Employment AGREEMENT
THIS
AGREEMENT
is made
as of the 3rd day of December 2006.
BETWEEN:
Xxxxxx
Xxxxx
of
the
City of Xxxxxxxxxx, XX 00000
(hereinafter
referred to as the "Employee")
AND:
a
corporation incorporated under the laws of Canada
(hereinafter
referred to as the "Employer")
WHEREAS:
The
Employer wishes to employ the Employee and the Employee wishes to serve the
Employer upon the terms and subject to the conditions herein
contained.
NOW
THEREFORE
in
consideration of the premises and the mutual covenants herein and other good
and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged by each of the parties, the parties hereto covenant and agree
as
follows:
| 1. |
DEFINITIONS
|
In
this
agreement, unless the context otherwise specifies or requires, the following
terms shall have the following meanings:
|
1.1
|
"Agreement,"
"hereto," "herein," "hereof," "hereunder"
and similar expressions refer to this Agreement and not to any particular
section or any particular portion of this Agreement and includes
all
schedules attached to this
Agreement;
|
|
1.2
|
“President”
shall mean the President of Enterprise Software for the
Company;
|
| 1.3 | "Court" shall mean a Court of competent jurisdiction; |
|
1.4
|
"Parties"
shall mean the Parties to this Agreement and "Party" shall mean one
of the
Parties to this Agreement.
|
| 2. |
EMPLOYMENT
|
|
2.1
|
The
Employer agrees to employ the Employee and the Employee agrees to
act as
President or in such other employment as the Employer and the Employee
may
from time to time agree in writing and the Employee agrees to serve
the
Employer upon the terms and subject to the conditions set out in
this
Agreement.
|
|
2.2
|
The
Employee specifically undertakes and agrees with the Employer that
he
shall be responsible for the
following:
|
| 2.2.1 |
for
fulfilling the title and role of the President of the Employer; and
|
| 2.2.2 |
such
other duties as may be reasonably required by the Board of Directors
of
Employer.
|
.
| 3. |
TERM
|
|
3.1
|
The
Initial Term of this Agreement shall be a period of two (2) years
from the date hereof. Unless written notice is given by either party
at
least ninety (90) days before the end of the Initial Term or any
one (1)
year extension thereof (each, a “Renewal Term”), that they wish this
Agreement to terminate at the end of the Initial or respective Renewal
Term, whichever may apply, this Agreement will be automatically extended
by successive one year Renewal Terms. Any references herein to the
“Term”
shall include both the Initial Term and any and all Renewal Terms.
If
Employer provides notice of termination pursuant to this Section
3.1,
Employee shall be shall be entitled to the payments set forth in
section
10.1.3 hereof, to be provided within thirty (30) days after his
termination.
|
REMUNERATION
|
4.1
|
In
consideration of the Employee’s undertaking and the performance of the
obligations contained in this Agreement, the Employer shall, unless
otherwise agreed upon by all parties to this Agreement, pay and grant
the
following remuneration to the
Employee:
|
| 4.1.1 |
Base
Salary. The Employee shall be entitled to receive a salary, not less
than
$300,000.00
(U.S.) per year Employee’s
base annual compensation shall be subject to review annually for
possible
adjustment by the Company (by action of the Compensation Committee
of the
Board of Directors) and shall be agreed to by the Company and the
Employee.
|
| 4.1.2 |
Bonus. In
addition to the base salary specified in section 4.1.1 the Employee
shall
be entitled to an aggregate annual bonus of $200,000.00 (U.S.) based
on
certain targets being achieved. The Parties will mutually agree to
these
targets. Achievement of targets will be assessed on a quarterly basis,
and
any bonus earned for a particular quarter, as reasonably determined
by the
Employer, will be paid to the Employee within 30 days after the close
of
the quarter
|
|
4.1.3
|
Stock
Options.
In
addition to the base salary outlined in section 4.1.1 on the first
date of
employment, the Employee shall be granted a stock option to purchase
1,000,000 shares of common stock of the Employer (the “Option Shares”) at
a price that is the closing price on the NASDAQ market on the date
of the
option grant. In addition, the Employee will be granted at least
250,000
additional options on the first anniversary of the initial option
grant.
These options shall vest one third annually over a three (3) year
period,
beginning on the first anniversary of the date of the option grant.
|
| 4.1.4 |
Restricted
Stock Units: In
addition to the base salary outlined in section 4.1.1 on the first
date of
employment, the Employee shall be granted 250,000 Restricted Stock
Units
(the “RSU’s”). These RSU’s shall vest one-third over a three (3) year
period, beginning on the first anniversary of the date of the grant.
Upon
separation for any reason, Employee will be entitled to any Restricted
Stock then vested.
|
2
|
5.
|
BENEFITS
|
|
5.1
|
In
consideration of the Employee’s undertaking and the performance of the
obligations contained in this Agreement, the Employer shall, unless
otherwise agreed upon by all parties to this Agreement, pay and grant
the
following benefits to the Employee:
|
|
5.1.1
|
Vacation.
The Employee shall be entitled to vacation time of three (3)
|
|
5.1.2
|
Other
Benefits. The
Employee shall be entitled to participate in all benefit programs
provided
by Employer to its executives effective upon the Employee’s start date.
The Employer shall pay for single coverage premiums for the Employee
and
his family for health and dental (if any) insurance offered by the
Employer. The Employer shall pay for the Employee’s STD/LTD premiums.
|
|
5.1.3
|
Expenses.
Employer shall pay Employee $500 per month toward a car allowance.
In
addition, the Employer shall reimburse the Employee for all reasonable
and
necessary business expenses, including but not limited to cellular
phone
expenses, upon the presentation to the Employer of appropriate written
documentation and receipts.
|
|
6.
|
ATTENTION
TO DUTIES
|
|
The Employee shall devote his
whole
working time and attention to the Employer during the Term of this
Agreement and will not engage in any other capacity or activity which,
in
the sole opinion of the Employer acting reasonably, would hinder
or
interfere with the performance of the duties of the Employee, however,
the
Employee shall be permitted, to the extent that such activities do
not
materially interfere with the performance of his duties and
responsibilities hereunder, to (i) manage his personal and family
financial affairs, (ii) serve on civic, not-for-profit or charitable
industry boards and advisory committees, (iii) on the board of United
Security Applications and (iv) serve on the Boards of Directors or
similar
governing bodies of one other business entities (provided, that the
business of such entities is not competitive with the business of
the
Company, as determined and approved by the Board of Directors, whose
determination and approval shall not be unreasonably
withheld).
|
|
7.
|
CONFIDENTIALITY
|
|
The parties acknowledge that
in carrying
out his duties under this Agreement, the Employee will have access
to and
become entrusted with confidential information regarding the business
plans and operations of the Employer, computer systems and technology,
unique methodology and other proprietary information. The Employee
acknowledges that the right to maintain such detailed confidential
information constitutes a proprietary right, which the Employer is
entitled to protect. Accordingly, the Employee shall not, during
the Term
of this Agreement, or for up to 3 years thereafter, disclose any
of such
detailed confidential information or trade secrets of the Employer
to any
person or persons, firm, association or corporation, nor shall the
Employee use the same for any purpose, in either case, except on
behalf of
the Employer. Notwithstanding the foregoing, the obligations of the
Employee in this Section 7 shall not apply to confidential information
(i) which at the date hereof or thereafter becomes a matter of public
knowledge without breach by the Employee of this Agreement; or
(ii) which is obtained by the Employee from a person, firm, or entity
(other than the Employer or an affiliate of the Employer) under
circumstances permitting its use or disclosure to others.
|
3
|
8.
|
OWNERSHIP
OF INVENTIONS
|
|
8.1
|
The
Employee shall promptly communicate and disclose to the Employer
all
inventions, improvements, modifications, discoveries, designs, formulae,
methods and processes made, discovered or conceived by the Employee
either
alone or jointly with others, during the period of his employment
with the
Employer, providing the same relate to or are capable of being used
by the
corporation or any affiliate thereof in the normal course of their
businesses.
|
|
8.2
|
The
Employee acknowledges and declares that all inventions, improvements,
modifications, discoveries, designs, formulae, methods, processes,
as are
described in section 8.1 hereof, and all patents and patent applications
relating thereto are the property of the Employer and hereby assigns
to
the Employer all of the right, title and interest of the Employee
in any
such inventions, improvements, modifications, discoveries, designs,
formulae, methods and processes, and in any patents or patent applications
relating thereto. The Employee shall, at the Employer’s expense, execute
all instruments and documents and do all such further acts and things
as
may be necessary or desirable, in the Employer's opinion to carry
out the
provisions of this section.
|
|
9.
|
NON-COMPETITION
|
|
The Employee shall not, without
prior
written consent of the Employer for the period of his employment
hereunder
or for a period of one (1) year following the termination of this
Agreement or any renewal hereof, for any reason be it for cause or
not,
either alone or in conjunction with any individual, firm, corporation,
association or any entity, except for the Employer, whether as principal,
agent, shareholder, employee or in any other capacity whatsoever,
perform
the duties of or provide the services as are described in section
2.2
hereof in a business which competes with the Employer, within any
geographical location where the Employer has carried on business
or
expended time and personnel and financial resources. Furthermore,
the
Employee also agrees that upon the termination of his employment
he will
not solicit to hire or encourage to leave their employ, any of the
Employer's other employees for a period of one (1) year following
termination of this Agreement. Notwithstanding the foregoing, the
Employee
shall not be precluded from competing with the business of the Employer
in
the event his employment is terminated by the Employee for good reason
or
by the Employer other than for cause, unless the Employer provides
the
applicable compensation and benefits set out in section 10.1.3 hereof,
in
which case, the Employee shall be precluded from competing as described
in
this section 9 until such time as such compensation and benefits
are
terminated.
|
|
10.
|
TERMINATION
|
|
10.1
|
The
parties understand and agree that employment pursuant to this Agreement
may be terminated during the Term in the following manner in the
specified
circumstances:
|
|
10.1.1
|
by
the Employee without good reason (as defined below), on the giving
of not
less than one (1) month prior written notice to the Employer, which
the
Employer may waive, in whole or in
part;
|
|
10.1.2
|
by
the Employee for good reason on the giving of not less than one (1)
month
prior written notice to the Employer, if the Employer has not cured
the
event giving rise to good reason by the end of such notice period.
For
purposes of this Agreement good reason shall mean, absent the Employee’s
prior written consent: (i) the Employer’s failure to timely provide the
Employee with the salary, bonus and equity as set forth in section
4.1
hereof or to provide benefits to the Employee in accordance with
section
5.1 hereof; (ii) a material breach by the Employer of this Agreement
or
any other agreement with the Employee; (iii) a material diminution
by the
Employer in the Employee’s title, responsibilities, authority, reporting
structure; (iv) Employer requiring Employee to change his office
location
to a place which is more than 50 miles from his current residence
(current
residence address is 0000 Xxxxxx Xxxxx, Xxxxxxxxxx, XX 94566); or
(v)
failure of the Employer to ensure that any successor or assign of
the
Employer agrees in writing to be bound by the terms of this Agreement
If
the Employee terminates his employment for good reason, he shall
be
entitled to the payments set forth in section 10.1.3 hereof, to be
provided within thirty (30) days after his termination;
|
4
|
|
10.1.3 |
by
the Employer in its absolute discretion
without cause upon not less than one (1) month prior written notice
to the
Employee, on giving the Employee a payment equal to (i) twelve (12)
months
salary at the rate in effect on the Employee’s termination date; (ii) the
value of twelve (12) months of benefits and entitlements the Employee
was
enjoying as of his termination date (including but not limited to
the cost
to Employee to pay for twelve (12) months of COBRA payments for health
and
dental (if any) family insurance coverage); (iii) all salary, benefits
and
entitlements to which the Employee is entitled in accordance with
any
relevant statute
or
law; and (iv) if the employment of the Employee is terminated during
the
first 12 months of the employment then the vesting schedule of the
Employee’s unvested outstanding stock options and RSU awards will
accelerate by 12 months, and he will be permitted to exercise vested
options for 9 months following termination of employment; if the
employment of the Employee is terminated after the first 12 months
of the
employment then the vesting schedule of the Employee’s unvested
outstanding stock options and RSU awards will accelerate by 9 months,
and he will be permitted to exercise vested options for 9 months
following termination of employment. The payment representing this
aggregate amount shall be paid within thirty (30) days from notice
provided herein;
|
|
10.1.4
|
by
the Employer for cause. The parties agree that for the purposes of
this
Agreement, “cause” shall mean the following, as reasonably determined by
the Employer in good faith, and that the Employee shall be terminated
immediately upon written notice for such
cause:
|
|
10.1.4.1
|
any
material breach of the provisions of this Agreement or of an established
written policy of the Employer after Employer provided written notice
to
Employee and 30 day opportunity to cure during which time Employee
failed
to cure;
|
|
10.1.4.2
|
any
intentional or grossly negligent disclosure of any confidential
information as described in section 7 hereof, by the
Employee;
|
5
|
10.1.4.3
|
in
carrying out his duties hereunder, the Employee; (i) has been grossly
negligent, or (ii) has committed willful gross misconduct;
|
|
10.1.4.4
|
Employee’s
conviction of a felony or other criminal act, as reasonably determined
in
good faith in the sole discretion of the Employer, it would materially
injure the reputation of the Employer if the Employee is retained
as an
Employee;
|
|
10.2
|
The
Parties understand and agree that the giving of notice or the payment
of
termination pay, and severance pay, as required by the Employer to
the
Employee on termination shall not prevent the Employer from alleging
cause
for the termination.
|
|
11.
|
RESULTS
OF TERMINATION
|
|
11.1
|
If
this Agreement is terminated for cause, as described in section 10.1.4
hereof, the Employee shall be entitled to receive his remuneration
to the
date of such termination for cause, including any and all vacation
pay and
bonuses earned to date.
|
|
11.2
|
If
this Agreement is terminated upon written notice as described in
paragraphs 3.1, 10.1.1, 10.1.2, and 10.1.3 hereof, the Employer shall
pay
to the Employee to the end of the notice period his salary and at
the end
of the date terminating the notice provision, the Employer shall
pay to
the Employee vacation pay equivalent and any other monies due under
applicable United States federal or state law, as well as any and
all
amounts to which he may be entitled pursuant to sections 10.1.2 or
10.1.3.
|
|
12.
|
MEDIATION/ARBITRATION
|
|
12.1
|
Should
any dispute or disagreement of any kind arise at any time; (i) regarding
the rights and liabilities of the Parties hereof or with respect
to the
interpretation, validity, construction, meaning, performance, effect
or
application of this Agreement, as amended from time to time; or (ii)
between the Employer and the Employee, the Parties agree that good
faith
negotiations shall take place between the Employer and the Employee.
If
such good faith negotiations have not resolved the dispute or disagreement
within a reasonable period of time, either Party may request mediation
between the Parties, or either Party may refer the dispute or disagreement
directly to arbitration without going to
mediation.
|
|
12.2
|
The
mediator shall be agreed upon by the both Parties. In the event that
the
Parties are unable to agree upon the mediator, the dispute or disagreement
shall be referred to arbitration in accordance with this
section.
|
|
12.3
|
All
discussions before the mediator shall be non-binding, confidential
and
without prejudice to the position of either Party. The Parties agree
that
if the mediation process does not result in a satisfactory solution
of the
dispute or disagreement after the lesser of either; (a) ten (10)
hours of
mediation, or (b) thirty (30) days from the commencement of the mediation,
then either Party may refer the dispute or disagreement to arbitration
pursuant to the provisions of the American
Arbitration Association's National Rules for the Resolution of Employment
Disputes in effect at the time of the arbitration demand,
in
accordance with the following:
|
6
| 12.3.1 | the reference to arbitration shall be to one (1) arbitrator. |
|
12.3.2
|
any
such arbitration shall be held in the city of Orlando, Florida. The
arbitration shall be completely private. The Employer agrees to reimburse
the Employee for reasonable travel and expenses for all arbitration
related travel. The arbitrator shall fix the appropriate procedures
which
may include discovery, an oral hearing(s) and any other procedures
the
arbitrator deems appropriate. The issue or issues to be decided by
the
arbitrator shall be defined in an arbitration agreement filed on
consent
by the aggrieved party. In the event the Parties to the arbitration
shall
be unable to agree upon the issue or issues to be decided by the
arbitrator in any arbitration pursuant to this paragraph, the arbitrator
shall have jurisdiction to determine the issue or issues to be so
decided.
The Parties shall do all such acts and things as are necessary to
enable
the arbitrator to make a proper finding respecting the matters in
issue.
The arbitrator may order interest on any award and the arbitrator
may
award costs, including attorneys’ fees, to either Party, provided that
such award is permitted by the applicable law governing the underlying
claim. In the absence of any award of costs, each of the Parties
shall
bear their own costs, including attorneys’ fees, of any arbitration
pursuant to this paragraph and one-half of the cost of the arbitrator.
The
arbitrator shall be strictly bound by applicable legal principles
and the
general nature of this Agreement in rendering his/her/its
decision.
|
|
12.3.3
|
The
Parties agree that good faith negotiations, mediation and arbitration
shall all be without recourse to the Courts. The award of the arbitrator
shall be final and binding, except that either Party may appeal an
arbitration award to the Courts on a question of law. Judgment upon
the
award rendered by the arbitrator may be entered in any Court having
jurisdiction.
|
|
13.
|
RIGHT
TO INJUNCTIVE RELIEF
|
| As a violation by the Employee of the provisions of paragraphs 7 and 9 hereof could cause irreparable injury to the Employer and there is no adequate remedy at law for such violation, the Employer shall have the right, in addition to any other remedies available to it at law or in equity, to enjoin the Employee in a court of equity from violating such provisions. The provisions of paragraphs 7 and 9 hereof shall survive the termination of this Agreement. |
|
14.
|
ASSIGNMENT
OF RIGHTS
|
|
The rights and obligations which
accrue to
the Employer under this Agreement shall automatically inure to the
benefit
of and be binding on its successors and assigns, whether by operation
of
law or otherwise. The rights of the Employee under this Agreement
are not
assignable or transferable in any manner, except that any accrued
salary
or bonus, vested options or other benefits shall be provided to the
Employee’s heirs, beneficiaries or estate, or trustee under any trust set
up by and for Employee.
|
| 15. | CHANGE OF CONTROL |
|
The Employer agrees that should
there be a
change in control of the Employer during the Employee’s employment with
the Employer or within 90 days after Employee’s employment is terminated
without cause, all unvested stock options, RSU’s and restricted stock held
by the Employee shall become immediately vested and exercisable in
full
and the Employee will be permitted to exercise vested options and
RSU’s
for 12 months following change of control. The Employer further
agrees If, within 90 days before or 18 months following a change
of control, the Employee’s employment is terminated for any reason except
for cause or the Employee resigns for good reason as defined in section
10.1.2, the Employee shall receive payment equal to (i) twelve (12)
months
salary and 100% of his target bonus for the year of termination at
the
rate in effect on the Employee’s termination date; (ii) the value of
twelve (12) months of benefits and entitlements the Employee was
enjoying
as of his termination date (including but not limited to the cost
to
Employee to pay for twelve (12) months of COBRA payments for health
and
dental (if any) family insurance coverage); and (iii) all salary,
benefits
and entitlements to which the Employee is entitled in accordance
with any
relevant statute or law. The payment representing this aggregate
amount
shall be paid within thirty (30) days from notice provided herein.
For the
purposes of this section, “change in control” shall be defined as such
term is defined the Employer’s 2002 Amended and Restated Stock Option
Plan.
|
7
| 16. | RESIDENCE |
| 17. | INDEMNIFICATION |
|
The Employer agrees to fully
indemnify and
defend the Employee against all claims, liabilities, costs, attorneys’
fees, settlement payments and damages relating to or arising from
any
threatened or actual legal action against the Employee by the company
with
which the Employee was last employed before the date hereof, in relation
in any manner to section 7 of the Employee’s prior employment agreement
with such company. Employer shall also maintain in force at least
$5,000,000 of directors and officers liability insurance with Employee
as
a named insured.
|
|
18.
|
CURRENCY
|
| All dollar amounts referred to in this Agreement are in United States funds. |
|
19.
|
AMENDMENT
OF AGREEMENT
|
| This Agreement may be altered or amended at any time by the mutual consent in writing of the parties hereto. |
|
20.
|
TIME
OF ESSENCE
|
| Time shall be of the essence hereof. |
|
21.
|
GOVERNING
LAW
|
| This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario. |
|
22.
|
HEADINGS
|
| The headings appearing throughout this Agreement are inserted for convenience only and form no part of the Agreement. |
|
23.
|
SEVERABILITY
|
|
The invalidity or unenforceability
of any
provision of this Agreement will not affect the validity or enforceability
of any other provision hereof and any such invalid or unenforceable
provision will be deemed to be
severable.
|
|
24.
|
ENTIRE
AGREEMENT
|
|
This Agreement constitutes the
entire
agreement between the parties and supersedes all prior and contemporaneous
agreements, understandings and discussions, whether oral or written,
and
there are no other warranties, agreements or representations between
the
parties except as expressly set forth
herein.
|
8
|
25.
|
AGREEMENT
BINDING
|
|
This Agreement shall inure to
the benefit
of and be binding upon the parties hereto and their respective personal
representatives, executors, administrators, successors and
assigns.
|
|
26.
|
INDEPENDENT
LEGAL ADVICE
|
|
The Employee acknowledges that
he has read
and understands the Agreement and acknowledges that he has had the
opportunity to obtain independent legal advice regarding the terms
of the
Agreement and their legal
consequences.
|
| 27. |
SURVIVAL
|
|
In the event this Agreement terminates
for
any reason, sections 3.1, 7, 9, 10.1.2, 10.1.3, 11, 15 and 17 hereof
shall
survive to the extent necessary to give full effect to their terms.
|
IN
WITNESS WHEREOF
this
Agreement has been executed by the parties hereto as of the date first set
forth
above.
SIGNED,
SEALED & DELIVERED
| /s/ Xxxxxx Xxxxx | |||
|
Witness |
Xxxxxx Xxxxx |
||
| WORKSTREAM INC. | |||
| Per: | /s/ Xxxxxxx Xxxxxxxxx | ||
|
Xxxxxxx Xxxxxxxxx |
|||
| Title: | Chairman & Chief Executive Officer | ||
9
