EMPLOYMENT CONTRACT
EMPLOYMENT CONTRACT ("Contract"), dated as of January, 1998
(the "Effective Date"), between USCOMMUNICATION SERVICES, INC., a
Delaware corporation with offices at 000 Xxxx Xxxxxxxxx Xxxxxxx,
Xxxxxx, Xxxxx 00000 (the "Company"), CANMAX INC., a Wyoming
corporation ("Canmax"), and XXXXX X. XXXXXX residing at 00000
Xxxxx Xxxx, Xxxxx 0000, Xxxxx, Xxxxxxxxxx 00000 (the
"Employee").
RECITALS
WHEREAS, the Company, Canmax and CNMX MergerSub, Inc.
("CMI") are parties to that certain Agreement and Plan of Merger
dated as of January 30, 1998 (the "Merger Agreement"), pursuant
to which the USCommunication Services, Inc. ("USC") was merged
with and into CMI (which concurrently changed its name to
USCommunication Services, Inc.) and CMI (now the Company), as the
surviving corporation, became a wholly owned subsidiary of
Canmax;
WHEREAS, it is a condition precedent to the Closing under
the Merger Agreement that Employee enter into this Contract;
WHEREAS, the Closing is being consummated as of the date of
this Contract;
WHEREAS, Employee has executed a Non-Competition Agreement
as of this date with the Company;
WHEREAS, Employee was an employee of USC through the date of
the Closing and the Company desires to retain Employee upon the
terms set forth in this Contract; and
WHEREAS, Employee desires to be retained by the Company upon
the terms set forth in this Contract.
NOW, THEREFORE, in consideration of the foregoing premises
and other good and valuable consideration, the sufficiency of
which is hereby acknowledged, the Company and Employee hereby
agree as follows:
1. TERM AND RENEWAL.
The Company agrees to employ Employee, and the Employee
agrees to serve, on the terms and conditions of this Contract,
for a period commencing the Effective Date and ending three (3)
years thereafter, or such shorter period as may be provided for
herein. The period during which Employee is employed hereunder is
hereafter referred to as the "Employment Period."
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2. DUTIES AND SERVICES.
During the Employment Period, Employee shall be employed as
the President of the Company and shall also perform services in a
responsible executive or managerial capacity for any of the
Company's or Canmax's subsidiary corporations when and as
requested by the Company or Canmax. In the performance of his
duties, Employee shall be subject to the direction of the Chief
Executive Officer of Canmax and the Board of Directors of Canmax.
Employee agrees to his employment as described in this Section 2
and agrees to devote substantially all of his time and efforts to
the performance of his duties under this Agreement. Employee
shall be available to travel as the needs of the business
require.
3. COMPENSATION.
(a) As compensation for his services hereunder, the Company
shall pay Employee, during the Employment Period, a salary
payable in equal monthly installments at the annual rate of
$150,000. Employee shall also participate in any bonus programs
for the Company's executive officers, as provided by the Board of
Directors of Canmax, and shall be guaranteed a minimum annual
bonus of $30,000 per year (which guaranteed bonus amount shall be
reduced by the amount of any future increase in base salary).
During the term of this Agreement, the Company may increase the
base salary payable to Employee, but may not reduce the base
amount of Employee's base salary or Employee will also be
eligible to participate in the regular employee benefit programs
and stock option plans now or hereafter established by the
Company and in any special executive benefits and perquisites
established by the Board of Directors of Canmax.
(b) As additional consideration for Employee's agreeing to
perform the duties and services provided in this Agreement,
Canmax shall grant to the Employee warrants to purchase up to 2.0
million shares of Canmax common stock, which warrants shall be in
form and substance as attached hereto as Exhibit A (the
"Warrants").
(c) During the Employment Term, Employee shall be entitled
to a car allowance equal to his actual expense thereof, but not
in excess of $500 per month.
(d) Employee shall be entitled to reasonable vacations in
accordance with the then regular procedures of the Company
governing executives.
4. EXPENSES.
Employee shall be entitled to reimbursement for travel and
other out-of-pocket expenses incurred by Employee in the
performance of his duties hereunder, upon submission and approval
of written statements and bills in accordance with the then
regular procedures of the Company.
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5. NON-COMPETITION; NON-SOLICITATION.
Employee agrees that he will not during the Employment
Period engage in, or otherwise directly or indirectly be employed
by, or act as a consultant or lender to, or be a director,
officer, employee, owner or partner of, any other business or
organization that directly or indirectly competes with the
business of the Company, Canmax or any of their respective
subsidiaries; provided, however, that not withstanding the
foregoing, the provisions of this Section 5 will not be deemed
breached merely because Employee owns not more than 1% of the
outstanding equity securities of an entity if, at the time of its
acquisition by Employee, said securities are listed on a national
security exchange, is reported on the Nasdaq stock market CNSM,
or is regularly traded in the over-the-counter market by a member
of a national securities exchange. Executive agrees that he
shall not, during the two-year period after he voluntarily
terminates this Agreement or is terminated pursuant to this
Agreement for "cause" (as defined in Section 7(d) below), solicit
or encourage any employee, consultant, vendor or supplier or
customer of the Company or Canmax or any of their subsidiaries to
leave the employment of, or cease or diminish its relations with,
the Company, Canmax or any of their respective subsidiaries.
6. CONFIDENTIAL INFORMATION.
All confidential information which Employee may now possess,
may obtain from the Company or its subsidiaries during or after
the Employment Period, or may create prior to the end of the
Employment Period or otherwise relating to the financial
condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company or of any
customer or supplier of any of them shall not be published,
disclosed, or made accessible by him to any other person or
entity either during or after the termination of his employment
or used by him except during the Employment Period in the
business and for the benefit of the Company and its subsidiaries,
in each case without prior written permission of the Company.
Employee shall deliver to the Company all tangible evidence of
such confidential information prior to or at the termination of
his employment. The provisions of this Section 6 shall survive
the termination of this Contract by either party.
7. TERMINATION.
(a) EMPLOYEE'S DEATH. If Employee shall die during the
Employment Period, this Contract shall terminate, except that
Employee's estate ("Estate") shall be entitled to receive (i) the
base salary payable to Employee through the remaining term of the
Employment Period (but in no event less than $15,000 per month),
in accordance with the regular payroll cycle of the Company and
(ii) any death benefits provided under employee benefit plans
maintained by the Company. In addition, if Employee shall die
during the Employment Period and notwithstanding any contrary
provisions of any Company stock option, warrant or stock option
plan, the Estate shall have the right to retain and exercise (y)
any vested options or warrants outstanding as of the date of
death and (z) any unvested options or warrants outstanding on the
date of death that vest within one (1) year of the date of death,
in each case in accordance with their respective terms.
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(b) EMPLOYEE'S DISABILITY. If, during the Employment
Period, Employee shall become Disabled (as defined below), this
Agreement shall terminate effective on such incapacity, and
Employee (or his legal representatives) shall be entitled only to
the base compensation earned through the date of termination with
no entitlement to any base salary after the date of termination;
provided, however, that (i) Employee shall be entitled to receive
all benefits to which he may be entitled pursuant to the
Company's employee benefit plans; and (ii) the Company shall not
be obligated to make any payments to Employee under this Section
7(b) to the extent that such payments, when aggregated with all
other salary or disability payments received by Employee (whether
from disability programs maintained by the Company or otherwise)
exceed the then current base salary of Employee. As used herein,
the term "Disabled" or "Disability" shall mean a mental or
physical condition that prevents Employee from performing his
usual duties and services hereunder for a period of six (6)
consecutive months or six (6) non-consecutive months in any
twelve (12) month period, as determined in the reasonable
discretion of the Board of Directors of Canmax; provided that if
Employee disputes such determination by the Board of Directors of
Canmax, Employee (or his legal representatives) shall notify the
Canmax in writing and (x) the Canmax and Employee (or his legal
representatives) shall each designate a licensed physician
practicing in the field to which the alleged Disability relates
within fifteen (15) days of the delivery of such notice, (y) the
designated physicians shall within fifteen (15) days select a
third physician practicing in the field to when the alleged
Disability relates, and (z) the third physician shall determine
whether Employee is or has been Disabled within the meaning of
this Agreement.
(c) TERMINATION BY THE COMPANY WITHOUT CAUSE. This
Agreement may be terminated by the Company without cause upon
thirty (30) days' prior written notice thereof given to Employee.
In the event of termination without cause, the Company shall for
a period of one (1) year continue to pay Employee the base salary
effective at the time of termination in accordance with the
Company's regular payroll cycle. Additionally, Employee shall be
entitled to continue to participate in all regular employee
benefit plans of the Company for a period of one (1) year
following termination without cause; provided, however, that if
Employee accepts another job during such period that provides
employee benefits comparable to those offered by the Company at
such time at a cost to Employee no greater than the cost of the
benefits provided by the Company, the Company's obligation to
extend such benefits to Employee shall cease.
(d) TERMINATION BY THE COMPANY FOR CAUSE. This Agreement
may be terminated by the Company "for cause", as defined below,
by delivering to Employee written notice describing the cause and
granting Employee thirty (30) days to respond to the Board of
Directors of Canmax. If this Agreement is terminated by the
Company for cause, Employee shall only be entitled to the base
salary earned by him to the date of termination with no
entitlement to any base salary continuation payments or benefits
continuation (except as otherwise provided by the terms of an
employee benefit plan of the Company). The determination as to
whether termination shall be for cause shall be made by the Board
of Directors of Canmax in the exercise of its business judgment.
Termination of this Agreement by the Company for cause shall be
deemed to have occurred only if:
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(i) termination shall have been the result of an act
or acts of dishonesty on the Employee's part constituting a
felony or intended to result directly or indirectly in
substantial gain or personal enrichment to him at the
expense of the Company; or
(ii) termination shall have been the result of the
Employee's willful and continued failure substantially to
perform his duties and responsibilities as an officer of the
Company (other than such failure resulting from his
incapacity due to physical or mental illness) after a demand
for substantial performance is delivered to the Employee by
the Board of Directors of Canmax which specifically
identifies the manner in which the Board of Directors of
Canmax believes that the Employee has not substantially
performed his duties and the Employee is given a reasonable
time after such demand substantially to perform his duties.
Employee's employment shall in no event be considered to
have been terminated by the Company for cause if the act or
failure to act upon which the termination is based (A) was done
or omitted to be done without intent of gaining therefrom
directly or indirectly a profit to which Employee was not legally
entitled and as a result of his good faith belief that such act
or failure to act was in or was not opposed to the interests of
the Company, or (B) is an act or failure to act in respect of
which Employee meets the applicable standard of conduct
prescribed for indemnification or reimbursement of expenses under
the Bylaws of the Company or the laws of its state of
incorporation.
(e) VOLUNTARY TERMINATION BY EMPLOYEE. Employee may
terminate this Agreement at any time upon delivering thirty (30)
days' written notice to the Company. In the event of such
voluntary termination. Employee shall be entitled to his base
salary earned to the date of his resignation, but no base salary
continuation payment or benefits continuation (except as provided
by the terms of the Company's employee benefit plans). On or
after the date the Company receives notice of Employee's
resignation, the Company may, at its option, pay Employee his
base salary through the effective date of his resignation and
terminate his employment immediately.
(f) TERMINATION BY EMPLOYEE FOR GOOD REASON. Employee may
at any time voluntarily terminate his employment for "good
reason", as defined below, upon thirty (30) days written notice
thereof to the Company; provided that the Company may, at its
option, pay Employee his base salary through the effective date
of his resignation, terminate his employment immediately (except
for the provision of non monetary benefits) and, following the
effective date of such resignation, provide the payments and
benefits provided in Section 7(c). In the event of such
voluntary termination for "good reason", Employee shall be deemed
to have been terminated without cause with the same payments and
benefits set forth in Section 7(c) being applicable to Employee's
termination under this Section 7(f).
For purposes of this Agreement, "good reason" shall
mean the occurrence of any of the following events:
(i) reduction in the base salary payable to Employee;
or
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(ii) the Company otherwise commits a material breach of
this Agreement;
provided that "good reason" shall not include the temporary
appointment of another person to fulfill Employee's
responsibilities during any period of disability of Employee.
8. CHANGE OF CONTROL
(a) CONCERNS REGARDING CHANGE OF CONTROL. Employee and the
Company agree that the circumstances surrounding a "Change of
Control," as hereinafter defined, impose unique risks to the
Company and Employee and that in response to the unique
circumstances surrounding a Change of Control, the provisions of
this Agreement shall separately consider the parties rights' and
obligations in the event that a Change of Control occurs. This
Section 8 shall be applicable whether or not a Change of Control
is contemplated at this time. Notwithstanding any other provision
of this Agreement, the severance payments and benefits, if any,
payable to Employee shall be determined solely by reference to
this Section 8 in the event that a Change of Control has
occurred, or if Employee is "involuntarily terminated," as
hereinafter defined, in contemplation of a Change of Control.
(b) INVOLUNTARY TERMINATION IN CONTEMPLATION OF, OR WITHIN
TWO YEARS FOLLOWING, A CHANGE OF CONTROL. If Employee is
involuntarily terminated, other than "for cause" (as defined in
Section 7(d)) in contemplation of, or within two (2) years
following, a Change of Control, the Company shall pay Employee
(i) a lump sum severance payment equal to (A) Employee's
annualized base salary in effect at the time of involuntary
termination plus (B) fifty percent (50%) of any bonus paid
during the preceding twelve-month period, payable as a lump sum,
and (ii) continuation of all employee benefits, Employee benefits
and perquisites, or benefits reasonably equivalent thereto, for a
period of one (1) year; provided, however, that if Employee
accepts another job during such period that provides employee
benefits comparable to those offered by the Company at such time
at a cost to Employee no greater than the cost of the benefits
provided by the Company, the Company's obligation to extend such
benefits to Employee shall cease.
For purposes of this Agreement, the following shall be
deemed to constitute involuntary termination:
(i) dismissal of Employee (except termination "for
cause" as defined in Section 7(d) hereof);
(ii) reduction in Employee's base salary;
(iii) reduction in the level of employee benefits
received by Employee, unless substituted with reasonably
comparable benefits;
(iv) requesting Employee to relocate more than 100
miles from his current location other than the relocation of
Employee in connection with the relocation of the
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Company's corporate headquarters or relocation to another
existing facility of the Company;
(v) removal from the offices Employee holds on the
date of this Agreement or a material reduction in Employee's
authority or responsibility; or
(vi) the Company otherwise commits a material breach of
this Agreement.
In the event that within two (2) years following a
Change of Control, Employee is terminated for cause, Employee
shall only be entitled to his base salary up until the last date
of employment pursuant to the date of termination for cause.
(c) TERMINATION OF THIS AGREEMENT MORE THAN TWO YEARS AFTER
A CHANGE OF CONTROL. The parties' rights and obligations arising
from a termination of this Agreement, whether by Employee or the
Company, that occurs more than two (2) years following a Change
of Control shall be governed by Section 7 of this Agreement.
(d) DEFINITION OF CHANGE OF CONTROL. For purposes of this
Agreement, a Change of Control shall be deemed to exist upon the
occurrence of any of the following:
(i) any "Person" (as such term is used in Section
13(d) and Section 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), is or becomes a
"beneficial owner" (as defined in Section 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Company or Canmax representing more than thirty percent
(30%) of the combined voting power of the outstanding
securities of the Company or Canmax;
(ii) at any time during the twenty-four (24) month
period following a merger, tender offer, consolidation, sale
of assets or contested election, or any combination of such
transactions, at least a majority of the Board of Directors
of the Company or Canmax shall cease to be "continuing
directors" (meaning directors of the Company or Canmax prior
to such transaction or who subsequently became directors and
whose election or nomination for election by the
stockholders of the Company or Canmax, was approved by a
vote of at least two-thirds of the directors then still in
office prior to such transaction); or
(iii) the stockholders approve an agreement of sale
or disposition by the Company or Canmax of all or
substantially all of the assets of the Company or Canmax.
(e) NO MITIGATION OF COMPENSATION. Employee shall not be
required to mitigate any severance payments received under this
Section 8 due to his employment with a successor organization.
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9. SURVIVAL.
The covenants, agreements, representations, and warranties
contained in or made pursuant to this Contract shall survive
Employee's termination of employment.
10. MODIFICATION.
This Contract sets forth the entire understanding of the
parties with respect to the subject matter hereof, supersedes all
existing agreements between them concerning such subject matter,
and may be modified only by a written instrument duly executed by
each party.
11. NOTICES.
Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested, or by Federal Express,
Express Mail, or similar overnight delivery or courier service or
delivered (in person or by telecopy, telex, or similar
telecommunications equipment) against receipt to the party to
whom it is to be given at the address of such party set forth in
the preamble to this Contract (or to such other address as the
party shall have furnished in writing in accordance with the
provisions of this Section 11). Any notice given to the Company
shall be addressed to the attention of the Corporate Secretary.
Notice to the estate of Employee shall be sufficient if addressed
to Employee as provided in this Section 11. Any notice or other
communication given by certified mail shall be deemed given at
the time of certification thereof, except for a notice changing a
party's address which shall be deemed given at the time of
receipt thereof. Any notice given by other means permitted by
this Section 11 shall be deemed given at the time of receipt
thereof.
12. WAIVER.
Any waiver by either party of a breach of any provision of
this Contract shall not operate as or be construed to be a waiver
of any other breach of that provision or of any breach of any
other provision of this Contract. The failure of a party to
insist upon strict adherence to any term of this Contract on one
or more occasions shall not be considered a waiver or deprive
that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Contract. Any
waiver must be in writing.
13. BINDING EFFECT.
Employee's rights and obligations under this Contract shall
not be transferable by assignment or otherwise, such rights shall
not be subject to commutation, encumbrance, or the claims of
Employee's creditors, and any attempt to do any of the foregoing
shall be void. The provisions of this Contract shall be binding
upon and inure to the benefit of Employee and his heirs and
personal representatives, shall be binding upon and inure to the
benefit of the Company and its successors and assigns.
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14. HEADINGS.
The headings of this Contract are solely for the convenience
of reference and shall be given no effect in the construction or
interpretation of this Contract.
15. ATTORNEYS' FEES.
In the event that any person commences any action or
proceeding to enforce the terms of this Contract, the prevailing
party shall be entitled to recover from the other his or its
reasonable attorney's fees.
16. COUNTERPARTS; GOVERNING LAW.
This Contract may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall
be governed by and construed in accordance with the laws of the
State of Texas, without giving effect to the conflict of laws
rules. Any action, suit, or proceeding arising out of, based on,
or in connection with this Contract, any document or instrument
delivered pursuant to, in connection with, or simultaneously with
this Contract, any breach of this Contract or any such document
or instrument, or any transaction contemplated hereby or thereby
may be brought only in the District Courts of Dallas County,
Texas or the United States District Court for the Northern
District of Texas, Dallas Division and each party covenants and
agrees not to assert, by way of motion, as a defense, or
otherwise, in any such action, suit, proceeding, any claim that
such party is not subject personally to the jurisdiction of such
court, that such party's property is exempt or immune from
attachment or execution, that the action, suit or proceeding is
brought in an inconvenient forum, that the venue of the action,
suit, or proceeding is improper, or that this Contract or the
subject matter hereof may not be enforced in or by such court.
17. DEFINITIONS.
Except to the extent specifically defined in this Contract,
all capitalized terms used herein shall have the meanings
ascribed to such terms in the Merger Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have duly executed this
Contract as of the date first above written.
COMPANY:
USCOMMUNICATION SERVICES, INC.
By: /s/ XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
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Title:
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EMPLOYEE:
/s/ XXXXX X. XXXXXX
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XXXXX X. XXXXXX
CANMAX INC.
By: /s/ XXXXXX X. XXXXXXX
--------------------------------
Name: Xxxxxx X. Xxxxxxx
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Title: Treasurer
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