EXHIBIT 10.9
CHANGE OF CONTROL AGREEMENT
This CHANGE OF CONTROL AGREEMENT is entered into as of February 25, 2004,
2004 between XXXXXXXXX RESOURCES, INC., a British Columbia corporation (the
"Company"), and _________________, the ____________ of the Company (the
"Executive").
The parties desires to provide an incentive for the Executive to remain
with the Company by establishing a termination settlement that will be payable
in the event the Executive's employment is terminated under certain
circumstances following a change of control. Accordingly, the parties hereto
agree as follows.
1. DEFINITIONS. The following terms used in this Agreement shall have the
meanings set forth below.
1.1 "Adjudication" means an adjudication and final judgment
determining the rights or obligations of a party hereunder in any court of
competent jurisdiction.
1.2 "Cause" means the Executive's conviction of a felony of any
nature or a misdemeanor involving embezzlement of corporate property.
1.3 "Change of Control" means an event or series of events by which
(a) any "person" (as used in Sections 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all shares that it has the right to acquire without condition,
other than the passage of time, whether the right is exercisable immediately or
only after the passage of time), directly or indirectly, of 20% or more of the
total voting power of the outstanding voting stock of the Company, computed
without regard to any so-called "share caps" intended to comply with the
shareholder approval rules of the Nasdaq Stock Market, (b) the Company conveys,
transfers, sells or leases all or substantially all of its assets to any person
other than to a wholly owned subsidiary of the Company, (c) the stockholders of
the Company approve any plan of liquidation or dissolution of the Company or (d)
during any period of 12 consecutive months, individuals who, at the beginning of
that period, constituted the Board of Directors of the Company (together with
any new directors whose election by the Board of Directors or whose nomination
for election by the stockholders of the Company, as applicable, was approved by
a vote of not less than a majority of the directors then still in office who
were either directors at the beginning of that period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company then in office.
1.4 "Company" means Xxxxxxxxx Resources, Inc. and its subsidiaries
unless the context otherwise requires or, following a Change of Control, any
successor to all or substantially all the business or assets of the Company,
whether direct or indirect, by purchase, merger, consolidation or otherwise.
1.5 "Disability" means a disability that renders the Executive
unable for a period of six consecutive months to conduct his duties in
substantially the same manner conducted prior thereto.
1.6 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.7 "Good Reason" means (a) removal of the Executive from his
position unless the removal is for Cause, (b) diminution of the Executive's
power, authority or responsibilities or grant thereof or any substantial portion
thereof to a person other than the Executive, (c) reduction of the Executive's
compensation or failure to grant increases in the Executive's compensation on a
basis at least substantially comparable to those granted to other executives of
the Company of comparable title, salary and performance ratings made in good
faith, (d) material breach of the Company's indemnification obligations to the
Executive under its governing instruments or the Indemnification Agreement
between the Executive and Company of even date herewith (e) any purported
termination of this Agreement by the Company, (f) any failure by the Company to
obtain the express written assumption of the Company's obligations under this
Agreement by any successor to all or substantially all the business or assets of
the Company, whether direct or indirect, by purchase, merger, consolidation or
otherwise, (g)
any failure by the Company to honor its obligations under the Incentive
Agreement or (h) and action, event or condition that constitutes Good Reason
under the Other Change of Control Agreements.
1.8 "Incentive Agreement" means the Long Term Incentive Agreement of
even date herewith between the Company and the Executive.
1.9 "Independent Legal Counsel" has the meaning set forth in Section
6.3.
1.10 "Other Change of Control Agreements" means the Change of
Control Agreements of even date herewith between the Company and each of Xxxxxxx
Xxxx, III, D. Xxxxxxx Xxxxxx and Xxxxxxx X. Xxxxxxxx.
1.11 "Reviewing Party" has the meaning set forth in Section 6.2.
1.12 "Salary" means the Executive's annual compensation, including
any cash bonus and the value of any stock bonus or stock option award.
1.13 "Termination Date" has the meaning set forth in Section 5.
2. TERMINATION SETTLEMENT. In the event that, within five years following
any Change of Control or the Company's execution of any agreement providing for
a transaction that would result in a Change of Control, the Executive's
employment with the Company is terminated by the Executive for Good Reason or by
the Company other than for Cause or the death or Disability of the Executive,
the Company shall provide the Executive with a termination settlement in an
amount equal to __ years' Salary. The rate used to determine the settlement
payment shall be the Salary in effect immediately prior to the employment
termination or, in the event of a termination for Good Reason under Section
1.7(c), the Salary in effect immediately prior to its reduction.
3. SETTLEMENT PAYMENT. The termination settlement provided under Section 2
shall be payable by the Company in cash on the effective date of employment
termination or, at the election of the Executive, in periodic installment
payments, subject in either case to any applicable withholding taxes. The
payments provided herein are intended as a termination settlement and not as
salary continuation.
4. DEATH OR DISABILITY. In the event that, within five years following any
Change of Control, the Executive's employment is terminated by reason of the
Executive's death or Disability, the Executive or the legal representative of
the Executive shall be entitled to death or long-term disability benefits from
the Company on terms no less favorable than the maximum benefits to which the
Executive would have been entitled had the death or termination for Disability
occurred immediately prior to the Change of Control.
5. NOTICE OF TERMINATION. Any purported termination of the Executive's
employment by the Company for Cause or Disability or by the Executive for Good
Reason shall be communicated by written notice to the other party. The notice
shall indicate the effective date of termination, subject to extension pursuant
to Section 6 (the "Termination Date") and the specific basis for termination,
setting forth in reasonable detail the facts and circumstances claimed for
termination on those grounds.
6. DISPUTE RESOLUTION.
6.1 Extension of Termination Date. If the party who receives a
notice of termination pursuant to Section 5 notifies the other party within 30
days that a dispute exists on the basis for termination stated therein, the
Termination Date for purposes of this Agreement shall be extended to the date on
which the dispute is finally determined, either by written agreement between the
parties, by the Reviewing Party or by Adjudication, provided that the
Termination Date shall be so extended only if the aggrieved party pursues the
resolution of the dispute in good faith and with reasonable diligence, in which
event the Company shall continue to pay the Executive the same Salary in effect
immediately prior to the employment termination or, in the event of a
termination for Good Reason under Section 1.7(c), the Salary in effect
immediately prior to its reduction. If the dispute is ultimately determined in
favor of the Company, then all sums paid by the Company to the Executive from
the termination date specified in the notice of termination until final
resolution of the dispute shall be repaid promptly by the Executive, together
with interest at the same rate then being paid by the Company under its bank
credit facility. If the dispute is ultimately determined in favor of the
Executive or is settled by agreement between the parties, then the Executive
shall be
2
entitled to retain all sums paid from the termination date specified in the
notice of termination until final resolution of the dispute and shall be
entitled to receive, in addition thereto, the payments provided herein to the
extent not previously paid under this Section 6.1.
6.2 Reviewing Party. A dispute on the basis for termination under
this Agreement shall be determined in a forum (the "Reviewing Party") selected
by the Executive from any one of (a) a committee of the Board of Directors of
the Company comprised of all directors other than the Executive, if he is then
serving as a director, acting by a majority vote, (b) a law firm or member of a
law firm selected by the Executive and approved by the Board, provided that the
firm has not represented the Company, the Executive or any of their respective
affiliates in any material matter within the past five years ("Independent Legal
Counsel") or (c) a panel of three arbitrators, one selected by the Board, one by
the Executive and the third by the first two selected arbitrators, whose
proceedings shall be conducted pursuant to the commercial arbitration rules of
the American Arbitration Association and whose determination shall be presented
in a written opinion.
6.3 Fees and Expenses of Reviewing Party. If Independent Legal
Counsel or an arbitration panel is selected as the Reviewing Party to resolve a
dispute under this Section 6, the Company shall pay all reasonable fees and
expenses of the Reviewing Party and shall indemnify the Reviewing Party against
any and all expenses and losses incurred by the Reviewing Party in connection
with its engagement under this Agreement.
7. REMEDIES OF THE EXECUTIVE.
7.1 Right to Adjudication. In the event that (a) the Reviewing Party
makes a determination adverse to the Executive, (b) payments required to be made
by the Company hereunder are not timely made or (c) the Executive otherwise
seeks to enforce his rights under this Agreement, the Executive shall be
entitled to an Adjudication, and the Company will not oppose the Executive's
right to seek the Adjudication.
7.2 Burden of Proof in Adjudication. In any Adjudication, the
Executive shall be presumed to be entitled to the termination benefits provided
under this Agreement following a Change of Control, and the Company shall have
the burden of proof to overcome that presumption. Any Adjudication of an adverse
determination by the Reviewing Party shall be made de novo, and the Executive
shall not be prejudiced by the Reviewing Party's adverse determination. In any
Adjudication, the Company shall be precluded from asserting that the procedures
and presumptions provided in this Agreement are not valid, binding and
enforceable. The Company shall stipulate that it is bound by all the provisions
of this Agreement and precluded hereunder from making any assertion to the
contrary.
7.3 Expenses of Adjudication. Expenses reasonably incurred by the
Executive in connection with the enforcement of this Agreement through an
Adjudication shall be borne by the Company if the Executive is successful in the
Adjudication.
8. NATURE OF OBLIGATIONS. The Company's obligation hereunder shall be
absolute and unconditional and shall not be subject to any setoff, counterclaim,
recoupment, defense or other right that the Company may have against the
Executive or any other person. Any amounts payable by the Company hereunder
shall be made without notice or demand. The Company waives any rights it may now
have or hereafter acquire, by statute or otherwise, to cancel, terminate or
rescind this Agreement in whole or in part. Except as otherwise provided in
Section 6, any payment made by the Company hereunder shall not be subject to
recovery or recoupment for any reason from the Executive or any person entitled
thereto. The Executive shall not be required to mitigate the amount of any
payment provided for herein by seeking other employment or otherwise.
9. SUCCESSOR AND ASSIGNS. This Agreement shall be binding on the
successors and assigns of the Company and shall inure to the benefit of and be
enforceable by the legal representatives, executors, administrators, heirs,
distributees, devises and legatees of the Executive. Upon any Change of Control,
the Company shall require any successor to all or substantially all the business
or assets of the Company, whether direct or indirect, by purchase, merger,
consolidation or otherwise, by written agreement satisfactory in form and
substance to the Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no succession had taken place.
3
10. MISCELLANEOUS.
10.1 Reservation of Rights. Nothing in this Agreement shall affect
any right that the Company may otherwise have to terminate the Executive's
employment at any time in any lawful manner, subject to providing any
termination benefits required hereunder or under any severance policy of the
Company then in effect. The rights and remedies provided by this Agreement are
cumulative, and the use of any one right or remedy by a party shall not preclude
or waive that party's right to use any or all other remedies. Those rights and
remedies are given in addition to any other rights the parties may have by law,
statute, ordinance or otherwise.
10.2 Waiver of Provisions. No provisions of this Agreement may be
modified, amended, waived or discontinued unless agreed to in writing by the
parties hereto. No waiver at any time by either party of any breach by the other
party or waiver of compliance with any condition or provision to be performed by
the other party shall be deemed a waiver of similar or dissimilar breaches,
conditions or provisions at the same time or any prior or subsequent time.
10.3 Integration. This Agreement contains the entire agreement of
the parties with respect to the subject matter hereof. No assurances or
representations, oral or otherwise, express or implied, with respect to the
subject matter of this Agreement have been made by either party except as
expressly set forth herein.
10.4 Amendment. This Agreement shall not be amended or modified
except by a written instrument signed by both parties.
10.5 Governing Law. This Agreement and the rights and obligations of
the parties shall be governed by and construed in accordance with the laws of
the state of Delaware, excluding any conflict of laws rules of that State or
other principle that might refer the governance or construction of this
Agreement to the law of British Columbia or any other jurisdiction.
10.6 Binding Effect. The terms, conditions and provisions of this
Agreement and all obligations of the Company hereunder shall inure to the
benefit of, and be binding upon, the parties hereto and their respective heirs,
legal representatives, successors and permitted assigns.
10.7 Notices. Any notice, request or other communication required or
permitted under this Agreement shall be made in writing and shall be deemed to
have been duly given or made if delivered personally, or mailed (postage prepaid
by registered or certified mail), or sent by facsimile to the party (or to an
executive officer of the Company) at their respective addresses provided in
writing to the other party for that purpose. Any notice, request or other
communication so sent shall be deemed to have been given or delivered (a) at the
time that it is personally delivered, (b) two business days after the date
deposited in the United States mail, (c) one business day after delivery to an
overnight courier or (d) when receipt is acknowledged, if sent by facsimile.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
XXXXXXXXX RESOURCES, INC.
By_________________________
Name:
Title:
EXECUTIVE:
___________________________
4
