Exhibit (c)(5)
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_____________________________________________________________________________
EMPLOYMENT AGREEMENT
by and between
CEC RESOURCES LTD.
and
Xxxxx X. Xxxxxxxxx
Dated as of November 16, 1998
_____________________________________________________________________________
Table of Contents
Article I Term of Employment............................................... 1
1.1 Position and Employment Period...................................... 1
1.2 Change in Control................................................... 1
Article II Duties.......................................................... 3
2.1 Duties.............................................................. 3
Article III Compensation................................................... 3
3.1 Salary.............................................................. 3
3.2 Options............................................................. 3
3.3 Benefits............................................................ 3
3.4 Incentive Compensation.............................................. 4
3.5 Reimbursement of Expenses........................................... 4
Article IV Death and Disability............................................ 4
4.1 Death............................................................... 4
4.2 Disability.......................................................... 4
4.3 Determination of Disability......................................... 5
Article V Termination Benefits............................................. 5
5.1 Severance Payments.................................................. 5
5.2 Title for Cause..................................................... 6
Article VI. Covenants of Executive......................................... 6
6.1 Confidential Information............................................ 6
Article VII. Miscellaneous................................................. 6
7.1 Disagreements....................................................... 6
7.2 Binding Effect; Benefits............................................ 6
7.3 Notices............................................................. 7
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7.4 Entire Agreement.................................................... 7
7.5 Amendments and Waivers.............................................. 7
7.6 Section Headings.................................................... 7
7.7 Severability........................................................ 7
7.8 Governing Law....................................................... 7
7.9 Counterparts; Facsimile............................................. 7
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Employment Agreement
THIS EMPLOYMENT AGREEMENT (this "Agreement") is dated this 30th day of
June, 1998 and will be effective as of November 16, 1998 (the "Effective Date"),
by and between CEC RESOURCES LTD., an Alberta, Canada corporation, with offices
at 0000 Xxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000 ("Company"), and Xxxxx X.
Stuzeski ("Executive"), residing at 00000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxx 00000.
Recitals
WHEREAS, Company desires to acquire the services of Executive, and
Executive desires to be employed by Company upon the terms and conditions set
forth in this Agreement.
Agreement
NOW THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
Article I
Term of Employment
1.1 Position and Employment Period. Company hereby employs Executive as
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its Chief Financial Officer, and Executive hereby accepts employment with
Company, all in accordance with the terms and conditions hereof, for an initial
two year term commencing on the Effective Date and ending two (2) years from
that date, unless otherwise terminated as provided in Section 1.2 or Articles IV
and V. This Agreement shall continue from year to year thereafter unless Company
gives written notice of termination to Executive at least three months preceding
the date of termination or Executive gives such notice to Company on or at least
three months preceding the date of termination (the initial two-year term is
referred to as the "Initial Employment Period," and together with any subsequent
periods of employment pursuant hereto, the "Employment Period").
1.2 Change in Control.
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(a) Hostile Change in Control.
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i. A Change in Control (as defined below) is hostile if it is
neither solicited by Company nor supported by a majority of Company's then
existing Board of Directors ("Hostile Change in Control"). Notwithstanding
anything herein to the contrary, in the event that a Hostile Change in Control
of Company occurs, Company shall have the right to terminate this Agreement by
paying Executive 300% of the Compensation (as defined below), which he would
have received if this Agreement had not been terminated.
ii. In the event that a Hostile Change in Control of Company
occurs, Executive shall have the right to terminate this Agreement by written
notice to Company and Company shall immediately pay Executive 300% of the
Compensation, which he would have received if this Agreement had not been
terminated.
(b) Friendly Change in Control.
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i. A Change in Control (as defined below) is friendly if a
majority of Company's then existing Board of Directors supports such Change in
Control ("Friendly Change in Control"). Notwithstanding anything herein to the
contrary, in the event that a Friendly Change in Control of Company occurs,
Company shall have the right to terminate this Agreement by paying Executive
200% of the Compensation (as defined below), which he would have received if
this Agreement had not been terminated.
ii. In the event that a Friendly Change in Control of Company
occurs, Executive shall have the right to terminate this Agreement by written
notice to Company and Company shall immediately pay Executive 200% of the
Compensation, which he would have received if this Agreement had not been
terminated.
(c) In addition, upon the occurrence of either a Hostile Change in
Control of Company or a Friendly Change in Control of Company, the restrictions
on any outstanding incentive awards (including restricted stock and granted
performance shares) granted to Executive under any incentive plan or arrangement
shall lapse and such incentive awards shall become 100% vested, and all stock
options and stock appreciation rights granted to Executive shall become
immediately exercisable and shall become 100% vested.
(d) Any amounts required to be paid by Company pursuant to this
Section 1.2 shall be paid within five days of Executive's date of termination
(the "Termination Date").
(e) As used in this Agreement, the term "Compensation" shall be
determined by averaging the total value of Executive's annual base salary and
bonuses for the two years prior to the Termination Date (pro rated on a monthly
basis) or, if Executive has been employed for less than two full years, such
lesser number of calendar years during any part of which Executive has been so
employed, with his base salary and bonuses taken into account at their full
annualized rates for any partial year or years (pro rated on a monthly basis),
and multiplying that amount by the remaining months of the Initial Employment
Period, which for purposes of this Article I shall be deemed to be no less than
12 months, or if such Compensation is determined in reference to a period of
employment subsequent to the expiration of the Initial Employment Period, it
shall be the annualized amount of such Compensation during such period as
calculated above (pro rated on a monthly basis), multiplied by 12.
(f) A Change in Control of Company means:
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i. the acquisition, directly or indirectly, of the beneficial
ownership by any Person, individually or in concert with others acting as a
class or investor group, of 50% or more of the combined voting power of
Company's then outstanding securities within a 12-month period;
ii. the acquisition of Company by consolidation, merger, sale or
purchase of assets, liquidation or any other means as a result of which the then
existing stockholders of Company own less than 50.1% of the surviving entity; or
iii. there is a change in more than a majority of Company's Board
of Directors as a result of any transaction in which the Company is involved or
through a proxy contest.
iv. A Person, for purposes of this section, means an individual,
corporation, partnership, joint venture, trust, unincorporated association or
any other form of organization.
Article II
Duties
2.1 Duties. During the term hereof:
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(a) Executive shall, subject to the succeeding sentence, devote all
of his available working time to perform his duties and shall discharge such
duties to the best of his abilities. Executive may invest his personal assets
and his time in enterprises other than Company if such enterprises do not
compete with Company in Company's area of operations and do not require
Executive to devote substantial amounts of his time thereto.
Article III
Compensation
3.1 Salary. Company shall pay Executive a base salary of not less than
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$75,000 per year to be paid at the usual times for the payment of Company's
executives, subject to adjustment as provided herein. Executive's base salary
shall be reviewed annually by the Board of Directors of Company.
3.2 Options. As part of Executive's compensation, Company shall issue to
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Executive an option to acquire 20,000 shares of Company's common stock. Pursuant
to Company's Employee Incentive Share Option Plan, this option shall be granted
at a purchase price determined in accordance with Company's Employee Incentive
Share Option Plan. The option shall vest one year from the Effective Date unless
such vesting is accelerated pursuant to Sections 1.2 or 5.1. The complete terms
of such option are more particularly described in the Option Letter attached
hereto as Exhibit A.
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3.3 Benefits. Executive shall be entitled to receive all benefits (such as
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medical, dental, disability and life insurance, paid vacation (a maximum of
three weeks).
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Executive shall be eligible to participate in all bonus, incentive compensation,
stock option, performance unit or similar plans or programs as the Board of
Directors of Company may determine in its reasonable discretion based upon
Company's past compensation practices and Executive's responsibilities and
performance.
3.4 Incentive Compensation. Executive shall participate in a plan of
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incentive compensation and in a disability plan for Executive and all other
Company employees, to be presented for approval by the Board of Directors of
Company, which plans shall, upon approval and adoption by the Board of
Directors, in its discretion, be incorporated by reference herein as Exhibit B
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and Exhibit C, respectively.
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3.5 Reimbursement of Expenses. In addition, Company shall promptly
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reimburse Executive for all reasonable and documented out-of-pocket expenses
incurred in the performance of his duties hereunder, including expenses for
entertainment and travel.
Article IV
Death and Disability
4.1 Death. If Executive dies during the Employment Period, the Employment
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Period shall thereupon terminate for all purposes of this Agreement, and
Company's obligations hereunder shall terminate immediately, and Executive's
estate or legal representative shall be entitled only to the following:
(a) any unpaid bonus or compensatory options, as determined in
accordance with this Agreement, earned by Executive in respect of any calendar
year prior to the calendar year in which occurs the death of Executive;
(b) any bonus or compensatory options to be granted, as determined in
accordance with this Agreement, earned by Executive in respect of the year in
which occurs the death of Executive; and
(c) any reimbursable expenses incurred through the date of
Executive's death.
4.2 Disability. If Executive is unable to perform his duties as required
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under this Agreement by reason of mental or physical illness or incapacity.
Company agrees to continue all payments due hereunder, including salary, for a
period of 180 days from the date of disability. Notwithstanding anything to the
contrary contained herein, Executive shall be considered disabled and Company
may terminate this Agreement at any time Executive shall be absent from
employment as a result of mental or physical illness or incapacity for a
continuous period of 180 days, and all obligations of Company hereunder shall
cease upon any such termination. Upon any such termination, Executive shall be
entitled only to the following:
(a) any arrearages of salary, through the date of such termination,
including that which is payable as a result of the first sentence of this
Section 4.2;
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(b) any unpaid bonus or any options, as determined in accordance with
this Agreement earned by Executive in respect of any calendar year prior to the
calendar year in which occurs the disability of Executive;
(c) any bonus or options, as determined in accordance with this
Agreement, earned by Executive in respect of the year in which occurs the
disability of Executive; and
(d) any reimbursable expenses incurred by Executive.
4.3 Determination of Disability. For purposes of this Agreement, if at any
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time a question arises as to the disability of Executive, then Company and
Executive shall agree on one physician who is a member of the American Medical
Association to examine Executive and determine if his physical and/or mental
condition is such as to render him incapable of performing the usual duties of
his employment with Company.
Article V
Termination Benefits
5.1 Severance Payments. Subject to the provisions of Section 1.2 hereof,
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if Executive's employment (i) shall be terminated by the Board of Directors of
Company for any reason other than "for cause" or upon the death or disability of
Executive, or (ii) if Executive voluntarily terminates employment following a
change in position with Company if the new position is not a comparable position
to that described in Section 1.1, then Company shall pay Executive a termination
benefit as follows, provided Executive does not voluntarily accept the change in
position and notifies Company of his non-acceptance thereof:
(a) Company shall pay Executive an amount equal to Executive's
Compensation (pro rated on a monthly basis) multiplied by the remaining months
of this Agreement, which for purposes of this Article V shall be deemed to be no
less than 6 months (the "Severance Payments"). The Severance Payments shall be
paid in 6 equal monthly installments payable on or before the first day of each
calendar month following the Termination Date and shall be paid regardless of
whether Executive is able to secure alternative employment. In the event
Executive should die before payment of all of the installments due hereunder,
the remaining installments shall be paid to Executive's designated beneficiary,
if any, and otherwise to Executive's estate.
(b) Company shall continue to provide for a period of 6 months from
the Termination Date, medical, dental, disability and life insurance coverage to
Executive at the same levels of coverage as in effect immediately prior to such
date.
(c) Immediately upon terminate under this Section 5.1, all
Executive's options shall become immediately exercisable and shall become 100%
vested, and all performance incentives ranted to Executive shall become 100%
vested.
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(d) Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise
and no such payment shall be offset or reduced by the amount of any compensation
or benefits provided to Executive in any subsequent employment except as
provided herein.
(e) The severance pay and benefits provided in this Agreement shall
be in lieu of any other severance pay to which Executive may be entitled under
any Company severance plan, program or arrangement.
5.2 Title for Cause. If Executive is terminated for cause, then he shall
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receive no further benefits hereunder. A termination shall be deemed to be made
"for cause" by the Board of Directors of Company if such termination is on
account of substance abuse of Executive which is materially injurious to
Company, fraud, misappropriation, embezzlement or dishonesty by Executive that
is injurious to Company, commission of a criminal offense involving money or
other property of Company (excluding any traffic violations or similar
violations), or a criminal offense that constitutes a felony in the jurisdiction
in which the offense is committed.
Article VI.
Covenants of Executive
6.1 Confidential Information. Executive covenants and agrees that he will
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not at any time during or after the termination of his employment, whether under
this Agreement, or otherwise, reveal, divulge or make known to any person any
confidential or proprietary information ("Confidential Information") whatsoever
made known to Executive by reason of his employment by Company. This Section 6.1
shall not apply to information made known to Executive by reason of his outside
personal business interests or personal investments made in accordance with this
Agreement. In the event of a breach or threatened breach of Executive of the
provisions of this Section 6.1, Company shall be entitled, in addition to any
remedy hereunder or under any applicable law, to an injunction restraining
Executive from disclosing or using, in whole or in part, any Confidential
Information. The covenants contained in this Section 6.1 shall survive the
termination or expiration of this Agreement for a period of 24 months.
Article VII.
Miscellaneous
7.1 Disagreements. In the event that Company and Executive shall disagree
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as to their respective rights and obligations hereunder, the Company shall pay
reasonable counsel fees incurred by Executive in connection with such
disagreement, if Executive prevails in its position.
7.2 Binding Effect; Benefits. This Agreement shall inure to the benefit
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of, and shall be binding upon, the parties hereto and their respective
successors, assigns, heirs and legal representatives. Insofar as Executive is
concerned, this contract may not be assigned.
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7.3 Notices. All notices and other communications which are required or
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permitted hereunder shall be in writing and shall be sufficient if mailed by
registered or certified mail, postage prepaid to the address specified herein or
such other address as any party hereto shall have specified by notice in writing
to the other party hereto. All such notices and communications shall be deemed
to have been received on the date of delivery thereof or the fifth (5th)
business day after the mailing thereof, whichever is the earlier.
7.4 Entire Agreement. This Agreement contains the entire agreement
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between the parties hereto and supersedes all prior agreements and
understandings, oral or written, between the parties hereto with respect to the
subject matter hereof.
7.5 Amendments and Waivers. This Agreement may not be modified or amended
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except by an instrument or instruments in writing signed by the party against
whom enforcement or any such modification or amendment is sought. Either party
hereto may, by an instrument in writing, waive compliance by the other party
with any term or provision of this Agreement on the part of such other party
hereto to be performed or complied with. The waiver by any party hereto of a
breach of any term or provision of this Agreement shall not be construed as a
waiver of any subsequent breach.
7.6 Section Headings. The section and other headings contained in this
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Agreement are for reference purposes only and shall not be deemed to be a part
of this Agreement or to control or affect the meaning or construction of any
provision of this Agreement.
7.7 Severability. If any term or provision of this Agreement is held or
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deemed to be invalid or unenforceable, in whole or in part, by a court of
competent jurisdiction, this Agreement shall be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement.
7.8 Governing Law. This Agreement shall be governed by and construed and
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enforced in accordance with the laws of the State of Colorado without regard to
its principals regarding conflicts of law.
7.9 Counterparts; Facsimile. This Agreement may be executed in any number
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of counterparts, each of which shall be deemed an original, and all of which
together shall be deemed one and the same instrument. This Agreement may be
delivered by facsimile.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
COMPANY: CEC RESOURCES LTD.
By: /s/ Xxxxxxx X. XxXxxxxx
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Its: President
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EXECUTIVE: /s/ Xxxxx X. Xxxxxxxxx
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