Exhibit 4.21
[GRAPHIC OMITTED]
RETENTION AGREEMENT
MEMORANDUM OF AGREEMENT made in Mississauga, Ontario, as of August 13, 2001,
BETWEEN:
Cedara Software Corp., a corporation incorporated under the laws of
Ontario, having its principal place of business in Mississauga,
Ontario,
(hereinafter referred to as the "Corporation")
AND:
Xx. Xxxx Xxxxxxx, domiciled and residing in Oakville, Ontario
(hereinafter referred to as the "Executive")
WHEREAS the Executive has been employed by the Corporation since
August 3, 1999, and while so employed has rendered valuable service to the
Corporation and has acquired an extensive knowledge of the Business (as
hereinafter defined);
AND WHEREAS the Executive desires to continue in the employ of the
Corporation in the capacity hereinafter stated and for the period and on the
terms and conditions set forth herein;
AND WHEREAS the Corporation desires to retain and have the continued
benefit of the Executive's knowledge and experience as an employee of the
Corporation;
AND WHEREAS the Corporation desires to recognize and compensate the
Executive for additional duties and responsibilities that the Executive has
undertaken since the commencement of his employment;
AND WHEREAS the Corporation and the Executive desire to enter into
this retention agreement (the "Agreement") to set forth the definitive terms
and conditions of the continued employment of the Executive;
AND WHEREAS the Agreement between the parties will commence on August
1, 2001 (the "Effective Date");
NOW, THEREFORE, for the reasons set forth above, and in consideration
of the mutual promises and agreements hereinafter set forth and other good and
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the Corporation and the Executive agree as follows:
ARTICLE 1
INTERPRETATION
Section 1.1 Definitions
For the purpose of this Agreement, unless the context otherwise
requires, the following words or expressions shall have the following
meanings:
"Board" shall mean the Board of Directors of the Corporation.
"Business" shall mean (i) the business of developing and marketing
imaging software, software platforms, software systems and related
services; (ii) any business hereafter conducted by the Corporation up
to the termination of the Executive's employment; and (iii) any
business that the Corporation is in the process of developing (as
reflected in a written business plan) at the time of the termination
of the Executive's employment.
"Cause" shall mean any act or omission of the Executive which would
in law permit a Corporation to, without notice or payment in lieu of
notice, terminate the employment of an employee.
"Disability" shall mean the Executive's inability to substantially
fulfil his duties on behalf of the Corporation for a continuous
period of six (6) months or more or the Executive's inability to
substantially fulfil his duties on behalf of the Corporation for an
aggregate period of six (6) months or more during any consecutive
twelve (12) month period.
"Effective Change of Control" shall mean either (a) any event as a
result of or following which any Person beneficially owns or
exercises control or direction over voting securities carrying 30% or
more of the votes attached to all voting securities then outstanding
or (b) the sale to a Person who is not affiliated with the
Corporation within the meaning of the OBCA of assets at a price
greater than or equal to 30% of the net assets of the Corporation
other than the assets of Surgical Navigation Specialists Inc., as
shown on a consolidated balance sheet for the Corporation at the end
of the last completed quarter of the then current financial year or
as at the end of the last completed financial year if the sale occurs
during the first quarter of a financial year.
"OBCA" shall mean the Ontario Business Corporations Act, as amended
from time to time.
"Stock Option Plan" shall mean the Corporation's Stock Option Plan
No. 2, as amended or replaced from time to time.
ARTICLE 2
SCOPE OF EMPLOYMENT
Section 2.1 Employment
The Corporation acknowledges that the Executive has been employed
since August 3, 1999. The Corporation hereby agrees to employ the Executive
and the Executive hereby accepts such continued employment, in the position of
President and Chief Operating Officer, on the terms and conditions herein
contained as of and with effect from the Effective Date. During his
employment, the Executive shall report to the Chairman and Chief Executive
Officer of the Corporation unless otherwise notified in writing by the Board.
Section 2.2 Term
This Agreement and the Executive's employment hereunder shall be
deemed to commence on the Effective Date and shall continue for an indefinite
term until terminated in accordance with the terms and conditions set forth in
this Agreement.
Section 2.3 Duties
During the term of this Agreement, the Executive shall:
(a) perform those duties and responsibilities necessary or
incidental to perform the functions of President and Chief
Operating Officer;
(b) devote to the business and affairs of the Corporation the whole
of his working time, attention and ability, and will ensure
that he is not at any time engaged in conduct which would
interfere with the performance by the Executive of his duties
under this Agreement or which would constitute a conflict with
the interests of the Corporation;
(c) use his reasonable best efforts to promote the interests of the
Corporation and to improve and extend the business thereof; and
(d) not incur any debt, liability or obligation or enter into any
contract or agreement for, on behalf of, or in the name of the
Corporation, other than in the ordinary course of business,
unless duly authorized by the Board.
ARTICLE 3
REMUNERATION OF THE EXECUTIVE
Section 3.1 Remuneration and Benefits
As compensation for the performance by the Executive of his duties
hereunder:
(a) the Corporation shall pay to the Executive an annual base
salary (the "Base Salary") at the rate of $ 400,000.00 per
annum, payable in equal bi-weekly instalments in arrears, less
applicable statutory deductions and withholdings. The
Executive's Base Salary will be reviewed on an annual basis;
(b) the Executive shall be entitled to participate in the
Corporation's annual incentive program in accordance with the
terms of the Annual Incentive Program in effect from time to
time and as amended from time to time with a target
participation of 50% of Base Salary.
(c) the Executive shall be entitled to participate in the benefit
plans which are made available to senior employees of the
Corporation, in effect from time to time, in accordance with
the terms of such plans;
(d) the Corporation shall, upon presentation of itemized receipts,
reimburse the Executive for all approved travel and other
business expenses directly and reasonably incurred by the
Executive in the performance of his duties, including
reasonable approved travel and short-term accommodation
expenses for trips as required;
(e) the Executive shall be paid an annual car allowance in the
amount of $10,800.00, payable in equal bi-weekly instalments;
(f) a retention grant of 238,000 stock options immediately upon
acceptance of the Agreement, at an exercise price per stock
option of $2.00, such options vesting as to 80,000 on the first
anniversary of the Effective Date, as to 80,000 on the second
anniversary of the Effective Date, and as to 78,000 on the
third anniversary of the Effective Date, all such options to
expire on the fifth anniversary of the Effective Date. The
terms and conditions of options are governed entirely by the
terms of the Stock Option Plan. The Executive may qualify for
further options grants through the Corporation's annual review
of its options program that is usually concluded at the time of
the Corporation's annual general meeting in December of each
year;
(g) continuation of current tax equalization arrangements under
which the Executive received 100 percent tax equalization from
date of hire to December 31, 2000 and will receive 66.6% of tax
equalization from January 1 to December 31, 2001; and 33.3% of
tax equalization from January 1 to December 31, 2002;
(h) continuation of current financial consultation services
arrangements, the Executive has received and will continue to
receive up to $5,000.00 per annum for tax consultation and
expenses related to the cost of filing during the period of tax
equalization as set forth in (g) above.
Section 3.2 Vacation
The Executive shall be entitled to 30 days paid vacation per annum to
be taken at a time or times convenient to the Corporation. Such vacation
entitlement shall be pro-rated for the period of employment during the 2001
calendar year. Unused vacation may be carried over as per the following
schedule: zero to three years of service, 10 days; three years to five years
of service, 15 days; five years and more of service, 20 days.
Section 3.3 D&O Insurance
The Corporation shall maintain in full force and effect at all times
during the duration of this Agreement a directors and officers insurance
policy with coverage in an amount which the Board determines from time to time
is appropriate for a business such as the Corporation.
ARTICLE 4
TERMINATION
Section 4.1 Termination
This Agreement may be terminated by the Corporation at any time for
the following reasons:
(a) for Cause, by written notice to the Executive;
(b) in the event of the death of the Executive;
(c) in the event of a breach of this Agreement and/or the Employee
Confidentiality and Intellectual Property Assignment Agreement
by the Executive, as determined by the Corporation, where such
violation has not been cured within two (2) weeks of written
notice thereof by the Corporation to the Executive;
(d) in the event of the Disability of the Executive, by written
notice to the Executive; and
(e) without Cause and other than for the reasons in subsection
4.1(b), (c) and (d), by paying to the Executive: (i) any
accrued but unpaid Base Salary for services rendered to the
date of termination, any accrued but unpaid expenses required
to be reimbursed under this Agreement and the value of the
prorated vacation leave with pay for that portion of the year
in which the employment of the Executive hereunder is
terminated that the Executive was actively employed, to the
extent such vacation entitlement has not been used by the
Executive at the time of termination together with the value of
such vacation carried over in accordance with Section 3.2; (ii)
a lump sum amount equal to twenty-four months of Base Salary
less applicable statutory deductions and withholdings; (iii)
the monthly average of the previous year's bonus amount, if
any, paid to the executive multiplied by the number of months
of the severance term as set forth in (ii) above less statutory
deductions and withholdings; (iv) continued participation in
the benefit plans for the severance period as set forth in (ii)
above; (v) an executive outplacement programme for one (1)
year; and (vi) upon termination, vesting of stock options is
accelerated and all options expire six months from the date of
termination (subject to the terms and conditions of the Stock
Option Plan).
Section 4.2 Payment Upon Termination
Should this Agreement be terminated pursuant to Subsections 4.1(a),
(b), (c), or (d) or should the Executive resign from his employment pursuant
to section 4.3, the Executive, or his estate, as the case may be, shall only
be entitled, unless otherwise specified in this Agreement, to payment of the
Executive's Base Salary earned up to the date of termination plus an amount
equal to the sum of: (i) the value of the pro-rated vacation leave with pay
for that portion of the year in which the employment of the Executive
hereunder is terminated that the Executive was actively employed, to the
extent such vacation entitlement has not been used by the Executive at the
time of termination together with the value of such vacation carried over in
accordance with Section 3.2; and (ii) the business expenses reasonably
incurred by the Executive up to the date of termination. Should this Agreement
be terminated pursuant to Subsection 4.1(b) or (d), the Executive, or his
estate as the case may be, shall be paid a sum equal to the monthly average of
the previous year's bonus amount, if any, paid to the Executive multiplied by
the number of completed months of employment in the fiscal year in which the
Executive's employment is terminated. For greater certainty, should this
Agreement be terminated pursuant to Subsection 4.1(a) or (c) or Section 4.3,
the Executive shall not be entitled to any bonus for any portion of the year
in which the employment of the Executive is terminated that the Executive was
actively employed. Nothing in this Section 4.2 shall be construed so as to
terminate the Executive's participation in the Corporation's disability plans
to the extent that he is receiving benefits thereunder at the date of
termination, which continued participation shall be in accordance with the
terms of such plans. The parties agree that notwithstanding this section 4.2,
the Executive will not receive less than that which he is entitled to upon
termination of employment in accordance with the Employment Standards Act
(Ontario).
Section 4.3 Termination by Executive
The Executive may resign from his employment by giving 30 days'
written working notice (exclusive of vacation time) to the Corporation.
Section 4.4 Effective Change of Control
Following an Effective Change of Control, and the termination without
Cause of the employment of the Executive within eighteen (18) months of the
date of the Effective Change of Control, the Corporation shall pay to the
Executive, within 10 days following the date of the termination, and on
account of the Effective Change of Control and the termination without Cause,
an amount in a lump sum equal to: (i) any accrued but unpaid Base Salary for
services rendered to the date of termination, any accrued but unpaid expenses
required to be reimbursed under this Agreement and the value of the prorated
vacation leave with pay for that portion of the year in which the employment
of the Executive hereunder is terminated that the Executive was actively
employed, to the extent such vacation entitlement has not been used by the
Executive at the time of termination together with the value of such vacation
carried over in accordance with Section 3.2; (ii) a lump sum amount equal to
twenty-four months of Base Salary, less applicable statutory deductions and
withholdings; and (iii) an amount equal to the monthly average of the previous
year's bonus amount, if any, paid to the executive multiplied by the number of
months as set forth in section 4.1(e)(ii) multiplied by 1.5, less statutory
deductions and withholdings; and (iv) all unvested options held by the
Executive on the date of the Effective Change of Control shall vest on the
date of termination of the employment of the Executive.
Section 4.5 Duties Upon Termination
Following the termination of the Executive's employment for any
reason whatsoever, the Executive hereby agrees to resign from any offices,
positions and directorships which he may have or may have held with the
Corporation.
ARTICLE 5
CONFIDENTIAL INFORMATION
Section 5.1 Employee Confidentiality and Intellectual Property Assignment
Agreement
The Executive acknowledges his responsibilities and obligations as
outlined in the Employee Confidentiality and Intellectual Property Assignment
Agreement dated ______________, 2001.
ARTICLE 6
PROPERTY OF THE CORPORATION
Section 6.1 Deliveries Upon Termination
The Executive hereby agrees to return to the Corporation, immediately
upon the termination of the employment of the Executive hereunder and without
making copies or disclosing information relating thereto, any and all
documents, equipment and other property belonging to the Corporation. Without
restricting the generality of the foregoing, the Executive shall return all
credit cards, identification cards and keys belonging to the Corporation.
ARTICLE 7
NOTICES
Section 7.1 Notices
Any notice required or permitted to be given by a party hereto to the
other shall be deemed validly given if personally delivered or mailed by
registered prepaid post and addressed as follows:
- in the case of the Corporation to:
Cedara Software Corp.
0000 Xxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Chief Executive Officer
- in the case of the Executive, to:
Xx. Xxxx Xxxxxxx
0000 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
provided that a party hereto may from time to time notify the other
in writing of a new address to which notices to it shall henceforth be sent
until further notice in writing be given. Any notice shall be deemed to be
effected (I) if personally delivered, on the date of receipt, or (ii) if
mailed, on the fifth business day following the date of mailing.
Notwithstanding the foregoing, if a strike or lockout of postal employees is
in effect, or generally known to be impending, notice shall be effected by
personal delivery.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Assignment
This Agreement may not be assigned by the Executive. The Executive
acknowledges and agrees that the Corporation may assign this Agreement.
Section 8.2 Governing Law
This Agreement is to be governed by and construed and enforced in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
Section 8.3 Severability
If any provision of this Agreement is determined to be invalid,
illegal or incapable of being enforced for any reason, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and
effect.
Section 8.4 Entire Agreement
This Agreement and the Employee Confidentiality and Intellectual
Property Assignment Agreement dated August 3, 1999 and the Stock Option Plan,
constitute the entire agreement between the parties with respect to the
subject matter contemplated therein and supersede and replace any provision of
any other document heretofore entered into by them with respect to the subject
matter of this Agreement, the Employee Confidentiality and Intellectual
Property Assignment Agreement and the Stock Option Plan. This Agreement shall
not be amended except by a written instrument hereafter signed by the parties
hereto.
Section 8.5 Waiver
No waiver of any of the provisions of this Agreement shall constitute
a waiver of any other provision (whether or not similar) nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
Section 8.6 Successors and Assigns
This Agreement shall enure to the benefit of and be binding upon the
successors and assigns of the Corporation.
Section 8.7 Required Deductions For Withholdings
The Corporation shall make such deductions and withholdings from any
payments hereunder as may be required by law.
Section 8.8 Independent Legal Advice
The Executive acknowledges that he has been advised to obtain, and
that he has obtained or has been afforded the opportunity to obtain,
independent legal advice with respect to this Agreement and the Employee
Confidentiality and Intellectual Property Assignment Agreement and that he
understands the nature and consequences of this Agreement and the Employee
Confidentiality and Intellectual Property Assignment Agreement.
Section 8.9 Acknowledgements
The Executive acknowledges and accepts that the terms set out in
Section 4.1(e), provided that such terms are satisfied by the Corporation, are
in lieu of (and not in addition to) and in full satisfaction of any and all
other claims or entitlements which the Executive has or may have upon the
termination of his employment and the compliance by the Corporation with these
terms will affect a full and complete release of the Corporation from any and
all claims which the Executive may have for whatever reason or cause in
connection with the Executive's employment or the termination of such
employment, other than those obligations specifically set out in this
Agreement. In receiving a payment or payments pursuant to Section 4.1(e), the
Executive voluntarily accepts such payment or payments for the purpose of
making full and final compromise, adjustment and settlement of all claims as
aforesaid and specifically agrees to execute a formal release document to that
effect in the form attached hereto as Schedule "A".
Section 8.10 Counterparts
This Agreement may be executed by the parties in one or more
counterparts, each of which when so executed and delivered shall be deemed to
be an original and such counterparts shall together constitute one and the
same instrument.
IN WITNESS WHEREOF the parties hereto have executed this Agreement at
the place and as of the date first mentioned above.
SIGNED, SEALED AND DELIVERED )
in the presence of )
)
)
/s/ XXXXX XXXX ) /s/ ARUN MENEWAT
-------------------------------- -----------------------------------------
Witness )
XXXX XXXXXXX
CEDARA SOFTWARE CORP.
Per: /s/ XXXXXXX X. XXXXXXXXX
-----------------------------------
Name: XXXXXXX X. XXXXXXXXX
Title: CEO
