EXHIBIT 10.5.8
MANAGEMENT SERVICES AGREEMENT BETWEEN INTERNATIONAL VERIFACT INC., LBT
INVESTMENTS, INC.
AND L. XXXXX XXXXXXX DATED AS OF MAY 8, 1996
THIS MANAGEMENT SERVICES AGREEMENT is made as of the 8th day of May, 1996.
B E T W E E N
INTERNATIONAL VERIFACT INC.,
a corporation continued under the laws of Canada,
(hereinafter referred to as the "Corporation")
OF THE FIRST PART
-and -
L.B.T. INVESTMENTS INC., a corporation
incorporated under the laws of the Province of
Ontario,
(hereinafter referred to as the "Manager")
OF THE SECOND PART
-and -
L. XXXXX XXXXXXX,
of the Town of Oakville, in the Province of Ontario,
(hereinafter referred to as the "Thomson")
OF THE THIRD PART
WHEREAS the Corporation desires to retain the Manager to provide certain
services to the Corporation, including the provision of Thomson to act in the
capacity of President and Chief Executive Officer of the Corporation;
AND WHEREAS the Manager is prepared to provide the services required by the
Corporation;
AND WHEREAS Thomson is prepared, at the request of the Manager, to accept
the appointment as President and Chief Executive Officer of the Corporation;
NOW THEREFORE in consideration of the premises and of the mutual covenants
and agreements hereinafter set forth and in consideration of the sum of Two
Dollars ($2.00) now paid by the Corporation to each of the Manager and Thomson
(the receipt and sufficiency of which is hereby acknowledged) and for other good
and valuable consideration, the parties agree as follows:
1. DEFINITIONS
(a) "CHANGE OF CONTROL" means the occurrence of both:
(i) the acquisition or continuing ownership of voting securities of the
Corporation and/or securities ("Convertible Securities") convertible into,
exchangeable for or representing the right to acquire voting securities of
the Corporation as a result of which a person, group of persons or persons
acting jointly or in concert, or persons associated or affiliated within the
meaning of the CANADA BUSINESS CORPORATIONS ACT with any such person, group
of persons or any of such persons acting jointly or in concert (collectively
the "Acquirors"), beneficially own securities of the Corporation and/or
Convertible Securities such that, assuming only the conversion, exchange or
exercise of Convertible Securities beneficially owned by the Acquirors, the
Acquirors would beneficially own securities that would entitle the holders
thereof to cast more than 30% of the votes attaching to all securities in
the capital of the Corporation that may be cast to elect directors of the
Corporation; and
(ii) election or appointment of three or more directors of the
Corporation who were not Incumbent Directors after the date of the Acquirors
acquired control as set forth in subsection 1(a)(i) above; and
a Change of Control shall be deemed to have occurred on the date that the last
of the three or more directors who were not Incumbent Directors are elected or
appointed.
(b) "INCUMBENT DIRECTOR" means any member of the Board of Directors of the
Corporation who was a member of the Board of Directors of the Corporation
immediately prior to a Change of Control and any successor to an Incumbent
Director who was recommended or elected or appointed to succeed any Incumbent
Director by the affirmative vote of a majority of the Incumbent Directors then
on the Board of Directors of the Corporation.
2. TERM
This Agreement shall be in effect immediately upon execution and shall
remain in effect until it is terminated as provided in section 6 hereafter.
3. APPOINTMENT, ACCEPTANCE AND DUTIES
(a) The Corporation hereby retains the Manager to provide to the Corporation
the services of Thomson who will act as the President and Chief Executive
Officer of the Corporation and the Manager agrees to provide such services.
During the currency of this Agreement, Thomson shall:
(i) report to the board of directors of the Corporation and shall devote
his full time and attention and his best efforts during normal business
hours to the business and affairs of the Corporation;
(ii) exercise the powers and authorities and fulfil the responsibilities
of his position honestly, diligently and faithfully to the best of his
abilities and in the best interests of the Corporation; and
(iii) use his best efforts to promote the interests and goodwill of the
Corporation.
(b) During the currency of this Agreement the Corporation and the Manager
agree that the Corporation shall, unless Thomson otherwise requests, ensure that
Thomson will be nominated by management of the Corporation as a director
thereof.
4. MANAGEMENT FEE
(a) For the provision of the services herein set forth, subject to review as
hereinafter provided the Corporation agrees to pay to the Manager an annual fee
of $225,000.00. The Manager agrees that it will provide invoices to the
Corporation on a monthly basis, in arrears, for one-twelfth of the then current
annual fee. The Corporation and the Manager agree that on or before October 1 in
each year during the currency of this Agreement, commencing on or before October
1, 1996, the annual fee shall be reviewed by the Manager and the board of
directors of the Corporation with a view to ensuring that the Manager's fee is
fair and reasonable considering the services to be provided and considering the
performance of Thomson in carrying out his obligations in the capacity of
President and Chief Executive Officer of the Corporation. It is understood and
agreed that in no event shall the annual fee to be paid to the Manager be
reduced without the Manager's prior written consent. The amount of any increase
in the annual fee shall be determined solely by the board of directors in their
absolute discretion.
(b) The Manager shall be entitled to receive a performance bonus of not less
than $50,000.00 during each calendar year of this Agreement. The Manager and the
board of directors shall determine the Manager's bonus program on or before
April 1 in each year for that calendar year and such program will be based upon
the Manager meeting reasonably set, measurable performance objectives approved
by the board of directors. The parties acknowledge and agree that the Manager is
presently operating under an interim arrangement with the Corporation and
participating in a bonus program for the year January 1,
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1996 to December 31, 1996. The Manager shall permit Thomson to participate in
such stock options plans as may from time to time be established for directors
and senior officers of the Corporation in such manner as the board of directors
of the Corporation may, in their absolute discretion, determine.
(c) The Manager shall submit monthly in arrears, in addition to the invoice
in respect of its fees, an invoice in respect of its reasonable expenses
actually and properly incurred by it in connection with carrying out its duties
hereunder which such expenses will include an amount (presently $1,000.00 per
month (the "automobile payment") plus reasonable operating and maintenance
expenses) as agreed by the Manager and the Corporation from time to time, in
respect of the provision of an automobile for Thomson. The Corporation agrees
that it shall reimburse the Manager for such expenses no later than the 15th day
of the month following the month in which the Manager submitted same.
(d) The Corporation shall permit Thomson to be registered with such health
benefit programs as the Corporation may implement from time to time on behalf of
its employees (which shall include at least life insurance, medical insurance,
disability insurance, dental insurance and a drug plan) and the Corporation will
reimburse the Manager for the costs of providing such benefits to Thomson.
(e) The Corporation shall reimburse the Manager for its costs in paying for
Thomson's annual membership or association fees for such trade and C.E.O.
associations as the Corporation and the Manager may agree (to an aggregate
maximum amount of $6,000.00 per year) and its costs in paying for Thomson's
annual fees in a social club (to a maximum of $3,000.00 per year).
5. VACATION
The Manager agrees that Thomson shall be entitled to only four weeks
vacation per year and that Thomson shall only take such vacation at the most
appropriate time considering the demands of the business of the Corporation and
taking into account the staffing requirements of the Corporation and the need
for the timely performance of the services to be provided pursuant to the terms
of this Agreement.
6. TERMINATION
(a) The Corporation may terminate this Agreement without notice or any
payment in lieu of notice for cause.
(b) This Agreement may immediately be terminated by the Corporation without
notice to the Manager if Thomson becomes permanently disabled. Thomson shall be
deemed to have become permanently disabled if in any year during the currency of
this Agreement, because of ill health, physical or mental disability, or for
other causes beyond control of Thomson, Thomson has been continuously unable or
unwilling or has failed to perform his duties for 120 consecutive days, or if,
during any year during the currency of this Agreement he has failed to perform
his duties for a total of 180 days, consecutive or not. The term "any year
during the currency of this Agreement" means any period of 12 consecutive months
during which the Agreement is in full force and effect.
(c) The Corporation may terminate this Agreement without notice upon the
death of Thomson.
(d) The Manager may terminate this Agreement on not less than 30 days'
notice to the Corporation.
7. TERMINATION PAYMENTS
(a) Upon termination of this Agreement for the reason set forth in
subsection 6(a) above, the Manager shall not be entitled to any termination
payment other than its fees calculated PRO RATA up to and including the date of
termination and payment of any outstanding amounts due under subsections 4(c),
4(d) and 4(e) hereof. Upon termination of this Agreement for any of the reasons
set forth in subsections 6(b), (c) or (d) above, the Manager shall be entitled
to its fees calculated PRO RATA up to and including the date of termination,
payment of any outstanding amounts due under subsections 4(c), 4(d) and 4(e)
hereof
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and the Corporation shall pay to the Manager its PRO RATA entitlement under the
then current bonus program.
(b) If this Agreement is terminated for any other reason, other than the
reasons set forth in Section 6 and subsection 7(c) does not apply, then the
Corporation shall forthwith pay to the Manager or as the Manager directs the
following:
(i) two times the aggregate of the annual fee (referred to in subsection
4(a)) and the performance bonus (referred to in subsection 4(b)) paid and/or
earned by the Manager in the year immediately preceding the year of
termination;
(ii) two times the total automobile payments referred to in subsection
4(c) paid in the year immediately preceding the year of termination;
(iii) two times the cost of providing the benefits referred to in
subsections 4(d) and 4(e) in the year immediately preceding the year of
termination; and
(iv) the cost of the Manager retaining on behalf of Thomson outplacement
services provided by the KPMG Management Consulting C.E.O. Program or an
equivalent firm acceptable to the Manager.
The termination payments described in this subsection are the only payments
the Manager will receive in the event of the termination of this Agreement for
the reasons contemplated in this subsection (b).
(c) In the event that at any time within one year of a Change of Control
this Agreement is terminated for any reason other than the reasons set forth in
Section 6, then notwithstanding subsection 7(b) hereof, the Corporation shall
forthwith pay to the Manager or as the Manager directs the following:
(i) three times the greater of:
A. the aggregate of the annual fee (referred to in subsection 4(a))
and the performance bonus (referred to in subsection 4(b)) for the year
immediately preceding the year in which this Agreement is terminated; and
B. the aggregate of the annual fee (as referred to in subsection
4(a)) and the performance bonus referred to in subsection 4(b)) for the
year immediately preceding the Change of Control; and
(ii) three times the total automobile payments referred to in subsection
4(c) paid in the year immediately preceding the year of termination;
(iii) three times the cost of providing the benefits referred to in
subsections 4(d) and 4(e) hereof in the year immediately preceding the year
of termination; and
(iv) the cost of the Manager in retaining on behalf of Thomson
outplacement services provided by the KPMG Management Consulting C.E.O.
Program or an equivalent firm acceptable to the Manager.
8. CONFIDENTIALITY AND NON-SOLICITATION
Each of the Manager and Thomson acknowledge and agree that:
(a) in the course of providing the services contemplated by this
Agreement and in particular in the case of Thomson performing his duties and
responsibilities as the Chief Executive Officer of the Corporation, each of
them has had and will continue in the future to have access to and has been
and will be entrusted with detailed confidential information and trade
secrets (printed or otherwise) concerning past, present, future and
contemplated products, services, operations, technology and marketing
techniques and procedures of the Corporation and its subsidiaries,
including, without
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limitation, information relating to addresses, preferences, needs and
requirements of past, present and prospective clients, customers, suppliers
and employees of the Corporation and its subsidiaries (collectively,
"Confidential Information"), the disclosure of any of which to competitors
of the Corporation or to the general public, or the use of same by the
Manager, Thomson or any competitor of the Corporation or any of its
subsidiaries, would be highly detrimental to the interests of the
Corporation;
(b) in the course of performing his duties and responsibilities for the
Corporation, Thomson has been and will continue in the future to be a
representative of the Corporation to its customers, clients and suppliers
and as such has had and will continue in the future to have significant
responsibility for maintaining and enhancing the goodwill of the Corporation
with such customers, clients and suppliers and would not have, except by
virtue of the provision of services pursuant to this Agreement, developed a
close and direct relationship with the customers, clients and suppliers of
the Corporation;
(c) Thomson, in acting in the capacity of the Chief Executive Officer of
the Corporation, owes fiduciary duties to the Corporation, including the
duty to act in the best interests of the Corporation;
(d) the right to maintain the confidentiality of the Confidential
Information, the right to preserve the goodwill of the Corporation and the
right to the benefit of any relationship that has developed between Thomson
and the customers, clients and suppliers of the Corporation by virtue of the
provision of service pursuant to this Agreement constitute proprietary
rights of the Corporation, which the Corporation is entitled to protect; and
(e) the Manager and Thomson shall forthwith transfer to the benefit of
the Corporation any rights and interest in any invention and discovery of
any process or technology related in any manner to the business of the
Corporation Thomson could imagine, conceive or create during the term of
this Agreement.
In acknowledgement of the matters described above and in consideration of the
payments to be paid to the Manager pursuant to this Agreement, the Manager and
Thomson hereby agree that they will not, directly or indirectly, disclose to any
person or in any way make use of (other than for the benefit of the
Corporation), in any manner, any of the Confidential Information, provided that
such Confidential Information shall be deemed not to include information that is
or becomes generally available to the public other than as a result of
disclosure by the Manager or Thomson.
9. NON-SOLICITATION
The Manager and Thomson hereby agree that they will not, during the currency
of this Agreement and for a period of three years after the termination of this
Agreement, be a party to or abet any solicitation of customers, clients or
suppliers of the Corporation or any of its subsidiaries, to transfer business
from the Corporation or any of its subsidiaries to any other person, or seek in
any way to persuade or entice any employee of the Corporation (except the person
who fills the position of Executive Assistant to the President and Chief
Executive Officer) or any of its subsidiaries to leave that employment or to be
a party to or abet any such action.
10. DISCLOSURE
During the currency of this Agreement, the Manager and Thomson shall
promptly disclose to the Board of Directors by written notice to the Secretary
full information concerning any interest, direct or indirect, of the Manager or
Thomson (as owner, shareholder, partner, lender or other investor, director,
officer, employees, consultant or otherwise) or any member of Thomson's family
in any business that is reasonably known to the Manager or to Thomson to
purchase or otherwise obtain services or products from, or to sell or otherwise
provide services or products to the Corporation or to any of its suppliers or
customers. Notwithstanding the foregoing it is agreed and acknowledged that both
the Manager and
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Thomson shall be entitled to engage in normal dealings with any customer of or
supplier to the Corporation and to invest in any public company provided that
any such investment does not exceed 5% of the outstanding securities of such
public company.
11. RETURN OF MATERIALS
All files, forms, brochures, books, materials, written correspondence,
memoranda, documents, manuals, computer disks, software products and lists
(including lists of customers, suppliers, products and prices) pertaining to the
business of the Corporation or any of its subsidiaries and associates that may
come into the possession or control of the Manager or Thomson shall at all times
remain the property of the Corporation or such subsidiary or associate, as the
case may be. On termination of this Agreement for any reason, the Manager and
Thomson agree to deliver promptly to the Corporation all such property of the
Corporation in their possession or directly or indirectly under their control.
The Manager and Thomson agree not to make for their own use or that of any other
party reproductions or copies of any such property or other property of the
Corporation.
12. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario.
13. NO ASSIGNMENT
This Agreement may not be assigned without the consent of all of the parties
hereto.
14. SURVIVAL
The parties agree and acknowledge that notwithstanding the termination of
this Agreement pursuant to section 6 hereof the provisions of section 8, 11 and
16 hereof shall survive in perpetuity and the provisions of section 9 shall
survive for three (3) years from the date of such termination.
15. SEVERABILITY
If any provision in this Agreement including the breadth or scope of such
provision, is determined to be invalid or unenforceable in whole or in part by
any court of competent jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remaining provisions, or part
thereof, of this Agreement and such remaining provisions, or part thereof, shall
remain enforceable and binding.
16. ENFORCEABILITY
The Manager and Thomson hereby confirm and agree that the covenants and
restrictions pertaining to them contained in this Agreement are reasonable and
valid and hereby further acknowledge and agree that the Corporation would suffer
irreparable injury in the event of any breach by the Manager or Thomson of their
obligations under any such covenant or restriction. Accordingly, each of the
Manager and Thomson hereby acknowledge and agree that damages would be an
inadequate remedy at law in connection with any such breach and that the
Corporation shall therefore be entitled in lieu of any action for damages,
temporary and permanent injunctive relief enjoining and restraining the Manager
and Thomson from any such breach.
17. SUCCESSORS
This Agreement shall be binding on and enure to the benefit of the
successors and permitted assigns of the Corporation and the Manager and the
heirs, executors, personal legal representatives and permitted assigns of
Thomson.
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18. NOTICES
Any notice or other communication required or permitted to be given
hereunder shall be in writing and either delivered by hand or telecommunications
facility or mailed by prepaid registered mail. At any time other than during a
general discontinuance of postal service due to strike, lock-out or otherwise, a
notice so mailed shall be deemed to have been received three business days after
the post-marked date thereof or, if delivered by hand or telecommunications
facility, shall be deemed to have been received at the time it is delivered. If
there is general discontinuance of postal service due to strike, lock-out or
otherwise, a notice sent by prepaid registered mail shall be deemed to have been
received three business days after the resumption of postal service. Notices
shall be addressed as follows:
(a) if to the Corporation:
International Verifact Inc.
00 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
(b) if to the Manager:
000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
(c) if to Thomson:
000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
19. LEGAL ADVICE
Thomson hereby represents and warrants to the Manager and to the Corporation
and acknowledges and agrees that he had the opportunity to seek and was not
prevented nor discouraged by the Corporation or the Manager from seeking
independent legal advice prior to the execution and delivery of this Agreement
and that, in the event that he did not avail himself with that opportunity prior
to signing this Agreement, he did so voluntarily without any undue pressure and
agrees that his failure to obtain independent legal advice shall not be used by
him as a defence to the enforcement of his obligations under this Agreement.
20. WAIVER OF BREACH
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
thereof.
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IN WITNESS THEREOF the parties have executed this Agreement.
INTERNATIONAL VERIFACT INC.
/s/
-----------------------------------------
Name:
Title:
L.B.T. INVESTMENTS INC.
/s/
-----------------------------------------
Name:
Title:
/s/ /s/ L. XXXXX XXXXXXX
------------------------------ -----------------------------------------
WITNESS L. XXXXX XXXXXXX
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