Exhibit 10.1
Xxxxx.xxx, Inc.
Suite C200 - 0000 Xxxxxxx Xxxxxx
Xxxxxx xxx Xxx, Xxxxxxxxxx 00000
August 17, 2001
Xxxxx Xxxxxx
c/o Suite C200 - 0000 Xxxxxxx Xxxxxx
Xxxxxx xxx Xxx, Xxxxxxxxxx
00000
Dear Xxxxx:
Re: Termination Agreement
We provide this letter to confirm the terms and conditions upon which your
employment with Xxxxx.xxx, Inc. and Xxxxx.xxx (Canada) Enterprises Inc.
(together, "Xxxxx.xxx") will be ending by mutual agreement. When you sign and
return a copy of this letter to Xxxxx.xxx, this letter will become a binding
agreement.
1. Your employment under the written employment agreement made between us,
Bingo, Inc., and Redruth Ventures Inc. ("Redruth") dated April 16, 2001
(the "Employment Agreement") is terminated as of August 31, 2001. As a
result, all rights and obligations under the Employment Agreement,
other than sections 1, 3 and 7 and subsections 4(c), 4(e), 4(g) and
4(h) (which expressly survive the termination of your employment), are
terminated as of August 31, 2001.
2. Please return all property belonging to Xxxxx.xxx that is in your
possession, including all written information, tapes, discs or memory
devices and copies thereof, and any other material on any medium in
your possession or control relating to the business or affairs of
Xxxxx.xxx, without retaining any copies or records of confidential or
proprietary information whatsoever. Please return any keys, pass cards,
identification cards or other property belonging to Xxxxx.xxx.
3. With respect to salary, vacation pay and any other benefits, Xxxxx.xxx
will pay you any outstanding salary, vacation pay and benefits payable
under the Employment Agreement or pursuant to the Employment Standards
Act (British Columbia) for your employment up to and including August
31, 2001.
4. Xxxxx.xxx, Redruth and Xxxxx Xxxxx ("White") hereby covenant and agree
as follows:
(a) Xxxxx.xxx will make a payment to you of Cdn$10,000, on the
first day of each and every month for 12 months commencing on
September 1, 2001. The payments will be made to you by way of
12 post-dated cheques, which will be delivered to you on or
before August 31, 2001. You will be responsible for making and
remitting any necessary statutory deductions;
(b) White will execute a personal guarantee substantially in the
form attached as Schedule "A" hereto, whereby he will
guarantee payment to you of the 12 monthly payments of
Cdn$10,000 each as they become due and owing to you by
Xxxxx.xxx;
(c) Xxxxx.xxx will pay you Cdn$130,000 by issuing to you 250,000
Common shares (the "Shares") of Xxxxx.xxx, Inc. as validly
issued and outstanding fully paid and non-assessable Common
shares of Xxxxx.xxx, Inc. registered in your name and
beneficially owned by you. The Shares will be "restricted
securities" and will be subject to the conditions of the
resale exemption provided by U.S. Securities and Exchange
Commission Rule 144 ("Rule 144") including, without
limitation, a one-year hold period from the date of issuance
of the Shares;
(d) The payments under subparagraphs 4(a) and 4(c) and the other
covenants and agreements under this paragraph 4 are in full
satisfaction of all contractual, common law and statutory
obligations of Xxxxx.xxx regarding severance pay, notice,
payment in lieu of notice or damages of any kind including,
without limitation, any entitlements under the Employment
Standards Act (British Columbia).
(e) As of the date of this letter, you hold stock options to
purchase up to 1,100,000 Common shares of Xxxxx.xxx (the
"Options"). All of the Options will vest immediately.
Notwithstanding anything contained in the Employment
Agreement, the 1999 Non-Qualified Stock Option Plan, the Stock
Option Agreement dated December 13, 2000 or the Second Amended
and Restated Stock Option Agreement dated December 13, 2000,
your Options will expire on August 31, 2003;
(f) Xxxxx.xxx will sign a release substantially in the form
attached as Schedule "B" hereto;
(g) Xxxxx.xxx, Redruth and White will cause Xxxxxx Xxxxxxxx to be
appointed as President and Chief Executive Officer of
Xxxxx.xxx and Xxxxx.xxx (Canada) Enterprises Inc. and Xxxxxx
Xxxxxxxx will hold such offices until such time as Xxxxxx
Xxxxxxxx approves a successor; and
(h) The 750,000 Common shares issued to you under subsection 2(f)
of the Employment Agreement will be released to you on August
31, 2001. You acknowledge that the shares will be "restricted
securities" and will be subject to the conditions of the
resale exemption provided by Rule 144 including, without
limitation, a one-year hold period from July 11, 2001.
5. In consideration of the covenants and agreements of Xxxxx.xxx, Redruth
and White under paragraph 4 of this letter, you hereby covenant and
agree as follows:
(a) You will deliver a written resignation as director, President,
Chief Executive Officer, Chairman of the Board, Treasurer and
Secretary of Xxxxx.xxx, Inc. and director, President, Chief
Executive Officer and Secretary of Xxxxx.xxx (Canada)
Enterprises Inc. to Xxxxx.xxx for insertion into the minute
books of the companies;
(b) You will use your reasonable best efforts to cause Xxxxx Xxxxx
to resign as a director of Xxxxx.xxx, Inc.; and
(c) You will sign a release substantially in the form attached as
Schedule "B" hereto.
-2-
6. Provided that Xxxxx.xxx, White and Redruth remain in good standing with
respect to their obligations to you under paragraph 4 of this letter
(including, without limitation, payment of the monthly payments within
five days of the date that each becomes due and owing), you further
covenant and agree that:
(a) You will appoint by proxy a proxyholder to be determined by
Xxxxx.xxx and Redruth as your nominee to attend and act at
shareholder meetings of Xxxxx.xxx, Inc. The proxy will
represent all of the Common shares that you hold from time to
time of Xxxxx.xxx, Inc.;
(b) Prior to August 31, 2003 you will not, in any one day, sell a
number of Common shares of Xxxxx.xxx, Inc. that is greater
than 25% of the volume of Common shares of Xxxxx.xxx, Inc.
that is traded on a stock exchange on that day; and
(c) If at any time to desire to sell, exchange, assign or dispose
(a "Transfer") any of the Common shares that you acquire upon
the exercise of the Options, you may only do so if you first
offer Xxxxx.xxx, Inc. the prior right to purchase, receive or
acquire such shares on the following basis:
(i) the offer must be made by written notice to
Xxxxx.xxx, Inc. and must specify the number of shares
that you desire to Transfer;
(ii) Xxxxx.xxx, Inc. will have the right to accept the
offer to purchase some or all of the offered shares
from you;
(iii) the purchase price per share will be the closing
trading price of the Common shares on the last
trading day immediately preceding the date the offer
is made;
(iv) Xxxxx.xxx, Inc. will have 48 hours after receipt of
the offer (the "Offering Period") to deliver written
notice to you that Xxxxx.xxx, Inc. either accepts or
rejects the offer. Failure to deliver such notice
will be deemed to be a rejection of the offer;
(v) if Xxxxx.xxx, Inc. does not accept the Offer, then
you may transfer some or all of the offered shares to
a third party provided that the transfer is completed
within a 90 day period following the Offering Period
(after which period has expired you must again comply
with this subparagraph before you Transfer any of the
Common shares that you acquire upon the exercise of
the Options); and
(vi) the closing of the purchase of the shares by
Xxxxx.xxx, Inc. will take place within the 30 day
period following the Offering Period.
7. We take this opportunity to remind you that your obligations to
Xxxxx.xxx not to disclose trade secrets and other confidential
information and not to compete with or solicit the business or
employees of Xxxxx.xxx continue beyond the termination of your
employment.
-3-
We wish you every success in the future.
Xxxxx.xxx, Inc. Redruth Ventures Inc.
per: per:
"Xxxxx Xxxxxx" "Xxxxx Xxxxx"
---------------------------------------- ---------------------
Authorized Signatory Authorized Signatory
Xxxxx.xxx (Canada) Enterprises Inc.
per:
"Xxxxx Xxxxxx"
-------------------------------------------
Authorized Signatory
)
SIGNED, SEALED & DELIVERED )
by Xxxxx Xxxxx in the presence of: )
)
"Xxxxx Xxxxxxxxx" ) "Xxxxx Xxxxx"
------------------------------------------------------- -----------------
Signature of Witness ) Xxxxx Xxxxx
)
Name of Witness: C. Xxxxx Xxxxxxxxx )
)
Address of Witness: #0000 - 0000 Xxxxxxxx Xxxxxx, )
Xxxxxxxxx, XX )
Occupation of Witness: Chartered Accountant
I hereby agree to the terms and conditions contained in this letter, in witness
whereof I have hereunto set my hand and seal this 17th day of August, 2001.
)
SIGNED, SEALED & DELIVERED )
by Xxxxx Xxxxxx in the presence of: )
)
"Xxxxx Xxxxxxxxx" ) "Xxxxx Xxxxxx"
------------------------------------------------------- -----------------
Signature of Witness ) Xxxxx Xxxxxx
)
Name of Witness: C. Xxxxx Xxxxxxxxx )
)
Address of Witness: #0000 - 0000 Xxxxxxxx Xxxxxx, )
Xxxxxxxxx, XX )
Occupation of Witness: Chartered Accountant
-4-
SCHEDULE "A"
PERSONAL GUARANTEE
To: Xxxxx Xxxxxx
c/o Suite C200 - 0000 Xxxxxxx Xxxxxx
Xxxxxx xxx Xxx, Xxxxxxxxxx
00000
For consideration the undersigned hereby guarantees payment to Xxxxx Xxxxxx (the
"Creditor") of Cdn$120,000 as it becomes due and owing to the Creditor by
Xxxxx.xxx, Inc. and Xxxxx.xxx (Canada) Enterprises Inc. (together, the "Debtor")
in accordance with the terms of a Termination Agreement dated August 17, 2001
among the Creditor, the undersigned, Redruth Ventures Inc. and the Debtor (the
"Termination Agreement"). Under the Termination Agreement, a payment of
Cdn$10,000 shall become due and owing to the Creditor by the Debtor on the first
day of each and every month for 12 months commencing on September 1, 2001.
It is agreed that no change in the name, objects, capital stock or constitution
of the Debtor, shall in any way affect the liability of the undersigned, either
with respect to transactions occurring before or after any such change, and the
Creditor shall not be concerned to see or inquire into the powers of the Debtor
or any of its directors or other agents, acting or purporting to act on its
behalf, and moneys, advances, renewals or credits, in fact borrowed or obtained
from the Creditor in professed exercise of such powers shall be deemed to form
part of the debts and liabilities hereby guaranteed, notwithstanding that such
borrowing or obtaining of moneys, advances, renewals or credits shall be in
excess of the powers of the Debtor or of its directors or other agents
aforesaid, or be in any way irregular, defective or informal.
It is further agreed that the Creditor, without exonerating in whole or in part
the undersigned, may grant time, renewals, extensions, indulgences, releases and
discharges to, may take securities from and give the same and any or all
existing securities up to, may abstain from taking securities from, or from
perfecting securities of, may accept compositions from, and may otherwise deal
with the Debtor and all other persons (including the undersigned, and any other
guarantor) and securities, as the Creditor may see fit, and that all dividends,
compositions, and moneys received by the Creditor from the Debtor or from any
other persons or estates capable of being applied by the Creditor in reduction
of the debts and liabilities hereby guaranteed, shall be regarded for all
purposes as payments in gross, and the Creditor shall be entitled to prove
against the estate of the Debtor upon any insolvency or winding-up in respect of
the whole of said debts and liabilities and the undersigned shall have no right
to be subrogated to the Creditor in respect of any such proof until the Creditor
shall have received from such estate payment in full of its claim with interest.
And it is further agreed that this shall be a continuing Guarantee, and shall
cover and secure any ultimate balance owing to the Creditor, but the Creditor
shall not be obliged to exhaust its recourse against the Debtor or other persons
or the securities it may hold before being entitled to payment from the
undersigned of all and every of the debts and liabilities hereby guaranteed;
Provided always that the undersigned, or the executor, administrator or legal
representative of the undersigned, may determine his further liability under
this continuing guarantee by ninety days' notice in writing to be given to the
Creditor, and the liability hereunder of the undersigned, and his executor,
administrator or legal representative shall continue until the expiration of
ninety days after the giving of such notice, notwithstanding the death or
insanity of the undersigned, and after the expiry of such notice the
undersigned, and his executor, administrator or legal representative shall
remain liable under this guarantee in respect of any sum or sums of money owing
to the Creditor as aforesaid on the date such notice expired and also in respect
of any contingent or further liabilities incurred to or by the Creditor on or
before such date but maturing thereafter. Every Certificate issued under the
hand of the Creditor for
the time being purporting to show the amount at any particular time due and
payable to the Creditor, and covered by this Guarantee, shall be received as
conclusive evidence as against the undersigned, and his executor, administrator
or legal representative, that such amount is at such time so due and payable to
the Creditor and is covered hereby.
This contract shall be construed in accordance with the laws of the Province of
British Columbia and for the purpose of legal proceedings this Guarantee shall
be deemed to have been made in the said Province and to be performed there, and
the Courts of that Province shall have jurisdiction over all disputes which may
arise under this Guarantee, provided always that nothing herein contained shall
prevent the Creditor from proceeding at his election against the undersigned in
the Courts of any other Province or country.
Notwithstanding the provisions of any Statute relating to the rate of interest
payable by debtors, this Guarantee shall remain in full force and effect
whatever the rate of interest received or demanded by the Creditor.
All debts and liabilities present and future of the Debtor to the undersigned
are hereby postponed to the debts and liabilities of the Debtor to the Creditor
and all moneys received by the undersigned or his assign thereon shall be
received as trustee for the Creditor and shall be paid over to the Creditor.
The undersigned acknowledges that this Guarantee has been delivered free of any
conditions and that no representations have been made to the undersigned
affecting the liability of the undersigned under this Guarantee save as may be
specifically embodied herein and agrees that this Guarantee is in addition to
and not in substitution for any other Guarantees held or which may hereafter be
held by the Creditor.
The undersigned confirms that counsel for the Debtor has acted in the subject
matter of this Guarantee on behalf of the Debtor only, and is not acting for the
undersigned or for the directors, officers or shareholders of the Debtor in
their personal capacities. The undersigned acknowledges that the Debtor has
advised the undersigned to obtain independent legal advice concerning the
subject matter of this Guarantee.
AS WITNESS the hands and seals of the undersigned, at _______________ this 17th
day of August, 2001.
SIGNED, SEALED & DELIVERED )
by Xxxxx Xxxxx in the presence of: )
)
"Xxxxx Xxxxxxxxx" )
------------------------------------------------------- )
Signature of Witness ) "Xxxxx Xxxxx"
) -------------
) Xxxxx Xxxxx
Name of Witness: C. Xxxxx Xxxxxxxxx )
)
Address of Witness: #0000 - 0000 Xxxxxxxx Xxxxxx, )
Xxxxxxxxx, XX )
)
Occupation of Witness: Chartered Accountant )
)
-2-
SCHEDULE "B"
MUTUAL RELEASE
THIS MUTUAL RELEASE dated for reference and effective the 20 day of
August, 2001.
BETWEEN:
XXXXX.XXX, INC., at Suite C200 - 0000 Xxxxxxx Xxxxxx, Xxxxxx
xxx Xxx, Xxxxxxxxxx, 00000;
("Xxxxx.xxx")
AND:
XXXXX.XXX (CANADA) ENTERPRISES INC., at Suite C200 - 0000
Xxxxxxx Xxxxxx, Xxxxxx xxx Xxx, Xxxxxxxxxx, 00000;
("Xxxxx.xxx Canada")
AND:
XXXXX XXXXXX, c/o Suite C200 - 0000 Xxxxxxx Xxxxxx, Xxxxxx xxx
Xxx, Xxxxxxxxxx, 00000;
("Xxxxxx")
IN CONSIDERATION of the covenants and agreements made by or on behalf of
Xxxxx.xxx and Xxxxx.xxx Canada to Xxxxxx under the termination agreement dated
August 17, 2001 among Xxxxxx, Xxxxx.xxx, Xxxxx.xxx Canada, Xxxxx Xxxxx and
Redruth Ventures Inc. (the "Termination Agreement"), the receipt and sufficiency
of which is hereby duly accepted and acknowledged by Xxxxxx, and in further
consideration of the mutual promises and agreements contained herein, Xxxxxx,
Xxxxx.xxx and Xxxxx.xxx Canada each covenant and agree as follows:
ARTICLE 1
RELEASES AND INDEMNIFICATION
1.1 Release by Bingo Group
(a) Except with respect to the Termination Agreement, Xxxxx.xxx, Xxxxx.xxx
Canada, their divisions and subsidiaries, affiliates and predecessors
and their respective officers, directors, employees, servants, agents,
successors, heirs, administrators, executors, estates and assigns
(collectively, the "Bingo Group") release and forever discharge Xxxxxx
of and from any and all manner of action and actions, suits, debts,
dues, sums of money, accounts, covenants, contract, undertakings,
claims, losses, expenses and damages of every nature and kind
whatsoever, at law or in equity, which the Bingo Group had, has, or
which the Bingo Group can, shall or may have by reason of or arising
out of any matter, thing or cause whatsoever existing up to the present
time, whether now known to the Bingo Group or not and, in particular,
but without restricting the
generality of the foregoing, by reason of any matter, cause or thing
arising from the employment of Xxxxxx.
(b) The Bingo Group covenants and agrees that it will not make or continue
any claim or any proceeding at any time in respect of any matter
released under this Mutual Release that might result in any claim or
proceeding against Xxxxxx. If any such claim or proceeding has already
been commenced, or is commenced at any subsequent date, and if such
claim or proceeding results in a claim or proceeding against Xxxxxx,
then the Bingo Group will discontinue each such claim or proceeding and
will indemnify and save harmless Xxxxxx from all liabilities, claims,
losses, expenses, damages and costs, including solicitors' fees and
disbursements, together with all applicable taxes of every nature and
kind whatsoever, resulting from each such claim or proceeding.
1.2 Release by Xxxxxx Group
(a) Except with respect to (i) the Termination Agreement; and (ii) the
Stock Option Agreement dated December 13, 2000 (the "Option Agreement")
and the Second Amended and Restated Stock Option Agreement dated
December 13, 2000 (the "Second Option Agreement"), Xxxxxx does for
himself, his heirs, executors, administrators, successors and assigns
(collectively, the "Xxxxxx Group"), release and forever discharge the
Bingo Group of and from any and all manner of action and actions,
suits, debts, dues, sums of money, accounts, covenants, contracts,
undertakings, claims, losses, expenses and damages of every nature and
kind whatsoever, at law or in equity, which the Xxxxxx Group had, now
has, or which the Xxxxxx Group can, shall, or may have by reason of or
arising out of any matter, thing or cause whatsoever existing up to the
present time, whether now known to the Xxxxxx Group or not and, in
particular, but without restricting the generality of the foregoing, by
reason of any matter, cause or thing relating in any manner to Xxxxxx'x
employment with, or the termination of his employment by, the Bingo
Group.
(b) Except with respect to (i) the Termination Agreement; and (ii) the
Option Agreement and the Second Option Agreement, the Xxxxxx Group
covenants and agrees that it will not make or continue any claim or any
proceeding at any time in respect of any matter released under this
Mutual Release that might result in any claim or proceeding against the
Bingo Group. If any such claim or proceeding has already been
commenced, or is commenced at any subsequent date, and if such claim or
proceeding results in a claim or proceeding against the Bingo Group,
then the Xxxxxx Group will discontinue each such claim or proceeding
and will indemnify and save harmless the Bingo Group from all
liabilities, claims, losses, expenses, damages and costs, including
solicitors' fees and disbursements, together with all applicable taxes
of every nature and kind whatsoever, resulting from each such claim or
proceeding.
ARTICLE 2
INDEMNIFICATION BY xXXXXX
2.1 Indemnification
The Xxxxxx Group further covenants and agrees to save harmless and indemnify the
Bingo Group from and against any and all claims, charges, taxes or penalties and
demands that may be made by the Minister of National Revenue pursuant to the
Income Tax Act (Canada) or the Unemployment Insurance Commission or the Pension
Commission under applicable statutes and regulations, for and in respect of
withholdings that may arise from the payments under the Termination Agreement
and in respect of any
-2-
claims or demands by Human Resources Development Canada for overpaid benefits,
which according to Human Resources Development Canada ought to have been
deducted from any amounts paid under the Termination Agreement and to have been
remitted to the Receiver General by the Bingo Group, plus any interest or
penalties relating thereto and any reasonable costs or expenses incurred in
defending such claims or demands.
ARTICLE 3
GENERAL
3.1 Governing Law and Attornment
This Mutual Release will be governed by and construed in accordance with the
laws of British Columbia and the federal laws of Canada applicable in British
Columbia, without regard to the conflict of the law rules of British Columbia.
The Bingo Group and the Xxxxxx Group each hereby irrevocably and unconditionally
attorn to the exclusive jurisdiction of the Courts of British Columbia and all
courts competent to hear appeals therefrom. 3.2 Entire Agreement
The parties acknowledge and warrant that the terms of this Mutual Release
contain the entire agreement between them relating to the subject matter hereof
and that they have each had an opportunity to consult with and obtain advice
from their own solicitors before entering into this Mutual Release and that they
have read this Mutual Release and know the contents hereof and fully understand
them. There is no representation, warranty, collateral term or condition or
collateral agreement affecting this Mutual Release, other than as expressed in
writing in this Mutual Release.
3.3 No Admissions
The parties each acknowledge that the execution of this Mutual Release is not an
admission of any liability in any sense of the parties to this Mutual Release,
and agree that this Mutual Release may not be used by anyone as evidence of an
admission of liability or in any other manner except to the extent necessary to
enforce the terms of this Mutual Release.
3.4 Counterparts
This Mutual Release may be executed in any number of counterparts with the same
effect as if all parties had signed the same document. All of these counterparts
will for all purposes constitute one Mutual Release, binding on each such party,
notwithstanding that each party is not a signatory to the same counterpart.
3.5 Enurement
This Mutual Release will enure to the benefit of and be binding on the parties
and their respective heirs, executors, administrators, successors and assigns.
3.6 Headings
The headings and captions of sections and paragraphs contained in this Mutual
Release are all inserted for convenience of reference only and are not to be
considered when interpreting this Mutual Release.
[The next page is the execution page.]
-3-
IN WITNESS WHEREOF the parties hereto have executed this Mutual Release
effective as of the date specified on the first page of this Mutual Release.
SIGNED, SEALED & DELIVERED by XXXXX )
XXXXXX in the presence of: )
)
)
"Xxxxx Xxxxxxxxx" ) "Xxxxx Xxxxxx"
------------------------------------------------------- ) --------------
Signature of Witness ) XXXXX XXXXXX
Name of Witness: C. Xxxxx Xxxxxxxxx )
Address of Witness: #0000 - 0000 Xxxxxxxx Xxxxxx, )
Xxxxxxxxx, XX )
)
Occupation of Witness: Chartered Accountant )
)
)
XXXXX.XXX, INC.:
Per:
"Xxxxx Xxxxxx"
-----------------------------------
Authorized Signatory
XXXXX.XXX (CANADA) ENTERPRISES INC.
Per:
"Xxxxx Xxxxxx"
-----------------------------------
Authorized Signatory
-4-
