EMPLOYMENT AGREEMENT (the "Agreement") made as of October 5, 2001, (the
"Effective Date") by and between Delano Technology Corporation, an Ontario
corporation ("Delano" or the "Company") and Xxxxx Xxxxxx ("Kapoor").
WHEREAS, the Company desires to induce Kapoor to accept employment with
the Company and one or more of its subsidiaries as Chief Executive Officer and
Kapoor desires to be employed by the Company and one or more of the Company's
subsidiaries as Chief Executive Officer pursuant to the terms of this agreement;
AND WHEREAS as an essential inducement to Kapoor's employment with the
Company, the Company and Kapoor are entering into a Restricted Share Agreement
whereby the Company will grant common shares to Kapoor
AND WHEREAS this Employment Agreement, together with the Restricted Share
Agreement, is intended by the Company and Kapoor to constitute a written
compensation contract for purposes of the definition of "Employment Benefit
Plan" in Rule 405 under the U.S. Securities Act of 1933.
NOW, THEREFORE, the parties agree as follows:
AGREEMENT
1. TERM.
(a) The Company hereby agrees to employ Kapoor and Kapoor hereby
agrees to accept employment with the Company, in the positions set forth in
Section 2 below, for the Term (as defined below), subject to the terms and
conditions of this Agreement.
(b) The term (the "Term") of this Agreement shall commence as of the
Effective Date and shall continue until terminated pursuant to section 4.
2. POSITIONS; DUTIES AND RESPONSIBILITIES.
(a) During the Term, Kapoor shall serve the Company as President and
Chief Executive Officer and as a member of the Board of Directors. Kapoor shall
have such duties and responsibilities as are incidental to, or reasonably
requested in connection with, such positions, as well as such other comparable
duties and responsibilities as may be reasonably assigned to him by Delano's
Board of Directors or an authorized committee of the Board of Directors. Kapoor
shall be located in New York, and shall travel to such other cities as may be
required in his reasonable discretion.
(b) During the Term, Kapoor shall serve the Company faithfully,
diligently and to the best of Kapoor's ability, and shall devote substantially
all of his business time and efforts to his employment with the Company;
provided, however, that nothing in this Agreement shall preclude Kapoor from
engaging in personal investment opportunities and one ongoing project which has
been disclosed to the Company, referred to as the "Mergent Project;" provided
that, (i) the time devoted by Kapoor to the Mergent
Project and his personal investment opportunities shall not materially and
substantially interfere with or derogate from his material obligations under
this Agreement on an ongoing basis, and (ii) Kapoor will not pursue or
participate in a personal investment which creates a conflict of interest
between Kapoor, the Company or any customer or potential customer of the
Company, or which may materially adversely affect the goodwill of the Company.
3. COMPENSATION.
(a) Base Salary. During the Term, the Company shall pay to Kapoor a
base salary at the rate of $500,000 per year ("Base Salary"), subject to
increase in the discretion of the Compensation Committee of the Board of
Directors and payable in accordance with the regular payroll practices of the
Company.
(b) Bonus. A bonus will be paid to Kapoor from time to time, as may
be determined in the discretion of the Compensation Committee of the Board of
Directors.
(c) Benefits. Subject to any contribution therefore generally
required of senior executives of Delano, Kapoor shall be entitled to participate
in all employee benefits plans, including Delano's health and dental plans, as
adopted by the Board of Directors and in effect for the most senior executives
of the Company. Such participation shall be subject to (a) the terms of the
applicable plan documents, (b) generally applicable Company policies and (c) the
discretion of the Board or any administrative or other committee provided for in
or contemplated by such plans. The Company may alter, modify, add to, or delete
its employee benefits plans at any time as the Company, in its sole judgment,
determines to be appropriate. Kapoor shall be entitled to 15 days of annual
vacation, in accordance with applicable Company policies. Kapoor shall be
entitled to expense reimbursement for any expenses reasonably incurred in
performing his duties on behalf of the Company, prior to any termination.
(d) Restricted Shares. Issue From Treasury - Delano shall grant to
Kapoor, pursuant to the terms of a separate agreement (the "Restricted Share
Agreement"), an aggregate of 4,230,000 common shares of the Company (the
"Restricted Shares") which Restricted Shares shall be granted as at the
Effective Date, subject to the restrictions and rights as set out in the
Restricted Share Agreement. An 83(b) election may be made by Kapoor and, in such
event, both Kapoor and the Company agree to make all appropriate filings in such
connection. The Restricted Shares shall vest and become freely tradable by
Kapoor to the extent of 1/6 of the aggregate number of shares immediately upon
the Effective Date, and monthly in equal numbers of shares thereafter for thirty
(30) months following the Effective Date, at which time, subject to the terms
herein and the Restricted Share Agreement, one hundred percent (100%) of the
Restricted Shares shall be vested and fully tradable. The Restricted Shares
shall fully vest and become fully tradable on an accelerated basis upon: (i) a
"Business Combination," as defined in Exhibit A to the Restricted Share
Agreement; (ii) death or disability as hereinafter provided; or (iii) the
termination of Kapoor's employment without Cause by the Company or by Kapoor for
Good Reason, as hereinafter provided. To the extent of
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any conflict between this Agreement and the Restricted Share Agreement, the
terms of this Agreement shall control.
4. TERMINATION OF EMPLOYMENT.
(a) Termination Due to Death or Disability. Upon the termination of
Kapoor's employment under this Agreement during the Term due to Kapoor's death
or Kapoor's Disability (as defined in Section 5(b)), Company shall provide to
Kapoor, or Kapoor's legal representative, within ten (10) days of such
termination, (i) payment of any Base Salary earned through the date of the
termination of Kapoor's employment with the Company; (ii) payment of additional
salary equal to one (1) year Base Salary; (iii) reimbursement of expenses
incurred by Kapoor up through the date of such termination; and (iv) payment of
the earned but unpaid Bonus, if any. In such event, all theretofore unvested
Restricted Shares shall vest in accordance with the terms of the Restricted
Share Agreement.
(b) Termination by the Company for Cause. If Kapoor's employment is
terminated by the Company for Cause (as defined in Section 5(a)) during the
Term, Kapoor shall be entitled to any Base Salary earned and expenses not
reimbursed through the date of the termination of Kapoor's employment with the
Company. Kapoor shall be entitled to no other or additional payments under this
Agreement.
(c) Termination Without Cause. If, during the Term, Kapoor's
employment is terminated by the Company without Cause or he resigns for Good
Reason (as hereinafter defined), which he shall have the right to do upon
written notice to the Company, Company shall provide to Kapoor, within ten (10)
days of such termination: (i) payment of any Base Salary earned through the date
of the termination of Kapoor's employment with the Company; (ii) payment of
additional salary equal to one (1) year Base Salary; (iii) reimbursement of
expenses incurred by Kapoor up through the date of such termination; and (iv)
payment of the earned but unpaid Bonus, if any. In such event, all theretofore
unvested Restricted Shares shall vest in accordance with the terms of the
Restricted Share Agreement. Kapoor shall be entitled to no other or additional
payments under this Agreement. Notwithstanding the foregoing, if Kapoor elects
not to terminate his services hereunder by reason of a Business Combination (as
defined in paragraph 5(d)) then in such event Kapoor shall be entitled to the
acceleration of unvested Restricted Shares as provided hereunder but not to the
payments provided for in paragraphs 4(c) (ii). Termination without Cause and
termination for Good Reason, shall not include a termination pursuant to
Sections 4(a), (b), or (d).
(d) Voluntary Termination. Kapoor may voluntarily terminate his
employment at any time upon written notice to the Board of Directors of the
Company. After Kapoor gives notice, Company may terminate Kapoor's employment at
any time with or without Cause, and the termination will for purposes of this
Agreement be treated as a Voluntary Termination under this paragraph (d). In the
event of a Voluntary Termination, Kapoor shall be entitled to any Base Salary
earned and unreimbursed expenses incurred through the date of the termination of
Kapoor's employment with the
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Company. Kapoor shall be entitled to no other or additional payments under this
Agreement.
5. DEFINITIONS.
For purposes of the Agreement, the following terms shall be defined as set
forth below:
(a) Kapoor may be terminated by the Company for "Cause" for:
(i) a material breach or material default by Kapoor of the
performance of his duties with the Company which, if curable, has not been cured
within 30 days of detailed written notice thereof from the Company;
(ii) gross negligence in the performance of Kapoor's duties,
willful misfeasance in connection with Kapoor's work or a breach of fiduciary
duty by Kapoor; (no act or omission shall be considered willful unless done or
omitted in bad faith or without reasonable belief that the action or omission
was in the interest of the Company);
(iii) the commission by Kapoor of an act of fraud,
embezzlement or any other illegal conduct in connection with Kapoor's
performance of his duties;
(iv) Kapoor's conviction of a felony (or the equivalent in
Canada).
(b) "Disability" means Kapoor's inability, for a period of 90
consecutive days, to perform, with or without reasonable accommodation, the
essential functions of his position by reason of mental or physical disability,
whether resulting from illness, accident or otherwise.
(c) "Voluntary Termination" means a termination of employment during
the Term by Kapoor on Kapoor's own initiative delivered by written notice to the
Company, other than a termination for death or Disability under Section 4(a) or
for Good Reason under Section 4(e).
(d) "Good Reason" shall mean: (i) the breach by the Company of this
Agreement, which, if curable, has not been cured within 30 days of detailed
written notice thereof from Kapoor, (ii) a diminution which, if curable, has not
been cured within 30 days of detailed written notice thereof from Kapoor, in the
title, compensation or responsibilities of Kapoor (unless approved in writing by
Kapoor) (iii) appointment of any other person to an executive position at or
above the position of President or CEO, or which otherwise requires Kapoor to
report to such other person or position (iv) a "Business Combination" as defined
in Exhibit A of the Restricted Share Agreement, or (v) a filing by the Company
for bankruptcy or receivership, an adjudication that the Company is insolvent or
bankrupt, an admission by the Company that it is unable to pay its debts as they
mature, a failure by the Company to make payroll for two (2)
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consecutive weeks or an initiation by the Company of liquidation proceedings or
acts tantamount to the same (e.g., disposition or distribution of material
assets of the Company, or portions thereof).
6. NON-COMPETITION.
As a condition of this Agreement, and in consideration for the payments
set forth herein, Kapoor agrees that, during the Term, Kapoor will not become an
officer, director or employee of, maintain a consulting or other professional
relationship with, or acquire any securities (other than publicly-traded
securities aggregating less than 1% of the outstanding shares) of, any
enterprise that is engaged in any material respect in any business (including
business under active development) that is competitive with a business being
conducted or actively developed by Delano (or a subsidiary) at the date hereof
or at the time during the Term.
7. CONFIDENTIALITY.
Kapoor shall continue to be bound by the terms of the Confidentiality
Agreement that was signed in conjunction with the Opera Ventures Agreement.
8. INDEMNIFICATION.
Kapoor shall be entitled to indemnification from the Company to the
fullest extent permitted by law. Delano agrees to name Kapoor as an additional
named insured on its general liability and E&O policies, and D&O policies then
in force from time to time during the term.
9. ENTIRE AGREEMENT.
This Agreement contains the entire agreement between the Company and
Kapoor concerning Kapoor's employment by the Company and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between them with respect to the subject matter herein. Kapoor
and the Company agree to keep the terms of this Agreement strictly confidential,
subject to legal disclosure obligations.
10. AMENDMENT OR WAIVER.
This Agreement cannot be changed, modified or amended without the consent
in writing of both Kapoor and the Company. No waiver by either the Company or
Kapoor at any time of any breach by the other party of any condition or
provision of this Agreement shall be deemed a waiver of a similar or dissimilar
condition or provision at the same or at any prior or subsequent time. Any
waiver must be in writing and signed by Kapoor or an authorized officer of the
Company, as the case may be (other than Kapoor).
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11. SEVERABILITY.
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
12. SURVIVAL.
Sections 3, 4, 5, 7, 12, 14 and 15 and other provisions to the extent such
are necessary to the intended preservation of rights and obligations, shall
survive any termination of this Agreement.
13. GOVERNING LAW AND JURISDICTION; ARBITRATION.
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the New York without reference to principles of
conflict of laws. Any dispute, controversy or claim arising out of or in
connection with this Agreement shall be exclusively subject to arbitration
before the American Arbitration Association ("AAA") in New York City, before a
single arbitrator in accordance with the AAA's then current Employment
Arbitration Rules. Both parties hereby consent to such jurisdiction and venue.
Judgment upon any arbitration award may be entered in any court of competent
jurisdiction. All parties shall cooperate in the process of arbitration for the
purpose of expediting discovery and completing the arbitration proceedings.
Nothing contained in this section or elsewhere in this Agreement shall in any
way deprive either party of its right to obtain injunctive or other equitable
relief in a court of competent jurisdiction. The parties hereto consent to the
exclusive jurisdiction of the Courts of New York County in connection herewith.
Each party hereto shall be responsible for their own costs and fees (including
legal fees), provided that if any payment provided for hereunder is not timely
paid to Kapoor and Kapoor engages counsel to recover the same, Delano shall be
responsible for all reasonable costs and fees (including legal fees) incurred by
Kapoor to recover the same.
14. NOTICES.
Any notice given to either party shall be in writing and shall be deemed
to have been given when delivered personally or sent by certified or registered
mail, postage prepaid, return receipt requested, duly addressed to the party
concerned, if to the Company, addressed to the Board of Directors at the Company
principal executive offices, with a copy to the Chairman at his last known
address, and if to Kapoor, at the address of Kapoor shown on the Company's
records, with a copy to Xxxxxx Xxxxxxx & Menin, LLP, 0000 Xxxxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxxxxx X. Xxxxx, Esq., facsimile: 212/245-8683
or at such other address as such party may give written notice of.
15. MISCELLANEOUS.
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(a) The headings of the Sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
(b) This Agreement may be executed in two or more counterparts.
(c) The Company shall make such deductions and withhold such amounts
from each payment and benefit made or provided to Kapoor hereunder, as may be
required from time to time by applicable law, governmental regulation or order.
(d) All dollar amounts set out in this Agreement shall be United
States dollars.
16. ASSIGNMENT; SUCCESSORS.
This Agreement is personal in its nature and none of the parties hereto
shall, without the consent of the others, assign or transfer this Agreement or
any rights or obligations hereunder, provided that, in the event of the merger,
consolidation, transfer, or sale of all or substantially all of the assets or
stock of the Company, this Agreement shall be binding upon and inure to the
benefit of such successor of the Company and such successor shall assume in
writing all executory obligations to Kapoor hereunder and shall discharge and
perform all the promises, covenants, duties, and obligations of the Company
hereunder, and all references herein to the "Company" shall refer to such
successor.
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IN WITNESS WHEREOF the parties have duly executed this Agreement as of the
date first set out above.
DELANO TECHNOLOGY CORPORATION
By:/s/ Xxxxxx Xxxxxx
--------------------------------
Title: Chairman
Witness ) XXXXX XXXXXX
)
) /s/ Xxxxx Xxxxxx
) ----------------
) Name: Xxxxx Xxxxxx
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