EMPLOYMENT AGREEMENT
Exhibit
10.4
This EMPLOYMENT AGREEMENT
(the
"Agreement"), made as of December 1, 2005, by and between Sea Sun Capital Corp.,
a Delaware corporation (together with its subsidiaries, the "Company"), and
Xxxxxx Xxxxxxxxxx, a resident of Oakville Ontario (the "Employee").
WITNESETH
WHEREAS,
Employee desires to serve the Company as its President and Chief Executive
Officer.
WHEREAS,
the parties desire to provide that the Employee be employed by the Company
under
the terms of this Agreement.
NOW
THEREFORE in consideration of the mutual benefits to be derived from this
Agreement, the Company and the Employee hereby agree as follows:
1. Term
of Employment: Office and Duties:
1.1. Employee’s
term of employment under this Agreement shall commence as of the date hereof
(the "Effective Date") and, subject to the terms hereof, shall terminate on
such
date (the "Termination Date") which is the earlier of (i) December 31, 2008
or
(ii) the termination of Employee’s employment pursuant to this Agreement (the
period from the Effective Date until the Termination Date shall be the "Term").
The Termination Date (and the Term) shall automatically be extended for an
additional year on December 31, 2008 and on each subsequent last day of the
Company's fiscal year thereafter unless (a) Employee’s employment has been
terminated prior to such day, or (b) not later than sixty (60) days prior to
such day, either party to this Agreement shall have given written notice to
the
other party that he or it does not wish to extend further the Termination Date
(and the Term).
1.2. The
Employee shall devote substantially all of his working time to the business
and
affairs of the Company other than during vacations of four weeks per year and
periods of illness or incapacity; provided, however, that nothing in this
Agreement shall preclude the Employee from devoting time required: (i)
delivering lectures or fulfilling speaking engagements; or (ii) engaging in
charitable and community activities; or (iii) from managing any passive
investment made by him in publicly traded equity securities or other property
(provided that no such investment may exceed 5% of the equity of any
publicly traded entity, without the prior approval of the Company's Board of
Directors) or from serving, subject to the prior approval of the Company's
Board
of Directors, as a member of boards of directors or as a trustee of any other
corporation, association or entity, provided, however, that such activities
do
not interfere with the performance of his duties hereunder. For purposes of
the
preceding sentence, any required approval shall not be unreasonably withheld.
2.
Compensation
and Benefits
2.1. Base
Salary.
The
Company shall pay the Employee a base salary ("Base Salary") at the rate of
US$225,000 per annum during the Term and shall commence when the company is
adequately capitalized as determined by the Board of Directors; provided,
however, that commencing on October 31, 2006, the Compensation Committee of
the
Company's Board of Directors (the "Compensation Committee") shall, and each
year
thereafter shall, review the Employee's annual Base Salary for potential
increase; however, Employee’s right to annual increases shall not be
unreasonably denied, and the Base Salary shall not be decreased at any time
during the Term. Base Salary shall be payable in accordance with the ordinary
payroll practices of the Company. Any increase in Base Salary shall constitute
"Base Salary" hereunder.
2.2.
Bonus.
Employee will be entitled to receive an annual bonus (“the “Annual Bonus”),
payable each year subsequent to the issuance of final audited financial
statements, but in no case later than 120 days after the end of the Company’s
most recently completed fiscal year. The final determination on the amount
of
the Annual Bonus will be made by the Compensation Committee of the Board of
Directors, based primarily on mutually agreed upon criteria, established with
respect to the ensuing fiscal year, within thirty (30) days of the end of each
fiscal year. In the event that the applicable criteria cannot be mutually agreed
upon by the Compensation Committee and the Employee, such criteria shall be
established by majority vote of the entire Board of Directors. The Compensation
Committee may also consider other more subjective factors in making its
determination. The targeted amount of the Annual Bonus shall be 100% of the
Employee’s base salary, which shall be deemed fully earned if Employee meets
substantially all of the mutually agreed upon criteria specified above. The
actual Annual Bonus for any given period may be higher or, if Employee fails
to
meet substantially all of the above-specified criteria, lower than 50%.
Specifically, the Compensation Committee will give consideration to Earnings
Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), to EBITDA less
Capital Expenditures, and to other traditional criteria for determining
operating performance. The Compensation Committee may also consider other more
subjective factors in making its determination. Notwithstanding anything herein
to the contrary, Employee shall be entitled to receive an Annual Bonus of 50%
of
the Employee’s base salary if in any fiscal year the Company receives net
proceeds from a financing in the amount of at least $5,000,000, and Employee
shall be entitled to receive an Annual Bonus of 100% of the Employee’s base
salary if in any fiscal year the Company receives net proceeds from a financing
in the amount of at least $10,000,000.
2.3.
Stock
Option Awards.
As of
the Effective Date of this agreement, Employee shall receive an option to
purchase 400,000 shares of the Company’s common stock; par value $0.01 per share
(the “Common Stock”) at an exercise price equal to $0.75 per share; the other
terms and conditions of such award shall be governed by the terms of a
stock option award agreement which will be drafted by the Company. On the first
business day of each of the Company's 2007, and 2008 fiscal years (in each
case
so long as the Termination Date has not occurred), the Company shall award
Employee an additional option to acquire 100,000 shares of Company Common Stock
at an exercise price equal to the market price of Company Common Stock on the
date of the grant; the other terms and conditions of such awards shall be
governed by the terms of a stock option award agreement in a form substantially
similar to that then used by the Company. The options awarded pursuant to this
Section 2.3 shall be for a term of ten (10) years and shall vest in one-half
increments beginning on the first anniversary of the date of the award and
annually thereafter until fully vested. The vesting of the Employment Option
shall accelerate upon a change in control of the Company as defined in Rule
405
of the Securities Act of 1933 or upon sale of substantially all of the assets
of
the Company or the merger out of existence of the Company provided that Employee
is still in the employ of the Company or has not been terminated in
contemplation of such transaction.
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2.4.
Withholding
and Employment Tax.
Payment
of all compensation hereunder shall be subject to customary withholding tax
and
other employment taxes as may be required with respect to compensation paid
by
an employer/corporation to an employee.
2.5.
Employee
Medical, Health And Dental Plans.
The
Company shall provide the Employee and his family during the Term of his
employment with full medical, health and dental coverage, which is commensurate
with similar sized companies.
2.6.
Disability.
The
Company shall, to the extent such benefits can be obtained at a reasonable
cost,
provide the Employee with disability insurance benefits at least as favorable
to
the Employee as those being provided to other senior executives of similar
sized
companies. In the event of the Employee’s Disability (as hereinafter defined),
the Employee and his family shall continue to be covered by all of the Company’s
life, medical, health and dental plans, at the Company’s expense, to the extent
such benefits can be obtained at a reasonable cost, for the term of such
Disability (as hereinafter defined) in accordance with the terms of such plans.
2.7.
Death.
The
Company shall, to the extent such benefits can be obtained at a reasonable
cost,
provide the Employee with life insurance benefits at least as favorable to
the
Employee as those being provided to other senior executives of similar sized
companies, however the policy shall not be less than one million US dollars
(US$1,000,000). In the event of the Employee’s death, the Employee’s family
shall continue to be covered by all of the Company’s medical, health and dental
plans, at the Company’s expense, to the extent such benefits can be obtained at
a reasonable cost, for twenty-four (24) months following the Employee’s death in
accordance with the terms of such plans.
2.8.
Vacation.
Employee shall receive four (4) weeks of vacation annually, administered in
accordance with the Company’s vacation policy.
3. Business
Expenses
3.1. Expenses.
Employee is authorized to incur reasonable expenses in carrying out his duties
and responsibilities under this Agreement, including, without limitation,
expenses for travel and similar items related to such duties and
responsibilities. The Company will reimburse Employee for all such expenses
upon
presentation by Employee, from time to time, of accounts of such expenditures
(appropriately itemized and approved consistent with the Company's
policy).
3.2. Automobile
Expenses.
Use of,
and the payment of all reasonable expenses (including, without limitation,
insurance, repairs, maintenance, fuel and oil) for, an automobile. The monthly
lease payment or allowance for such automobile shall be a minimum of $750 per
month and is to be reviewed by the Compensation Committee on an annual
basis.
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4. Termination
of Employment.
4.1. Termination
by the Company Not for Cause or by Employee for Good Reason.
(a) The
Company may terminate Employee’s employment at any time for any reason. If
Employee’s employment is terminated prior to the Termination Date, as that date
may be extended from time to time under the terms of Section 1.1 hereof, (i)
by
the Company (other than for Cause (as defined in Section 4.2(c) hereof) or
by
reason of Employee’s death or Permanent Disability (as defined in Section 4.2(d)
hereof)), or (ii) by the Employee for Good Reason (as defined in Section 4.1(c)
hereof) prior to the Termination Date, Employee shall receive the following
items and payments:
(i)
An
amount (the "Termination Amount") in lieu of any Bonus in respect of all or
any
portion of the fiscal year in which such termination occurs and any other cash
compensation, which Termination Amount shall be payable in a single lump sum
within thirty (30) days following the date of such termination. The Termination
Amount shall consist of an amount equal to the sum of (x) [two (2) times
Employee’s Base Salary for the fiscal year immediately preceding the year in
which such termination occurs] plus (y) [two (2) times Employee’s Bonus for the
fiscal year immediately preceding the year in which such termination
occurs];
(ii)
Employee shall be entitled to receive a cash lump sum payment in respect of
accrued but unused vacation days (the "Vacation Payment") and to Base Salary
earned but not yet paid (the "Compensation Payment");
(iii)
Any
then unvested restricted stock and/or time-vesting stock option awards
previously granted to Employee by the Company, including, without limitation,
those grants set forth in Sections 2.3 hereof, shall become immediately
one-hundred percent vested; and
(iv)
Any
other benefits due to Employee pursuant to the terms of any employee benefit
plan or policy maintained generally for employees or a group of management
employees.
(b) The
Vacation Payment and the Compensation Payment shall be paid by the Company
to
Employee within 30 days after the termination of Employee’s employment by check
payable to the order of Employee or by wire transfer to an account specified
by
Employee.
(c) For
purposes of this Agreement, "Good Reason" shall mean any of the following
(without Employee’s express prior written consent):
(i) Any
material breach by the Company of this Agreement, including any material
reduction by the Company of Employee’s, title, duties or responsibilities
(except in connection with the termination of Employee’s employment for Cause,
as a result of Permanent Disability, as a result of Employee’s death or by
Employee other than for Good Reason); or
(ii) A
reduction by the Company in Employee’s Base Salary, other than a reduction which
is part of a general salary reduction program affecting senior Employees of
the
Company generally; or
(iii) Any
change by the Company of the Employee’s place of employment to a location more
than fifty (50) miles from the Company's headquarters.
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4.2 Discharge
for Cause; Voluntary Termination by Employee; Termination Because of Death
or
Permanent Disability.
(a) The
Company shall have the right to terminate the employment of Employee for Cause.
In the event that Employee’s employment is terminated prior to the Termination
Date (i) by the Company for Cause, or (ii) by Employee other than (A) for Good
Reason or (B) as a result of the Employee’s Permanent Disability or death,
Employee shall only be entitled to receive the Compensation Payment and the
Vacation Payment. Employee shall not be entitled, among other things, to the
payment of any Bonus in respect of all or any portion of the fiscal year in
which such termination occurs, but shall be entitled to the payment of any
unpaid bonus earned with respect to any prior fiscal year. After the termination
of Employee’s employment under this Section 4.2, the obligations of the Company
under this Agreement to make any further payments, or provide any benefits
specified herein, to Employee shall thereupon cease and terminate.
(b) If
Employee’s employment is terminated as a result of Employee’s Permanent
Disability or death:
(i) Employee
shall be entitled to receive the annual bonus described in Section 2.2 hereof
prorated to the date of Employee’s Permanent Disability or death;
(ii) Any
then
unvested restricted stock and/or time-vesting stock option awards previously
granted to Employee by the Company, including, without limitation, those grants
set forth in Section 2.3 hereof, shall become immediately one-hundred percent
vested; provided, however that in the event of Employee’s death future option
awards shall; and
(iii) The
Employee shall receive any other benefits due to Employee pursuant to the terms
of any employee benefit plan or policy maintained generally for employees or
a
group of management employees
(c) As
used
herein, the term "Cause" shall be limited to (i) willful malfeasance, willful
misconduct or gross negligence by Employee in connection with his employment,
(ii) willful and continuing refusal by Employee to perform his duties hereunder
or any lawful direction of the Company's Board of Directors (the "Board"),
after
notice of any such refusal to perform such duties or direction was given to
Employee and Employee is provided a reasonable opportunity to cure such
deficiency, or (iii) any material breach of the provisions of Section 10 of
this
Agreement by Employee or any other material breach of this Agreement by Employee
after notice of any such breach and an opportunity to cure such breach.
Termination of Employee pursuant to this Section 4.2 shall be made by delivery
to Employee of a copy of a resolution duly adopted by the affirmative vote
of
not less than a majority of the then members of the Board at a meeting of the
Board called and held for the purpose (after 30 days prior written notice to
Employee and reasonable opportunity for Employee to be heard before the Board
prior to such vote), finding that in the reasonable judgment of the Board,
Employee was guilty of conduct set forth in any of clauses (i) through (iii)
above and specifying the particulars thereof.
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(d) For
purposes of this Agreement "Permanent Disability" shall have the same meaning
ascribed thereto in the Company's Long-Term Disability Benefit Plan applicable
to senior Employee officers as in effect on the date hereof.
5. Mitigation
of Damages.
Employee shall not be required to mitigate damages or the amount of any payment
provided for under this Agreement by seeking other employment or otherwise
after
the termination of his employment hereunder, and any amounts earned by
Employee, whether from self-employment, as a common-law employee or otherwise,
shall not reduce the amount of any Termination Amount otherwise payable to
him.
6. Notices.
All
notices or communications hereunder shall be in writing, addressed as
follows:
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To
the Company:
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000
Xxxxxxxxx Xxxx
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Xxxxxxxx,
XX Xxxxxx X0X 0X0
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Attn:
Board of Directors
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To
Employee:
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Xxxxxx
Xxxxxxxxxx
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000
Xxxxxxxxx Xxxx
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Xxxxxxxx,
XX Xxxxxx X0X 0X0
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Any
such
notice or communication shall be delivered by hand or by courier or sent
certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in
a
notice duly delivered as described above), and the third business day after
the
actual date of mailing shall constitute the time at which notice was given.
7. Separability;
Legal Fees.
If any
provision of this Agreement shall be declared to be invalid or unenforceable,
in
whole or in part, such invalidity or unenforceability shall not affect the
remaining provisions hereof which shall remain in full force and effect. Each
party hereto shall be solely responsible for any and all legal fees incurred
by
him or it in connection with this Agreement, including the enforcement. In
the
event the Employee is required to bring any action to enforce rights or to
collect monies due under this Agreement and is successful in such action, the
Company shall reimburse the Employee for all of Employee’s reasonable attorneys'
fees and expenses in preparing, investigating and pursuing such
action.
8. Assignment.
This
Agreement shall be binding upon and inure to the benefit of the heirs and
representatives of Employee and the assigns and successors of the Company,
but
neither this Agreement nor any rights or obligations hereunder shall be
assignable or otherwise subject to hypothecation by Employee (except by will
or
by operation of the laws of intestate succession) or by the Company, except
that the Company may assign this Agreement to any successor (whether by merger,
purchase or otherwise) to the stock, assets or business(es) of the Company.
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9. Amendment.
This
Agreement may only be amended by written agreement of the parties hereto.
10. Nondisclosure
of Confidential Information; Non-Competition;
Non-Disparagement.
(a) Employee
shall not, without the prior written consent of the Company, use, divulge,
disclose or make accessible to any other person, firm, partnership, corporation
or other entity any Confidential Information (as defined below) pertaining
to
the business of the Company or any of its affiliates, except (i) while
employed by the Company, in the business of and for the benefit of the Company,
or (ii) when required to do so by a court of competent jurisdiction, by any
governmental agency having supervisory authority over the business of the
Company, or by any administrative body or legislative body (including a
committee thereof) with jurisdiction to order Employee to divulge, disclose
or
make accessible such information. For purposes of this Section 10(a),
"Confidential Information" shall mean non-public information concerning the
financial data, strategic business plans, product development (or other
proprietary product data), customer lists, marketing plans and other non-public,
proprietary and confidential information of the Company or its affiliates (the
"Restricted Group") or customers, that, in any case, is not otherwise available
to the public (other than by Employee’s breach of the terms
hereof).
(b) During
the Term and for one (1) year thereafter, Employee agrees that, without the
prior written consent of the Company, (A) he will not, directly or indirectly,
in Canada and the United States, participate in any Position (as defined below)
in any business which is in direct competition with any business of the
Restricted Group and (B) he shall not, on his own behalf or on behalf of any
person, firm or company, directly or indirectly, solicit or offer employment
to
any person who has been employed by the Restricted Group at any time during
the
12 months immediately preceding such solicitation, and (C) he shall not, on
his
own behalf or on behalf of any person, firm or company, solicit, call
upon, or otherwise communicate in any way with any client, customer, prospective
client or prospective customer of the Company or of any member of the Restricted
Group for the purposes of causing or of attempting to cause any such person
to
purchase products sold or services rendered by the Company or by any member
of
the Restricted Group from any person other than the Company or any member of
the
Restricted Group. The term "Position" shall include, without limitation, a
partner, director, holder of more than 5% of the outstanding voting shares,
principal, Employee, officer, manager or any employment or consulting position.
It is acknowledged and agreed that the scope of the clause as set forth above
is
essential, because (i) a more restrictive definition of "Position" (e.g.
limiting it to the "same" position with a competitor) will subject the Company
to serious, irreparable harm by allowing competitors to describe positions
in
ways to evade the operation of this clause, and substantially restrict the
protection sought by the Company, and (ii) by the allowing Employee to escape
the application of this clause by accepting a position designated as a "lesser"
or "different" position with a competitor, the Company is unable to restrict
the
Employee from providing valuable information to such competing company to the
harm of the Company.
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(c) Employee
agrees that he will not, directly or indirectly, individually or in concert
with
others, engage in any conduct or make any statement that is likely to have
the
effect of undermining or disparaging the reputation of the Company or any member
of the Restricted Group, or their good will, products, or business
opportunities, or that is likely to have the effect of undermining or
disparaging the reputation of any officer, director, agent, representative
or
employee, past or present, of the Company or any member of the Restricted Group.
Company agrees that it shall not, directly or indirectly, engage in any conduct
or make any statement that is likely to have the effect of undermining or
disparaging the reputation of Employee.
(d) For
purposes of this Section 10, a business shall be deemed to be in competition
with the Restricted Group if it is principally involved in the purchase, sale
or
other dealing in any property or the rendering of any service purchased, sold,
dealt in or rendered by the Restricted Group as a material part of the business
of the Restricted Group within the same geographic area in which the Restricted
Group effects such purchases, sales or dealings or renders such services.
Nothing in this Section 10 shall be construed so as to preclude Employee from
investing in any company pursuant to the provisions of Section 1.2
hereof.
(e) Employee
and the Company agree that this covenant not to compete is a reasonable covenant
under the circumstances, and further agree that if in the opinion of any court
of competent jurisdiction such restraint is not reasonable in any respect,
such
court shall have the right, power and authority to excise or modify such
provision or provisions of this covenant as to the court shall appear not
reasonable and to enforce the remainder of the covenant as so modified. Employee
agrees that any breach of the covenants contained in this Section 10 would
irreparably injure the Company. Accordingly, Employee agrees that the Company
may, in addition to pursuing any other remedies it or they may have in law
or in
equity, cease making any payments otherwise required by this Agreement and
obtain an injunction against Employee from any court having jurisdiction over
the matter restraining any further violation of this Agreement by
Employee.
11.
Beneficiaries; References.
Employee shall be entitled to select (and change, to the extent permitted under
any applicable law) a beneficiary or beneficiaries to receive any compensation
or benefit payable hereunder following Employee’s death, and may change such
election, in either case by giving the Company written notice thereof. In the
event of Employee’s death or a judicial determination of his incompetence,
reference in this Agreement to Employee shall be deemed, where appropriate,
to
refer to his beneficiary, estate or other legal representative. Any reference
to
the masculine gender in this Agreement shall include, where appropriate, the
feminine.
12. Survivorship.
The
respective rights and obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations. In particular, the provisions
of
Section 10 hereunder shall remain in effect as long as is necessary to give
effect thereto.
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13. Governing
Law.
This
Agreement shall be construed, interpreted and governed in accordance with the
laws of Ontario, without reference to rules relating to conflicts of
law.
14. Effect
on Prior Agreements.
This
Agreement contains the entire understanding among the parties hereto and
supersedes in all respects any prior or other agreement or understanding among
the parties or any affiliate or predecessor of the Company and Employee with
respect to Employee’s employment, including but not limited to any severance
arrangements. Under no circumstances shall Employee be entitled to any other
severance payments or benefits of any kind, except for the payments and benefits
described herein.
15. Withholding.
The
Company shall be entitled to withhold from payment any amount of withholding
required by law.
16. Counterparts.
This
Agreement may be executed in two or more counterparts, each of which will be
deemed an original.
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement on the day and year first above
written.
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Name:
Xxxxxx Xxxx
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Title:
Director
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Name:
Xxxxx Xxxxx
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Title: Director
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Xxxxxx Xxxxxxxxxx |
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