EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of November 30, 1999;
BETWEEN:
XXXXXXX X. XXXXXXXX, of the City of
Lafayette in the State of California
(hereinafter referred to as the "Employee"),
OF THE FIRST PART,
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CERTICOM CORP., a corporation organized
under the laws of the Yukon Territory
(hereinafter referred to as the "Employer")
OF THE SECOND PART.
THIS AGREEMENT WITNESSES that in consideration of the covenants and
agreements herein contained the parties hereto agree as follows:
ARTICLE ONE - EMPLOYMENT
1.1 Employment
Subject to the terms and conditions hereof, the Employee shall be
employed by the Employer in the office of President and Chief Executive Officer
and shall perform such duties and exercise such powers related to such office as
set forth in the by-laws of the Employer and as prescribed or specified by the
board of directors of the Employer, subject always to the control and direction
of such board of directors.
1.2 Term of Employment
The employment of the Employee hereunder shall commence on the date
hereof and shall terminate on April 30, 2001, subject to any renewal of this
Agreement pursuant to Section 5.1 and subject to earlier termination of this
Agreement pursuant to Sections 4.1 and 4.2.
ARTICLE TWO - REMUNERATION
2.1 Salary
The Employer or a United States subsidiary of the Employee shall pay
the Employee during the term of this Agreement a gross annual salary of US
$250,000 payable on the 15th and the last day of each calendar month. If this
Agreement is renewed beyond April 30, 2001, such salary shall be reviewed by
the parties prior to any additional renewals of this
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Agreement and any changes in such salary shall be as agreed upon in writing
between the parties.
2.2 Bonus
In its absolute discretion the Employer may pay the Employee an
additional bonus in respect of each fiscal year of the Employer. The Employee
acknowledges that the payment of any such bonus shall be in the absolute
discretion of the Employer.
2.3 Options
(a) The Employee shall be entitled to participate in the
Employer's 1997 Stock Option Plan ("SOP") and any additional stock option plans
or stock purchase plans established by the Employer. As of the date hereof, the
Employee shall be granted options to purchase an additional 110,000 common
shares under the SOP at an exercise price equivalent to the closing price of the
shares on November 29, 1999. The grant of any future options or other benefits
under such plans shall be in the discretion of the Employer.
(b) In the event any person acquires more than 50% of the
outstanding voting securities of the Employer, (a "Change of Control") and the
Employee is subsequently terminated by the Employer without Cause (as defined
below) or voluntarily terminates his employment hereunder with Good Reason (as
defined below) then any options or other rights to acquire securities of the
Employer, whether granted prior to or subsequent to the date hereof, including,
without limitation, all such options or rights granted pursuant to the SOP,
shall immediately vest and become fully exercisable. For the purposes of this
Agreement:
(i) "Cause" shall mean:
(i) fraud, misappropriation, embezzlement or
other act of material misconduct against the Employer or any
of its subsidiaries;
(ii) conviction of any criminal act
involving a crime of moral turpitude including without
limitation, misappropriation of funds or property;
(iii) wilful and knowing violation of any
rules or regulations of any governmental or regulatory body
which are material to the business of the Employer;
(iv) a material breach, material repudiation
or other material failure to comply with or perform any of
the material terms of this Agreement;
(v) adjudication as incompetent; or
(vi) a good faith determination by the board
of directors of the Employer based on objective evidence that
persistent use of drugs or
alcohol is significantly interfering with the Employee's
performance of his duties hereunder.
(ii) "Good Reason" shall be deemed to exist where (A)
the Employer materially alters or reduces the Employee's duties,
responsibilities, authority or base compensation from those in effect
immediately prior to the occurrence of a Change of Control (including
an alteration or reduction indirectly in the form of resource
allocation or other assignment); (B) the Employer materially breaches
the terms of this Agreement or any other agreement between the Employer
and the Employee with respect to the payment or vesting of compensation
or benefits or in any other material respect and such breach is not
cured within thirty (30) days after the Employer receives notice
thereof; (C) the Employer requires the Employee, as a condition of the
Employee's continued employment with the Employer to be based in any
location more than fifty miles from the City of Hayward, California or
to spend more than 25% of each calendar quarter travelling outside the
San Francisco Bay Area; or (D) the Employer requires the Employee as a
condition of the Employee's continued employment with the Employer, to
perform illegal or fraudulent acts or omissions.
2.4 Benefits
The Employee will be entitled to participate in all of the Employer's
benefit plans generally available to its senior executive employees based in the
United States from time to time in accordance with the terms thereof.
2.5 Vacation
The Employee shall be entitled to four weeks of vacation per annum,
which will be pro-rated for the first year of this Agreement.
2.6 Expenses
The Employee shall be reimbursed at the Employee's cost for all
authorized travelling and other out-of-pocket expenses actually and properly
incurred by him in connection with his duties hereunder. For all such expenses
the Employee shall furnish to the Employer statements and vouchers as and when
required by the Employer.
ARTICLE THREE - EMPLOYEE'S COVENANTS
3.1 Service
The Employee shall devote such of his time, attention and ability to
the business of the Employer as is necessary to fulfill his responsibilities,
and shall well and faithfully serve the Employer and shall use his best efforts
to promote the interests of the Employer.
3.2 Duties and Responsibilities
The Employee shall duly and diligently perform all the duties assigned
to him while in the employ of the Employer, and shall truly and faithfully
account for and deliver to the
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Employer all money, securities and things of value belonging to the Employer
which the Employee may from time to time receive for, from or on account of the
Employer.
3.3 Rules and Regulations
The Employee shall be bound by and shall faithfully observe and abide
by all the rules and regulations of the Employer from time to time in force
which are brought to his notice or of which he should reasonably be aware.
3.4 Proprietary Rights Agreement
The Employee has previously executed and delivered a Proprietary Rights
Agreement in the form attached. The Employee's obligations under such
Proprietary Rights Agreement shall continue both before and after he has used
any Confidential Information for the purposes of such Proprietary Rights
Agreement and both before and after the employment of the Employee with the
Employer ceases and shall continue until such time as the Employee is expressly
released therefrom by the Employer in writing and the obligations of the
Employee under this Agreement shall be binding on the assigns, executors,
administrators or other legal representatives of the Employee. Any breach by the
Employee of this Agreement or the above Proprietary Rights Agreement shall cause
irreparable damage to the Employer and any such breach shall entitle the
Employer to immediate injunctive relief from a court of competent jurisdiction.
ARTICLE FOUR - TERMINATION OF EMPLOYMENT
4.1 Termination by Employer for Cause
The Employer may terminate this Agreement at any time for Cause without
payment of any compensation either by way of anticipated earnings or damages of
any kind.
4.2 Termination by Employer or Employee on Notice
(a) The Employee may terminate this Agreement upon the giving of six
months written notice to the Employer.
(b) The Employer may terminate this Agreement immediately upon paying
to the Employee salary equal to that which would have been paid to the Employee
pursuant to Section 2.1 for the unexpired term of this Agreement, in lieu of
such notice and upon making the benefit plan contributions necessary to maintain
the Employee's participation for the minimum period prescribed by law in all
benefit plans provided to the Employee by the Employer immediately prior to the
termination of this Agreement. The Employee agrees that the Employer may deduct
from any payment of salary in lieu of notice hereunder the Employee's benefit
plan contributions which were regularly made during the term of this Agreement
in accordance with the terms of all benefit plans to be maintained hereunder for
the minimum period prescribed by law.
(c) Notwithstanding Section 4.2(a) following a Change of Control, the
Employee may terminate this Agreement on 15 days written notice to the Employer
if Good Reason exists.
4.3 Fair and Reasonable
The parties confirm that the notice and pay in lieu of notice
provisions contained in Section 4.2 are fair and reasonable and the parties
agree that upon any termination of this Agreement by the Employer in compliance
with Sections 4.1 or 4.2 or upon any termination of this Agreement by the
Employee, the Employee shall have no action, cause of action, claim or demand
against the Employer or any other person as a consequence of such termination.
4.4 Return of Property
Upon any termination of this Agreement the Employee shall at once
deliver or cause to be delivered to the Employer all books, documents, effects,
money, securities or other property belonging to the Employer or for which the
Employer is liable to others, which are in the possession, charge, control or
custody of the Employee.
4.5 Provisions Which Operate Following Termination
Notwithstanding any termination of this Agreement for any reason
whatsoever and with or without Cause, the provisions of Sections 3.4 and 4.4 of
this Agreement and any other provisions of this Agreement necessary to give
efficacy thereto shall continue in full force and effect following such
termination.
ARTICLE FIVE - RENEWAL OF AGREEMENT
5.1 Automatic Renewal
This Agreement shall continue for successive periods of one year's
duration on the same terms and conditions of employment or on such terms and
conditions of employment as are agreed upon in writing between the parties
unless either party has given at least 180 days written notice to the other that
this Agreement is to terminate at the end of the initial period or at the end of
any successive period of one year.
5.2 Non-Renewal
In the event one of the parties gives written notice that this
Agreement is to terminate at the end of the initial period of one year or any
successive period of one year as set forth in Section 5.1 hereof, this Agreement
shall expire and the employment hereunder shall terminate without any notice or
payment of salary or benefit plan contributions in lieu of notice at the end of
the initial period of one year or that successive period of one year for which
it was last renewed pursuant to Section 5.1 hereof, as the case may be.
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ARTICLE SIX - GENERAL
6.1 Sections and Headings
The division of this Agreement into Articles and Sections and the
insertion of headings are for the convenience of reference only and shall not
affect the construction or interpretation of this Agreement. The terms "this
Agreement", "hereof", "hereunder" and similar expressions refer to this
Agreement and not to any particular Article, Section or other portion hereof and
include any agreement or instrument supplemental or ancillary hereto. Unless
something in the subject matter or context is inconsistent therewith, references
herein to Articles and Sections are to Articles and Sections of this Agreement.
6.2 Number
In this Agreement words importing the singular number only shall
include the plural and vice versa and words importing the masculine gender shall
include the feminine and neuter genders and vice versa and words importing
persons shall include individuals, partnerships, associations, trusts,
unincorporated organizations and corporations and vice versa.
6.3 Benefit of Agreement
This Agreement shall inure to the benefit of and be binding upon the
heirs, executors, administrators and legal personal representatives of the
Employee and the successors and permitted assigns of the Employer respectively.
6.4 Entire Agreement
This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and cancels and supersedes any prior
understandings and agreements between the parties hereto with respect thereto,
including without limitation, the employment agreement dated June 18, 1997.
6.5 Amendments and Waivers
No amendment to this Agreement shall be valid or binding unless set
forth in writing and duly executed by both of the parties hereto. No waiver of
any breach of any provision of this Agreement shall be effective or binding
unless made in writing and signed by the party purporting to give the same and,
unless otherwise provided in the written waiver, shall be limited to the
specific breach waived.
6.6 Severability
If any provision of this Agreement is determined to be invalid or
unenforceable in whole or in part, such invalidity or unenforceability shall
attach only to such provision or part thereof and the remaining part of such
provision and all other provisions hereof shall continue in full force and
effect.
6.7 Notices
Any demand, notice or other communication (hereinafter in this Section
6.7 referred to as a "Communication") to be given in connection with this
Agreement shall be given in writing and may be given by personal delivery, by
fax or by registered mail addressed to the recipient as follows:
To the Employee: Xxxxxxx X. Xxxxxxxx
000 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
To the Employer: Certicom Corp.
000 Xxxxxxxx Xxxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx X0X 0X0
Attention: Secretary
Fax: (000)000-0000
or such other address or individual as may be designated by notice by either
party to the other. Any Communication given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof, if
made or given by facsimile on the business day following receipt thereof, and,
if made or given by registered mail, on the 7th day, other than a Saturday,
Sunday or statutory holiday in Ontario, following the deposit thereof in the
mail. If the party giving any Communication knows or ought reasonably to know of
any difficulties with the postal system which might affect the delivery of mail,
any such Communication shall not be mailed but shall be given by facsimile or
personal delivery.
6.8 Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable therein.
6.9 Attornment
For the purpose of all legal proceedings this Agreement shall be deemed
to have been performed in the Province of Ontario and the courts of the Province
of Ontario shall have exclusive jurisdiction to entertain any action arising
under this Agreement or in respect of the employment relationship between the
Employer and Employee. The Employer and the Employee each hereby attorns to the
jurisdiction of the courts of the Province of Ontario.
6.10 Copy of Agreement
The Employee hereby acknowledges receipt of a copy of this Agreement
duly signed by the Employer.
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IN WITNESS WHEREOF the parties have executed this Agreement.
)
) /s/ Xxxxxxx X. Xxxxxxxx
) ----------------------------------
Witness: Name Illegible ) Xxxxxxx X. Xxxxxxxx
)
Name: )
)
)
Address: )
CERTICOM CORP.
By: /s/ Xxxxxx X. Deck
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Xxxxxx X. Deck
Chairman of the Board
By: /s/ Xxxxx X. XxxXxxxx
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Xxxxx X. XxxXxxxx
Vice President Administration,
Chief Financial Officer and Secretary
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