material alteration of the Executive's title, position,
duties, responsibilities or status with the Company which
existed immediately prior to the Change in Control, unless any
such alteration is clearly consistent with a promotion.
(ii) Any material change in the Executive's direct reporting
relationship from the reporting relationship in effect
immediately prior to the Change in Control unless such change
is clearly consistent with a promotion.
(iii) Any reduction in the Executive's annual base salary or target
bonus incentive opportunity under any bonus or incentive plan,
or any change in the basis upon which the Executive's salary
or bonus or incentive is determined, if the change could be
adverse to the Executive. For purposes of this Agreement, the
term "Benefits" shall include all benefit plans, policies,
programs, perquisites, entitlements, cash allowances, vacation
benefits, funds or arrangements and the employee share
purchase plan in which the Executive currently participates or
which are or become generally available from time to time to
senior management of the Company , and excluding share option
plans, which are dealt with under separate written agreements
(iv) Any failure by the Company to continue in effect any benefit,
bonus, profit sharing, incentive, remuneration or compensation
plan, stock ownership or purchase plan, life insurance,
disability plan, pension plan or retirement plan in which the
Executive is participating or entitled to participate
immediately prior to the Change in Control that would
adversely affect the Executive's participation in or reduction
the Executive's rights or benefits under any such plan, unless
any such action is in the ordinary course of business and does
not adversely affect the aggregate value of the benefits or
plans to the Executive or the Company provides a replacement
benefit or plan of equivalent value.
(v) Any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company.
(vi) Any refusal by the Company to continue to allow the Executive
to attend to work-related matters or engage in work-related
activities which, though not directly related to the Company's
business, are related to the industry and/or the function that
the Executive performs for the Company, provided that prior to
the happening
-3-
of the Change in Control, the Executive was permitted by the
Board or the Chief Executive Officer of the Company to attend
to or engage in.
(vii) Relocation of the Executive's place of employment more than 15
miles from the Company's base office in Boca Raton, Florida.
(viii) The failure of the Company to pay amounts owed to the
Executive when due.
(ix) Any request by the Company of the Executive to act in a manner
which is contrary to any applicable law or regulation.
Nothing in this Agreement shall prevent the Executive from voluntarily resigning
from employment upon 30 days' written notice to the Company under circumstances
which do not constitute Constructive Discharge. If the Executive becomes
employed by the entity into which the Company merged, or the purchaser of
substantially all of the assets of the Company, or a successor to such entity or
purchaser, the Executive shall not be treated as having terminated employment
for purposes of this Agreement until such time as the Executive terminates
employment with the successor (including, without limitation, the merged entity
or purchaser). If the Executive is transferred to employment with an Affiliate
(including a successor to the Company), such transfer shall not constitute a
termination of employment for purposes of this Agreement, provided that the
Affiliate agrees to assume this agreement and be substituted for the Company
under this Agreement.
3. Severance Payments. In the event of a Termination described in
paragraph 2, the Executive shall be entitled to the following:
(a) An amount equal to the Executive's annual base salary rate in effect
immediately prior to the date of Termination, payable as a lump sum in
cash no later than ten business days after the date of Termination.
(b) An amount, payable as a lump sum in cash no later than ten business
days after the date of Termination, equal to the average of the
Executive's bonus plus any profit sharing payments received during the
previous two fiscal years of the Executive's employment, except that,
for purposes of this clause 3(b), any amounts paid to the Executive
pursuant to Section 3(c) of this Agreement shall not be considered one
of the two most recent payments. If the Executive has been employed by
the Company for less than two fiscal years, the amount to be used for
purposes of this clause 3(b) shall be the amount of the individual
bonus plus profit sharing payment received by the Executive for the
first full fiscal year of employment with the Company.
-4-
(c) Payment of the bonus for the fiscal year in which Termination occurs,
based on the Executive's target bonus payable for such fiscal year,
payable as a lump sum in cash no later than ten business days after the
date of Termination; provided however, that it shall be subject to a
pro-rata reduction for the portion of the fiscal year following the
date of Termination.
(d) The Company shall reimburse the Executive, upon presentation of
appropriate invoices, to a maximum of U.S. $ 10,000 plus taxes, for
legal, financial, outplacement/relocation counseling , or other
professional advice obtained by the Executive in connection with the
cessation of the Executive's employment.
(e) The Company shall continue, to the extent it may do so legally and in
compliance with its benefit plans in existence from time-to-time, all
Benefits for a period of twenty-four months at a level equivalent to
those previously provided to the Executive immediately prior to the
date of Termination or prior to the date of the Change in Control,
whichever is greater; provided that, if the Company cannot continue any
particular Benefit, then the Company shall reimburse the Executive for
all reasonable expenses incurred by the Executive to replace such
Benefit for an equivalent duration. At the Executive"s option and
direction the Company shall pay to the Executive an amount equal to the
annual present value of the continuation of his Benefits. Upon
Executing this Agreement the Executive shall be provided with a
statement of the Benefits which he currently receives.
Notwithstanding the foregoing provisions of this Agreement, no payment will be
made or benefit provided under this paragraph 3 unless the Executive has signed
a general release in a form satisfactory to the Company of all claims in favor
of the Company, including affiliates, subsidiaries, parents, and their
respective officers, directors, and employees.
4. Mitigation. The amounts payable to the Executive pursuant to
this Agreement shall not be reduced in any respect in the event that the
Executive secures or the Executive does not pursue alternative employment
following termination of his employment, nor are such amounts subject to set-off
against any amounts which may be due or alleged to be due to the Company from
the Executive.
5. Tax Payments. If:
(a) any payment or benefit to which the Executive is entitled from the
Company, any affiliate, or trusts established by the Company or by any
affiliate (the "Payments," which shall include, without limitation, the
vesting of an option or other non-cash benefit or property) are more
likely than not to be subject to the tax imposed by section 4999 of the
Internal Revenue Code of 1986 or any successor provision to that
section; and
-5-
(b) reduction of the Payments to the amount necessary to avoid the
application of such tax would result in the Executive retaining an
amount that is greater than the amount he would retain if the Payments
were made without such reduction but after the reduction for the amount
of the tax imposed by section 4999;
then the Payments shall be reduced to the extent required to avoid application
of the tax imposed by section 4999. The Executive shall be entitled to select
the order in which payments are to be reduced in accordance with the preceding
sentence. Determination of whether Payments would result in the application of
the tax imposed by section 4999, and the amount of reduction that is necessary
so that no such tax would be applied, shall be made, at the Company's expense,
by the independent accounting firm employed by the Company immediately prior to
the occurrence of the Change in Control.
6. Protection of Proprietary Information.
(a) The Executive shall not at any time during his or her employment or at
any time thereafter, without consent of the Company, disclose to any
person any material confidential information obtained by the Executive
while employed by the Company unless the disclosure of such information
is required by law, or is made in connection with the proper
performance of the Executive's duties with the Company. For the
purposes of this Agreement, "confidential information" shall not
include any information (i) known generally to the public; or (ii)
accessible to a third party on an unrestricted basis.
(b) The Executive agrees that he or she will not, directly or indirectly,
during the Agreement Term while employed by the Company and for a
period of twelve (12) months from the date he or she ceases to be an
employee of the Company, for the benefit of any Business, solicit or
offer employment to any officer of the Company employed or engaged by
the Company at the time he or she ceased to be employed by the Company,
or who was an employee with the Company during the twelve (12) month
period immediately preceding such time, provided that, nothing in this
paragraph 5 shall restrict any recruitment by means of general
advertisement.
Nothing in this paragraph 6 shall be construed to adversely affect the rights
that the Company would possess in the absence of the provisions of such
paragraph.
7. Other Benefits. Except as may be otherwise specifically
provided in an amendment of this Agreement adopted in accordance with paragraph
14, in the event of a termination of employment during the Agreement Term, the
Executive shall not be eligible to receive any benefits that may be otherwise
payable to or on behalf of the Executive pursuant to the terms of any severance
pay arrangement of the Company (or any affiliate of the Company), including any
-6-
arrangement of the Company (or any affiliate of the Company) providing benefits
upon involuntary termination of employment.
8. Duties on Termination. If the Executive's termination of
employment with the Company occurs during the Agreement Term, then, subject to
the terms and conditions of this Agreement, during the period beginning on the
date of delivery of a notice of termination, and ending on the date of
termination, the Executive shall continue to perform his duties as set forth in
this Agreement, and shall also perform such services for the Company as are
necessary and appropriate for a smooth transition to the Executive's successor,
if any. Notwithstanding the foregoing provisions of this paragraph 8, the
Company may suspend the Executive from performing his duties under this
Agreement following the delivery of a notice of termination providing for the
Executive's resignation, or delivery by the Company of a notice of termination
providing for the Executive's termination of employment for any reason;
provided, however, that during the period of suspension (which shall end on the
Executive's date termination), the Executive shall continue to be treated as
employed by the Company for other purposes, and his rights to compensation or
benefits shall not be reduced by reason of the suspension.
9. Definitions. For purposes of this Agreement, the following
terms shall be defined as indicated:
- The term "Affiliate" shall mean the Company and any of its "affiliates"
as that term is defined in the Exchange Act.
- The term "Company" shall mean Mackenzie Investment Management, Inc. and
shall include any corporation, partnership, joint venture, or other
entity that succeeds to the interests of Mackenzie Investment
Management, Inc. by means of a merger, consolidation, or other
restructuring.
- The term "Exchange Act" shall mean the Securities Exchange Act of 1934.
- The term "Parent" shall mean Mackenzie Financial Corporation, Inc. and
shall include any corporation, partnership, joint venture, or other
entity that succeeds to the interests of Parent Company, Inc. by means
of a merger, consolidation, or other restructuring.
- The term "Parent Affiliate" shall mean Parent and any of its
"affiliates" as that term is defined in the Exchange Act.
- The term "person" shall mean any person as defined in Section 3(a)(9)
of the Exchange Act, as such term is modified in Sections 13(d) and
14(d) of the Exchange Act, other than (1) any employee plan established
by the Company or an Affiliate, (2) the Company or an Affiliate, (3) an
underwriter temporarily holding securities pursuant to an offering of
such
-7-
securities, or (4) a corporation owned, directly or indirectly by
stockholders of the Company in substantially the same proportions as
their ownership of the Company.
10. Withholding. All payments to the Executive under this
Agreement will be subject to all applicable withholding of applicable taxes.
11. Assistance with Claims. The Executive agrees that, for the
period beginning on the Effective Date, and continuing for a reasonable period
after the Executive's termination of employment with the Company, the Executive
will assist the Company and the Affiliates and the Parent Affiliates in defense
of any claims that may be made against the Company, the Affiliates and the
Parent Affiliates and will assist the Company, the Affiliates and the Parent
Affiliates in the prosecution of any claims that may be made by the Company, the
Affiliates and the Parent Affiliates, to the extent that such claims may relate
to services performed by the Executive for the Company, the Affiliates and the
Parent Affiliates . The Executive agrees to promptly inform the Company if he
becomes aware of any lawsuits involving such claims that may be filed against
the Company, the Affiliates and the Parent Affiliates. The Company agrees to
provide legal counsel to the Executive in connection with such assistance (to
the extent legally permitted), and to reimburse the Executive for all of the
Executive's reasonable out-of-pocket expenses associated with such assistance,
including travel expenses. For periods after the Executive's employment with the
Company terminates, the Company agrees to provide reasonable compensation to the
Executive for such assistance. The Executive also agrees to promptly inform the
Company if he is asked to assist in any investigation of the Company, the
Affiliates and the Parent Affiliates (or their actions) that may relate to
services performed by the Executive for the Company, the Affiliates and the
Parent Affiliates, regardless of whether a lawsuit has then been filed against
the Company, the Affiliates and the Parent Affiliates with respect to such
investigation.
12. Equitable Remedies. The Executive acknowledges that the
Company would be irreparably injured by a violation of paragraph 6, and he or
she agrees that the Company, in addition to any other remedies available to it
for such breach or threatened breach, shall be entitled to a preliminary
injunction, temporary restraining order, or other equivalent relief, restraining
the Executive from any actual or threatened breach of paragraph 6. If a bond is
required to be posted in order for the Company to secure an injunction or other
equitable remedy, the parties agree that said bond need not be more than a
nominal sum.
13. Nonalienation. The interests of the Executive under this
Agreement are not subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors of the Executive or the Executive's beneficiary.
14. Amendment. This Agreement may be amended or canceled only by
mutual agreement of the parties in writing without the consent of any other
person. So long as the
-8-
Executive lives, no person, other than the parties hereto, shall have any rights
under or interest in this Agreement or the subject matter hereof.
15. Applicable Law. The provisions of this Agreement shall be
construed in accordance with the laws of the State of Florida, without regard to
the conflict of law provisions of any state.
16. Severability. The invalidity or unenforceability of any
provision of this Agreement will not affect the validity or enforceability of
any other provision of this Agreement, and this Agreement will be construed as
if such invalid or unenforceable provision were omitted (but only to the extent
that such provision cannot be appropriately reformed or modified).
17. Obligation of Company. Except as otherwise specifically
provided in this Agreement, nothing in this Agreement shall be construed to
affect the Company's right to modify the Executive's position or duties,
compensation, or other terms of employment, or to terminate the Executive's
employment.
18. Waiver of Breach. No waiver by any party hereto of a breach of
any provision of this Agreement by any other party, or of compliance with any
condition or provision of this Agreement to be performed by such other party,
will operate or be construed as a waiver of any subsequent breach by such other
party of any similar or dissimilar provisions and conditions at the same or any
prior or subsequent time. The failure of any party hereto to take any action by
reason of such breach will not deprive such party of the right to take action at
any time while such breach continues.
19. Successors, Assumption of Contract. This Agreement is personal
to the Executive and may not be assigned by the Executive without the written
consent of the Company. However, to the extent that rights or benefits under
this Agreement otherwise survive the Executive's death, the Executive's heirs
and estate shall succeed to such rights and benefits pursuant to the Executive's
will or the laws of descent and distribution; provided that the Executive shall
have the right at any time and from time to time, by notice delivered to the
Company, to designate or to change the beneficiary or beneficiaries with respect
to such benefits. This Agreement shall be binding upon and inure to the benefit
of the Company and any successor of the Company.
20. Notices. Notices and all other communications provided for in
this Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid
(provided that international mail shall be sent via overnight or two-day
delivery), or sent by facsimile or prepaid overnight courier to the parties at
the addresses set forth below. Such notices, demands, claims and other
communications shall be deemed given:
-9-
(a) in the case of delivery by overnight service with guaranteed next day
delivery, the next day or the day designated for delivery;
(b) in the case of certified or registered U.S. mail, five days after
deposit in the U.S. mail; or
(c) in the case of facsimile, the date upon which the transmitting party
received confirmation of receipt by facsimile, telephone or otherwise;
provided, however, that in no event shall any such communications be deemed to
be given later than the date they are actually received. Communications that are
to be delivered by the U.S. mail or by overnight service or two-day delivery
service are to be delivered to the addresses set forth below:
to the Company:
Mackenzie Investment Management
000 X Xxxxxxx Xxx
Xxxxx 000
Xxxx Xxxxx, Xx.
00000
or to the Executive:
Mackenzie Investment Management
000 X Xxxxxxx Xxx
Xxxxx 000
Xxxx Xxxxx, Xx.
00000
All notices to the Company shall be directed to the attention of Chairman of the
Board of the Company, with a copy to the Secretary of the Company. Each party,
by written notice furnished to the other party, may modify the applicable
delivery address, except that notice of change of address shall be effective
only upon receipt.
21. Legal and Enforcement Costs and Indemnification. The Company
agrees to pay, to the fullest extent permitted by law, all reasonable legal and
other professional fees and expenses which the Executive may incur as a result
of any contest (regardless of the outcome thereof) by the Company or others of
the validity or enforceability of or liability under the Agreement, or as a
result of any proceeding reasonably brought by the Executive to enforce the
Executive's rights under this Agreement. The Company agrees to indemnify the
Executive and save the Executive harmless from and against all claims, demands,
costs (including legal costs and disbursements)
-10-
incurred in respect of any matter or any civil, criminal or administrative
action or proceeding to which the Executive is made a party by reason of having
been an employee, director or officer of the Company or of any affiliate or
subsidiary. The Executive shall be entitled to coverage under a directors and
officers liability insurance policy maintained by the Company or its Affiliates
to the extent that such coverage may be obtained at a reasonable cost to the
Company.
22. Survival of Agreement. Except as otherwise expressly provided
in this Agreement, the rights and obligations of the parties to this Agreement
shall survive the termination of the Executive's employment with the Company.
23. Entire Agreement. This Agreement supersedes any and all prior
agreements and representations, whether written, oral, expressed or implied
pertaining to the cessation of the Executive's employment and the circumstances
set out in paragraph 3 (relating to Severance Payments).
24. Counterparts. This Agreement may be executed in two or more
counterparts, any one of which shall be deemed the original without reference to
the others.
IN WITNESS THEREOF, the Executive has hereunto set his hand, and the
Company has caused these presents to be executed in its name and on its behalf,
all as of the Effective Date.
/s/ XXXXXXX X. XXXXXXX
-----------------------
Xxxxxxx X. Xxxxxxx
Mackenzie Investment Management, Inc.
By /s/ XXXXX X. XXXXXXX
------------------------------------
Xxxxx X. Xxxxxxx
Its President & CEO
-11-
