EXHIBIT 99.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
MEMORANDUM OF AGREEMENT made effective as of the 28th day of April, 2004.
BETWEEN:
XXXXXX INTERNATIONAL INC., a Massachusetts business trust
organized under the laws of the State of Washington with an
office at 00000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxxx, 00000
(hereinafter referred to as the "Corporation")
OF THE FIRST PART
AND:
XXXXX X.X. XXX, Businessman
(hereinafter referred to as the "Executive")
OF THE SECOND PART
WHEREAS:
A. The Corporation recognizes the valuable services that the Executive has
provided and is continuing to provide to the Corporation and its
subsidiaries and believes that it is reasonable and fair to the
Corporation that the Executive receive fair treatment, in particular,
in the event of a Change of Control (as hereinafter defined);
B. The Corporation recognizes that the Executive has acquired outstanding
and special skills relating to the business of the Corporation and its
subsidiaries and desires, in the best interests of the Corporation, to
have the Executive continue employment with the Corporation, including
up to and after such a Change of Control;
C. The Executive is willing to remain in the employment of the Corporation
but desires assurance that in the event of any such Change of Control
the Executive will continue employment with the Corporation, including
during the period up to and after such Change of Control, and will
continue to have the responsibility and status that the Executive has
earned; and
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D. Both the Corporation and the Executive wish formally to agree to the
terms and conditions of the Executive's employment and the terms and
conditions that will, in certain circumstances hereinafter set forth,
govern in the event of a termination of the employment of the Executive
by the Corporation.
NOW THEREFORE in consideration of the premises hereof and of the mutual
covenants and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each of the parties hereto, the parties hereby covenant and agree as follows:
ARTICLE I
RECITALS
1.1 RECITALS. The parties hereby represent and warrant that the above
recitals are true and correct.
ARTICLE II
INTERPRETATION
2.1 HEADINGS. The headings of the Articles, Sections and subsections herein
are inserted for convenience of reference only and shall not affect the
meaning or construction hereof.
2.2 DEFINITIONS. For the purposes of this Agreement, the following terms
shall have the following meanings, respectively:
(a) "Accrued Benefits" has the meaning ascribed to such term in
subsection 4.1(b)(iv) hereof;
(b) "Affiliate" and "Associates" shall have the meanings ascribed
to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date
of this Agreement;
(c) "Agreement" means this Amended and Restated Employment
Agreement and all schedules and amendments hereto;
(d) "Annual Bonus" has the meaning ascribed to such term in
Section 3.6(a) hereof;
(e) "Banking Day" means a day on which banks are open for business
in Vancouver, British Columbia;
(f) "Base Salary" has the meaning ascribed to such term in Section
3.6(a) hereof;
(g) "Board" means the board of Trustees of the Corporation;
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(h) "Change of Control" means the occurrence of any of the
following events:
(i) Any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), together with all
Associates and Affiliates of such person, directly or
indirectly: (a) becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of
securities of the Corporation representing the
greater of: (i) 15% or more of the aggregate of the
Common Shares then outstanding and the Issuable Note
Shares; and (ii) 20% of the then outstanding Common
Shares; or (b) has sole and/or shared voting, or
dispositive, power over the greater of: (i) 15% or
more of the aggregate of the Common Shares then
outstanding and the Issuable Note Shares; and (ii)
20% of the then outstanding Common Shares; or
(ii) A change in the composition of the Board occurring
within a two-year period prior to such change, as a
result of which fewer than a majority of the Trustees
are Incumbent Trustees. "Incumbent Trustees" shall
mean Trustees who are either: (a) Trustees of the
Corporation as of the Effective Date; or (b) elected,
or nominated for election, to the Board with the
affirmative votes of at least a majority of the
Trustees who had been Trustees two (2) years prior to
such change and who were still in office at the time
of such election or nomination; or
(iii) The solicitation of a dissident proxy, or any proxy
not approved by the Incumbent Trustees, the result of
which is to change the composition of the Board so
that fewer than a majority of the Trustees are
Incumbent Trustees; or
(iv) The consummation of a merger, amalgamation or
consolidation of the Corporation with or into another
entity or any other corporate reorganization, if more
than 50% of the combined voting power of the
continuing or surviving entity's securities
outstanding immediately after such merger,
amalgamation, consolidation or reorganization are
owned by persons who were not stockholders of the
Corporation immediately prior to such merger,
amalgamation, consolidation or reorganization; or
(v) The consummation of a sale, transfer or disposition
by the Corporation of all or substantially all of the
assets of the Corporation; or
(vi) The approval by the shareholders of the Corporation
of a plan of complete liquidation or dissolution of
the Corporation.
An event shall not constitute a Change of Control if its sole
purpose is to change the jurisdiction of the Corporation's
organization or to create a holding company, partnership or
trust that will be owned in substantially the same proportions
by the persons who held the Corporation's securities
immediately before such event.
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Additionally, a Change of Control will not be deemed to have
occurred, with respect to the Executive, if the Executive is
part of a purchasing group that consummates the Change of
Control event;
(i) "Common Shares" means the issued and outstanding shares of
beneficial interest of the Corporation;
(j) "Compensation Committee" means the independent committee of
the Board consisting of two or more Trustees, not employed by
the Corporation and each of whom is an independent Trustee
under applicable laws and regulations and the listing
requirements of the Nasdaq National Market, which committee is
responsible for making any and all decisions to award Stock
Options under the Plan to officers of the Corporation, in the
event the Corporation does not have a Compensation Committee
all references herein to Compensation Committee shall be
deemed to refer to the Board as a whole;
(k) "Date of Termination" means the date of termination of the
Executive's employment with the Corporation;
(l) "Disability" shall mean the Executive's failure to
substantially perform his material duties for the Corporation
on a full-time basis for twelve (12) consecutive months as a
result of physical or mental incapacity;
(m) "Disability Termination" has the meaning ascribed thereto in
Section 4.1 hereof;
(n) "Effective Date" means the date first above written;
(o) "Exchange Act" means the SECURITIES EXCHANGE ACT OF 1934, as
amended;
(p) "Good Reason" means, without the express written consent of
the Executive, the occurrence of any of the following events:
(i) Any material reduction or diminution (except
temporarily during any period of physical or mental
incapacity or disability of the Executive) in the
Executive's titles, status or positions, any material
reduction or diminution in the Executive's authority,
duties or responsibilities with the Corporation
(including any position or duties as a Trustee of the
Corporation and the failure to re-elect the Executive
as a Trustee and to the Board), it being acknowledged
that, in the event any entity becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, beneficially or
otherwise of more than the greater of: (i) 15% of the
aggregate of the Common Shares then outstanding and
the Issuable Note Shares; and (ii) 20% of the Common
Shares then outstanding, it shall be Good Reason if
the Executive is not the Chief Executive Officer of
such entity; or
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(ii) A breach by the Corporation of any material provision
of this Agreement, including, but not limited to, a
breach of the obligations of the Corporation under
Sections 3.2, 3.6, 6.1, 7.5 and 7.9 (other than a
reduction in the Executive's Base Salary that does
not exceed an aggregate of ten percent (10%) of the
Executive's then current Base Salary and which
reduction applies, in equal percentages, to all
senior officers of the Corporation) or any failure to
timely pay any part of the Executive's compensation
hereunder, including, without limitation, the
Executive's Base Salary, Annual Bonus and any other
bonuses payable to him or to materially provide, in
the aggregate, the level of benefits contemplated
herein; or
(iii) The failure of the Corporation to obtain and deliver
to the Executive a written agreement, in a form
reasonably satisfactory to the Executive, to be
entered into with any successor, assignee or
transferee of the Corporation to assume and agree to
perform this Agreement in accordance with Section
7.11 hereof; or
(iv) Any failure by or of the Corporation to continue in
effect any benefit, bonus, profit sharing, incentive,
remuneration, compensation, stock ownership, stock
purchase, stock option, life insurance, disability,
pension or retirement plans in which the Executive is
participating or entitled to participate on the date
hereof, or the Corporation takes, or fails to take,
any action that materially adversely affects the
Executive's participation in, or reduces his rights
or benefits, under or pursuant to such plans (other
than a failure that results in a reduction in
benefits under any such plan that does not reduce the
Executive's benefits under such plan by more than an
aggregate of ten percent of the Executive's then
existing benefits under such plan and which said
reduction applies, in equal percentages, to all
senior officers of the Corporation), or the
Corporation fails to increase or improve such rights
or benefits on a basis consistent with practices in
effect prior to such failure, or with practices
implemented subsequent to a Change of Control, with
respect to senior officers of the Corporation; or
(v) The relocation of the Executive by the Corporation to
a place other than the location at which he performed
his duties for the Corporation immediately prior to
such relocation, except for required travel on the
Corporation's business to an extent substantially
consistent with the Executive's business obligations
to the Corporation;
(vi) Any failure by the Corporation to provide the
Executive with the number of paid vacation days to
which he is entitled, as set forth herein, or the
Corporation failing to increase such paid vacation
days on a basis consistent with practices in effect
prior to such failure, or with practices implemented
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subsequent to a Change of Control, with respect to
the senior officers of the Corporation; or
(vii) The Corporation taking any action to deprive the
Executive of any material fringe benefit enjoyed by
him immediately prior to such deprivation (other than
a reduction in benefits under such plan that does not
reduce the Executive's benefits under any plan by
more than an aggregate of ten percent of the
Executive's then benefits under such plan and which
said reduction applies, in equal percentages, to all
senior officers of the Corporation) or the
Corporation failing to increase or improve such
material fringe benefits on a basis consistent with
practices in effect prior to such deprivation, or
with practices implemented subsequent to a Change of
Control, with respect to senior officers of the
Corporation;
(q) "Incumbent Trustees" has the meaning ascribed thereto in
Section 2.2(h)(ii);
(r) "Issuable Note Shares" shall mean Common Shares of the Company
into which the then outstanding Notes are convertible as if
the then outstanding Notes had been fully converted;
(s) "Just Cause" means the occurrence of any of the following
events:
(i) Serious misconduct, dishonesty or disloyalty of the
Executive directly related to the performance of his
duties for the Corporation which results from a
willful act or omission or from gross negligence and
which is materially injurious to the operations,
financial condition or business reputation of the
Corporation;
(ii) Willful and continued failure by the Executive to
substantially perform his duties under this Agreement
(other than any such failure resulting from his
incapacity due to physical or mental disability or
impairment); or
(iii) Any other material breach of this Agreement by the
Executive.
For purposes of this Agreement, no act, or failure to act, by
the Executive shall be "willful" unless it is done, or omitted
to be done, in bad faith and without a reasonable belief that
the act or omission was in the best interests of the
Corporation;
(t) "Market Price" means on any date, the average market price of
the Common Shares calculated as the simple average of the
closing price of the Common Shares as quoted through NASDAQ on
each of the 10 business days preceding such date on which a
closing price was quoted;
(u) "NASDAQ" means the National Association of Stock Dealers
Automated Quotation System;
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(v) "Notes" shall mean the 8.5% Convertible Senior Subordinated
Notes due 2010 of the Company issued pursuant to an indenture
made between the Company and Xxxxx Fargo Bank, Minnesota,
N.A., as trustee, dated October 10, 2003 (as it may be amended
from time to time);
(w) "Plan" has the meaning ascribed to such term in Section
3.6(b)(i) hereof;
(x) "Prime" means the prime lending rate charged by Royal Bank of
Canada to its most credit worthy customers for U.S. dollar
commercial loans at its main branch in Vancouver, British
Columbia;
(y) "Prorated Bonus" has the meaning ascribed to such term in
subsection 4.1(c) hereof;
(z) "SEC" means the United States Securities and Exchange
Commission;
(aa) "Securities Act" means the SECURITIES ACT OF 1933, as amended;
(bb) "Stock Options" has the meaning ascribed to such term in
Section 3.6(b)(i) hereof; and
(cc) "Trustees" means the trustees of the Corporation, and
"Trustee" means any one of them.
ARTICLE III
TERMS AND CONDITIONS OF CONTINUING EMPLOYMENT
3.1 EMPLOYMENT. The parties acknowledge and agree that the Executive is
employed by the Corporation and will, from the Effective Date, continue
to be employed by the Corporation and will serve the Corporation as the
President and Chief Executive Officer, and in such other related senior
capacity as the Board may from time to time reasonably require. The
Executive shall report to the Board and shall have such authority as
the Board may from time to time delegate to the Executive. The
Executive's duties shall include those duties set forth in Schedule A
hereto and any other duties consistent with the Executive's position in
the Corporation.
3.2 APPOINTMENT AS TRUSTEE. During the term of this Agreement, the
Corporation agrees to nominate the Executive to the position of Trustee
and Chairman of the Board and support the Executive in seeking office
as a Trustee and Chairman of the Board.
3.3 ORDERS OF BOARD. The Executive shall always act in accordance with any
reasonable decision of and obey and carry out all lawful and reasonable
orders given to him by the Board.
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3.4 TIME AND ENERGY. Unless prevented by ill health, or physical or mental
disability or impairment, the Executive shall, during the term hereof,
devote sufficient business time, care and attention to the business of
the Corporation in order to properly discharge his duties hereunder. It
is acknowledged and agreed that the Executive is currently, and may
continue to act as, a director, trustee, officer, shareholder or
investor in other businesses, ventures, entities, institutions and
organizations (herein this Section 3.4 "entities") during the term of
this Agreement provided that: (i) he may only devote time, care and
attention thereto so long as his doing so does not materially adversely
affect the ability of the Executive to devote sufficient time and
energy to properly discharge his duties hereunder; and (ii) he shall
not act as a director or trustee of more than two other entities that
are publicly held or which have their securities listed on any
exchange, quoted on any quotation system or traded on the
over-the-counter market without the prior consent of the Board.
3.5 FAITHFUL SERVICE. The Executive shall well and faithfully serve the
Corporation and use his reasonable efforts to promote the interests
thereof and shall not use for his own purposes, or for any purposes
other than those of the Corporation, any non-public information he may
acquire with respect to the business, affairs and operations of the
Corporation.
3.6 COMPENSATION. During the term of this Agreement, and any extension
thereof, the Corporation shall pay and provide the Executive the
following:
(a) CASH COMPENSATION. As compensation for his services to the
Corporation, the Executive shall receive a base salary (the
"Base Salary") and in addition to the Base Salary shall be
eligible to receive in respect of each calendar year (or
portion thereof) additional variable cash compensation, in an
amount determined in accordance with any bonus, profit sharing
or short term incentive compensation program which may be
established by the Board or the Compensation Committee, as
applicable, either for the Executive or for senior officers of
the Corporation (the "Annual Bonus"). As of the Effective
Date, the Executive's annualized Base Salary shall be EURO
325,000. During the term of this Agreement the Board shall
review the Executive's Base Salary and Annual Bonus then in
effect annually to ensure that such amounts are reasonably
competitive with awards granted to similarly situated
executives of publicly held companies comparable to the
Corporation as may be determined by the Board or the
Compensation Committee, as applicable, from time to time. The
Board shall not reduce the Executive's Base Salary except as
set forth herein. The Board may reduce the Executive's Base
Salary provided such reduction in the Executive's Base Salary
does not exceed an aggregate total of ten percent (10%) of the
Executive's Base Salary in effect as of the Effective Date and
which reduction applies, in equal percentages, to all senior
officers of the Corporation. The Executive's Base Salary and
Annual Bonus shall be payable in accordance with the
Corporation's normal payroll practices, as applicable. No
increase in the Executive's Base Salary and Annual Bonus shall
be used to offset or otherwise reduce any obligations of the
Corporation to the Executive hereunder or otherwise.
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(b) EQUITY COMPENSATION.
(i) STOCK OPTIONS. The Corporation has granted to the
Executive non-qualified stock options (the "Stock
Options") under the Corporation's Amended and
Restated 1992 Non-Qualified Stock Option Plan (the
"Plan") to purchase as at the Effective Date a total
of 1,585,000 Common Shares. The Stock Options shall
expire at the close of business on the first day
following the tenth (10th) anniversary of the date of
their grant. In the case of termination by the
Corporation without Just Cause, voluntary termination
by the Executive for Good Reason, retirement, death
or a Disability Termination, the Stock Options and
any other options or equity grants by the Corporation
then held by the Executive shall remain exercisable
until the earlier of one (1) year from the Date of
Termination or the expiration of such Stock Options
or other options or equity grants. As of the
Effective Date, all the Stock Options granted to the
Executive have vested and are exercisable. The
Compensation Committee may issue additional options,
restricted shares or share appreciation rights to the
Executive as incentive compensation determined in
accordance with any bonus or incentive compensation
plans or programs which may be established by the
Board either for the Executive or senior officers of
the Corporation. The determination as to the amounts
of any awards available to the Executive under such
plans or programs shall be reviewed annually by the
Board or the Compensation Committee, as applicable,
to ensure that such amounts are reasonably
competitive with awards granted to similarly situated
executives of publicly held companies comparable to
the Corporation as may be determined by the
Compensation Committee from time to time.
(ii) TAX LIABILITY. In the event the Executive incurs any
withholding tax liability in connection with the
exercise of the Executive's Stock Options, or any
other rights or options to acquire Common Shares, the
Executive may elect to satisfy his resulting
withholding tax obligation by having the Corporation
retain that number of such Common Shares or other
stock or equity awards having a fair market value
equal to such withholding tax obligation.
(iii) ONGOING AWARDS. The Board shall ensure, and shall
take the necessary action to ensure, that the
Executive participates in the Corporation's incentive
stock plans and any other long-term incentive
programs which may be established by the Board for
senior officers of the Corporation at levels
commensurate with his position as may be determined
by the Compensation Committee.
(c) EMPLOYEE BENEFITS. The Executive shall, to the extent
eligible, be entitled to participate at a level commensurate
with his position in all of the Corporation's employee
benefit, welfare and retirement plans and programs, as well as
equity plans, provided by the Corporation to its senior
officers in accordance with the terms thereof as in effect
from time to time.
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(d) PERQUISITES. The Corporation shall provide the Executive, at
the Corporation's cost, with all perquisites which other
senior officers of the Corporation are entitled to receive and
such other perquisites which are suitable to the character of
the Executive's position with the Corporation and adequate for
the performance of his duties hereunder, including a housing
and living allowance not to exceed in aggregate EURO 75,000
per annum. To the extent legally permissible under applicable
laws, the Corporation shall not treat such amounts as income
to the Executive.
(e) BUSINESS AND ENTERTAINMENT EXPENSES. Upon submission of
appropriate documentation in accordance with its policies in
effect from time to time, the Corporation shall pay or
reimburse the Executive for all business expenses which the
Executive incurs in the performance of his duties under this
Agreement, including, but not limited to, travel,
entertainment, professional dues and subscriptions, and all
dues, fees, and expenses associated with membership in various
professional, business, and civic associations and societies
in which the Executive participates in accordance with the
Corporation's policies in effect from time to time.
(f) FLEXIBLE TIME OFF. The Executive shall be entitled to paid
time off in accordance with the standard written policies of
the Corporation with regard to its senior officers, but in no
event less than twenty (20) days per calendar year not
including, and in addition to, weekends and statutory
holidays.
(g) DEMAND REGISTRATION RIGHTS.
(i) REQUEST FOR REGISTRATION. Subject to subsection
3.6(i)(ii) of this Agreement, the Executive shall be
entitled to make a written request ("Demand
Registration Request") to the Corporation for
registration with the SEC under and in accordance
with the provisions of the Securities Act of all or
part of the Common Shares owned by the Executive (a
"Demand Registration") (which Demand Registration
Request shall specify the intended number of Common
Shares to be disposed of by the Executive and the
intended method of disposition thereof); provided,
that the Corporation may, if the Board so determines
in the exercise of its reasonable, good faith
judgment that due to a pending or contemplated
acquisition or disposition or public offering or
other similar occurrence it would be inadvisable to
effect such Demand Registration at such time, defer
such Demand Registration for a single period not to
exceed one hundred eighty (180) days; provided,
however, in the event that the Corporation proposes
to register shares of beneficial interest of the
Corporation under the Securities Act, whether or not
for sale for its own account, during such single
period, the Corporation shall, as part of or in
conjunction with such registration, register the
Common Shares set forth in the Executive's Demand
Registration Request. Within ten (10) days after
receipt of such request, the Corporation will use its
best efforts to effect the
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registration under the Securities Act of the Common
Shares which the Corporation has been so requested to
register by the Executive.
(ii) NUMBER OF DEMAND REGISTRATIONS. At any time on or
after the Effective Date, the Executive shall be
entitled to make one Demand Registration Request at
any time; provided that (i) the Corporation shall not
be obligated to effect more than one Demand
Registration and (ii) the Executive shall not be
entitled to make a Demand Registration Request during
any period during which (A) all of the Common Shares
may be freely transferred at the same time pursuant
to Rule 144 promulgated under the Securities Act, or
(B) all of the Common Shares have been properly
registered on a registration statement under the
Securities Act, such registration statement is
effective under the Securities Act and all of the
Common Shares may be freely transferable pursuant to
such registration statement.
(iii) EFFECTIVE REGISTRATION AND EXPENSES. A registration
will not count as a Demand Registration until it has
become effective (unless the Executive withdraws the
Common Shares, in which case such demand will count
as a Demand Registration unless the Executive agrees
to pay all the expenses of such registration). The
Corporation shall be solely responsible for any and
all costs and expenses of all registrations and
qualifications under the Securities Act, and of all
other actions the Corporation is required to take in
order to effect the registration of Common Shares
under the Securities Act whether pursuant to this
Agreement or otherwise.
(iv) PRIORITY ON DEMAND REGISTRATIONS. If the offering of
the Executive's Common Shares pursuant to such Demand
Registration is in the form of an underwritten
offering and the managing underwriter or underwriters
of such offering advise the Corporation and the
Executive in writing that in their opinion the number
of Common Shares requested to be included in such
offering is sufficiently large to adversely affect
the success of such offering, the Corporation will
include in such registration the aggregate number of
Common Shares which in the opinion of such managing
underwriter or underwriters can be sold without any
such adverse effect, and such amount shall be
allocated in the following order of priority: (i)
first, any Common Shares that the Corporation or any
other holder proposes to sell; and (ii) second, the
Common Shares of the Executive subject to any such
Demand Registration.
3.7 SHARES IN LIEU OF CASH. Subject to receipt of all necessary regulatory
approvals including, but not limited to, any approvals under any
securities legislation and the rules and regulations of NASDAQ, if any,
the Executive may, at his sole option, exercisable by notice in writing
to the Corporation at least seven (7) business days prior to the
commencement of each period in respect of which such election is made,
elect to have all or a portion of his Base Salary and/or Annual Bonus
paid by way of delivery of Common Shares of the Corporation at a price
per
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share equal to the Market Price as at the day prior to the date of
issue to the Executive equal to the Base Salary and/or Annual Bonus or
a portion thereof elected to be so paid.
3.8 TERM. This Agreement shall remain in force until this Agreement is
terminated pursuant to Article 4 herein.
3.9 AMOUNTS PAYABLE CONSIDERED DEBT. All amounts payable by the Corporation
under this Agreement shall constitute a debt owing by the Corporation
to the Executive.
ARTICLE IV
OBLIGATIONS OF THE CORPORATION UPON TERMINATION
4.1 DEATH OR DISABILITY. The Corporation may terminate the Executive's
employment in the event the Executive has been unable to perform his
material duties hereunder because of Disability by giving the Executive
notice of such termination while such Disability continues (a
"Disability Termination"). The Executive's employment shall
automatically terminate on the Executive's death. In the event the
Executive's employment with the Corporation terminates during the term
of this Agreement by reason of the Executive's death or as a result of
a Disability Termination, then upon and immediately effective the Date
of Termination:
(a) the Executive shall be fully and immediately vested in his
unvested stock options or equity awards granted by the
Corporation to the Executive, that are unvested on the Date of
Termination so that such options and equity awards are fully
and immediately exercisable by the Executive;
(b) the Corporation shall promptly pay and provide the Executive
(or in the event of the Executive's death, the Executive's
estate):
(i) any unpaid Base Salary and any outstanding and
accrued regular and special vacation pay through the
Date of Termination;
(ii) any unpaid Annual Bonus and other bonuses accrued
with respect to the fiscal year ending on or
preceding the Date of Termination;
(iii) reimbursement for any unreimbursed expenses incurred
through to the Date of Termination; and
(iv) all other payments, benefits or fringe benefits to
which the Executive may be entitled subject to and in
accordance with the terms of any applicable
compensation arrangement or benefit, equity or fringe
benefit plan or program or grant, and amounts which
may become due under this Agreement (the payments
referred to herein in subsections 4.1(b)(i) to
4.1(b)(iv) shall, collectively, be referred to as
"Accrued Benefits"); and
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(c) the Corporation shall pay to the Executive (or in the event of
the Executive's death, the Executive's estate) at the time
other senior executives are paid under any cash bonus or long
term incentive plan, a PRO RATA Annual Bonus equal to the
amount the Executive would have received if his employment
continued (without any discretionary cutback) multiplied by a
fraction where the numerator is the number of days in each
respective bonus period prior to the Executive's termination
and the denominator is the number of days in the bonus period
(the "Prorated Bonus").
4.2 TERMINATION FOR JUST CAUSE. The Corporation may terminate the
Executive's employment for Just Cause. In the event that the
Executive's employment with the Corporation is terminated during the
term of this Agreement by the Corporation for Just Cause, the Executive
shall not be entitled to any additional payments or benefits hereunder,
other than the Accrued Benefits (including, but not limited to, any
then vested Stock Options or other options or equity grants) and the
Prorated Bonus which the Corporation shall pay or provide to the
Executive immediately upon the Date of Termination.
Notwithstanding the foregoing, no event shall constitute or be
deemed the basis for termination of the Executive's employment
for Just Cause unless the Executive is terminated therefor
within sixty (60) days after such event is known to the
Chairman of the Corporation, or, if the Executive is the
Chairman, known to a majority of the Board (other than the
Executive) and the Executive shall not be deemed to have been
terminated for Just Cause without:
(a) advance written notice received by the Executive not less than
thirty (30) days prior to the Date of Termination setting
forth the Corporation's intention to consider terminating the
Executive and including a statement of the proposed Date of
Termination, the specific detailed basis for such
consideration of termination for Just Cause and demanding that
the Executive remedy the event, conduct, condition, act or
omission that is the basis for such consideration of
termination for Just Cause set forth in such notice (the "Just
Cause Event") within thirty (30) days of receipt of such
notice by the Executive;
(b) an opportunity for the Executive, together with his counsel,
to be heard before the Board at least ten (10) days after the
giving of such notice and prior to the proposed Date of
Termination;
(c) the failure on the part of the Executive to remedy the Just
Cause Event within thirty (30) days from receipt of such
notice, or any extension thereof granted by the Board, or the
failure on the part of the Executive to take all reasonable
steps to that end during such thirty (30) day period, or any
extension thereof;
(d) a duly adopted resolution of the Board stating that in
accordance with the provisions of the next to the last
sentence of this Section 4.2 that the actions of the Executive
constituted Just Cause and the basis thereof; and
14
(e) a written determination provided by the Board setting forth
the acts and omissions that form the basis of such termination
of employment. Any determination by the Board hereunder shall
be made by the affirmative vote of at least a two-thirds (2/3)
majority of all of the members of the Board (other than the
Executive). Any purported termination of employment of the
Executive by the Corporation which does not meet each and
every substantive and procedural requirement of this Section
4.2 shall be treated for all purposes under this Agreement as
a termination of employment without Just Cause.
4.3 VOLUNTARY TERMINATION FOR GOOD REASON; INVOLUNTARY TERMINATION OTHER
THAN FOR JUST CAUSE. The Executive may terminate his employment with
the Corporation for Good Reason at any time within one hundred eighty
(180) days after the occurrence of the Good Reason event by written
notice to the Corporation. If the Executive's employment with the
Corporation is voluntarily terminated by the Executive for "Good
Reason" or is involuntarily terminated by the Corporation other than
for "Just Cause", then the Corporation shall pay or provide the
Executive with the following:
(a) any Accrued Benefits;
(b) a severance amount equal to three (3) times the sum of: (A)
the Executive's then Base Salary; and (B) the higher of (x)
the Executive's then current Annual Bonus and (y) the highest
variable pay and incentive bonus received by the Executive
from the Corporation for the three (3) fiscal years last
ending prior to such termination, which severance amount is
payable in substantially equal installments over twelve (12)
months in accordance with the Corporation's standard payroll
practice; provided, however, that:
(i) in the event of a Change of Control following such
termination, the unpaid portion of such severance
amount, if any, shall be paid to the Executive in
full in a single lump sum cash payment immediately
following such Change of Control; and
(ii) if such termination occurs in contemplation of, at
the time of, or within three (3) years after a Change
of Control, the Executive shall instead be entitled
to a lump sum cash payment immediately following such
termination equal to three (3) times the sum of: (A)
the Executive's then Base Salary; and (B) the higher
of (x) the Executive's then current Annual Bonus and
(y) the highest variable pay and annual incentive
bonus received by the Executive for the three (3)
fiscal years last ending prior to such termination;
and
(c) the Executive shall be fully and immediately vested in his
unvested Stock Options and any other options or equity awards
granted by the Corporation to the Executive so that such Stock
Options, options and equity awards are fully and immediately
exercisable by the Executive.
15
4.4 WITHOUT GOOD REASON. The Executive may terminate his employment at any
time without Good Reason by written notice to the Corporation. In the
event that the Executive's employment with the Corporation is
terminated during the term of this Agreement by the Executive without
Good Reason, the Executive shall not be entitled to any additional
payments or benefits hereunder, other than Accrued Benefits (including,
but not limited to, any then vested Stock Options, or other options or
equity grants) and the Prorated Bonus which the Corporation shall pay
or provide to the Executive immediately upon the Date of Termination.
4.5 MITIGATION AND OFFSET. In the event of the termination of the
Executive's employment under this Agreement;
(a) The Executive shall be under no obligation to seek other
employment or otherwise mitigate the value of any compensation
or benefits contemplated by this Agreement, nor shall any such
compensation or benefits be reduced in any respect in the
event that the Executive shall secure, or shall not reasonably
pursue, alternative employment or earnings or benefits that
the Executive may receive from any other source;
(b) The amounts payable by the Corporation hereunder shall not be
subject to setoff, offset, counterclaim, recoupment, defence
or other right which the Corporation may have against the
Executive or others; and
(c) The Executive may, at his sole option, set-off or offset any
amounts payable by the Executive to the Corporation against
any amounts payable by the Corporation to the Executive under
this Agreement.
4.6 CHANGE OF CONTROL VESTING ACCELERATION. In the event of a "Change of
Control" and either (i) the Executive is involuntarily terminated by
the Corporation other than for Just Cause, or (ii) the Executive
terminates his employment with the Corporation for Good Reason, the
Executive shall be fully and immediately vested in any unvested stock
options, or other equity awards granted by the Corporation to the
Executive that are unvested on the Date of Termination so that any such
options and equity awards are fully and immediately exercisable by the
Executive.
ARTICLE V
FURTHER EXECUTIVE BENEFITS
5.1 HOUSING. If, at the Date of Termination, the Executive was residing in
a home provided to him by the Corporation, pursuant to a lease or
rental agreement, or other arrangement, between the Corporation and a
third party the Executive may elect, at any time during the sixty (60)
days following the Date of Termination, and the Corporation will permit
the Executive, to assume, or take the assignment of, any such lease or
rental agreement, or other arrangement, respecting such housing in
accordance with the terms of any such lease or
16
rental agreement, or other arrangement, in force between the
Corporation and the party leasing or renting such housing to the
Corporation prior to the Date of Termination.
5.2 OUT OF POCKET AND RELOCATION EXPENSES. Upon termination (other than
termination for Just Cause by the Corporation), the Corporation shall
pay additional reasonable moving and relocation expenses that shall be
incurred by the Executive in connection with the relocation by the
Executive and his family to another location in Europe or North
America. For greater certainty, if the Executive is terminated for Just
Cause pursuant to Section 4.2, he shall not be entitled to recover or
otherwise receive any costs, expenses or other amounts pursuant to this
Section 5.2.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION. The Corporation hereby covenants and agrees that if
the Executive is made a party, or is threatened to be made a party, to
any action, suit or proceeding, whether civil, criminal, administrative
or investigative of any nature whatsoever (a "Proceeding"), by reason
of, or as a result of, the fact that he is or was a Trustee, officer or
employee of the Corporation or is or was serving at the request of the
Corporation as a trustee, director, officer, member, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans,
whether or not the basis of such Proceeding is the Executive's alleged
action in an official capacity while serving as a Trustee, director,
officer, member, employee or agent of the Corporation, the Executive
shall be indemnified and held harmless by the Corporation to the
fullest extent legally permitted or authorized by the Corporation's
constating documents or, if greater, by applicable federal, state or
provincial legislation, against all costs, expenses, liability and
losses of any nature whatsoever (including, without limitation,
attorney's fees, judgments, fines, interest, taxes or penalties and
amounts paid or to be paid in settlement) reasonably incurred or
suffered by the Executive in connection therewith (collectively, the
"Indemnification Amounts"), and such indemnification shall continue as
to the Executive even if he has ceased to be a officer, Trustee,
director, member, employee or agent of the Corporation or other entity
and shall inure to the benefit of the Executive's heirs, executors and
administrators. The Corporation shall: (i) promptly advance to the
Executive the Indemnification Amounts incurred; or (ii) to the extent
legally permissible reasonably estimated to be incurred, by him
immediately upon receipt by the Corporation of a written request for
such advance.
6.2 STANDARD OF CONDUCT. Neither the failure of the Corporation or the
Board to have made a determination prior to the commencement of any
proceeding concerning payment of amounts claimed by the Executive under
Section 6.1 hereof that indemnification of the Executive is proper
because he has met the applicable standard of conduct, nor a
determination by the Corporation or the Board that the Executive has
not met such applicable standard of conduct, shall create a presumption
that the Executive has not met the applicable standard of conduct.
17
ARTICLE VII
GENERAL
7.1 NO PROHIBITION ON EMPLOYMENT. The Executive shall not be prohibited in
any manner whatsoever from obtaining employment with or otherwise
forming or participating in a business competitive to the business of
the Corporation after termination of employment with the Corporation.
7.2 RESIGNATION OF POSITIONS. The Executive agrees that after termination
of his employment with the Corporation he will tender his resignation
from any position he may hold as an officer, director or Trustee of the
Corporation or any of its affiliated or associated companies if so
requested by the Board.
7.3 RIGHTS AND OBLIGATIONS SURVIVE. The respective rights and obligations
of the parties hereunder shall survive any termination of the
Executive's employment to the extent necessary to preserve such rights
and obligations. For greater certainty, notwithstanding anything to the
contrary in this Agreement, the parties hereto acknowledge and agree
that Sections 4.1, 4.2, 4.3, 4.5, 4.6, 5.1, 5.2, 6.1, 7.3, 7.5, 7.7,
7.8, 7.13, 7.14 and 7.16 shall survive the termination of the
Executive's employment with the Corporation and remain in full force
and effect.
7.4 BENEFICIARIES. The Executive shall be entitled, to the extent permitted
under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder
following the Executive's death by giving the Corporation written
notice thereof. In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement to the
Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.
7.5 LEGAL, ACCOUNTING AND PROFESSIONAL EXPENSES. The Corporation shall pay,
to the full extent permitted by law, all legal, accounting and other
professional fees and related expenses the Executive, the Executive's
legal representatives or the Executive's family may reasonably incur in
connection with the preparation of this Agreement, any contest by the
Corporation, the Executive or others of the validity or enforceability
of, interpretation of, or liability under, any provision of this
Agreement or as a result of any action by the Executive, the
Executive's legal representatives or the Executive's family to enforce
his or their rights under this Agreement, plus interest, compounded
quarterly, on the total unpaid amount determined to be payable under
this Agreement, such interest to be calculated at a rate equal to 2% in
excess of Prime in effect from time to time during the period of such
non-payment. The Corporation shall advance to the Executive such fees
and expenses incurred, by him in connection with such negotiation and
preparation, contest or action within ten (10) Banking Days after
receipt by the Corporation of a written request for such amount.
Notwithstanding any other provision herein, in the event that an
action, proceeding or other claim whatsoever is made in a court of
competent jurisdiction by the Executive, his legal representatives or
family or the Corporation (collectively, a "Proceeding") and is
determined by such court in favour of the
18
Corporation pursuant to a final non-appealable judgment or order, the
Executive shall repay to the Corporation all amounts for professional
fees provided to him in respect of that particular Proceeding pursuant
to this Section 7.5.
7.6 FAIR AND REASONABLE PROVISIONS. The Corporation and Executive
acknowledge and agree that the provisions of this Agreement regarding
further payments of the Executive's Base Salary, Annual Bonus and other
bonuses, and the exercisability and vesting of his Stock Options, and
other options or equity grants, constitute fair and reasonable
provisions for the consequences of such termination, do not constitute
a penalty, and such payments and benefits shall not be limited or
reduced by amounts the Executive might earn or be able to earn from any
other employment or ventures during the remainder of the agreed term of
this Agreement.
7.7 LUMP SUM PAYMENT. Except as otherwise specifically provided in this
Agreement, the Corporation shall pay the Executive any lump sum payment
due to him under this Agreement within ten (10) Banking Days of the
Date of Termination. Any payments due to the Executive under this
Agreement that are not paid within such time shall accrue interest,
compounded quarterly, on the total unpaid amount payable under this
Agreement, such interest to be calculated at a rate equal to 2% in
excess of Prime then in effect from time to time during the period of
such non-payment. No payments due to the Executive under this Agreement
may be offset by the Corporation by amounts due to the Corporation from
the Executive.
7.8 LIABILITY INSURANCE. The Corporation shall use its best efforts to
obtain and continue coverage of the Executive under trustees and
officers liability insurance both during and, while potential liability
exists, after the Executive's employment with the Corporation in the
same amount and to the same extent, if any, as the Corporation covers
its other Trustees, officers and directors.
7.9 NO DEROGATION OF RIGHTS. Nothing herein derogates from any rights
the Executive may have under applicable law.
7.10 ASSIGNABILITY. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, heirs
(in the case of the Executive) and assigns. No rights or obligations of
the Corporation under this Agreement may be assigned or transferred by
the Corporation except that such rights or obligations may be assigned
or transferred pursuant to a merger, amalgamation, reorganization,
continuance or consolidation in which the Corporation is not the
continuing entity, or the sale or liquidation of all or substantially
all of the assets of the Corporation, provided that the assignee or
transferee is the successor to all or substantially all of the assets
of the Corporation and such assignee or transferee assumes the
liabilities, obligations and duties of the Corporation, as contained in
this Agreement, either contractually or as a matter of law. The
Corporation further agrees that, in the event of a sale of assets or
liquidation as described in the preceding sentence, it shall take
whatever action it legally can in order to cause such assignee or
transferee to expressly assume the liabilities, obligations and duties
of the Corporation hereunder. No rights or obligations of
19
the Executive under this Agreement may be assigned or transferred by
the Executive other than: (a) his rights to compensation and benefits,
in whole or in part, which may be transferred by the Executive to (i) a
corporation owned or controlled by the Executive or members of the
Executive's family, (ii) a trust, the beneficiaries of which are the
Executive or members of the Executive's family, (iii) a charity, a
foundation or trust established for charitable purposes, or which may
be transferred by the Executive's will or the operation of law; (b) to
a corporation through which the Executive shall provide the services
required of him hereunder; and (c) as provided in Section 7.4 hereof.
7.11 AUTHORIZATION. The Corporation represents and warrants that it is fully
authorized and empowered to enter into this Agreement and perform its
obligations hereunder, which performance will not violate any agreement
between the Corporation and any other person, firm or organization nor
breach any provisions of its constating documents or governing
legislation.
7.12 AMENDMENT OR WAIVER. No provision in this Agreement may be amended
unless such amendment is agreed to in writing and signed by the
Executive and an authorized officer of the Corporation. No waiver by
either party hereto of any breach by the other party hereto of any
condition or provision contained in this Agreement to be performed by
such other party shall be deemed a waiver of a similar or dissimilar
condition or provision at the same or any prior or subsequent time. Any
waiver must be in writing and signed by the Executive or an authorized
officer of the Corporation, as the case may be.
7.14 INTERPRETATION OF PLAN AND OPTION AGREEMENTS. In the event of a
conflict between, or inconsistency with, any, or any part, of the terms
or provisions of this Agreement and the terms or provisions of the Plan
or any written stock option agreement between the Executive and the
Corporation (the "Option Agreements"), as the case may be, the terms
and provisions of this Agreement shall be deemed to govern, supersede,
and take precedence over such inconsistent or conflicting terms and
provisions contained in the Plan and the Option Agreements, as the case
may be.
7.15 GOVERNING LAW AND VENUE. This Agreement shall be construed and
interpreted in accordance with the laws of the Province of British
Columbia. Each of the parties hereby irrevocably attorns to the
non-exclusive jurisdiction of the courts of the Province of British
Columbia, situate in Vancouver, with respect to any matters arising out
of this Agreement.
7.16 NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be properly given if delivered
or mailed by prepaid registered mail addressed as follows:
20
(a) in the case of the Corporation:
Xxxxxx International Inc. with a copy to:
00000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxx 000 Xxxxxx International Inc.
Xxxxxxx, Xxxxxxxxxx, 00000 c/o Xxxxx 0000,
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
(b) in the case of the Executive:
to the last address of the Executive in the records of the
Corporation and its subsidiaries or to such other address as
the parties may from time to time specify by notice given in
accordance herewith.
Any notice so given shall be conclusively deemed to have been
given or made on the day of delivery, if delivered, or if
mailed as aforesaid, upon the date shown on the postal return
receipt as the date upon which the envelope containing such
notice was actually received by the addressee.
7.17 SEVERABILITY. If any provision contained herein is determined to be
void or unenforceable for any reason, in whole or in part, it shall not
be deemed to affect or impair the validity of any other provision
contained herein and the remaining provisions shall remain in full
force and effect to the fullest extent permissible by law.
7.18 ENTIRE AGREEMENT. Other than the Amended and Restated Trustee's
Indemnity Agreement between the Executive and the Corporation dated for
reference February 4, 2003 (the "Indemnity Agreement"), this Amended
and Restated Employment Agreement contains the entire understanding and
agreement between the parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the
parties with respect thereto. For greater certainty, notwithstanding
anything to the contrary in this Agreement, the parties hereto
acknowledge and agree that nothing contained herein is intended to
modify, abridge, limit or affect any of the rights or obligations of
the parties hereto contained in the Indemnity Agreement.
7.19 CURRENCY. Unless otherwise specified herein all references to EURO,
Euro or Euros are references to European Union Euros.
7.20 FURTHER ASSURANCES. Each of the Executive and the Corporation will do,
execute and deliver, or will cause to be done, executed and delivered,
all such further acts, documents and things as the Executive or the
Corporation may require for the purposes of giving effect to this
Agreement.
7.21 COUNTERPARTS/FACSIMILE EXECUTION. This Agreement may be executed in
several parts in the same form and such parts as so executed shall
together constitute one original document, and
21
such parts, if more than one, shall be read together and construed as
if all the signing parties had executed one copy of the said Agreement.
7.22 AMENDMENT AND RESTATEMENT. This Amended and Restated Employment
Agreement is hereby amended, ratified and confirmed by each of the
parties hereto and shall amend and restate in its entirety the amended
and restated employment agreement made between the parties dated
November 20, 2000 which is hereby terminated and null and void.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date first
above written.
XXXXXX INTERNATIONAL INC.
By: /S/ XXXXXXX XXXXXXXXX
------------------------------------
Name: Xxxxxxx XxXxxxxxx /S/ XXXXX X.X. XXX
Title: Trustee -------------------------
Xxxxx X.X. Xxx
A-1
SCHEDULE A
EXECUTIVE'S DUTIES
Management of all matters relating to the operations of the Corporation,
including:
1. Performance of the duties of President of the Corporation and Trustee
of the Corporation normally associated with the office of Chief
Executive Officer;
2. Supervision of investor relations and corporate information
dissemination;
3. Participation in the development of policies and programs for review
and approval by the Board;
4. The review and assessment of business opportunities presented to the
Corporation;
5. Preparation of business plans as required from time to time for review
and approval by the Board;
6. Monitoring and control of the operations of the Corporation; and
7. Performance of such other duties consistent with the Executive's
position which the Board shall, from time to time, reasonably direct.
